UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON, DC~~Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For the transition period from ___________ to ___________~~Commission File Number 001-37906

~~Commission File Number: 001-37906~~

~~Avista Healthcare Public Acquisition Corp.~~ORGANOGENESIS HOLDINGS INC.

(Exact ~~Name~~name of ~~Registrant~~registrant as ~~Specified~~specified in its ~~Charter)~~charter)

~~Cayman Islands~~
Delaware		98-1329150
(State or other jurisdiction of	~~(I.R.S. Employer~~
incorporation or organization)		(I.R.S. Employer Identification No.)
~~65 East 55th Street, 18th Floor~~ ~~New York, NY~~

85 Dan Road

Canton, MA 02021

(Address of principal executive offices) (Zip Code)

(781) 575-0775

~~10022~~

(~~Address of principal executive offices)~~

~~(Zip Code)~~

Registrant’s telephone number, including area ~~code:~~ ~~(212) 593-6900~~code)

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Class A Common Stock, $0.0001 par value

ORGO

Nasdaq Capital Market

Securities registered pursuant to Section 12(b) of the Act.

Indicate by check mark whether the ~~registrant:~~registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ◻☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ◻

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~


Large accelerated filer	☐	☐	Accelerated filer		☐

Non-accelerated filer	☒ ~~(Do not check if a smaller reporting company)~~	☒	Smaller reporting company	☐	☒
	
			Emerging growth company		☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒☐ No ☐☒

AtAs of November ~~14, 2017, there were 31,000,000~~1, 2020, the registrant had a total of 107,785,526 shares of its Class A ~~ordinary shares, $0.0001 par value per share and 7,750,000 Class B ordinary shares,~~common stock, $0.0001 par value per share, outstanding.

Organogenesis Holdings Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended September 30, 2020

Table of Contents

~~Table of Contents~~


				Page
PART I.			FINANCIAL INFORMATION	3		4
Item 1.		Unaudited Consolidated Financial Statements	3		4
		~~Condensed~~Consolidated Balance Sheets	3		4
		~~Condensed~~Consolidated Statements of Operations ~~(unaudited)~~	4		5
		~~Condensed~~Consolidated Statements of Redeemable Common Stock and Stockholders’ Equity			6
		Consolidated Statements of Cash Flows ~~(unaudited)~~	5		7
		Notes to Consolidated Financial Statements			8
Item 2.	~~Notes to Condensed Financial Statements (unaudited)~~	6
~~Item 2.~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15		25
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	19		36
Item 4.		Controls and Procedures	19		37

PART II.			OTHER INFORMATION	20		38
Item 1.		Legal Proceedings	20		38
Item ~~1A.~~ 1A		Risk Factors	20		39
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	20		41
Item 3.		Defaults Upon Senior Securities	21		41
Item 4.		Mine Safety Disclosures	21		41
Item 5.		Other Information	21		41
Item 6.		Exhibits	21		42
			~~Signatures~~				23
SIGNATURES					43

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. These statements may relate to, but are not limited to, expectations of our future results of operations, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities and the effects of competition, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These risks and other factors include, but are not limited to, those listed under “Risk Factors.” In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “might,” “would,” “continue” or the negative of these terms or other comparable terminology. These forward-looking statements are based on our management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and discussed elsewhere in this Form 10-Q, including those related to the coronavirus (COVID-19) pandemic. These forward-looking statements speak only as of the date of this Form 10-Q. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Form 10-Q.

As used herein, except as otherwise indicated by context, references to “we,” “us,” “our,” “the Company,” “Organogenesis” and “ORGO” will refer to Organogenesis Holdings Inc. and its subsidiaries.

~~Table of Contents~~

PART ~~I -~~ I—FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements.

ORGANOGENESIS HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(amounts in thousands, except share and per share data)

~~Item 1. Financial Statements~~

~~Avista Healthcare Public Acquisition Corp.~~

~~CONDENSED BALANCE SHEETS~~

As of

As of

September 30, 2017

December 31, 2016

(Unaudited)

ASSETS

Current assets

Cash

$
117,728

$
1,040,068
Prepaid expenses

242,302

395,843
Total current assets

360,030

1,435,911

Cash and cash equivalents held in trust account

311,658,037

310,000,000
Accrued interest receivable held in trust account

39,744

—
Total assets

$
312,057,811

$
311,435,911

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Offering costs payable

$
—

$
427,578
Accrued expenses

2,696,066

50,782
Total current liabilities

2,696,066

478,360

Deferred underwriting commission

10,850,000

10,850,000

Total liabilities

13,546,066

11,328,360

COMMITMENTS

Class A ordinary shares subject to possible redemption, $0.0001 par value; 29,191,301 and 29,510,755 shares at conversion value at September 30, 2017 and December 31, 2016

293,511,740

295,107,550
Shareholders' equity

Preferred shares, $0.0001 par value, 1,000,000 shares authorized: no shares issued and outstanding at September 30, 2017 and December 31, 2016

—

—
Ordinary shares, $0.0001 par value, 220,000,000 shares authorized

Class A ordinary shares 200,000,000 shares authorized; 1,808,699 and 1,489,245 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively, (excluding 29,191,301 and 29,510,755 shares subject to possible redemption at September 30, 2017 and December 31, 2016, respectively)

181

149
Class B ordinary shares, 20,000,000 shares authorized; 7,750,000 and 7,750,000 shares issued and outstanding at September 30, 2017 and December 31, 2016

775

775
Additional paid-in capital

6,828,715

5,232,937
Accumulated deficit

(1,829,666)

(233,860)
Total shareholders' equity

5,000,005

5,000,001
Total liabilities and shareholders' equity

$
312,057,811

$
311,435,911


	September 30,			December 31,
	2020			2019
Assets
Current assets:
Cash	$	36,512		$	60,174
Restricted cash		374			196
Accounts receivable, net		56,915			39,359
Inventory		29,882			22,918
Prepaid expenses and other current assets		5,327			2,953

Total current assets		129,010			125,600
Property and equipment, net		55,937			47,184
Notes receivable from related parties		—			556
Intangible assets, net		31,849			20,797
Goodwill		28,916			25,539
Deferred tax asset, net		16			127
Other assets		700			884

Total assets	$	246,428		$	220,687

Liabilities and Stockholders’ Equity
Current liabilities:
Deferred acquisition consideration	$	966		$	5,000
Current portion of term loan		11,667			—
Current portion of capital lease obligations		3,473			3,057
Accounts payable		24,007			28,387
Accrued expenses and other current liabilities		26,132			23,450

Total current liabilities		66,245			59,894
Line of credit		39,353			33,484
Term loan, net of current portion		47,999			49,634
Deferred acquisition consideration, net of current portion		1,436			—
Earnout liability		3,782			—
Deferred rent		1,098			1,012
Capital lease obligations, net of current portion		12,239			14,431
Other liabilities		8,802			6,649

Total liabilities		180,954			165,104

Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.0001 par value; 400,000,000 shares authorized; 108,185,702 and 105,599,434 shares issued; 107,457,154 and 104,870,886 shares outstanding at September 30, 2020 and December 31, 2019, respectively.		11			10
Additional paid-in capital		237,015			226,580
Accumulated deficit		(171,552	)		(171,007	)

Total stockholders’ equity		65,474			55,583

Total liabilities and stockholders’ equity	$	246,428		$	220,687

The accompanying notes are an integral part of ~~the~~these unaudited ~~condensed~~consolidated financial statements.

~~Table of Contents~~

ORGANOGENESIS HOLDINGS INC.

~~Avista Healthcare Public Acquisition Corp.~~

~~CONDENSED~~CONSOLIDATED STATEMENTS OF OPERATIONS ~~(UNAUDITED)~~

(unaudited)

(amounts in thousands, except share and per share data)

For the

For the

For the

For the

Three Months Ended

Three Months Ended

Nine Months Ended

Nine Months Ended


September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Formation and operating costs

$
2,853,131

$
14,492

$
3,293,587

$
30,542

Loss from operations

(2,853,131)

(14,492)

(3,293,587)

(30,542)

Other income:

Interest income

736,128

—

1,697,781

—

Net loss

$
(2,117,003)

$
(14,492)

$
(1,595,806)

$
(30,542)

Weighted average number of shares outstanding, basic and diluted (1)

9,278,550

7,500,000

9,259,196

7,500,000

Basic and diluted loss per share

$
(0.30)

$
(0.00)

$
(0.35)

$
(0.00)

~~(1)~~

~~Excludes an aggregate of up to 1,125,000 shares that are subject to forfeiture if the over-allotment option is not exercised in full by the underwriters at September 30. 2016 (see Note 6)~~


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net revenue	$	100,799		$	64,265		$	231,491		$	186,336
Cost of goods sold		22,964			19,131			61,799			55,557

Gross profit		77,835			45,134			169,692			130,779
Operating expenses:
Selling, general and administrative		51,146			49,475			150,261			147,325
Research and development		3,709			3,924			13,787			11,159

Total operating expenses		54,855			53,399			164,048			158,484

Income (loss) from operations		22,980			(8,265	)		5,644			(27,705	)

Other expense, net:
Interest expense, net		(2,969	)		(2,427	)		(8,391	)		(6,392	)
Loss on the extinguishment of debt		—			—			—			(1,862	)
Gain on settlement of deferred acquisition consideration		951			—			2,246			—
Other income (expense), net		44			(1	)		90			11

Total other expense, net		(1,974	)		(2,428	)		(6,055	)		(8,243	)

Net income (loss) before income taxes		21,006			(10,693	)		(411	)		(35,948	)
Income tax expense		(72	)		(48	)		(134	)		(108	)

Net income (loss)		20,934			(10,741	)		(545	)		(36,056	)

Non-cash deemed dividend to warrant holders		—			(645	)		—			(645	)

Net income (loss) attributed to common shareholders	$	20,934		$	(11,386	)	$	(545	)	$	(36,701	)

Net income (loss) attributed to common shareholders, per share:
Basic	$	0.20		$	(0.12	)	$	(0.01	)	$	(0.40	)

Diluted	$	0.19		$	(0.12	)	$	(0.01	)	$	(0.40	)

Weighted-average common shares outstanding—basic and diluted
Basic		105,040,035			92,276,858			104,748,297			91,182,233

Diluted		108,489,768			92,276,858			104,748,297			91,182,233

The accompanying notes are an integral part of ~~the~~these unaudited ~~condensed~~consolidated financial statements.

ORGANOGENESIS HOLDINGS INC.

4CONSOLIDATED STATEMENTS OF REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY

(unaudited)

~~Table of Contents~~

(amounts in thousands, except share data)

~~Avista Healthcare Public Acquisition Corp.~~


	Three and Nine Months Ended September 30, 2020
	Redeemable								Additional
	Common Stock				Common Stock				Paid-in		Accumulated			Total
	Shares		Amount		Shares		Amount		Capital		Deficit			Stockholders’ Equity
Balance as of June 30, 2020		—	$	—		105,417,168	$	11	$	228,225	$	(192,486	)	$	35,750
Exercise of stock options		—		—		92,033		—		318		—			318
Stock-based compensation expense		—		—		—		—		486		—			486
Issuance of common stock associated with business acquisition		—		—		1,947,953		—		7,986					7,986
Net income		—		—		—		—		—		20,934			20,934

Balance as of September 30, 2020		—	$	—		107,457,154	$	11	$	237,015	$	(171,552	)	$	65,474
							��
Balance as of December 31, 2019		—	$	—		104,870,886	$	10	$	226,580	$	(171,007	)	$	55,583
Exercise of stock options		—		—		638,315		1		1,285		—			1,286
Issuance of common stock associated with business acquisition						1,947,953		—		7,986					7,986
Stock-based compensation expense		—		—		—		—		1,164		—			1,164
Net loss		—		—		—		—		—		(545	)		(545	)

Balance as of September 30, 2020		—	$	—		107,457,154	$	11	$	237,015	$	(171,552	)	$	65,474

~~CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

For the

For the

Nine Months Ended

Nine Months Ended


September 30, 2017

September 30, 2016

Cash flows from operating activities:

Net loss

$
(1,595,806)

$
(30,542)

Adjustments to reconcile net loss to net cash used in operating activities:

Interest income received in the Trust Account

(1,658,037)

—

Change in operating assets and liabilities:

Accrued interest receivable held in Trust Account

(39,744)

—

Prepaid expenses

153,541

—

Accrued expenses

2,645,284

6,056

Net cash used in operating activities

(494,762)

(24,486)

Cash flows from financing activities:

Proceeds from note payable to Sponsor

—

125,000

Payment of offering costs

(427,578)

(54,742)

Net cash provided by/(used) in financing activities

(427,578)

70,258

Net change in cash

(922,340)

45,772

Cash at beginning of period

1,040,068

126,062

Cash at end of period

$
117,728

$
171,834

Supplemental disclosure of non-cash financing activities:

Offering costs included in deferred offering costs

$
—

$
305,095

Change in ordinary shares subject to possible redemption

$
(1,595,810)

$
—


	Three and Nine Months Ended September 30, 2019
	Redeemable									Additional
	Common Stock					Common Stock				Paid-in		Accumulated			Total
	Shares			Amount		Shares		Amount		Capital		Deficit			Stockholders’ Equity
Balance as of June 30, 2019		—		$	—		91,342,722	$	9	$	178,412	$	(155,223	)	$	23,198
Exercise of stock options		—			—		64,362		—		109		—			109
Exercise of common stock warrants		—			—		19,426		—		—		—			—
Common stock issued in warrant exchange		—			—		3,315,232		—		645		(645	)		—
Stock-based compensation expense		—			—		—		—		242		—			242
Net loss		—			—		—		—		—		(10,741	)		(10,741	)

Balance as of September 30, 2019		—		$	—		94,741,742	$	9	$	179,408	$	(166,609	)	$	12,808

Balance as of December 31, 2018		728,548		$	—		91,261,413	$	9	$	177,272	$	(130,240	)	$	47,041
Adoption of ASC 606		—			—		—		—		—		332			332
Exercise of common stock warrants		—			—		74,052		—		628		—			628
Exercise of stock options		—			—		91,045		—		163		—			163
Common stock issued in warrant exchange		—			—		3,315,232		—		645		(645	)		—
Stock-based compensation expense		—			—		—		—		700		—			700
Redemption of redeemable common stock placed into treasury		(728,548	)		—		—		—		—		—			—
Net loss		—			—		—		—		—		(36,056	)		(36,056	)

Balance as of September 30, 2019		—		$	—		94,741,742	$	9	$	179,408	$	(166,609	)	$	12,808

The accompanying notes are an integral part of ~~the~~these unaudited ~~condensed~~consolidated financial statements.

~~Table of Contents~~

ORGANOGENESIS HOLDINGS INC.

~~AVISTA HEALTHCARE PUBLIC ACQUISITION CORP.~~CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(amounts in thousands)


	Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(545	)	$	(36,056	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2,749			2,553
Amortization of intangible assets		2,518			4,526
Non-cash interest expense		160			196
Deferred interest expense		1,577			974
Deferred rent expense		33			606
Gain on settlement of deferred acquisition consideration		(2,246	)		—
Recovery of certain notes receivable from related parties		(1,111	)		—
Provision (benefit) recorded for sales returns and doubtful accounts		2,559			(29	)
Loss on disposal of property and equipment		201			—
Adjustment for excess and obsolete inventories		2,024			809
Stock-based compensation		1,164			700
Loss on extinguishment of debt		—			1,862
Changes in operating assets and liabilities:
Accounts receivable		(19,160	)		553
Inventory		(7,757	)		(7,840	)
Prepaid expenses and other current assets		(2,262	)		(699	)
Accounts payable		(3,778	)		5,348
Accrued expenses and other current liabilities		3,521			85
Other liabilities		878			(715	)

Net cash used in operating activities		(19,475	)		(27,127	)
Cash flows from investing activities:
Purchases of property and equipment		(12,260	)		(2,526	)
Proceeds from the repayment of notes receivable from related parties		1,726			—
Cash paid for business acquisition		(5,820	)
Acquisition of intangible asset		—			(250	)

Net cash used in investing activities		(16,354	)		(2,776	)
Cash flows from financing activities:
Line of credit borrowings		5,869			7,000
Proceeds from term loan		10,000			50,000
Repayment of notes payable		—			(17,585	)
Proceeds from the exercise of stock options		1,286			163
Proceeds from the exercise of common stock warrants		—			628
Redemption of redeemable common stock placed into treasury		—			(6,762	)
Principal repayments of capital lease obligations		(1,776	)		(863	)
Payment of deferred acquisition consideration		(3,034	)		—
Payment of debt issuance costs		—			(924	)

Net cash provided by financing activities		12,345			31,657
Change in cash and restricted cash		(23,484	)		1,754
Cash and restricted cash, beginning of period		60,370			21,405

Cash and restricted cash, end of period	$	36,886		$	23,159

Supplemental disclosure of cash flow information:
Cash paid for interest	$	7,130		$	5,922
Cash paid for income taxes	$	—		$	110
Supplemental disclosure of non-cash investing and financing activities:
Fair value of shares issued for business acquisition	$	7,986		$	—
Deferred acquisition consideration and earnout liability recorded for business acquisition	$	5,218		$	—
Debt and equity issuance costs included in accounts payable	$	—		$	91
Purchases of property and equipment included in accounts payable and accrued expenses	$	2,628		$	3,698
Amounts due related to acquisition of intangible assets included in accrued expenses and other liabilities	$	—		$	500
Non-cash deemed dividend related to warrant exchange	$	—		$	645
Equipment acquired under capital lease	$	—		$	973

The accompanying notes are an integral part of these unaudited consolidated financial statements.

ORGANOGENESIS HOLDINGS INC.

NOTES TO ~~CONDENSED~~UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share data)

~~Note 1—Organization~~1. Nature of the Business and ~~Plan~~Basis of ~~Business Operations~~Presentation

~~Organization and General~~

Organogenesis Holdings Inc. (formerly Avista Healthcare Public Acquisition Corp. ~~(the “Company~~”) ~~was incorporated as~~(“ORGO” or the “Company”) is a ~~Cayman Islands exempted~~leading regenerative medicine company focused on ~~December 4, 2015. The Company was formed~~the development, manufacture, and commercialization of solutions for the ~~purpose~~Advanced Wound Care and Surgical & Sports Medicine markets. Many of ~~effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company intends to focus its search for a target business~~the existing and pipeline products in the ~~healthcare industry, although it may seek to complete a~~Company’s portfolio have Premarket Application approval, Business ~~Combination with an operating company in any industry~~License Applicant approval or ~~sector. The Company is an “emerging growth company,” as defined in Section 2(a) of~~Premarket Notification 510(k) clearance from the ~~Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (as amended, the “JOBS Act~~”United States Food and Drug Administration (“FDA”). The Company’s ~~sponsor is Avista Acquisition Corp. (the “Sponsor”), which was incorporated on December 4, 2015.~~

At September 30, 2017, the Company had not commenced any operations. All activity through September 30, 2017 relates to the Company’s formation, its initial public offering of 30,000,000 units (the “~~Units”)~~ ~~at $10.00 per Unit, each consisting of one of the Company’s Class A ordinary shares, par value $0.0001 per share (the “Class A Shares”),~~ ~~and one warrant (the “Warrants”)~~ ~~to purchase one-half of one Class A Share (the “Public Offering~~”customers include hospitals, wound care centers, government facilities, ambulatory service centers (“ASCs”) and efforts directed towards locating a suitable initial Business Combination. The Company also granted the Underwriters (as defined below) of the Public Offering a 45-day option to purchase up to 4,500,000 additional Units to cover over-allotments (the “~~Over-allotment Option~~”). The Class A Shares sold as part of the Units in the Public Offering are sometimes referred to herein as the “public shares.” The Company will not generate any operating revenues until after completion of a Business Combination, at the earliest.

~~Financing~~

~~The registration statement for the Company’s Public Offering was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on October 7, 2016. The Public Offering closed on October 14, 2016 (the “Close Date”). The Sponsor and certain other accredited investors (the “Initial Shareholders”)~~ ~~purchased an aggregate of 16,000,000 warrants (the “Private Placement Warrants”) at a purchase price of $0.50 per warrant, or $8,000,000 in the aggregate, in a private placement at the Close Date (the “Private Placement”).~~

On November 28, 2016, the Company consummated the closing of the sale of 1,000,000 Units which were sold pursuant to the Over-allotment Option. The Company also consummated a simultaneous private placement of an additional 400,000 Private Placement Warrants with the Initial Shareholders. Following the closing of the Over-allotment Option and Private Placement, an additional $10,000,000 was placed into the Trust Account, after paying additional underwriting discounts of $200,000.

The Company intends to finance a Business Combination with net proceeds from its $310,000,000 Public Offering and $8,200,000 Private Placement (see Note 3). Following the Public Offering, after paying underwriting discounts of $6,200,000 and funds designated for operational use of $2,000,000, the remaining net proceeds of $310,000,000 were deposited in a trust account with Continental Stock Transfer and Trust Company acting as trustee (the “~~Trust Account”) as described below.~~

~~The Trust Account~~

On January 6, 2017 the funds in the Trust Account were invested in U.S. government treasury bills, which matured on April 6, 2017. On April 6, 2017 the funds in the Trust Account were reinvested in U.S. government treasury bills, which matured on July 6, 2017. On July 6, 2017, the funds in the Trust Account were reinvested in US government treasury bills, which matured on August 3, 2017. On August 3, 2017, the funds in the Trust Account were reinvested in US government treasury bills, which matured on August 31, 2017. On August 31, 2017, the funds in the Trust Account were reinvested in US government treasury bills, which matured on September 28, 2017. On September 28, 2017, the funds in the Trust Account were reinvested in US government treasury bills, which matured on October 26, 2017. On October 26, 2017 the funds in the Trust Account were reinvested in U.S. government treasury bills, maturing on

~~Table of Contents~~

November 24, 2017. The funds in the Trust Account will continue to be invested in U.S. government treasury bills, or other similar investments until the earlier of (i) the consummation of the Business Combination and (ii) the Company’s failure to consummate a Business Combination within the prescribed time. Placing funds in the Trust Account may not protect those funds from third-party claims against the Company. Although the Company will seek to have all vendors, service providers (other than its independent auditors), prospective target businesses or other entities it engages execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The Sponsor has agreed that it will be liable to the Company under certain circumstances if and to the extent any claims by such persons reduce the amount of funds in the Trust Account below a specified threshold.physician offices. The Company has ~~not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations~~one operating and ~~believes that the Sponsor’s only assets are securities~~reportable segment.

COVID-19 pandemic

The emergence of the ~~Company. Therefore,~~coronavirus (COVID-19) around the ~~Sponsor may not be able to satisfy those obligations should they arise. The remaining net proceeds (not held~~world, and particularly in the ~~Trust Account) may be used~~United States, continues to ~~pay for~~present significant risks to the Company. While the COVID-19 pandemic has not materially adversely affected the Company’s financial results and business ~~legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses as well as any taxes. The balance in~~operations through the ~~Trust Account as of~~third quarter ended September 30, ~~2017 was $311,697,781, of this amount $39,744 was accrued interest.~~

~~Business Combination~~

~~The Company’s management has broad discretion with respect~~2020, the Company is unable to predict the ~~specific application~~impact that COVID-19 will have on its financial position and operating results because of the ~~net proceeds~~numerous uncertainties created by the unprecedented nature of the ~~Public Offering,~~pandemic. The public health actions being undertaken to reduce the ~~sale~~spread of the ~~Private Placement Warrants~~virus, and ~~the Over-allotment Option, although substantially all of the net proceeds are intended~~that may have to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to successfully effect a Business Combination. The Company will provide the holders of the public shares (the “~~Public Shareholders”) with the opportunity to redeem all or a portion of their public shares upon the completion of the Business Combination, either (i)~~undertaken again in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer, in either case at a per‑share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares. Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules, a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “~~Exchange Act~~”), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the public shares. In connection with any shareholder vote required to approve any Business Combination, the Initial Shareholders have agreed (i) to vote any of their respective Ordinary Shares (as defined below) in favor of the Business Combination and (ii) not to redeem any of their Ordinary Shares in connection therewith.

The NASDAQ rules require that the Business Combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80% of the balance in the Trust Account (less any Deferred Commissions (as defined below) and taxes payable on interest earned) at the time of the Company signing a definitive agreement in connection with the Business Combination.

If the Company has not completed a Business Combination by October 14, 2018, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per‑share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish the rights of the Public Shareholders as Shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and its Board of Directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In the event of a ~~liquidation,~~resurgence of the Public Shareholders will be entitled to receive a full pro rata interest in the Trust Account (initially anticipated to be approximately $10.00 per share, plus any pro rata interest earned on the Trust Account not previously releasedvirus, may create significant disruptions to the Company ~~and less up to $50,000 of interest to pay dissolution expenses). There will be no redemption rights or liquidating distributions~~ with respect to: (i) the demand for its products, (ii) the ability of its sales representatives to reach healthcare customers, (iii) its ability to maintain staffing levels to support its operations, (iv) its ability to continue to manufacture certain of its products, (v) the ~~Founder Shares~~reliability of its supply chain and (vi) its ability to achieve the financial covenants required under the 2019 Credit Agreement (see Note “11. Long-Term Debt Obligations”). The extent to which the COVID-19 pandemic may impact the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, travel restrictions and social distancing in the U.S. and other countries, business closures or business disruptions and the effectiveness of actions taken in the U.S. and other countries to contain and treat the disease.

The Company is closely monitoring the evolving impact of the pandemic on all aspects of its business. The Company has implemented a number of measures designed to protect the health and safety of its employees, support its customers and promote business continuity. The Company is also actively reviewing and implementing cost-saving measures including discontinuing or delaying all non-essential services and programs and instituting controls on travel, events, marketing and clinical studies to adapt the business plan for the evolving COVID-19 challenges.

Merger with Avista Healthcare Public Acquisition Corp

On December 10, 2018, Avista Healthcare Public Acquisition Corp., our predecessor company (“AHPAC”), consummated the previously announced merger (the “Avista Merger”) pursuant to an Agreement and Plan of Merger, dated as of August 17, 2018 (as ~~defined below) or~~amended, the ~~Private Placement Warrants, which will expire worthless if the Company fails to complete a Business Combination within the 24‑month time period.~~

~~Table of Contents~~

~~Proposed Business Combination~~

~~On August 21, 2017, the Company,~~“Avista Merger Agreement”), by and among AHPAC, Avista Healthcare Merger Sub, Inc. (“~~Merger Sub~~”), ~~Avista Healthcare NewCo, LLC (“NewCo”), Envigo International Holdings, Inc. (“Envigo”), and Jermyn Street Associates, LLC, solely in its capacity as Shareholder Representative, entered into a Transaction Agreement (the “Transaction Agreement”).~~

~~Pursuant to the Transaction Agreement, among other things, (i) the Company will transfer by way of continuation out of the Cayman Islands into the State of Delaware or domesticate as~~ a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended and the Cayman Islands Companies Law (2016 Revision); (ii) Merger Sub will merge with and into Envigo, the separate corporate existence of Merger Sub will cease and Envigo will be the surviving corporation and a direct wholly-owned subsidiary of ~~the Company (the “First~~AHPAC (“Avista Merger~~”) (Envigo, in its capacity as the surviving corporation in the First Merger, is sometimes referred to as the “Surviving Corporation~~” Sub”) and ~~(iii)~~Organogenesis Inc., a Delaware corporation (“Organogenesis Inc.”). As a result of the ~~Surviving Corporation will merge~~Avista Merger and the other transactions contemplated by the Avista Merger Agreement, Avista Merger Sub merged with and into ~~NewCo,~~Organogenesis Inc., with Organogenesis Inc. surviving the ~~separate corporate existence of the Surviving Corporation will cease~~Avista Merger and ~~NewCo will be the surviving company and~~becoming a ~~direct~~ wholly-owned subsidiary of the Company. For additional information regarding the Transaction Agreement, the Parent Sponsor Letter Agreement and the Business Combination, see the Current Report on Form 8-K filed by the Company on August 22, 2017.

~~Liquidity~~

~~As of September 30, 2017, the Company had a working capital deficit of $2,336,036.In order~~AHPAC. AHPAC changed its name to ~~preserve liquidity, as of April 30, 2017, the affiliate of the Sponsor (the “Affiliate~~”) has agreed to defer payment of the monthly administrative fee under the Administrative Services Agreement until the initial Business Combination, at which time all such accrued but unpaid fees will be paid to the Affiliate. In addition certain vendors have agreed to defer the payment of invoices until the close or termination of the Proposed Business Combination.Organogenesis Holdings Inc. (ORGO).

The Company issued to the Sponsor on August 11, 2017, an unsecured promissory note pursuant to which the Company is permitted to borrow up to $300,000 in aggregate principal amount. The Company has not drawn amounts under this note. This note is non-interest bearing and payable on the earlier of October 14, 2018 or the closing of the Proposed Business Combination.

~~Based on the foregoing, management believes that the Company will have sufficient working capital to continue~~Avista Merger was accounted for as a ~~going concern until the earlier of October 14, 2018 or the close or termination of the Proposed Business Combination.~~

~~Note 2—Significant Accounting Policies~~

~~Basis of Presentation~~

~~The accompanying unaudited condensed financial statements have been prepared in U.S dollars~~reverse merger in accordance with accounting principles generally accepted in the United States of America (“~~US GAAP~~”GAAP”). Under this method of accounting, AHPAC was treated as the “acquired” company for ~~interim~~accounting purposes. This determination was primarily based on Organogenesis Inc.’s equity holders having a majority of the voting power of the combined company, Organogenesis Inc. comprising the ongoing operations of the combined entity, Organogenesis Inc. comprising a majority of the governing body of the combined company, and Organogenesis Inc.’s senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Avista Merger was treated as the equivalent of Organogenesis Inc. issuing stock for the net assets of AHPAC, accompanied by a recapitalization. The net assets of AHPAC were recorded at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Avista Merger are those of Organogenesis Inc.

Liquidity and Financial Conditions

In accordance with ASC 205-40, Going Concern (“ASC 205-40”), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial ~~information~~statements are issued. While the Company has reported net income for the three months ended September 30, 2020, the Company has recurring losses from operations since its inception and has funded its operations primarily with cash flow from product sales and proceeds from loans from affiliates and entities controlled by its affiliates, sales of its common stock and third-party debt. As of September 30, 2020, the Company had an accumulated deficit of $171,552 and working capital of $62,765. During the nine months ended September 30, 2020, the Company incurred a net loss of $545 and used $19,475 of cash in operations. The Company may continue to incur negative cash flows from operations and operating losses in the future as the Company expends resources to grow the organization to support the planned expansion of the business. The Company expects that its cash of $36,512 and working capital of $62,765 as of September 30, 2020, plus net cash flows from product sales, will be sufficient to fund its operating expenses, capital expenditure requirements and debt service payments for at least 12 months beyond the filing date of this quarterly report. The Company is closely monitoring ongoing developments in connection with the COVID-19 pandemic, which may negatively impact its commercial prospects, projected cash position and access to capital in the future. The Company will continue to assess its cash position and, if circumstances warrant, make appropriate adjustments to its operating plan.

The Company expects to continue investing in product development, sales and marketing, and customer support for its products. The Company may seek to raise additional funding through public and/or private equity financings, debt financings, or other strategic transactions. There can be no assurance that the Company will be able to obtain additional debt or equity financing on terms acceptable to the Company, on a timely basis or at all, particularly in light of the adverse impacts of the COVID-19 pandemic on the capital markets. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations, and financial condition. The Company’s current borrowings under the 2019 Credit Agreement are subject to compliance with certain financial covenants that include maintaining Minimum Trailing Twelve Month Consolidated Revenue and Non-PuraPly Revenue. If the Company is not able to comply with these covenants, due to the impacts of COVID-19 or otherwise, the borrowings under the 2019 Credit Agreement may become due and payable immediately unless the Company obtains an amendment or waiver from its lenders. There can be no assurance that the Company’s lenders would agree to any such amendment or waiver on acceptable terms, or at all.

2. Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying unaudited consolidated financial statements have been prepared by management in accordance with GAAP and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted, pursuant to the rules and regulations of the ~~SEC for~~Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes ~~necessary~~required by generally accepted accounting principles for ~~a comprehensive presentation of~~complete financial statements. While we believe that the ~~financial position, results of operations or cash flows. In~~disclosures presented are adequate in order to make the ~~opinion of management, the accompanying~~information not misleading, these unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

~~The accompanying unaudited condensed~~quarterly financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s ~~form~~ Annual Report on Form 10-K ~~as filed with~~ for the ~~SEC on March 28, 2017. Operating~~fiscal year ended December 31, 2019 (the “Annual Report”).

The unaudited consolidated financial statements include the accounts and results of operations of Organogenesis Holdings Inc. and its wholly-owned or controlled subsidiaries of Organogenesis Inc., including Organogenesis GmbH (a Switzerland corporation) and Prime Merger Sub, LLC. All intercompany balances and transactions have been eliminated in consolidation. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s financial position, results of operations and cash flows at the dates and for the periods indicated. The results for the nine months ended September 30, ~~2017~~2020 are not necessarily indicative of the results ~~that may~~to be expected for the year ending December 31, ~~2017~~2020, any other interim periods, or any ~~other~~ future ~~period.~~years or periods.

~~Table of Contents~~

~~Emerging Growth Company~~

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

Use of Estimates

The preparation of ~~the Company’s~~ financial statements in conformity with US GAAP requires ~~the Company’s~~ management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure as of ~~contingent assets and liabilities at~~ the date of the consolidated financial ~~statements.~~statements and the reported results of operations during the reporting period. Actual results could differ from those estimates.

~~Cash~~

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note “2. Significant Accounting Policies” to the Consolidated Financial Statements included in the Annual Report. There have been no material changes to the significant accounting policies previously disclosed in the Annual Report.

Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which applies to all leases and ~~Cash Equivalents~~will require lessees to record most leases on the balance sheet but recognize expenses in a manner similar to the current standard. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, which provides narrow amendments to clarify how to apply certain aspects of ASU 2016-02, and ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides adopters an additional transition method by allowing entities to initially apply ASU 2016-02, and subsequent related standards, at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Additionally, in March 2019, the FASB issued ASU 2019-01, Leases (Topic 842): Codification Improvements, which clarifies the transition guidance related to interim disclosures provided in the year of adoption. ASU 2016-02 and related amendments and improvements are effective for fiscal years beginning after December 15, 2018 for public business entities and interim periods within those years and for all other entities for years beginning after December 15, 2020. Entities are required to use a modified retrospective approach of adoption for leases that exist or are entered into after the beginning of the transition date. A full retrospective application is prohibited. The Company is a public entity but took advantage of the relief provided for emerging growth companies to allow them to follow the private company adoption timelines and the Company will adopt this standard and the related improvements on January 1, 2021 by recognizing a cumulative-effect adjustment for any impact. The Company continues to evaluate the impact of adopting this standard on its accounting policies, financial statements, business processes, systems and internal controls. Additionally, the Company has established a project management and implementation team consisting of internal resources and external advisors. These evaluation and implementation processes are expected to continue through 2020. The Company expects to recognize all of its leases with terms over twelve months on the balance sheet by recording a right-of-use asset and a corresponding lease liability.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). Subsequent to the issuance of ASU 2016-13, the FASB has issued the following updates: ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments- Credit Losses, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, ASU 2019-05, Financial Instruments—Credit Losses (Topic 326)—Targeted Transition Relief and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. The objective of ASU 2016-13 and all the related updates is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 and the related updates are effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 for public business entities excluding entities eligible to be smaller reporting companies and for fiscal years, and interim periods within those years, beginning after December 15, 2022 for all other entities. Early adoption is permitted. The Company is a smaller reporting company and follows the private company adoption timelines and the Company will adopt this standard and the related improvements on January 1, 2023 by recognizing a cumulative-effect adjustment to retained earnings for any impact. The adoption of ASU 2016-13 and related improvements is not expected to have a material impact on the Company’s consolidated financial statements.

3. Acquisition

On September 17, 2020 (the “Acquisition Date”), the Company acquired certain assets and assumed certain liabilities of CPN Biosciences, LLC (“CPN”) pursuant to an asset purchase agreement dated July 24, 2020. CPN offered a physician office management solution and advanced wound care products.

The aggregate consideration amounted to $19,024 as of the Acquisition Date, subject to post-closing adjustments for working capital. Total consideration consisted of $6,427 in cash, 2,151,438 shares of the Company’s Class A common stock with a fair value of $8,815, and contingent consideration (the “Earnout” or “Earnout Liability”) with a fair value of $3,782. On the Acquisition Date, the Company paid $5,820 in cash and issued 1,947,953 shares of the Company’s class A common stock. The remaining consideration of $1,436 was held back (the “Holdback”) and will be paid or issued, as applicable, eighteen months after the Acquisition Date, subject to any offsetting indemnification claims against CPN.

The Company ~~considers all highly liquid investments purchased with~~is obligated to pay an ~~original maturity of three months or less~~Earnout to ~~be cash equivalents.~~

~~Concentration of Credit Risk~~

~~Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts~~CPN’s former shareholders if CPN’s legacy product revenue in a ~~financial institution, which at times, may exceed~~twelve-month period, starting on January 1, 2021 (the “Earnout Period”), exceeds CPN’s 2019 revenue. The amount of the ~~Federal depository insurance coverage~~Earnout, if any, will be equal to 70% of ~~$250,000.~~the excess and will be payable in March 2022. The Company ~~has not experienced losses on these accounts~~recorded a non-current liability of $3,782, for the fair value of the contingent consideration related to the expected Earnout. The Earnout Liability is classified as a Level 3 measurement for which fair value is derived from inputs that are unobservable and ~~management believes~~significant to the ~~Company is not exposed to significant risks on such accounts.~~

~~Financial Instruments~~

overall fair value measurement. The fair value of such Earnout Liability is estimated using a Monte Carlo simulation model that utilizes key assumptions including forecasted revenues and volatilities of the ~~Company’s~~underlying financial metrics during the Earnout period.

This transaction was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the Acquisition Date. The fair values of intangible assets were based on valuations using various income approaches and methods, such as the multiperiod excess earnings method, relief from royalty method, etc., which require the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill.

Based upon a preliminary valuation, the total purchase price allocation was as follows:


Assets acquired:
Accounts receivable	$	1,048
Inventory		1,230
Prepaid expenses and other current assets		1
Property and equipment		85
Intangible assets		13,570
Other assets		4

Total assets acquired		15,938
Liabilities assumed:
Accounts payable		51
Accrued expenses and other current liabilities		240

Total liabilities assumed		291
Total identifiable assets acquired, net		15,647
Total purchase price		19,024

Goodwill	$	3,377

The preliminary fair values recorded were based on a preliminary valuation and the estimates and assumptions used in such valuation are subject to change, which could be significant, within the measurement period (up to one year from the acquisition date). The Company is continuing to obtain information to determine the acquired assets and liabilities, including tax assets, liabilities and other attributes.

The preliminary purchase price allocation resulted in goodwill of $3,377, which ~~qualify as financial instruments under FASB ASC 820, Fair Value Measurements~~will be deductible for income tax purposes. The resulting amount of goodwill is primarily attributed to expected synergies from cross-sale opportunities and ~~Disclosures, approximates~~future growth. Intangible assets of $13,570 include customer relationships of $10,690, developed technologies of $2,050, non-competition agreements of $750, and trademarks of $80, which are being amortized on a straight-line basis, over weighted-average useful lives of 10 years, 6 years, 5 years and 1 year, respectively.

At the ~~carrying amounts represented~~time of the acquisition, CPN had approximately 30 employees. The results of operations of CPN have been included in the ~~balance sheet.~~

~~Fair Value Measurement~~

~~ASC 820 establishes a fair value hierarchy that prioritizes~~Company’s consolidated financial statements beginning on the Acquisition Date. Revenue and ~~ranks~~expenses of CPN since the ~~level~~Acquisition Date were not material. The acquisition of ~~observability of inputs used to measure investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment, characteristics specific~~CPN does not result in any changes to the ~~investment, market conditions~~Company’s operating or reportable segment structure.

4. Product and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements).

Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability and a lesser degree of judgment applied in determining fair value.

Geographic Sales

The ~~three levels~~Company generates revenue through the sale of Advanced Wound Care and Surgical & Sports Medicine products. There is a single performance obligation in all of the ~~fair value hierarchy under ASC 820 are as follows:~~

~~Level I – Quoted prices (unadjusted)~~Company’s contracts, which is the Company’s promise to transfer the Company’s products to customers based on specific payment and shipping terms in ~~active markets for identical investments at~~ the ~~measurement date are used.~~

Level II – Pricing inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly. Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

~~Table of Contents~~

~~Level III – Pricing inputs are unobservable and include situations where there~~arrangement. The entire transaction price reflects a single performance obligation. Product revenue is ~~little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation.~~

~~In some cases, the inputs used to measure fair value might fall within different levels~~recognized when a customer obtains control of the ~~fair value hierarchy. In such cases, the level~~Company’s products which occurs at a point in ~~the fair value hierarchy within which the investment is categorized in its entirety is determined~~time and may be upon shipment, procedure date, or delivery, based on the ~~lowest level input that~~terms of the contract. Revenue is ~~significant~~recorded net of a reserve for returns, discounts and Group Purchasing Organization (“GPO”) rebates, which represent a direct reduction to the ~~investment. Assessing~~revenue recognized. These reductions are accrued at the significance of a particular input to the valuation of an investment in its entirety requires judgment and considers factors specific to the investment. The categorization of an investment within the hierarchytime revenue is recognized, based upon historical experience and specific circumstances. For the ~~pricing transparency~~three months ended September 30, 2020 and 2019, the Company recorded GPO fees of $1,013 and $880, respectively, as a direct reduction of revenue. For the ~~investment~~nine months ended September 30, 2020 and ~~does not necessarily correspond to~~2019, the ~~perceived risk~~Company recorded GPO fees of ~~that investment.~~$2,810 and $1,991, respectively, as a direct reduction of revenue.

The following tables set forth revenue by product category:


	Three Months Ended September 30,
	2020		2019
Advanced Wound Care	$	89,990	$	54,310
Surgical & Sports Medicine		10,809		9,955

Total net revenue	$	100,799	$	64,265


	Nine Months Ended September 30,
	2020		2019
Advanced Wound Care	$	201,009	$	157,365
Surgical & Sports Medicine		30,482		28,971

Total net revenue	$	231,491	$	186,336

For the three months ended September 30, 2020 and 2019, net PuraPly revenue totaled $40,945 and $31,755, respectively. For the nine months ended September 30, 2020 and 2019, net PuraPly revenue totaled $101,969 and $86,893, respectively. For all periods presented, net revenue generated outside the United States represented less than 1% of total net revenue.

5. Fair Value of Financial Assets and Liabilities

The following table presents information about the Company’s financial assets ~~that are~~and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of September 30, ~~2017.~~2020. There was no such assets or liabilities as of December 31, 2019.

Description

September 30, 2017

Level 1

Level 2

Level 3
Investments and cash held in Trust Account

$
311,697,781

$
311,697,781

$
—

$
—
Total

$
311,697,781

$
311,697,781

$
—

$
—


	Fair Value Measurements
	as of September 30, 2020 Using:
	Level 1		Level 2		Level 3		Total
Liabilities:
Earnout Liability	$	—	$	—	$	3,782	$	3,782

	$	—	$	—	$	3,782	$	3,782

Earnout Liability

~~Offering Costs~~

In connection with accounting for the CPN acquisition on September 17, 2020, the Company recorded the Earnout Liability representing the fair value of contingent consideration payable upon the achievement of a certain revenue target. The Earnout Liability was valued using the Monte Carlo simulation model based on inputs that are not observable in the market, which represents a level 3 measurement within the fair value hierarchy. Changes in the fair value of the Earnout Liability will be reflected in selling, general and administrative expenses until the liability is fully settled. For more information about the Earnout Liability, refer to Note “3. Acquisition”.

The Company ~~complies~~did not have any financial assets and liabilities measured at fair value on a non-recurring basis as of September 30, 2020 and December 31, 2019.

6. Accounts Receivable, Net

Accounts receivable consisted of the following:


	September 30,			December 31,
	2020			2019
Accounts receivable	$	62,040		$	42,408
Less — allowance for sales returns and doubtful accounts		(5,125	)		(3,049	)

	$	56,915		$	39,359

The Company’s allowance for sales returns and doubtful accounts was comprised of the following:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Balance at beginning of period	$	3,928		$	3,021		$	3,049		$	3,420
Additions (reductions)		1,589			(56	)		2,559			(29	)
Write-offs		(392	)		(30	)		(483	)		(456	)

Balance at end of period	$	5,125		$	2,935		$	5,125		$	2,935

7. Inventories

Inventories, net of related reserves for excess and obsolescence, consisted of the following:


	September 30,		December 31,
	2020		2019
Raw materials	$	9,676	$	9,178
Work in process		1,499		781
Finished goods		18,707		12,959

	$	29,882	$	22,918

Raw materials include various components used in the Company’s manufacturing process. The Company’s excess and obsolete inventory review process includes analysis of sales forecasts and historical sales as compared to inventory level, and working with operations to maximize recovery of excess inventory. During the three months ended September 30, 2020 and 2019, the Company charged $315 and $286, respectively, for inventory excess and obsolescence to cost of goods sold within the consolidated statements of operations. During the nine months ended September 30, 2020 and 2019, the Company charged $2,024 and $809, respectively, for inventory excess and obsolescence to cost of goods sold within the consolidated statements of operations.

8. Property and Equipment, Net

Property and equipment consisted of the following:


	September 30,			December 31,
	2020			2019
Leasehold improvements	$	39,169		$	36,344
Furniture, computers and equipment		47,798			46,430

		86,967			82,774
Accumulated depreciation and amortization		(68,559	)		(65,812	)
Construction in progress		37,529			30,222

	$	55,937		$	47,184

Depreciation expense was $956 and $792 for the three months ended September 30, 2020 and 2019. Depreciation expense was $2,749 and $2,553 for the nine months ended September 30, 2020 and 2019. As of September 30, 2020 and December 31, 2019, the Company had $21,689 of buildings under capital leases recorded within leasehold improvements. As of September 30, 2020 and December 31, 2019, the Company had $14,675 and $13,777 recorded within accumulated depreciation and amortization related to buildings under capital leases, respectively. Construction in progress primarily represents unfinished construction work on a building under a capital lease and, more recently, improvements at the Company’s leased facilities in Canton and Norwood, Massachusetts.

9. Goodwill and Intangible Assets

On September 17, 2020, the Company acquired certain assets and assumed certain liabilities of CPN. This transaction was accounted for as a business combination in accordance with ASC Topic 805 Business Combinations. The Company recorded $3,377 of goodwill and $13,570 of intangible assets associated with this acquisition. Refer to Note “3. Acquisition” for detail.

Goodwill was $28,916 as of September 30, 2020 and $25,539 as of December 31, 2019. There were no impairments recorded against goodwill during the three and nine months ended September 30, 2020 and 2019.

In April 2019, the Company purchased $750 of intangibles related to patent and know-how which were recorded within the developed technology category. The Company paid $250 at the time of the transaction with the ~~requirements~~remaining purchase price being paid over two years after the transaction closed. As of ~~ASC 340-10-S99-1~~September 30, 2020, $250 was remaining and ~~SEC Staff Accounting Bulletin Topic 5A; “Expenses~~was recorded in accrued expenses and other current liabilities on the consolidated balance sheets.

Identifiable intangible assets consisted of ~~Offering”~~the following as of September 30, 2020:


	Original Cost		Accumulated Amortization			Net Book Value
Developed technology	$	32,620	$	(13,503	)	$	19,117
Trade names and trademarks		2,080		(828	)		1,252
Customer relationships		10,690		(45	)		10,645
Non-compete agreements		1,010		(175	)		835

Total	$	46,400	$	(14,551	)	$	31,849

Identifiable intangible assets consisted of the following as of December 31, 2019:


	Original Cost		Accumulated Amortization			Net Book Value
Developed technology	$	30,570	$	(11,266	)	$	19,304
Trade names and trademarks		2,000		(650	)		1,350
Non-compete agreements		260		(117	)		143

Total	$	32,830	$	(12,033	)	$	20,797

Amortization of intangible assets, calculated on a straight-line basis or using an accelerated method, was $885 and $1,529 for the three months ended September 30, 2020 and 2019, respectively, and $2,518 and $4,526 for the nine months ended September 30, 2020 and 2019, respectively.

10. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


	September 30, 2020		December 31, 2019
Accrued personnel costs	$	21,158	$	17,640
Other		4,974		5,810

	$	26,132	$	23,450

11. Long-Term Debt Obligations

Long-term debt obligations consisted of the following:


	September 30, 2020			December 31, 2019
Line of credit	$	39,353		$	33,484

Term loan		60,000			50,000
Less debt discount and debt issuance cost		(334	)		(366	)
Less current maturities		(11,667	)		—

Term loan, net of debt discount, debt issuance cost and current maturities	$	47,999		$	49,634

2019 Credit Agreement

In March 2019, the Company, its subsidiaries and Silicon Valley Bank (“SVB”), and the several other lenders thereto (collectively, the “Lenders”) entered into a credit agreement, as amended (the “2019 Credit Agreement”), providing for a term loan (the “Term Loan Facility”) and a revolving credit facility (the “Revolving Facility”) in an aggregate principal amount of $100,000. Capitalized terms used herein and not otherwise defined are defined as set forth in the 2019 Credit Agreement.

The Term Loan Facility is structured in three tranches, as follows: (i) the first tranche of $40,000 was made available to the Company and fully funded on March 14, 2019; (ii) the second tranche of $10,000 was made available to the Company and fully funded in September 2019 upon achievement of certain financial metrics; and (iii) the third tranche of $10,000 was made available to the Company and fully funded in March 2020 upon achievement of a certain financial metric. The interest rate for the Term Loan Facility is a floating per annum interest rate equal to the greater of 3.75% above the Wall Street Journal Prime Rate and 9.25%. The interest rate as of September 30, 2020 was 9.25%. The 2019 Credit Agreement requires the Company to make monthly interest-only payments on outstanding balances under the Term Loan Facility through February 2021. Thereafter, each term loan advance will be repaid in thirty-six equal monthly installments of principal, plus accrued interest, with the Term Loan Facility maturing on March 1, 2024 (the “Term Loan Maturity Date”).

The Company’s final payment on the Term Loan Facility, due on the Term Loan Maturity Date, will include all outstanding principal and accrued and unpaid interest under the Term Loan Facility, plus a final payment (the “Final Payment”) equal to the original aggregate principal amount of the Term Loan Facility multiplied by 6.5%. The Company ~~incurred offering costs~~may prepay the Term Loan Facility, subject to paying the Prepayment Premium (described below) and the Final Payment. The Prepayment Premium is equal to 2.50% of the outstanding principal amount of the Term Loan Facility if the prepayment occurs after the one year anniversary and prior to the second anniversary of the closing, and 1.50% of the outstanding principal amount of the Term Loan Facility if the prepayment occurs after the two year anniversary but prior to the three year anniversary of the closing, and 0.50% thereafter. Once repaid, amounts borrowed under the Term Loan Facility may not be re-borrowed.

The Revolving Facility is equal to the lesser of $40,000 and the amount determined by the Borrowing Base, which is defined as a percentage of the Company’s book value of qualifying finished goods inventory and eligible accounts receivable. The interest rate for advances under the Revolving Facility is a floating per annum interest rate equal to the greater of the Wall Street Journal Prime Rate and 5.50%. The interest rate as of September 30, 2020 was 5.50%. If the actual outstanding advances are less than 25% of the then-available Revolving Commitments, the Company must pay monthly interest equal to the interest that would have accrued if the average outstanding advances had been 25% of the then-available Revolving Commitments. The Company is also required to pay an unused line fee equal to 0.25% per annum, calculated based on the difference of $40,000 minus the greater of (i) the average balance outstanding under the Revolving Facility for such period and (ii) 25% of the then-available Revolving Commitments. The maturity date for advances made under the Revolving Facility is March 1, 2024.

The Company may elect to reduce or terminate the Revolving Facility in its entirety at any time by repaying all outstanding principal, unpaid accrued interest and a reduction or termination fee equal to 3.00% of the aggregate Revolving Commitments so reduced or terminated if the reduction or termination occurs after the one year anniversary and prior to the second anniversary of the closing, and 2.00% of the aggregate Revolving Commitments so reduced or terminated if the reduction or termination occurs after the two year anniversary but prior to the three year anniversary of the closing, and $0 thereafter.

The Company is required to achieve certain financial covenants under the 2019 Credit Agreement, including Minimum Trailing Twelve Month Consolidated Revenue and Non-PuraPly Revenue, tested quarterly. The Minimum Trailing Twelve Month Consolidated Revenue thresholds for the year ending December 31, 2020 were agreed to and the covenant requiring Trailing Twelve Month Non-PuraPly Revenue beginning with the quarter ending September 30, 2020 was added in connection with the third amendment to the 2019 Credit Agreement entered into on March 26, 2020. In addition, the Company is required to maintain Minimum Liquidity equal to the greater of (i) 6 months Monthly Burn and (ii) $10,000.

As of September 30, 2020, the Company was in compliance with the financial covenants under the 2019 Credit Agreement.

As of September 30, 2020, the Company had outstanding borrowings of $60,000 under the Term Loan Facility and $39,353 under the Revolving Facility with $0 available for future revolving borrowings. The Company accrues for the Final Payment of $3,900 over the term of the Term Loan Facility through a charge to the interest expense. The related liability of $1,541 and $681 as of September 30, 2020 and December 31, 2019, respectively, was included in other liabilities on the consolidated balance sheets. The Company incurred costs of $554 in connection with the Term Loan Facility, which are recorded as a reduction of the carrying value of the term loan on the Company’s consolidated balance sheets. In connection with the Revolving Facility, the Company incurred costs of $370, which are recorded as other assets. Both of these costs are being amortized to interest expense through March 1, 2024.

Future payments of the 2019 Credit Agreement, as of September 30, 2020, are as follows for the calendar years ending December 31:


2020	$	—
2021		16,667
2022		20,000
2023		20,000
2024		42,686

Total	$	99,353

2017 Credit Agreement

On March 21, 2017, the Company entered into a credit agreement (the “2017 Credit Agreement”) with SVB whereby SVB agreed to extend to the Company a revolving credit facility in an aggregate amount not to exceed $30,000 with a letter of credit sub-facility and a swing line sub-facility as a sublimit of the revolving loan facility. In April 2018, the Company further amended its ~~Public Offering~~2017 Credit Agreement in order to receive additional funding of ~~$833,589, primarily~~$5,000 through a term loan. The amendment increased the commitment under the 2017 Credit Agreement to an aggregate amount not to exceed $35,000, consisting of ~~accounting~~a term loan not to exceed $5,000 and ~~legal services, securities registration expenses~~a revolving loan not to exceed $30,000. In December 2018, the Company fully repaid and ~~exchange listing fees,~~canceled the term loan including the outstanding principal and ~~excluding $6,200,000~~accrued and unpaid interest.

On March 14, 2019, $26,541, representing all outstanding unpaid principal and accrued interest relating to the revolving borrowing due under the 2017 Credit Agreement, was rolled into the 2019 Credit Agreement.

Master Lease Agreement

On April 28, 2017, the Company entered into the Master Lease Agreement (the “ML Agreement”) with Eastward Fund Management LLC that allowed the Company to borrow up to $20,000 on or prior to June 30, 2018. If the Company elected to prepay the loan or terminated the loan early within the first 24 months, the Company was required to pay an additional 3% of the outstanding principal and any accrued and unpaid interest and fees. This prepayment fee decreased to 2% after the first 24 months. A final payment fee of 6.5% multiplied by the principal amount of the borrowings under the ML Agreement was due upon the earlier to occur of the first day of the final payment term month or prepayment of all outstanding principal. In March 2019, upon entering into the 2019 Credit Agreement, the Company paid an aggregate amount of $17,649 due under the ML Agreement, including unpaid principal, accrued interest, final payment, and early termination penalty, with proceeds from the 2019 Credit Agreement, and the ML Agreement was terminated. Upon termination of the ML Agreement, the Company recognized $1,862 as loss on the extinguishment of the loan.

12. Stockholders’ Equity

Common Stock

As of September 30, 2020, the Company was authorized to issue 400,000,000 shares of $0.0001 par value Class A common stock and 1,000,000 shares of $0.0001 par value preferred stock. 108,185,702 shares of Class A common stock were issued as of September 30, 2020, which included 728,548 shares of treasury stock. These treasury shares were initially issued in ~~underwriting discounts~~connection with the acquisition of Nutech Medical, Inc. (“NuTech Medical”) in 2017 and ~~$10,850,000 in deferred underwriting discounts. These offering costs, along with underwriting discounts, were charged~~included a put right. The holders of the shares exercised the right to ~~shareholders’ equity.~~put the shares back to the Company at an agreed-upon exercise price of $9.28 per share on March 24, 2019.

As of September 30, 2020 and December 31, 2019, the Company reserved the following shares of Class A common stock for future issuance:


	September 30, 2020		December 31, 2019
Shares reserved for issuance for outstanding options		6,788,655		6,503,646
Shares reserved for issuance for outstanding restricted stock units		819,248		—
Shares reserved for issuance for future grants		6,819,449		9,008,996

Total shares of authorized common stock reserved for future issuance		14,427,352		15,512,642

Warrant Exchange and Warrant Exercise

In the third quarter of 2019, the Company executed a series of transactions related to its then outstanding 30,890,748 public warrants and 4,100,000 private placement warrants. The Company issued an aggregate of 2,845,280 shares of Class A common stock for 29,950,150 public warrants at an exchange rate of 0.095. The Company issued an aggregate of 80,451 shares of Class A common stock for the remaining public warrants at an exchange rate of 0.0855. The Company issued an aggregate of 389,501 shares of Class A common stock for the private placement warrants at an exchange rate of 0.095.

On August 13, 2019, Massachusetts Capital Resource Company and Life Insurance Community Investment Initiative, LLC net exercised outstanding warrants to purchase an aggregate of 182,700 shares of the Company’s Class A common stock at an exercise price of $3.95 per share. The Company issued an aggregate of 19,426 shares of common stock in connection with this transaction.

As a result of these transactions, the Company issued an aggregate of 3,334,658 shares of common stock, representing approximately 3% of the total Class A common stock outstanding after such issuances. No warrants were outstanding after these transactions.

As the fair value of the warrants exchanged in the warrant exchange transactions immediately prior to the exchanges was less than the fair value of the common stock issued, the Company recorded a non-cash deemed dividend of $0.6 million for the incremental fair value provided to the warrant holders in the three months ended September 30, 2019.

13. Stock-Based Compensation

Stock Incentive Plans-the 2018 Plan

On November 28, 2018, the Board of Directors of the Company adopted, and on December 10, 2018 the Company’s stockholders approved, the Organogenesis 2018 Equity and Incentive Plan (the “2018 Plan”). The purposes of the 2018 Plan are to provide long-term incentives and rewards to the Company’s employees, officers, directors and other key persons (including consultants), to attract and retain persons with the requisite experience and ability, and to more closely align the interests of such employees, officers, directors and other key persons with the interests of the Company’s stockholders.

The 2018 Plan authorizes the Company’s Board of Directors or a committee of not less than two independent directors (in either case, the “Administrator”) to grant the following types of awards: non-statutory stock options; incentive stock options; restricted stock awards; restricted stock units; stock appreciation rights; unrestricted stock awards; performance share awards; and dividend equivalent rights. The 2018 Plan is administered by the Company’s Board of Directors.

As of September 30, 2020, a total of 9,198,996 shares of Class A common stock have been authorized to be issued under the 2018 Plan (subject to adjustment in the case of any stock dividend, stock split, reverse stock split, or similar change in capitalization of the Company).

Stock Incentive Plans-the 2003 Plan

The Organogenesis 2003 Stock Incentive Plan (the “2003 Plan”), provides for the Company to issue restricted stock awards, or to grant incentive stock options or non-statutory stock options. Incentive stock options may be granted only to the Company’s employees. Restricted stock awards and non-statutory stock options may be granted to employees, members of the Board of Directors, outside advisors and consultants of the Company.

Effective as of the closing of the Avista Merger on December 10, 2018, no additional awards may be made under the 2003 Plan and as a result (i) any shares in respect of stock options that are expired or terminated under the 2003 Plan without having been fully exercised will not be available for future awards; (ii) any shares in respect of restricted stock that are forfeited to, or otherwise repurchased by the Company, will not be available for future awards; and (iii) any shares of common stock that are tendered to the Company by a participant to exercise an award will not be available for future awards.

Following the closing of the Avista Merger, the 2003 Plan is administered by the Company’s Board of Directors.

Stock-Based Compensation Expense

Stock options awarded under the stock incentive plans expire 10 years after the grant date and typically vest over four or five years. Restricted stock units awarded typically vest over four years.

Stock-based compensation expense was $486 and $242 for the three months ended September 30, 2020 and 2019, respectively, and was $1,164 and $700 for the nine months ended September 30, 2020 and 2019, respectively. The total amount of stock-based compensation expense was included within selling, general and administrative expenses on the consolidated statements of operations.

Restricted Stock Units (RSUs)

In the nine months ended September 30, 2020, the Company granted 873,595 time-based restricted stock units to its employees, executives and the Board of Directors. Each restricted stock unit represents the contingent right to receive one share of the Company’s common stock. A majority of the restricted stock units will vest in four equal annual installments in 2021, 2022, 2023 and 2024. The fair value of the restricted stock units was based on the fair market value of the Company’s stock on the date of grant.

The activity of restricted stock units is set forth below:


	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2019		—		$	—
Granted		873,595			3.81
Vested		—			—
Canceled/Forfeited		(54,347	)		3.69

Unvested at September 30, 2020		819,248		$	3.82

As of September 30, 2020, the total unrecognized compensation cost related to unvested restricted stock units expected to vest was $1,977 and the weighted average remaining recognition period for unvested awards was 3.21 years.

Stock Option Valuation

The stock options granted during the nine months ended September 30, 2020 and 2019 were 1,553,723 and 100,000 respectively. The assumptions that the Company used to determine the grant-date fair value of stock options granted during these periods were as follows, presented on a weighted-average basis:


	September 30, 2020			September 30, 2019
Risk-free interest rate		0.46	%		2.24	%
Expected term (in years)		6.22			6.50
Expected volatility		37.42	%		42.7	%
Expected dividend yield		0.0	%		0.0	%
Exercise price	$	4.04		$	7.08
Underlying stock price	$	3.37		$	7.08

These assumptions resulted in an estimated weighted-average grant-date fair value per share of stock options granted during the nine months ended September 30, 2020 and 2019 of $1.05 and $3.24, respectively.

Stock Option Activity

The following table summarizes the Company’s stock option activity since December 31, 2019:


						Weighted
						Average
				Weighted		Remaining
				Average		Contractual		Aggregate
	Number of			Exercise		Term		Intrinsic
	Shares			Price		(in years)		Value
Outstanding as of December 31, 2019		7,179,636		$	1.98		5.06	$	20,799
Granted		1,553,723			4.04
Exercised		(638,315	)		2.02				1,623
Canceled / forfeited		(630,399	)		3.64

Outstanding as of September 30, 2020		7,464,645			2.27		5.53		12,855

Options exercisable as of September 30, 2020		5,512,393			1.60		4.20		12,701

Options vested or expected to vest as of September 30, 2020		7,062,928		$	2.16		5.30	$	12,835

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s Class A common stock for those stock options that have exercise prices lower than the fair value of the Company’s Class A common stock.

The total fair value of options vested during the nine months ended September 30, 2020 and 2019 was $387 and $538, respectively.

As of September 30, 2020, the total unrecognized stock compensation expense related to unvested stock options expected to vest was $1,598 and was expected to be recognized over a weighted-average period of 2.90 years.

As of September 30, 2020, partial recourse notes were outstanding totaling $635. These notes were taken by a former executive to exercise his stock options between 2011 and 2013 and the notes were initially secured with the 675,990 shares held by the former executive. As the partial recourse notes are still outstanding, the options are not considered exercised and are included within the options outstanding. Accordingly, the 675,990 shares are not considered outstanding for accounting purposes and the additional paid-in capital associated with these shares were deducted from equity in prior periods. In the three months ended September 30, 2020, the former executive sold 25,096 of the 675,990 shares to pay back a portion of his nonrecourse notes. see Note “16. Related Parties Transactions”.

14. Net Income (Loss) ~~Per~~per Share (EPS)

~~The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income/(loss) per ordinary share~~Basic EPS is ~~computed~~calculated by dividing net ~~income/~~income (loss) by the weighted-average number of shares outstanding during the period. Diluted EPS is calculated by dividing net income (loss) by the weighted-average number of shares outstanding plus the dilutive effect, if any, of outstanding RSUs and options using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of unrecognized compensation expenses as additional proceeds.

A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net income (loss) attributable to ~~ordinary shares by~~ the ~~weighted average number~~common stockholders of ~~ordinary shares outstanding for~~Organogenesis Holdings Inc. is as follows.


	Three Months Ended September 30,					Nine Months Ended September 30,
Calculation of Basic and Diluted EPS	2020		2019			2020			2019
Weighted-average common shares outstanding—basic		105,040,035		92,276,858			104,748,297			91,182,233
Dilutive effect of restricted stock units		134,759		—			—			—
Dilutive effect of options		3,314,974		—			—			—

Weighted-average common shares outstanding—diluted		108,489,768		92,276,858			104,748,297			91,182,233
Earnings (loss) per share—basic	$	0.20	$	(0.12	)	$	(0.01	)	$	(0.40	)
Earnings (loss) per share—diluted	$	0.19	$	(0.12	)	$	(0.01	)	$	(0.40	)

For the ~~period. Ordinary shares subject to possible redemption at~~three months ended September 30, ~~2017, which are not currently redeemable and are not redeemable at fair value,~~2020, outstanding stock-based awards of 2,009,245 were excluded from the diluted EPS calculation. The Company had a net loss in the other periods presented. As such, the potentially dilutive securities have been excluded from the ~~calculation~~computation of ~~basic income~~diluted net loss per share ~~since such~~as these securities have anti-dilutive effect and including them would reduce the net loss per share. Therefore, the weighted-average number of common shares ~~if redeemed, only participate in their pro rata~~outstanding used to calculate both basic and diluted net loss per share ~~of the Trust Account earnings. Also excluded,~~attributable to ~~the extent dilutive,~~common stockholders is the ~~incremental number~~same for these periods. For the three months ended September 30, 2019, the Company excluded 7,263,990 potential shares of Class A ~~Shares~~common stock, presented based on amount outstanding at this period end, from the computation of diluted net loss per share attributable to ~~settle~~ the ~~Private Placement Warrants and the Warrants included in the Units. At September 30, 2017, the Company had outstanding warrants~~common stockholders for ~~the purchase of up to 23,700,000 Class A Shares.~~this period. For the ~~period~~nine months ended September 30, ~~2017,~~2020 and 2019, the ~~weighted average~~Company excluded 8,283,893 and 7,263,990 potential shares of ~~these shares was excluded~~Class A common stock, respectively, presented based on amounts outstanding at each period end, from the ~~calculation~~computation of diluted net ~~income/(loss)~~loss per ~~ordinary~~ share ~~since~~attributable to the common stockholders for these periods.

15. Commitments and Contingencies

Capitalized Leases

On January 1, 2013, the Company entered into capital lease arrangements with 65 Dan Road SPE, LLC, 85 Dan Road Associates, LLC, Dan Road Equity I, LLC and 275 Dan Road SPE, LLC for office and laboratory space in Canton, Massachusetts. 65 Dan Road SPE, LLC, 85 Dan Road Associates, LLC, Dan Road Equity I, LLC and 275 Dan Road SPE, LLC are related parties as the owners of these entities are also stockholders of the Company. The leases terminate on December 31, 2022 and each contains a renewal option for a five-year period with the rental rate at the greater of (i) rent for the last year of the prior term, or (ii) the then fair market value. Notice of the exercise of this renewal option is due one year prior to the ~~warrants~~expiration of the initial term. Aggregate annual lease payments are approximately $4,308 with future rent increases of 10% effective January 1, 2022.

The Company records the capital lease asset within property and equipment and the liability is ~~contingent~~recorded within the capital lease obligations on the ~~occurance~~consolidated balance sheets.

As of ~~future events. As a result, diluted net income/(loss) per ordinary share is equal~~September 30, 2020 and December 31, 2019, the Company owed an aggregate of $10,336 of accrued but unpaid lease obligations, which are subordinated to ~~basic net income/(loss) per ordinary share.~~

~~Reconciliation Of Net Income (Loss) Per Share~~

~~The Company’s net loss is adjusted for~~ the ~~portion of income that is attributable to ordinary shares subject to redemption, as these shares only participate in the income of the Trust Account~~2019 Credit Agreement and ~~not the losses of the Company. Accordingly, basic and diluted loss per ordinary share is calculated as follows:~~

Three Months

Nine Months

Ended

Ended

September 30, 2017

September 30, 2017

Net loss

$
(2,117,003)

$
(1,595,806)
Less: Income attributable to ordinary shares subject to redemption

(693,179)

(1,598,724)
Adjusted net loss

$
(2,810,182)

$
(3,194,530)

Weighted average shares outstanding, basic and diluted

9,278,550

9,259,196

Basic and diluted net loss per ordinary share

$
(0.30)

$
(0.35)

~~Table of Contents~~

~~Income Taxes~~

~~The Company accounts for income taxes under FASB ASC 740,~~ ~~Income Taxes~~ (“~~ASC 740~~”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be ~~realized.~~

~~ASC 740 also clarifies~~paid until the ~~accounting for uncertainty~~debt under the 2019 Credit Agreement is paid off in ~~income taxes recognized~~2024 even though the capital leases expire in ~~an enterprise’s financial statements~~December 2022. The accrued but unpaid lease obligations include rent in arrears and ~~prescribes a recognition threshold~~unpaid operating and ~~measurement process for financial statement recognition~~common area maintenance costs under the aforementioned leases. The principal portion of rent in arrears on the capital leases totaled $6,783 and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more‑likely‑than‑not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits$6,321 as of September 30, ~~2017.~~2020 and December 31, 2019, respectively, and is included in the long-term portion of capital lease obligations. The interest portion of rent in arrears totaled $3,042 and $3,512 as of September 30, 2020 and December 31, 2019, respectively, and is included in other liabilities on the consolidated balance sheets. The unpaid operating and common area maintenance costs totaled $511 and $503 as of September 30, 2020 and December 31, 2019, respectively, and are included in other liabilities on the consolidated balance sheets.

Effective April 1, 2019, the Company agreed to accrue interest on the accrued but unpaid lease obligations at an interest rate equal to the rate charged in the 2019 Credit Agreement (see Note “11. Long-Term Debt Obligations”). The accrued interest is also subordinated to the 2019 Credit Agreement and, as such, is included in other liabilities on the consolidated balance sheet. Interest accrual as of September 30, 2020 and December 31, 2019 totaled $1,434 and $717, respectively.

In addition to the capital leases with affiliates discussed above, the Company also has certain insignificant capital leases with non-affiliates. Future obligations under capital leases in the aggregate and for the next five years are as follows:


2020 (remaining 3 months)	$	1,198
2021		4,786
2022		4,945
2023		—
2024		9,825

		20,754
Less amount representing interest		(5,042	)

Present value of minimum lease payments		15,712
Less current maturities		(3,473	)

Long-term portion	$	12,239

Operating Leases

The Company leases vehicles for certain employees and has fleet services agreements for service on these vehicles. The minimum lease term for each newly leased vehicle is one year with three consecutive one-year renewal terms.

In March 2014, in conjunction with the acquisition of Dermagraft from Shire plc, the Company entered into a rental sublease agreement for certain operating and office space in California. The sublease agreements called for escalating monthly rental payments and expires in December 2021.

In conjunction with the acquisition of NuTech Medical in March 2017, the Company entered into an operating lease with Oxmoor Holdings, LLC, an entity that is affiliated with the former sole shareholder of NuTech Medical, related to the facility at NuTech Medical’s headquarters in Birmingham, Alabama. Under the lease, the Company is required to make monthly rent payments of approximately $21 through the lease termination date on December 31, 2021.

In March 2019, the Company entered into an agreement to lease approximately 43,850 square feet of office and laboratory space in Norwood, Massachusetts. Pursuant to the lease agreement, the rent commencement date was February 1, 2020. The initial lease term is ten years from the rent commencement date and includes an option for an early extension term of five years which is exercisable during the first two years after the rent commencement date. In addition to the early extension term, the lease provides the Company with an option to extend the lease term for a period of ten years, if exercised, at rental rates equal to the then fair market value. Annual lease payments during the first year are $1,052 with increases of $44 each year during the initial ten-year lease term, an increase of $44 during the first year of the early extension term and $33 during year two through five of the early extension term. Upon execution of the agreement, the Company delivered a security deposit in the form of a letter of credit of $526 to the landlord. Following 36 months from the rent commencement date, the security deposit may be reduced by $263.

Operating lease expenses were $1,620 and $1,766 for the three months ended September 30, 2020 and 2019, respectively, and were $4,971 and $4,993 for the nine months ended September 30, 2020 and 2019, respectively.

Future minimum lease payments due under noncancelable operating lease agreements as of September 30, 2020 are as follows:


2020 (remaining 3 months)	$	1,250
2021		5,974
2022		3,471
2023		2,804
2024		1,224
Thereafter		6,899

	$	21,622

Royalty Commitments

The Company entered into a license agreement with a university for certain patent rights related to the development, use, and production of one of its advanced wound care products. Under this agreement, the Company incurred a royalty based on a percentage of net product sales, for the use of these patents until the patents expired, which was in November 2006. Accrued royalties totaled $1,187 as of September 30, 2020 and December 31, 2019, respectively, and are classified as part of accrued expenses on the Company’s consolidated balance sheets. There was no royalty expense incurred during the three and nine months ended September 30, 2020 or 2019 related to this agreement.

In October 2017, the Company entered into a license agreement with a third party. Under the license agreement, the Company is required to pay royalties based on a percentage of net sales of the licensed product that occur, after December 31, 2017, through the expiration of the underlying patent in October 2026, subject to minimum royalty payment provisions. The Company recorded royalty expense of $1,201 and $991 during the three months ended September 30, 2020 and 2019, respectively, and $3,020 and $2,695 during the nine months ended September 30, 2020 and 2019, respectively, within selling, general and administrative expenses on the consolidated statement of operations.

As part of the NuTech Medical acquisition, the Company inherited certain product development and consulting agreements for ongoing consulting services and royalty payments based on a percentage of net sales on certain products over a period of 15 years from the execution of the agreements. These product development and consulting agreements were cancelled in January 2020 for total consideration of $1,950 that was paid on February 14, 2020. The $1,950 cancellation fee was recorded within selling, general and administrative expenses on the consolidated statement of operations for the nine months ended September 30, 2020.

Ransomware Attack

In August 2020, the Company’s information technology (“IT”) systems were exposed to a ransomware attack, which partially impaired certain IT systems for a short period of time. The Company is ~~currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.~~

~~There is currently no taxation imposed on income by~~investigating the ~~Government of the Cayman Islands.~~

~~Recent Accounting Standards~~

~~Management~~incident, together with legal counsel and other incident response professionals. The Company does not believe ~~that any recently issued, but~~it has experienced a material loss related to the ransomware attack, and substantially all costs incurred to date are expected to be reimbursed by insurance.

Legal Proceedings

In conducting its activities, the Company, from time to time, is subject to various claims and also has claims against others. In management’s opinion, the ultimate resolution of such claims would not ~~yet effective, accounting standards if currently adopted would~~ have a material effect on the ~~accompanying~~financial position, operating results or cash flows of the Company. The Company accrues for these claims when amounts due are probable and estimable.

The Company accrued $158 and $542 as of September 30, 2020 and December 31, 2019, respectively, in relation to certain pending lawsuits.

The purchase price for NuTech Medical acquired in 2017 included $7,500 deferred acquisition consideration of which the Company paid $2,500 in 2017. The remaining $5,000 of deferred acquisition consideration plus accrued interest owed to the sellers of NuTech Medical was previously in dispute. The Company asserted certain claims for indemnification that would offset in whole or in part its payment obligation and the sellers of NuTech Medical filed a lawsuit alleging breach of contract and seeking specific performance of the alleged payment obligation and attorneys’ fees. In February 2020, the Company entered into a settlement agreement with the sellers of NuTech Medical and settled the dispute for $4,000, of which, $2,000 was paid immediately on February 24, 2020 (the “Settlement Date”) and the remaining $2,000 is being paid in four quarterly installments of $500 each with the first quarterly payment due and payable on the date that is 90 days from the Settlement Date. In addition, the Company assumed from the sellers of NuTech Medical the payment responsibilities related to a legacy lawsuit existing at the acquisition date of NuTech Medical. In connection with the settlement of this dispute, the Company recorded a gain of $1,295 for the three months ended March 31, 2020. The assumed legacy lawsuit was settled in October 2020 and the Company recorded a gain of $951 from the decrease in legal accrual for the three months ended September 30, 2020. Both of the gains were included as a component of other expense, net, on the consolidated statement of operations.

16. Related Party Transactions

Capital lease obligations to affiliates, including unpaid lease obligations, and an operating lease with affiliates are further described in Note “15. Commitments and Contingencies”.

During 2010, the Company’s Board of Directors approved a loan program that permitted the Company to make loans to three executives of the Company (the “Employer Loans”) to (i) provide them with liquidity (“Liquidity Loans”) and (ii) fund the exercise of vested stock options (“Option Loans”). The Employer Loans mature with all principal and accrued interest due on the tenth anniversary of the issuance date of each subject loan. The borrower may prepay all or any portion of his Employer Loan at any time without premium or penalty. Interest on the Employer Loans accrues at various rates ranging from 2.30%—3.86% per annum, compounded annually. The Employer Loans are secured by shares of Company’s Class A common stock. With respect to the Liquidity Loans, the Company has no personal recourse against the borrowers beyond the pledged shares.

As of September 30, 2020, Liquidity Loans and Option Loans to one former executive were outstanding with an aggregate principal balance ~~sheet.~~of $297 and $635, respectively As of December 31, 2019, Liquidity Loans to two former executives were outstanding with an aggregate principal balance of $2,350 and Option Loans to one former executive were outstanding with an aggregate principal balance of $635. The principal and part of the interest receivable under the Employer Loans were fully reserved with net interest receivable of $0 and $556 as of September 30, 2020 and December 31, 2019, respectively, included in the notes receivable from related parties balance in the consolidated balance sheets. In the three months ended September 30, 2020, one of the former executives paid $1,000 of the outstanding principal balance of his liquidity loans and the related interest receivable. The Company forgave $1,000 of the remaining outstanding principal balance of his liquidity loans. The other former executive paid $53 of the outstanding principal balance of his liquidity loans and $58 of the related accrued interest. As a result, the Company recorded $1,111 as a recovery of the previously reserved related party receivables within selling, general and administrative expenses on the consolidated statement of operations for the three months ended September 30, 2020.

17. Subsequent Events

~~On October 26, 2017, the~~The Company ~~invested the funds held in the Trust Account in U.S. Treasury Bills maturing on November 24, 2017.~~

~~Other than the foregoing, management~~ has ~~performed an evaluation of~~evaluated subsequent events ~~from September 30, 2017~~ through November 9, 2020, the date on which these consolidated financial statements were issued. ~~Based upon the review, management did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements.~~

~~Note 3—Public Offering~~

~~In the Public Offering,~~On October 21, 2020, the Company ~~issued~~committed to a plan to restructure the workforce and sold 31,000,000 Units at a price of $10.00 per Unit, including 1,000,000 Units issued upon exercise of the Over-allotment Option. The ordinary shares and warrants comprising the Units began separate trading on November 29, 2016. The holders have the option to continue to hold Units or separate their Units into the component securities. Each Unit consists of one Class A Share and one Warrant to purchase one‑half of one Class A Share. Two Warrants must be exercised for one whole Class A Share at a price of $11.50 per share. The Warrants will become exercisable on the later of 30 days after completion of the Business Combination or 12 months after the Close Date and will expire five years from the completion of the Business Combination or earlier upon redemption or liquidation. The Company may redeem the Warrants at a price of $0.01 per Warrant upon 30 days’ notice, only in the event that the last sale price of the Class A Shares is at least $24.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30‑trading day period ending on the third trading day prior to the date on which notice of redemption is given. The Company will not redeem the Warrants unless a registration statement under the Securities Act covering the Class A Shares issuable upon exercise of the Warrants is effective and a current prospectus relating to those shares is available throughout the 30 day redemption period, unless the Warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If the Company redeems the Warrantsconsolidate La Jolla facilities as described above, management will have the option to require all holders that wish to exercise their Warrants to do so on a cashless basis, provided an exemption from registration is available. No Warrants will be exercisable for cash unless the Company has an effective registration statement covering the Class A Shares issuable upon exercise of the Warrants and a current prospectus relating to such shares. If the shares issuable upon exercise of the Warrants are not registered under the Securities Act, holders will be permitted to exercise their Warrants on a cashless basis. However, no Warrant will be

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exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any Class A Shares to holders seeking to exercise their Warrants, unless the issuance of the Class A Shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available.

~~Note 4—Commitments~~

~~Underwriting Agreement~~

~~The Company entered into an agreement with the underwriters (the “Underwriters”) of the Public Offering (“Underwriting Agreement~~”) that required the Company to pay an underwriting discount of 2.0% of the gross proceeds of the Public Offering and Over-allotment Option to the Underwriters at the Close Date of the Public Offering. The Company will pay the Underwriters a deferred underwriting discount of 3.5% of the gross proceeds of the Public Offering and Over-allotment Option (“~~Deferred Commissions~~”) at the time of the closing of the Business Combination. The Deferred Commission was placed in the Trust Account at the completion of the Public Offering and will be forfeited if the Company is unable to complete a Business Combination in the prescribed time.

~~Registration Rights~~

Holders of the Founder Shares, the Private Placement Warrants, and warrants that may be issued on conversion of working capital loans (and any Class A Shares issuable upon exercise of such warrants and upon conversion of the Founder Shares) will be entitled to registration rights with respect to such securities (in the case of the Founder Shares, only after conversion to Class A Shares) pursuant to an agreement signed on the effective date of the Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities for resale. In addition, the holders have certain “piggy‑back” registration rights with respect to registration statements filed subsequent to the Business Combination. However, the registration rights agreement will provide that the Company will not permit any registration statement to become effective until termination of applicable lock‑up periods with respect to such securities.

~~Note 5—Cash Held in Trust Account~~

Gross proceeds of $310,000,000 and $8,200,000 from the Public Offering and Over-allotment Option, and Private Placement, respectively, less underwriting discounts of $6,200,000 and $2,000,000 designated for offering expenses and to fund the Company’s ongoing administrative and acquisition search costs, were held in the Trust Account at the close date.

~~Note 6—Related Party Transactions~~

~~Related Party Loans~~

The Company issued to the Sponsor on December 14, 2015, as amended and restated on September 1, 2016, an unsecured promissory note pursuant to which the Company was permitted to borrow up to $300,000 in aggregate principal amount. Between inception and the Close Date, the Company borrowed $300,000. This note was non-interest bearing and was repaid in full to the Sponsor at the Close Date.

The Sponsor may make a working capital loan to the Company and up to $1,500,000 of such loan may be converted into warrants, at the price of $0.50 per warrant at the option of the Sponsor. Such warrants would be identical to the Private Placement Warrants.

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~~Administrative Services Agreement~~

The Company presently occupies office space provided by an Affiliate. The Affiliate has agreed that, until the Company consummates a Business Combination, it will make such office space, as well as certain support services, available to the Company, as may be required by the Company from time to time. The Company will pay the Affiliate an aggregate of $10,000 per month for such office space and support services.

As of April 30, 2017, the Affiliate has agreed to defer payment of the monthly administrative fee under the Administrative Services Agreement until the initial Business Combination, at which time all such accrued but unpaid fees will be paid to the Affiliate.

~~Private Placement Warrants~~

The Initial Shareholders purchased 16,000,000 Private Placement Warrants at $0.50 per warrant (for an aggregate purchase price of $8,000,000) from the Company in a Private Placement on the Close Date. A portion of the proceeds from the sale of the Private Placement Warrants were placed into the Trust Account. The Initial Shareholders have also purchased an additional 400,000 Private Placement Warrants at $0.50 per warrant (for an aggregate purchase price of $200,000) simultaneously with the underwriter’s exercise of the Over-Allotment Option. Each Private Placement Warrant is exercisable for one‑half of one Class A Share. Two Private Placement Warrants must be exercised for one whole Class A Share at a price of $11.50 per share. The Private Placement Warrants are identical to the Warrants included in the Units to be sold in the Public Offering except that the Private Placement Warrants: (i) will not be redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, as described in the registration statement relating to the Public Offering, so long as they are held by the Initial Shareholders or any of their permitted transferees. Additionally, the Initial Shareholders have agreed not to transfer, assign or sell any of the Private Placement Warrants, including the Class A Shares issuable upon exercise of the Private Placement Warrants (except to certain permitted transferees), until 30 days after the completion of the Business Combination.

~~Founder Shares~~

~~In connection with the organization of the Company, on December 14, 2015, an aggregate of 8,625,000 Class B Shares (the “Founder Shares”) were sold to the Sponsor at a price of approximately $0.003 per share, for an aggregate price of $25,000. In October 2016, the Sponsor transferred 50,000 Founder Shares to each~~part of the Company’s independent directors at a price per share of approximately $0.003 per share. In addition, at such time, each of our independent directors purchased an additional 421,250 Founder Shares from our Sponsor at a price per share of approximately $0.003 per share. The 8,625,000 Founder Shares included an aggregate of uplong-term plan to ~~1,125,000 shares that were subject to forfeiture if the Over‑allotment Option was not exercised~~consolidate manufacturing operations in ~~full by the Underwriters~~Massachusetts in order to ~~maintain~~reduce the ~~Initial Shareholders’ ownership at 20%~~Company’s cost structure. The restructuring is expected to result in a charge of the issued and outstanding Ordinary Shares upon completion of the Public Offering. Following the partial exercise of the Over-allotment Option, 875,000 Founder Shares were forfeited in order to maintain the Initial Shareholder’s ownership at 20% of the issued and outstanding Ordinary shares. The Founder Shares are identicalapproximately $5.5 million, which is primarily attributable to the Class A Shares included in the Units sold in the Public Offering, except that the Founder Shares (i) have the voting rights described in Note 7, (ii) are subject to certain transfer restrictions described below, and (iii) are convertible into Class A Shares on a one‑for‑one basis, subject to adjustment pursuant to the anti‑dilution provisions contained therein. The Founder Shares may not be transferred, assigned or sold until the earlier of (i) one year after the completion of the Business Combination and (ii) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction after the Business Combination that results in all of the Public Shareholders having the right to exchange their Class A Shares for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of the Class A Shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period commencing at least 150 days after the Business Combination, the Founder Shares will be released from the lock‑up.retention benefits associated with approximately 75 employees.

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~~Note 7—Shareholders’ Equity~~

~~Preferred Shares~~

The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001. The Company’s board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The board of directors will be able to, without shareholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the Ordinary Shares and could have anti‑takeover effects. At September 30, 2017 there were no preferred shares issued or outstanding.

~~Ordinary Shares~~

~~The Company is authorized to issue 200,000,000 Class A Shares, with a par value of $0.0001 each, and 20,000,000 Class B ordinary shares, with a par value of $0.0001 each (the “Class B Shares” and, together with the Class A Shares, the “Ordinary Shares”). Holders of the Ordinary Shares are entitled to one vote for each Ordinary Share;~~ ~~provided~~, that only holders of the Class B Shares have the right to vote on the election of directors prior to the Business Combination. The Class B Shares will automatically convert into Class A Shares at the time of the Business Combination, on a one‑for‑one basis, subject to adjustment for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A Shares, or equity‑linked securities, are issued or deemed issued in excess of the amounts sold in the Public Offering and related to the closing of the Business Combination, the ratio at which the Class B Shares shall convert into Class A Shares will be adjusted (unless the holders of a majority of the outstanding Class B ordinary shares agree to waive such anti‑dilution adjustment with respect to any such issuance or deemed issuance) so that the number of Class A Shares issuable upon conversion of all Class B Shares will equal, in the aggregate, 20% of the sum of all Ordinary Shares outstanding upon completion of the Public Offering plus all Class A Shares and equity‑linked securities issued or deemed issued in connection with the Business Combination, excluding any Ordinary Shares or equity‑linked securities issued, or to be issued, to any seller in the Business Combination. Holders of Founder Shares may also elect to convert their Class B Shares into an equal number of Class A Shares, subject to adjustment as provided above, at any time. At September 30, 2017 there were 31,000,000 Class A Shares issued and outstanding, of which 29,191,301 shares were subject to possible redemption and are classified outside of shareholders’ equity at the balance sheet date and 7,750,000 Class B Shares issued and outstanding.

~~Redeemable Ordinary Shares~~

~~The Class A Shares subject to possible redemption will be recorded at redemption value and classified as temporary equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU~~”) 480, Distinguishing Liabilities from Equity. The Company will proceed with a Business Combination only if it has net tangible assets of at least $5,000,001 upon consummation of the Business Combination and, in the case of a shareholder vote, a majority of the outstanding Ordinary Shares voted are voted in favor of the Business Combination. Accordingly, at September 30, 2017, 29,191,301 of the Company’s 31,000,000 Class A Shares were classified outside of permanent equity at their redemption value.

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Item ~~2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~References in this report (this “Quarterly Report~~”) to “we,” “us” or the “Company” refer to Avista Healthcare Public Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “sponsor” refer to Avista Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Quarterly Report.

~~Special Note regarding Forward-Looking Statements~~

~~This Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements under “Item~~ 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations” regarding the Company’s~~Operations.

The following discussion and analysis should be read in conjunction with our financial ~~position, business strategy~~statements and the plans and objectives of management for future operations. These statements constitute projections, forecasts and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of performance. They involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by these statements. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When usedaccompanying notes included in this Quarterly Report on Form 10-Q ~~words~~ and the financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission, or SEC, on March 9, 2020, as amended. Please refer to our note regarding forward-looking statements on page 3 of this Form 10-Q, which is incorporated herein by this reference.

Overview

Organogenesis is a leading regenerative medicine company focused on the development, manufacture, and commercialization of solutions for the Advanced Wound Care and Surgical & Sports Medicine markets. Our products have been shown through clinical and scientific studies to support and in some cases accelerate tissue healing and improve patient outcomes. We are advancing the standard of care in each phase of the healing process through multiple breakthroughs in tissue engineering and cell therapy. Our solutions address large and growing markets driven by aging demographics and increases in comorbidities such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would”diabetes, obesity, cardiovascular and ~~similar expressions may identify forward-looking statements, but~~peripheral vascular disease and smoking. We offer our differentiated products and in-house customer support to a wide range of health care customers including hospitals, wound care centers, government facilities, ambulatory service centers (“ASCs”), and physician offices. Our mission is to provide integrated healing solutions that substantially improve medical outcomes and the ~~absence~~lives of ~~these words does not mean~~patients while lowering the overall cost of care.

We offer a comprehensive portfolio of products in the markets we serve that address patient needs across the continuum of care. We have and intend to continue to generate data from clinical trials, real-world outcomes and health economics research that validate the clinical efficacy and value proposition offered by our products. Several of our existing and pipeline products in our portfolio have PMA approval, BLA approval or 510(k) clearance from the FDA. Given the extensive time and cost required to conduct clinical trials and receive FDA approvals, we believe that our data and regulatory approvals provide us a ~~statement is not forward-looking. When~~strong competitive advantage. Our product development expertise and multiple technology platforms provide a robust product pipeline, which we believe will drive future growth.

In the ~~Company discusses its strategies or plans, it is making projections, forecasts or forward-looking statements. Such statements are based~~Advanced Wound Care market, we focus on the ~~beliefs~~development and commercialization of ~~as well as assumptions made by~~advanced wound care products for the treatment of chronic and ~~information currently available~~acute wounds, primarily in the outpatient setting. We have a comprehensive portfolio of regenerative medicine products, capable of supporting patients from early in the wound healing process through to wound closure regardless of wound type. Our Advanced Wound Care products include Apligraf for the ~~Company’s management. Actual results~~treatment of venous leg ulcers (“VLUs”) and ~~shareholders’ value will be affected by~~diabetic foot ulcers (“DFUs”); Dermagraft for the treatment of DFUs; PuraPly AM to address biofilm across a broad variety of wound types; and Affinity and NuShield to address a variety of ~~risks~~wound sizes and ~~factors,~~types. We have a highly trained and specialized direct wound care sales force paired with exceptional customer support services.

In the Surgical & Sports Medicine market, we focus on products that support the healing of musculoskeletal injuries, including ~~without limitation, international, national~~degenerative conditions such as osteoarthritis and ~~local economic conditions, merger, acquisition~~tendonitis. We are leveraging our regenerative medicine capabilities in this attractive, adjacent market. Our Surgical & Sports Medicine products include ReNu for in-office joint and tendon applications; NuCel for bony fusion in the spine and extremities; NuShield and Affinity for surgical application in targeted soft tissue repairs; and PuraPly AM for surgical treatment of open wounds. We currently sell these products through independent agencies and our growing direct sales force.

On December 10, 2018, Avista Healthcare Public Acquisition Corp., our predecessor company (“AHPAC”), consummated the previously announced business combination ~~risks, financing risks, geo-political risks, acts~~pursuant to that certain Agreement and Plan of terror or war, and those risk factors described under “Item 1A. Risk Factors.” Many of the risks and factors that will determine these results and shareholders’ value are beyond the Company’s ability to control or predict.

~~All such forward-looking statements speak only~~Merger, dated as of August 17, 2018 (as amended, the date of this Quarterly Report on Form 10-Q. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are qualified in their entirety“Avista Merger Agreement”), by ~~this Special Note Regarding Forward-Looking Statements.~~

~~Overview~~

~~We are a blank check company incorporated as a Cayman Islands exempted company~~ and formed for the purpose of effecting a Business Combination in the form of a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more target businesses. We have reviewed, and continue to review, a number of opportunities to enter into a Business Combination with an operating business, but we are not able to determine at this time whether we will complete a Business Combination with any of the businesses that we have reviewed or with any other target business. We intend to effectuate a Business Combination using cash from the proceeds from the Public Offering and the sale of the Private Placement Warrants, and from additional issuances of, if any, our capital stock and debt or a combination of cash, stock and debt. At September 30, 2017, we held cash of $117,728, had current liabilities of $2,696,066 and deferred underwriting compensation of $10,850,000. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.

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~~Recent Developments~~

~~Proposed Business Combination~~

~~On August 21, 2017, the Company,~~among AHPAC, Avista Healthcare Merger Sub, ~~NewCo, Envigo, and Jermyn Street Associates, LLC, solely in its capacity as Shareholder Representative, entered into~~Inc., a ~~Transaction Agreement.~~

~~Pursuant to the Transaction Agreement, among other things, (i) the Company will transfer by way of continuation out of the Cayman Islands into the State of~~ Delaware or domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended and the Cayman Islands Companies Law (2016 Revision); (ii) Merger Sub will merge with and into Envigo, the separate corporate existence of Merger Sub will cease and Envigo will be the surviving corporation and a direct wholly-owned subsidiary of AHPAC (“Avista Merger Sub”) and Organogenesis Inc., a Delaware corporation. As a result of the ~~Company and (iii)~~transactions contemplated by the ~~Surviving Corporation will merge~~Avista Merger Agreement, Avista Merger Sub merged with and into ~~NewCo,~~Organogenesis Inc., with Organogenesis Inc. surviving the ~~separate corporate existence~~merger (the “Avista Merger”). In addition, in connection with the business combination, AHPAC redomesticated as a Delaware corporation (the “Domestication”). After the Domestication, AHPAC changed its name to “Organogenesis Holdings Inc.” As a result of the ~~Surviving Corporation will cease and NewCo will be the surviving company and~~Avista Merger, Organogenesis Inc. became a wholly-owned direct ~~wholly-owned~~ subsidiary of the Company. For additional information regarding the Transaction Agreement, the Parent Sponsor Letter Agreement and the Business Combination, see the Current Report on Form 8-K filed by the Company on August 22, 2017.Organogenesis Holdings Inc.

~~Results of Operations~~

For the three months ended September 30, 2017 we had a net loss of $2,117,003, which consisted of interest income from the trust account of $736,128 and operating costs of $2,853,131. For the three months ended September 30, 2016 we had a loss of $14,492, which consisted of operating costs of $14,492. For the nine months ended September 30, ~~2017~~2020, we generated $231.5 million of net revenue and had a$0.5 million of net loss compared to $186.3 million of ~~$1,595,806, which consisted~~net revenue and $36.1 million of ~~interest income from the trust account of $1,697,781 and operating costs of $3,293,587. For the nine months ended September 30, 2016 we had a~~net loss ~~of $30,542, which consisted of operating costs of $30,542. Our business activities~~ for the nine months ended September 30, ~~2017~~2019. We have incurred significant losses since inception and, while we have reported net income for the three months ended September 30, 2020, we may incur operating losses in the future as we expend resources as part of our efforts to grow our organization to support the planned expansion of our business. As of September 30, 2020, we had an accumulated deficit of $171.6 million. Our primary sources of capital to date have been from sales of our products, borrowings from related parties and institutional lenders and proceeds from the sale of our common stock. We operate in one segment of regenerative medicine.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, and the virus continues to spread throughout the United States and the rest of the world. Various public and private sector measures have been taken and may continue to be taken to reduce its transmission, such as the imposition of social distancing, stay-at-home and shelter-in-place orders, which are having the effect of suspending or severely curtailing operations for most industries and businesses. We are one of many companies providing essential services during this national emergency related to the COVID-19 pandemic. We have implemented a number of measures designed to protect the health and safety of our employees, support our customers and promote business continuity. We have reviewed and implemented cost-saving measures and we will continue to review and implement additional cost-saving measures, as necessary. These measures have included discontinuing or delaying all non-essential services and programs, and instituting controls on travel, events, marketing and clinical studies to adapt our business plan for the evolving COVID-19 challenges.

While the COVID-19 pandemic has not materially adversely affected our financial results and business operations through the third quarter ended September 30, 2020, the pandemic may pose significant risks to our business. We cannot currently quantify the impact the continuing COVID-19 pandemic may have on our revenue for the remainder of our fiscal year ending December 31, 2020 or beyond, but the public health actions being undertaken to reduce the spread of the virus may create significant disruptions with respect to: (i) the demand for our products, (ii) the ability of our sales representatives to reach our healthcare customers, (iii) our ability to maintain staffing levels to support our operations, (iv) our ability to continue to manufacture certain of our products, (v) the reliability of our supply chain and (vi) our ability to achieve the financial covenants required under the 2019 Credit Agreement. Accordingly, management continues to evaluate the Company’s liquidity position, communicate with and monitor the actions of our customers and suppliers, and review our near-term financial performance as we manage the Company through this period of uncertainty. Please see “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q for an additional discussion of risks and potential risks of the COVID-19 pandemic on our business, financial condition and results of operations.

CPN Acquisition

On September 17, 2020, we acquired certain assets and assumed certain liabilities of CPN Biosciences, LLC (“CPN”) pursuant to an asset purchase agreement dated July 24, 2020. This transaction was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The aggregated consideration amounted to $19.0 million as of the acquisition date which consisted ~~solely~~ of ~~identifying~~$6.4 million in cash, 2,151,438 shares of our common stock with a fair value of $8.8 million, and ~~evaluating prospective~~a contingent consideration (the “Earnout”) with a fair value of $3.8 million. At the closing, we paid $5.8 million in cash and issued 1,947,953 shares of our Class A common stock. The remaining consideration was held back and will be paid or issued, as applicable, eighteen months after the closing date, subject to any offsetting indemnification claims against CPN. The results of operations of CPN have been included in our consolidated financial statements beginning on the acquisition ~~targets~~date. Revenue and expenses of CPN since the acquisition date were not material.

Components of Our Consolidated Results of Operations

In assessing the performance of our business, we consider a variety of performance and financial measures. We believe the items discussed below provide insight into the factors that affect these key measures.

Revenue

We derive our net revenue from our portfolio of Advanced Wound Care and Surgical & Sports Medicine products. We primarily sell our Advanced Wound Care products through direct sales representatives who manage and maintain the sales relationships with hospitals, wound care centers, government facilities, ASCs and physician offices. We primarily sell our Surgical & Sports Medicine products through third party agencies. As of September 30, 2020, we had approximately 295 direct sales representatives and approximately 170 independent agencies.

We recognize revenue from sales of our Advanced Wound Care and Surgical & Sports Medicine products when the customer obtains control of our product, which occurs at a point in time and may be upon procedure date, shipment, or delivery, based on the contractual terms of a contract. We record revenue net of a reserve for returns, discounts and GPO rebates, which represent a direct reduction to the revenue we recognize.

Several factors affect our reported revenue in any period, including product, payer and geographic sales mix, operational effectiveness, pricing realization, marketing and promotional efforts, the timing of orders and shipments, regulatory actions including healthcare reimbursement scenarios, competition and business acquisitions.

Included within our product revenue is our PuraPly product portfolio that consists of PuraPly and PuraPly AM. We launched PuraPly in mid-2015, and introduced PuraPly AM in 2016. In order to encourage the development of innovative medical devices, drugs and biologics, CMS can grant new products an additional “pass-through payment” in addition to the bundled payment amount for a ~~Business Combination.~~limited period of no more than three years. Our PuraPly products were granted pass-through status from launch through December 31, 2017, which created an economic incentive for practitioners to use PuraPly over other skin substitutes. As a result, we saw increases in revenue related to our PuraPly portfolio in the reported periods. Beginning January 1, 2018, PuraPly AM and PuraPly transitioned to the bundled payment structure for skin substitutes, which provides for a two-tiered payment system in the hospital outpatient and ASC setting. The two-tiered Medicare payment system bundles payment for our Advanced Wound Care products (and all skin substitutes) into the payment for the procedure for applying the skin substitute, resulting in a single payment to the provider that includes reimbursement for both the procedure and the product itself. As a result of the transition to the bundled payment structure, total Medicare reimbursement for procedures using our PuraPly AM and PuraPly products decreased substantially. This reduction in reimbursement resulted in a substantial decrease in revenue from our PuraPly AM and PuraPly products during the first nine months of 2018 and had a negative effect on our business, results of operations and financial condition. On March 23, 2018, Congress passed, and the President signed into law, the Consolidated Appropriations Act of 2018, or the Act. The Act restored the pass-through status of PuraPly and PuraPly AM effective October 1, 2018. As a result, effective October 1, 2018, Medicare resumed making pass-through payments to hospitals using PuraPly and PuraPly AM in the outpatient hospital setting and in ASCs. PuraPly and PuraPly AM had pass-through reimbursement status through September 30, 2020. After September 30, 2020, we expect our net revenue from PuraPly and PuraPly AM will decrease as they transition to the bundled payment structure. While we expect our net revenue from Non-PuraPly products will continue to increase, we cannot be certain that any such revenue increase will fully offset the revenue decrease from PuraPly products. We ~~will~~are not ~~generate any operating revenues until after completion~~able to estimate the extent of the changes in revenue due to the uncertainties related to the impact from the COVID-19 pandemic, which could have material adverse effects on our revenue, especially to the extent that the pandemic persists or exacerbates over an extended period of time.

Cost of goods sold, gross profit and gross profit margin

Cost of goods sold includes personnel costs, product testing costs, quality assurance costs, raw materials and product costs, manufacturing costs, and the costs associated with our manufacturing and warehouse facilities. The increases in our cost of goods sold correspond with the increases in sales units driven by the expansion of our ~~Business Combination at~~sales force and sales territories, expansion of our product portfolio offerings, and the ~~earliest. Starting~~number of healthcare facilities that offer our products.

Gross profit is calculated as net revenue less cost of goods sold and generally increases as revenue increases. Gross profit margin is calculated as gross profit divided by total net revenue. Our gross profit and gross profit margin are affected by product and geographic sales mix, realized pricing of our products, the efficiency of our manufacturing operations and the costs of materials used and fees charged by third-party manufacturers to produce our products. Regulatory actions, including healthcare reimbursement scenarios, which may require costly expenditures or result in ~~January 2017,~~pricing pressures, may decrease our gross profit and gross profit margin.

Selling, general and administrative expenses

Selling, general and administrative expenses generally include personnel costs for sales, marketing, sales support, customer support, and general and administrative personnel, sales commissions, incentive compensation, insurance, professional fees, depreciation, amortization, bad debt expense, royalties, information systems costs and costs associated with our administrative facilities. We generally expect our selling, general and administrative expenses to continue to increase due to increased investments in market development and the geographic expansion of our sales forces as we ~~began generating non-operating income~~drive for continued revenue growth.

Research and development expenses

Research and development expenses include personnel costs for our research and development personnel, expenses related to improvements in our manufacturing processes, enhancements to our currently available products, and additional investments in our product and platform development pipeline. Our research and development expenses also include expenses for clinical trials. We expense research and development costs as incurred. We generally expect that research and development expenses will increase as we continue to conduct clinical trials on new and existing products, move products through the ~~form~~regulatory pathway (e.g., seek BLA approval), add personnel to support product enhancements as well as to bring new products to market, and enhance our manufacturing process and procedures.

Other expense, net

Interest expense, net—Interest expense, net consists of interest on our outstanding indebtedness, including amortization of debt discount and debt issuance costs, net of interest income recognized.

Loss on the ~~funds~~extinguishment of debt—In March 2019, upon entering into the 2019 Credit Agreement, we paid an aggregate amount of $17.6 million associated with the termination of the ML Agreement, including unpaid principal, accrued interest and an early termination penalty. We recognized $1.9 million as loss on the extinguishment of the loan for the nine months ended September 30, 2019.

Gain on settlement of deferred acquisition consideration—In February 2020, we settled the dispute on the $5.0 million deferred purchase acquisition consideration with the sellers of NuTech Medical for $4.0 million and assumed from the sellers of NuTech Medical the responsibilities related to a legacy lawsuit of NuTech Medical. In connection with the settlement of this dispute, we recorded a gain of $1.3 million for the three months ended March 31, 2020. The assumed legacy lawsuit was settled in October 2020 and we recorded a gain of $1.0 million from the decrease in legal accrual for the three months ended September 30, 2020.

Income taxes

We account for income taxes using an asset and liability approach. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are provided when necessary to reduce net deferred tax assets to an amount that is more likely than not to be realized.

In determining whether a valuation allowance for deferred tax assets is necessary, we analyze both positive and negative evidence related to the realization of deferred tax assets and inherent in that, assess the likelihood of sufficient future taxable income. We also consider the expected reversal of deferred tax liabilities and analyze the period in which these liabilities would be expected to reverse to determine whether the taxable temporary difference amounts serve as an adequate source of future taxable income to support realizability of the deferred tax assets. In addition, we consider whether it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. Based on a consideration of the factors discussed above, including the fact that through the period ended September 30, 2020, our results reflected a three-year cumulative loss position, we have determined that a valuation allowance is necessary against the full amount of our net U.S. deferred tax assets, excluding alternative minimum tax credits. On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which provides for an accelerated refund of the remaining alternative minimum tax credit (“AMT credit”) carryforward which was held as a deferred tax asset of $0.1 million as of December 31, 2019. The CARES Act modifications to the limitation on business interest expense and net operating loss provisions are not expected to have a material impact on our consolidated financial statement.

Results of Operations

The following table sets forth, for the periods indicated, our results of operations:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net revenue	$	100,799		$	64,265		$	231,491		$	186,336
Cost of goods sold		22,964			19,131			61,799			55,557

Gross profit		77,835			45,134			169,692			130,779
Operating expenses:
Selling, general and administrative		51,146			49,475			150,261			147,325
Research and development		3,709			3,924			13,787			11,159

Total operating expenses		54,855			53,399			164,048			158,484

Income (loss) from operations		22,980			(8,265	)		5,644			(27,705	)

Other expense, net:
Interest expense, net		(2,969	)		(2,427	)		(8,391	)		(6,392	)
Loss on the extinguishment of debt		—			—			—			(1,862	)
Gain on settlement of deferred acquisition consideration		951			—			2,246			—
Other income (expense), net		44			(1	)		90			11

Total other expense, net		(1,974	)		(2,428	)		(6,055	)		(8,243	)

Net income (loss) before income taxes		21,006			(10,693	)		(411	)		(35,948	)
Income tax expense		(72	)		(48	)		(134	)		(108	)

Net income (loss)	$	20,934		$	(10,741	)	$	(545	)	$	(36,056	)

EBITDA and Adjusted EBITDA

Our management uses financial measures that are not in accordance with generally accepted accounting principles in the ~~Trust Account. There has been no significant change~~United States, or GAAP, in addition to financial measures in accordance with GAAP to evaluate our operating results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. Our management uses Adjusted EBITDA to evaluate our operating performance and trends and make planning decisions. Our management believes Adjusted EBITDA helps identify underlying trends in our ~~financial or trading position~~business that could otherwise be masked by the effect of the items that we exclude. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and ~~no material adverse change has occurred since~~others in understanding and evaluating our operating results, enhancing the ~~date~~overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to key financial ~~statements. We incur expenses~~metrics used by our management in its financial and operational decision-making.

The following is a reconciliation of GAAP net income (loss) to non-GAAP EBITDA and non-GAAP Adjusted EBITDA for each of the periods presented:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	(in thousands)						(in thousands)
Net income (loss)	$	20,934		$	(10,741	)	$	(545	)	$	(36,056	)
Interest expense, net		2,969			2,427			8,391			6,392
Income tax expense		72			48			134			108
Depreciation		956			792			2,749			2,553
Amortization		885			1,529			2,518			4,526

EBITDA		25,816			(5,945	)		13,247			(22,477	)

Stock-based compensation expense		486			242			1,164			700
Gain on settlement of deferred acquisition consideration (1)		(951	)		—			(2,246	)		—
Loss on extinguishment of debt (2)		—			—			—			1,862
Exchange offer transaction costs (3)		—			916			—			916
Recovery of certain notes receivable from related parties (4)		(1,111	)		—			(1,111	)		—
Other costs and expenses (5)		361			—			929			—

Adjusted EBITDA	$	24,601		$	(4,787	)	$	11,983		$	(18,999	)

(1)

The amounts reflect the gain recognized related to the settlement of the deferred acquisition consideration dispute with the sellers of NuTech Medical in February 2020 as well as the settlement of the assumed legacy lawsuit from the sellers of NuTech Medical in October 2020. See Note “15. Commitments and Contingencies”.

(2)	The amount reflects the loss recognized on the extinguishment of the Master Lease Agreement upon repayment.

(3)	The amount reflects legal, advisory and other professional fees incurred in the quarter ended September 30, 2019 related directly to the warrant exchange transactions in Note “12. Stockholders’ Equity”.

(4)	The amount reflects the collection of certain notes receivable from related parties previously reserved. See Note “16. Related Party Transactions”.

(5)	The amounts reflect the legal, advisory and other professional fees incurred in the three and nine months ended September 30, 2020 related directly to the CPN acquisition.

Comparison of the Three and Nine Months Ended September 30, 2020 and 2019

Revenue


	Three Months Ended September 30,				Change
	2020		2019		$		%
	(in thousands, except for percentages)
Advanced Wound Care	$	89,990	$	54,310	$	35,680		66	%
Surgical & Sports Medicine		10,809		9,955		854		9	%

Net revenue	$	100,799	$	64,265	$	36,534		57	%


	Nine Months Ended September 30,				Change
	2020		2019		$		%
	(in thousands, except for percentages)
Advanced Wound Care	$	201,009	$	157,365	$	43,644		28	%
Surgical & Sports Medicine		30,482		28,971		1,511		5	%

Net revenue	$	231,491	$	186,336	$	45,155		24	%

Net revenue from our Advanced Wound Care products increased by $35.7 million, or 66%, to $90.0 million in the three months ended September 30, 2020 from $54.3 million in the three months ended September 30, 2019. Net revenue from our Advanced Wound Care products increased by $43.6 million, or 28%, to $201.0 million in the nine months ended September 30, 2020 from $157.4 million in the nine months ended September 30, 2019. The increase in Advanced Wound Care net revenue was primarily attributable to the expanded sales force, increased sales to existing and new customers and increased adoption of our amniotic product portfolio, including our Affinity product.

Net revenue from our Surgical & Sports Medicine products increased by $0.9 million, or 9%, to $10.8 million in the three months ended September 30, 2020 from $10.0 million in the three months ended September 30, 2019. Net revenue from our Surgical & Sports Medicine products increased by $1.5 million, or 5%, to $30.5 million in the nine months ended September 30, 2020 from $29.0 million in the nine months ended September 30, 2019. The increase in Surgical & Sports Medicine net revenue was primarily attributable to the expanded sales force and penetration of existing and new customer accounts, partially offset by postponement or cancellation of medical procedures as a result of ~~being a public company (for legal, financial reporting, accounting~~COVID-19.

Included within net revenue is PuraPly revenue of $40.9 million and ~~auditing compliance)~~$31.8 million for the three months ended September 30, 2020 and 2019, respectively, and $102.0 million and $86.9 million for the nine months ended September 30, 2020 and 2019, respectively. PuraPly had pass-through status in both of the periods. The increase in PuraPly revenue in the three and nine month periods was due to the expanded sales forces and increased sales to existing and new customers.

Cost of goods sold, gross profit and gross profit margin


	Three Months Ended September 30,						Change
	2020			2019			$		%
	(in thousands, except for percentages)
Cost of goods sold	$	22,964		$	19,131		$	3,833		20	%

Gross profit	$	77,835		$	45,134		$	32,701		72	%

Gross profit%		77	%		70	%


	Nine Months Ended September 30,						Change
	2020			2019			$		%
	(in thousands, except for percentages)
Cost of goods sold	$	61,799		$	55,557		$	6,242		11	%

Gross profit	$	169,692		$	130,779		$	38,913		30	%

Gross profit%		73	%		70	%

Cost of goods sold increased by $3.8 million, or 20%, to $23.0 million in the three months ended September 30, 2020 from $19.1 million in the three months ended September 30, 2019. Cost of goods sold increased by $6.2 million or 11% to $61.8 million in the nine months ended September 30, 2020 from $55.6 million in the nine months ended September 30, 2019. The increase in cost of goods sold was primarily due to increased unit volumes, additional manufacturing and quality control headcount.

Gross profit increased by $32.7 million, or 72%, to $77.8 million in the three months ended September 30, 2020 from $45.1 million the three months ended September 30, 2019. Gross profit increased by $38.9 million, or 30%, to $169.7 million in the nine months ended September 30, 2020 from $130.8 million in the nine months ended September 30, 2019. The increase in gross profit resulted primarily from increased sales volume due to the strength in our Advanced Wound Care and Surgical & Sports Medicine products as well as ~~for~~a shift in product mix to our higher gross margin products.

Research and Development Expenses


	Three Months Ended September 30,						Change
	2020			2019			$			%
	(in thousands, except for percentages)
Research and development	$	3,709		$	3,924		$	(215	)		(5%	)

Research and development as a percentage of net revenue		4	%		6	%


	Nine Months Ended September 30,						Change
	2020			2019			$		%
	(in thousands, except for percentages)
Research and development	$	13,787		$	11,159		$	2,628		24	%

Research and development as a percentage of net revenue		6	%		6	%

Research and development expenses decreased by $0.2 million, or (5%), to $3.7 million in the three months ended September 30, 2020 from $3.9 million in the three months ended September 30, 2019. The decrease was primarily due ~~diligence~~to delayed enrollment in trials and limited clinical spending due to the COVID-19. Research and development expenses increased by $2.6 million, or 24%, to $13.8 million in the nine months ended September 30, 2020 from $11.2 million in the nine months ended September 30, 2019. The increase in research and development expenses was primarily due to an increase in process development costs associated with a new contract manufacturer, increased headcount associated with our existing Advanced Wound Care and Surgical & Sports Medicine products, an increase in product costs associated with our pipeline products not yet commercialized and an increase in costs to move products through the regulatory pathway (e.g., seek BLA approval). The increase was partially offset by a decrease due to delayed enrollment in trials and limited clinical spending due to the COVID-19.

Selling, General and Administrative Expenses


	Three Months Ended September 30,						Change
	2020			2019			$		%
	(in thousands, except for percentages)
Selling, general and administrative	$	51,146		$	49,475		$	1,671		3	%

Selling, general and administrative as a percentage of net revenue		51	%		77	%


	Nine Months Ended September 30,						Change
	2020			2019			$		%
	(in thousands, except for percentages)
Selling, general and administrative	$	150,261		$	147,325		$	2,936		2	%

Selling, general and administrative as a percentage of net revenue		65	%		79	%

Selling, general and administrative expenses increased by $1.7 million, or 3%, to $51.1 million in the three months ended September 30, 2020 from $49.5 million in the three months ended September 30, 2019. The increase in selling, general and administrative expenses was primarily due to a $6.4 million increase related to additional headcount, primarily in our ~~acquisition plans.~~direct sales force and increased sales commissions due to increased sales, a $0.4 million increase in credit card processing fees due to increased collection and $0.2 million increase in royalties due to increased sales. These increases were partially offset by a $3.3 million decrease related to reduced travel and marketing programs amid travel restrictions in place due to the COVID-19, a $0.6 million decrease in amortization associated with intangible assets amortized using an accelerated method, a $0.6 million decrease in legal, consulting fees and other costs associated with the ongoing operations of our business and a $0.8 million decrease in bad debt primarily due to the collection of the previously reserved related party receivables.

Selling, general and administrative expenses increased by $2.9 million, or 2%, to $150.3 million in the nine months ended September 30, 2020 from $147.3 million in the nine months ended September 30, 2019. The increase in selling, general and administrative expenses was primarily due to a $10.5 million increase related to additional headcount, primarily in our direct sales force and increased sales commissions due to increased sales, a $2.0 million cancellation fee for certain product development and consulting agreements, and a $0.9 million increase in credit card processing fees due to increased collection. These increases were partially offset by a $6.4 million decrease related to reduced travel and marketing programs amid travel restrictions in place due to the COVID-19, a $1.4 million decrease in legal, consulting fees and other costs associated with the ongoing operations of our business, a $2.0 decrease in amortization associated with the intangible assets amortized using an accelerated method and a $0.8 million decrease in bad debt primarily due to the collection of the previously reserved related party receivables.

Other Expense, net


	Three Months Ended September 30,						Change
	2020			2019			$			%
	(in thousands, except for percentages)
Interest expense, net	$	(2,969	)	$	(2,427	)	$	(542	)		22	%
Gain on settlement of deferred acquisition consideration		951			—			951			100	%
Other income (expense), net		44			(1	)		45			*	*

Total other expense, net	$	(1,974	)	$	(2,428	)	$	454			(19	%)


	Nine Months Ended September 30,						Change
	2020			2019			$			%
	(in thousands, except for percentages)
Interest expense, net	$	(8,391	)	$	(6,392	)	$	(1,999	)		31	%
Loss on the extinguishment of debt		—			(1,862	)		1,862			(100	%)
Gain on settlement of deferred acquisition consideration		2,246			—			2,246			100	%
Other income, net		90			11			79			*	*

Total other expense, net	$	(6,055	)	$	(8,243	)	$	2,188			(27	%)

**	not meaningful

Other expense, net, decreased by $0.5 million, or 19%, to $2.0 million in the three months ended September 30, 2020 from $2.4 million in the three months ended September 30, 2019. The decrease is primarily due to a $1.0 million decrease in legal accruals related to the settlement of the assumed legacy lawsuit from the sellers of NuTech Medical in October 2020. We assumed the legacy lawsuit as part of the resolution of the deferred acquisition consideration dispute with the sellers of NuTech Medical in February 2020. The decrease was partially offset by a $0.5 million or 22% increase in interest expense resulting from the increased borrowings under the 2019 Credit Agreement.

Other expense, net, decreased by $2.2 million or 27% to $6.1 million in the nine months ended September 30, 2020 from $8.2 million in the nine months ended September 30, 2019. Interest expense, net, increased by $2.0 million or 31% primarily due to the increased borrowings under the 2019 Credit Agreement. The loss on the extinguishment of debt of $1.9 million for the nine months ended September 30, 2019 reflected the write-off of unamortized debt discount upon repayment of the Master Lease Agreement as well as early payment penalties in March 2019. The gain of $2.2 million for the nine months ended September 30, 2020 was related to the settlement of the deferred acquisition consideration dispute with the sellers of NuTech Medical in February 2020 as well as the decrease in legal accruals related to the settlement of a legacy lawsuit in October 2020. We assumed the legacy lawsuit from the sellers of NuTech Medical as part of the resolution of the aforementioned dispute.

Liquidity and Capital Resources

Since our inception, we have funded our operations and capital expenditures through cash flows from product sales, loans from affiliates and entities controlled by certain of our affiliates, third-party debt and proceeds from the sale of our capital stock. As of September 30, 2020, we had $36.5 million in cash and $62.8 million in working capital. We expect that our cash on hand and other components of working capital as of September 30, 2020, plus net cash flows from product sales, will be sufficient to fund our operating expenses, capital expenditure requirements and debt service payments for at least 12 months beyond the filing date of this quarterly report. We continue to closely monitor ongoing developments in connection with the COVID-19 pandemic, which may negatively impact our commercial prospects, cash position and access to capital in fiscal 2020 or beyond. We will continue to assess our cash and other sources of liquidity and, if circumstances warrant, we will make appropriate adjustments to our operating plan. Please see “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q for an additional discussion of risks and potential risks of the COVID-19 pandemic on our business, financial condition and results of operations.

Our primary uses of cash are working capital requirements, capital expenditures and debt service payments. Additionally, from time to time, we may use capital for acquisitions and other investing and financing activities. Working capital is used principally for our personnel as well as manufacturing costs related to the production of our products. Our working capital requirements vary from period-to-period depending on manufacturing volumes, the timing of shipments and the payment cycles of our customers and payers. Our capital expenditures consist primarily of building improvements, manufacturing equipment, and computer hardware and software.

To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute on our business strategy, we anticipate that they will be obtained through additional equity or debt financings, other strategic transactions or a combination of these potential sources of funds. There can be no assurance that we will be able to obtain additional funds on terms acceptable to us, on a timely basis or at all, particularly in light of the adverse impacts of the COVID-19 pandemic on the capital markets. Any failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on our business, results of operations, and financial condition. Our current borrowings under the 2019 Credit Agreement are subject to compliance with certain financial covenants regarding Minimum Trailing Twelve Month Consolidated Revenue and Non-PuraPly revenue. If we are not able to comply with these covenants, due to the impacts of COVID-19 or otherwise, the borrowings under the 2019 Credit Agreement may become due and payable immediately unless we obtain an amendment from our lenders. There can be no assurance that our lenders would agree to any such amendment on acceptable terms, or at all.

Cash Flows

The following table summarizes our cash flows for each of the periods presented:


	Nine Months Ended September 30,
	2020			2019
	(in thousands)
Net cash used in operating activities	$	(19,475	)	$	(27,127	)
Net cash used in investing activities		(16,354	)		(2,776	)
Net cash provided by financing activities		12,345			31,657

Net change in cash and restricted cash	$	(23,484	)	$	1,754

Operating Activities

During the nine months ended September 30, 2020, net cash used in operating activities was $19.5 million, resulting from our net loss of $0.5 million and net cash used in connection with changes in our operating assets and liabilities of $28.6 million, partially offset by non-cash charges of $9.6 million. Net cash used in changes in our operating assets and liabilities included an increase in accounts receivable of $19.2 million, an increase in inventory of $7.8 million, an increase in prepaid expenses and other current assets of $2.3 million, and a decrease in accounts payable of $3.8 million, all of which were partially offset by an increase in accrued expenses and other liabilities of $4.4 million.

During the nine months ended September 30, 2019, net cash used in operating activities was $27.1 million, resulting from our net loss of $36.1 million and net cash used in connection with changes in our operating assets and liabilities of $3.3 million, partially offset by non-cash charges of $12.2 million. Net cash used in changes in our operating assets and liabilities includes an increase in inventory of $7.8 million, an increase in prepaid expenses and other current assets of $0.7 million and a decrease in other liabilities of $0.7 million, all of which were partially offset by a decrease in accounts receivable of $0.6 million and an increase in accounts payable and accrued expenses and other current liabilities of $5.4 million.

Investing Activities

During the nine months ended September 30, 2020, we used $16.4 million of cash in investing activities consisting of capital expenditures of $12.3 million, payment of $5.8 million related to the acquisition of CPN partially offset by notes receivable repayment of $1.7 million from our former executives.

During the nine months ended September 30, 2019, we used $2.8 million of cash in investing activities consisting of capital expenditures and an intangible asset purchase.

Financing Activities

During the nine months ended September 30, 2020, net cash provided by financing activities was $12.3 million. This consisted primarily of $15.9 million in proceeds from our 2019 Credit Agreement, and $1.3 million in proceeds from the exercise of common stock options. The net cash provided by financing activities was partially offset by the payment of capital lease obligations of $1.8 million and the payment of $3.0 million related to the NuTech Medical deferred acquisition consideration.

During the nine months ended September 30, 2019, net cash provided by financing activities was $31.7 million. This consisted primarily of $56.1 million in net proceeds from the 2019 Credit Agreement, and $0.8 million in proceeds from the exercise of common stock warrants and options. The net cash provided by financing activities was partially offset by the payment of the put option on redeemable common stock of $6.8 million, repayment of the Master Lease Agreement of $17.6 million, and repayment of capital lease obligations of $0.9 million.

Indebtedness

2019 Credit Agreement

On March 14, 2019, we and our subsidiaries entered into a credit agreement with SVB and several other lenders, which we refer to as the 2019 Credit Agreement. Capitalized terms used herein and not otherwise defined are defined as set forth in the 2019 Credit Agreement.

The 2019 Credit Agreement, as amended, provides for a revolving credit facility (the “Revolving Facility”) of up to the lesser of $40.0 million and the amount determined by the Borrowing Base. Additionally, we entered into a $60.0 million term loan (the “Term Loan Facility”) structured in three tranches. The first tranche of $40.0 million was made available to us and fully funded on March 14, 2019; (ii) the second tranche of $10.0 million was made available to us and fully funded in September 2019 upon achievement of certain financial metrics; and (iii) the third tranche of $10.0 million was made available to us and fully funded in March 2020 upon achievement of a certain financial metric.

We are required to comply with certain covenants and restrictions under the 2019 Credit Agreement. If we fail to comply with these requirements, the lenders will be entitled to exercise certain remedies, including the termination of the lending commitments and the acceleration of the debt payments under either or both of the Revolving Facility and the Term Loan Facility. We are also required to achieve certain financial covenants, including Minimum Trailing Twelve Month Consolidated Revenue and Non-PuraPly Revenue, tested quarterly. The Minimum Trailing Twelve Month Consolidated Revenue thresholds for the year ending December 31, 2020 were agreed to and the covenant requiring Trailing Twelve Month Non-PuraPly Revenue beginning with the quarter ending September 30, 2020 was added in connection with the third amendment to the 2019 Credit Agreement entered into on March 26, 2020. The Minimum Trailing Twelve Month Consolidated Revenue requirements for the year ending December 31, 2020 are set at the following levels: $235.0 million for the trailing twelve months ending March 31, 2020; $253.0 million for the trailing twelve months ending June 30, 2020; $260.0 million for the trailing twelve months ending September 30, 2020; and $262.0 million for the trailing twelve months ending December 31, 2020. The Trailing Twelve Month Non-PuraPly Revenue requirements are set at the following levels: $136.5 million for the trailing twelve months ending September 30, 2020; and $145.0 million for the trailing twelve months ending December 31, 2020. The minimum revenue covenant levels for 2021 are to be agreed with the lenders no later than March 31, 2021. We are also required to maintain Minimum Liquidity equal to the greater of (i) 6 months Monthly Burn and (ii) $10.0 million.

As of September 30, 2020, we were in compliance with the financial covenants under the 2019 Credit Agreement and we had outstanding borrowings under the Revolving Facility and Term Loan Facility of the 2019 Credit Agreement of $39.4 million and $60.0 million, respectively.

2017 Credit Agreement

In March 2017, we ~~had cash~~entered into a credit agreement with SVB, which we refer to as the 2017 Credit Agreement. The 2017 Credit Agreement, as amended, provided for a revolving credit facility of ~~$117,728~~up to $30.0 million and a ~~working capital deficit~~term loan of ~~$2,336,036.~~up to $5.0 million. The term loan was repaid in full in December 2018. Upon entering into the 2019 Credit Agreement, the outstanding amount due under the 2017 Credit Agreement was fully repaid and terminated.

Master Lease Agreement

~~At September 30,~~In April 2017, ~~$311,697,781 was held in~~we entered into the ~~Trust Account and consisted of cash, U.S. Treasury Bills and accrued interest. The U.S. Treasury Bills matured on October 26, 2017. On October 26, 2017~~Master Lease Agreement (the “ML Agreement”) with Eastward Fund Management LLC. In March 2019, upon entering into the ~~funds in the Trust Account were reinvested in U.S. Treasury Bills, maturing on November 24, 2017.~~

~~On December 14, 2015, our Sponsor purchased 8,625,000 Founder Shares for~~2019 Credit Agreement, we paid an aggregate ~~purchase price~~amount of $25,000, or approximately $0.003 per share. In October 2016, our Sponsor transferred 50,000 Founder Shares to each of our independent directors at their original per share purchase price. In addition, at such time, each of our independent directors purchased an additional 421,250 Founder Shares from our Sponsor at their original purchase price.

~~On October 14, 2016,~~$17.6 million due under the Company consummated its Public Offering of 30,000,000 Units, each unit consisting of one Class A ordinary share and one Warrant to purchase one-half of one Class A ordinary share. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $300,000,000. The Company granted the underwriters a 45-day option to purchase up to 4,500,000 additional Units to cover over-allotments, if any. On November 28, 2016, the underwriters partially exercised the Over-allotment Option, and we sold an additional 1,000,000 Units at a price of $10.00 per Unit, generating an additional $10,000,000 of gross proceeds.

~~On October 14, 2016, simultaneously~~ML Agreement with the consummation of the Public Offering, the Company completed a private placement of an aggregate of 16,000,000 Private Placement Warrants to the Sponsor and the Company’s independent directors, at a purchase price of $0.50 per warrant, generating gross proceeds of $8,000,000. On November 28, 2016, the Initial Shareholders purchased an additional 400,000 Private Placement Warrants at a price of $0.50 per warrant (or an aggregate purchase price of $200,000) in conjunction with the exercise of the Over-allotment Option. Following the partial exercise of the Over-allotment Option, 875,000 Founder Shares were forfeited in order to

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maintain the ownership of the Initial Shareholders at 20% of the issued and outstanding ordinary shares. On November 28, 2016, our Sponsor sold 161,180 Founder Shares and 350,114 Private Placement Warrants to one of our independent directors at their original purchase price. On July 5, 2017, our Sponsor sold 186,320 Founder Shares and 404,723 Private Placement Warrants to one of our independent directors at their original per share purchase price.

~~A total of $310,000,000 of the net~~ proceeds from the ~~Public Offering~~2019 Credit Agreement, and the ~~sale~~ML Agreement was terminated. Upon termination of the ~~Private Placement Warrants was deposited in~~ML Agreement, we recognized $1.9 million as loss on the ~~Trust Account established for the benefit~~extinguishment of the ~~Company’s public shareholders. Remaining proceeds of approximately $2,000,000 were used to repay the sponsor note~~loan.

Contractual Obligations and ~~accrued offering and formation costs, and the remainder was deposited in the Company’s operating account and is available for working capital purposes.~~Commitments

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable and excluding deferred underwriting commissions) to complete our Business Combination. We may withdraw interest to pay taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. To the extent that our ordinary shares or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

We will use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents andThere have been no material agreements of prospective target businesses, structure, negotiate and complete a Business Combination, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes. Such expenses may be significant, and we expect that a portion of these expenses will be paid upon completion of a Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with an intended Business Combination, the Company issued to the Sponsor on August 11, 2017, an unsecured promissory note pursuant to which the Company is permitted to borrow up to $300,000 in aggregate principal amount. The Company has not drawn amounts under this note. This note is non-interest bearing and payable on the earlier of October 14, 2018 or the closing of the Business Combination. In the event that our Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of $0.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants issuedchanges to our ~~Initial Shareholders. The terms of such loans by our officers~~contractual obligations and ~~directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our Sponsor or an Affiliate~~commitments as ~~we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.~~

In order to preserve liquidity, as of April 30, 2017, the Affiliate has agreed to defer payment of the monthly administrative fee under the Administrative Services Agreement until the initial Business Combination, at which time all such accrued but unpaid fees will be paid to the Affiliate. We do not believe we will need to raise additional funds through October 14, 2018 in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon completion of a Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. We believe that we have sufficient funds available to complete our efforts to effect a Business Combination with an operating business by October 14, 2018, which is 24 months from the closing of the Public Offering

We have 24 months after the Close Date to complete a Business Combination. If we do not complete a Business Combination within this time period, we shall (i) cease all operations except for the purposes of winding up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest, net of tax (less up to $50,000 of such net interest to pay dissolution expenses), divided by the number of then outstanding Public

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Shares, which redemption will completely extinguish the shareholder rights of owners of Class A ordinary shares (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

~~Off-Balance Sheet Financing Arrangements~~

As of September 30, ~~2017, we did not have any obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate~~2020 from those disclosed in ~~transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established~~our Annual Report on Form 10-K for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

~~Contractual Obligations~~

As of September 30, 2017, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. On October 10, 2016, we entered into an administrative services agreement pursuant to which have agreed to pay an Affiliate a total of $10,000 per month for office space, administrative and support services. Upon completion of a Business Combination or our liquidation, we will cease paying these monthly fees. In order to preserve liquidity, as of April 30, 2017, the Affiliate has agreed to defer payment of the monthly administrative fee under the Administrative Services Agreement until the initial Business Combination, at which time all such accrued but unpaid fees will be paid to the Affiliate.

The underwriters are entitled to underwriting commissions of 5.5%, of which 2.0% ($6,200,000) was paid at the closing of the Public Offering and Over-allotment Option, and 3.5% ($10,850,000) was deferred. The deferred underwriting commissions held in the Trust Account will be forfeited in the event we do not complete a Business Combination, subject to the terms of the underwriting agreement. The underwriters are not entitled to any interest accrued on the deferred underwriting commissions.

year ended December 31, 2019.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of ~~condensed~~our consolidated financial statements ~~and related disclosures in conformity with US GAAP~~ requires ~~management~~us to make estimates, assumptions and ~~assumptions~~judgments that affect the reported amounts of assets, liabilities, and ~~liabilities,~~the disclosure ~~of contingent assets and liabilities~~ at the date of the ~~condensed~~ financial statements, ~~and income~~as well as revenue and expenses recorded during the reporting periods. Management bases its estimates, assumptions and judgments on historical experience and on various other factors that it believes to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our consolidated financial statements, which, in turn, could materially change our results from those reported. Management evaluates its estimates, assumptions and judgments on an ongoing basis. Historically, our critical accounting estimates have not differed materially from actual results. However, if our assumptions change, especially given the risks and uncertainties related to COVID-19, we may need to revise our estimates, or take other corrective actions, either of which may also have a material adverse effect on our consolidated statements of operations, liquidity and financial condition. See also our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for information about these accounting policies as well as a description of our other significant accounting policies.

Emerging Growth Company Status

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We may take advantage of these exemptions until we are no longer an emerging growth company. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards (such as ASU 2016-02,Leases(Topic 842)) and, as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following October 14, 2021, the fifth anniversary of our IPO, or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, we have more than $700.0 million in market value of our stock held by non-affiliates or we issue more than $1.0 billion of non-convertible debt securities over a three-year period.

Off-Balance Sheet Arrangements

We did not have, during the periods ~~reported. Actual results could materially differ from those estimates. The Company has identified~~presented, and we do not currently have, any off-balance sheet arrangements, as defined in the ~~following as its critical accounting policies:~~

~~Offering Costs~~

~~The Company complies with the requirements of Accounting Standards Codification (“the ASC”) 340-10-S99-1~~rules and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering”. We incurred offering costs in connection with the Public Offering of $833,589, primarily consisting of accounting and legal services, securities registration expenses and exchange listing fees. These costs, along with paid and deferred underwriting commissions totaling $17,050,000, were charged to additional paid-in capital at the Close Date.

~~Redeemable Ordinary Shares~~

The Class A ordinary shares subject to possible redemption will be recorded at redemption value and classified as temporary equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 480, ~~Distinguishing Liabilities from Equity. The Company will proceed with a Business Combination only if it has net tangible assets of at least $5,000,001 upon consummation~~regulations of the ~~Business Combination and,~~SEC.

Recently Issued Accounting Pronouncements

We have reviewed all recently issued standards as disclosed in ~~the case~~Note “2. Summary of ~~a shareholder vote, a majority of the outstanding ordinary shares voted are voted~~Significant Accounting Policies” to our consolidated financial statements included in favor of the Business Combination. Accordingly, at September 30, 2017, 29,191,301 of the Company’s 31,000,000 Class A ordinary shares were classified outside of permanent equity at their redemption value.this Report on Form 10-Q.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~All activity through September 30, 2017 related~~Pursuant to ~~our formation and~~Item 305(e) of Regulation S-K, the preparation for the Public Offering and identifying and evaluating prospective acquisition targets for a Business Combination. On September 28, 2017, the net proceeds of the Public Offering and the sale of the Private Placement Warrants held in the Trust Account were invested in U.S. government treasury bills with a maturity of 180 days or less. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk. For the three months ended September 30, 2017, the effective annualized interest rate earned on our US Treasury Bills investment was 0.96%

At September 30, 2017, $311,697,781 was held in the Trust Account for the purposes of consummating a Business Combination. If we complete a Business Combination within 24 months after the Close Date, funds in the Trust Account will be used to pay for the Business Combination, redemptions of Class A ordinary shares, if any, the deferred underwriting compensation of $10,850,000 and accrued expenses related to the Business Combination. Any funds remaining will be made available to us Company is not required to provide ~~working capital to finance our operations.~~the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

~~We have not engaged in any hedging activities since our inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.~~

Item 4. Controls and Procedures

~~ITEM 4. CONTROLS AND PROCEDURES~~Evaluation of Disclosure Controls and Procedures

Material Weaknesses on Internal Control over Financial Reporting

~~Disclosure~~The Company’s management, with the participation of its principal executive officer and principal financial officer, evaluated the effectiveness of its disclosure controls and procedures ~~are~~as of September 30, 2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in ~~our~~the reports ~~filed~~that it files or ~~submitted~~submits under the ~~Securities~~ Exchange Act ~~of 1934 as amended (the “Exchange Act”)~~ is recorded, processed, summarized and reported, within the time periods specified in the ~~SEC’s~~ rules and ~~forms.~~forms promulgated by the Securities and Exchange Commission (the “SEC”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in ~~Company~~the reports ~~filed~~that it files or ~~submitted~~submits under the Exchange Act is accumulated and communicated to the company’s management, including ~~our Chief Executive Officer~~its principal executive and ~~Chief Financial Officer,~~principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

~~Evaluation~~Because of ~~Disclosure Controls and Procedures~~

~~As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an~~inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, our management has assessed the effectiveness of our internal control over financial reporting based on the criteria set forth in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

As previously disclosed under “Item 9A. Controls and Procedures” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2019, we identified the following material weakness that existed as of December 31, 2019 and continued to exist at September 30, 2020. A material weakness is a control deficiency or a combination of control deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

We did not design and ~~operation~~maintain formal accounting, business operations, and Information Technology policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures, including (i) formalized policies and procedures for reviews over account reconciliations, journal entries, and other accounting analyses and memos and procedures to ensure completeness and accuracy of information used in these review controls and (ii) controls to support the objectives of proper segregation of the initiation of transactions, the recording of transactions, and the custody of assets.

Because of the deficiencies noted above, in consultation with management, our principal executive officer and principal financial officer concluded that we did not maintain effective internal control over financial reporting and our disclosure controls and procedures were not effective as of both December 31, 2019 and September 30, 2020, based on the criteria in Internal Control—Integrated Framework (2013) issued by COSO.

Plans for Remediation of Material Weakness

Management is currently taking actions to remediate the deficiencies in its internal controls over financial reporting and is implementing additional processes and controls designed to address the underlying causes associated with the above-mentioned material weakness. Although the Company has made significant progress in remediating the aforementioned deficiencies, management did not perform sufficient control testing to conclude that the material weakness was remediated and therefore some of the control deficiencies continued to exist as of September 30, ~~2017. Based upon their evaluation, our Chief Executive Officer~~2020. Management is committed to remediating the material weakness described above and ~~Chief Financial Officer concluded that our disclosure~~remediation efforts have continued in 2020. Management’s internal control remediation efforts include the following:

We began the implementation of a new company-wide enterprise resource planning system to provide additional systematic controls and ~~procedures (as defined~~segregation of duties for our accounting processes. We anticipate that the enterprise resource planning system will go live in ~~Rules 13a-15 (e)~~the first half of 2021.

We have designed more effective controls throughout 2019 which continued into 2020 that should remediate these deficiencies once they have been implemented and ~~15d-15 (e) under~~have had sufficient time for them to operate effectively.

We formalized, and provided training on, certain policies, including a procurement and contract management policy.

We engaged an outside firm to assist management with:

Enhancing the execution of our risk assessment activities by evaluating whether the design of our internal controls appropriately addresses changes in the business (including changes to people, processes and systems) that could impact our system of internal controls;

Reviewing our current processes, procedures and systems to identify opportunities to enhance the design of each process and to include additional control activities that will ensure all transactions are properly recorded;

Designing controls that address the completeness and accuracy of any key reports utilized in the execution of internal controls; and

Developing a monitoring protocol that will allow the Company to validate the operating effectiveness of certain controls over financial reporting to gain assurance that such controls are present and functioning as designed.

We have reported regularly to the ~~Exchange Act) were effective.~~audit committee on the progress and results of the remediation plan, including the identification, status and resolution of internal control deficiencies.

In addition to implementing and refining the above activities, we engaged in additional activities in 2020, including engaging the same outside firm to assist management with:

Monitoring the progress of the remediation plan established by management.

Performing testing to validate the operating effectiveness of certain controls over financial reporting.

Management believes these actions will be effective in remediating the material weakness described above. As management continues to evaluate and work to improve its internal control over financial reporting, management may determine to take additional measures to address the material weakness or determine to modify the remediation plan described above. Until the remediation steps set forth above are fully implemented and operating for a sufficient period of time, the material weakness described above will continue to exist.

Changes in Internal Control Over Financial Reporting

~~During~~Other than in connection with executing upon the ~~most recently completed fiscal quarter,~~implementation of the remediation plan outlined above, there ~~has been~~were no ~~change~~changes in our internal control over financial reporting during the period ended September 30, 2020 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

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PART II —– OTHER INFORMATION

Item 1. Legal Proceedings

~~ITEM 1. LEGAL PROCEEDINGS~~We are not a party to any material legal proceedings. From time to time, we may become involved in litigation or other legal proceedings relating to claims arising from the ordinary course of business. These matters may include intellectual property, employment and other general claims. With respect to our outstanding legal matters, based on our current knowledge, we believe that the amount or range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties.

~~None.~~

Item 1A. Risk Factors

~~ITEM 1A. RISK FACTORS~~

~~Factors that could cause~~Investing in our ~~actual results to differ materially~~common stock involves a high degree of risk. Our Annual Report on Form 10-K for the year ended December 31, 2019, as amended, includes a detailed discussion of our risk factors under the heading “Part I, Item 1A—Risk Factors.” Except as set forth below, there have been no material changes from ~~those in this report or any of~~such risk factors during the ~~risks disclosed~~quarter ended September 30, 2020. You should consider carefully the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2016, which was filed with~~2019, and all other information contained in or incorporated by reference in this Quarterly Report on Form 10-Q before making an investment decision. If any of the ~~SEC~~risks discussed in the Annual Report on ~~March 28, 2017. Any~~Form 10-K for the year ended December 31, 2019 or herein actually occur, they may materially harm our business, financial condition, operating results, cash flows or growth prospects. As a result, the market price of ~~these factors~~our common stock could decline, and you could lose all or part of your investment. Additional risks and uncertainties that are not yet identified or that we think are immaterial may also materially harm our business, financial condition, operating results, cash flows or growth prospects and could result in a complete loss of your investment.

Significant disruptions of our information technology systems or breaches of information security could adversely affect our business, results of operations and financial condition.

We rely to a large extent upon sophisticated information technology systems to operate our business. In the ordinary course of business, we collect, store and transmit large amounts of confidential information (including, but not limited to, personal information and intellectual property). We also have outsourced significant elements of our operations to third parties, including significant elements of our information technology infrastructure and, as a result, we are managing many independent vendor relationships with third parties who may or could have access to our confidential information. The size and complexity of our information technology and information security systems, and those of our third-party vendors with whom we contract (and the large amounts of confidential information that is present on them), make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees or vendors, or from malicious attacks by third parties. Such attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives (including, but not limited to, industrial espionage and market manipulation) and expertise. While we have invested significantly in the protection of data and information technology, and will continue to do so, there can be no assurance that our efforts will prevent service interruptions or security breaches. For example, in August 2020, our information technology (“IT”) systems were exposed to a ransomware attack, which partially impaired certain IT systems for a short period of time. We are investigating the incident, together with legal counsel and other incident response professionals. We do not believe that we have experienced any material losses related to the ransomware attack and were able to recover all data quickly, with only a minimal and temporary interruption to our business. While we have implemented measures to protect our data security and information technology systems, such measures may not prevent these events. Although we have cyber-insurance coverage that may cover certain events described above, this insurance is subject to deductibles and coverage limitations and we may not be able to maintain this insurance. Also, it is possible that claims could exceed the limits of our coverage. Any interruption or breach in our systems could adversely affect our business operations and/or result in the loss of critical or sensitive confidential information or intellectual property, and could result in financial, legal, business and reputational harm to us or allow third parties to gain material, inside information that they use to trade in our securities.

Interruptions in the supply of our products or inventory loss may adversely affect our business, results of operations and financial condition.

Our products are manufactured using technically complex processes requiring specialized facilities, highly specific raw materials and other production constraints. The complexity of these processes, as well as strict company and government standards for the manufacture and storage of our products, subjects us to production risks. In addition to ongoing production risks, process deviations or unanticipated effects of approved process changes may result in non-compliance with regulatory requirements including stability requirements or specifications. Most of our products must be stored and transported within a specified temperature range. For example, if environmental conditions deviate from that range, our products’ remaining shelf-lives could be impaired or their safety and efficacy could be adversely affected, making them unsuitable for use. These deviations may go undetected. The occurrence of actual or suspected production and distribution problems can lead to lost inventories, and in some cases recalls, with consequential reputational damage and the risk of product liability. The investigation and remediation of any identified problems can cause production delays and result in substantial additional expenses. Production of our Affinity product, for example, was suspended in the first quarter of 2019 due to production issues at one of our suppliers. Although our supplier has implemented certain corrective measures, we have determined that the current process does not meet our production standards. As a result, we identified an alternate supplier, and were only able to resume commercial-scale production in the second quarter of 2020. This disruption in supply resulted in reduced Affinity revenue. Although we were able to partially offset the lost Affinity revenue by increasing production of our other products, there can be no assurance that we will be able to do so in the event of any future suspensions or failures in the storage or manufacturing of Affinity, Dermagraft (including in connection with the expected suspension of manufacturing of Dermagraft in the fourth quarter of 2021) or our other products. Any future failure in the storage or manufacture of our products or loss in supply could result in a loss of our market share and negatively affect our revenues and operations.

We are dependent on the proper functioning of our and third-party manufacturing facilities, our supply chain and our sales force, all of which could be negatively impacted by the global COVID-19 pandemic in a manner that could materially adversely affect our business, financial condition or results of operations.

Our ability to manufacture products may be materially adversely impacted by the coronavirus.

COVID-19 is continuing to impact worldwide economic activity. Estimates for economic growth have been reduced and may have a corresponding effect on our sales activity. The virus has been declared a pandemic by the World Health Organization and has spread globally to over 180 countries, including the United States. The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. We, like many employers in the United States, have required (with limited exceptions) employees to work from home or not come into their offices or facilities. We manufacture our non-amniotic products and use third-party manufacturers for our amniotic products and we use third-party raw material suppliers to support our internal manufacturing processes. Our manufacturing facilities have, thus far, remained operational as “essential” services under applicable regulatory orders. If our manufacturing capabilities or the manufacturing capabilities of our suppliers are impacted as a result of COVID-19, it may not be possible for us to timely manufacture relevant products at the required levels or at all. A reduction or interruption in any of our manufacturing processes could have a material adverse effect on our business, results of operations, financial condition and cash flows. Further, remote work may disrupt our operations or increase the risk of a cybersecurity incident.

We also may be unable to obtain the raw materials necessary to support our internal manufacturing processes due to the additional constraints on suppliers created by COVID-19. Any delays in the delivery of these raw materials and delay manufacturing of our products may result in the cancellation of orders for our products.

In addition, the manufacture of our products is dependent on the availability of sufficient quantities of source tissue, which is the primary component of our products. Source tissue includes donated human tissue, porcine tissue and bovine tissue. We acquire donated human tissue directly through institutional review board approved protocols at multiple hospitals, as well as through tissue procurement firms engaged by us or by our contract manufacturers. Any failure to obtain tissue from our sources, including any failures related to COVID-19, will interfere with our ability to effectively meet demand for our products. Any interruption in the supply of source tissue could materially harm our ability to manufacture our products until a new source of supply, if any, could be found. We may be unable to find a sufficient alternative supply channel in a reasonable time period or on commercially reasonable terms, if at all, which would have a material adverse effect on our business, results of operations and financial condition.

Our sales may be materially adversely impacted by the coronavirus.

Our current Advanced Wound Care portfolio is sold throughout the United States via an experienced direct sales force, which focuses its efforts on outpatient wound care. We use a mix of direct sales representatives and independent agencies to service the Surgical & Sports Medicine market. These sales representatives are supported by teams of professionals focused on sales management, sales operations and effectiveness, ongoing training, analytics and marketing.

Our direct sales force functions by meeting in person with physicians and health care providers to discuss our products. COVID-19 may negatively affect demand for our products by limiting the ability of our sales personnel to maintain their customary contacts with physicians and health care providers. We may also find that the independent agencies that we use will have to prioritize their workload and may be forced to slow their activities as a result of COVID-19. As a result, we cannot assure you that our direct sales representatives or independent agencies will increase or maintain our current sales levels, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. The support for our sales force may also be impacted, thereby reducing the effectiveness of our sales force.

We may also experience significant and unpredictable reductions in demand for certain of our products if patients are unable to access certain advanced therapies due to stay-at-home orders or providers prioritizing resources to address the COVID-19 pandemic.

The impact of COVID-19 on economic activity, and its effect on our manufacturing facilities, supply chain and sales force is uncertain at this time and could have a material adverse effect on our results, especially to the extent theses effects persist or exacerbate over an extended period of time.

Our ability to comply with financial covenants under our credit agreement and raise capital may be materially adversely impacted by COVID-19.

We have funded our operations ~~or financial condition. Additional risk factors not presently known to us or~~and capital spending, in part, through third party debt and proceeds from the sale of our Class A common stock. Our 2019 Credit Agreement requires that we ~~currently deem immaterial may also impair our business or results of operations.~~

~~As of the date of this Quarterly Report on Form 10-Q, there have been no material changes~~comply with certain financial covenants that include maintaining Minimum Trailing Twelve Month Consolidated Revenue and Non-PuraPly Revenue, each tested quarterly. If we are unable to meet these financial covenants due to the ~~risk factors disclosed~~economic impact of COVID-19 or otherwise, the borrowings under the 2019 Credit Agreement may become due and payable immediately unless we obtain an amendment from our lenders and we would be prohibited from making additional borrowings under the Revolving Facility if we have availably under that facility in the future. There can be no assurance that our ~~Annual Report~~lenders would agree to any such amendment on ~~Form 10-K for~~acceptable terms, or at all. In addition, any sustained disruption in the ~~year ended December 31, 2016, which was filed with~~capital markets from the ~~SEC on March 28, 2017. However, we may disclose changes~~COVID-19 pandemic could negatively impact our ability to ~~such factors~~raise capital from the offering of equity or ~~disclose additional factors from time to time in our future filings with the SEC.~~debt securities.

~~ITEM~~Item 2. ~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

~~On December 14, 2015 our Sponsor purchased 8,625,000 Class B ordinary shares for $25,000, or approximately $0.003 per share. In October 2016, the Sponsor transferred 50,000 Founder Shares to each~~Unregistered Sales of the Company’s independent directors at a price per share of approximately $0.003 per share. In addition, at such time, each of our independent directors purchased an additional 421,250 Founder Shares from our Sponsor at a price per share of approximately $0.003 per share.

Simultaneously with the consummation of our Public Offering, the Initial Shareholders purchased from the Company an aggregate of 16,000,000 Private Placement Warrants at a price of $0.50 per Private Placement Warrant (or an aggregate purchase price of $8,000,000). On November 28, 2016, the Initial Shareholders purchased an additional 400,000 Private Placement Warrants at a price of $0.50 per warrant (or an aggregate purchase price of $200,000) in conjunction with the exercise of the Over-allotment Option. Following the partial exercise of the Over-allotment Option, 875,000 Founder Shares were forfeited in order to maintain the Initial Shareholder’s ownership at 20% of the issuedEquity Securities and outstanding ordinary shares. On November 28, 2016, our Sponsor sold 161,180 Founder Shares and 350,114 Private Placement Warrants to one of our independent directors at their original per share purchase price. On July 5, 2017, our Sponsor sold 186,320 Founder Shares and 404,723 Private Placement Warrants to one of our independent directors at their original per share purchase price. Each Private Placement Warrant entitles the holder to purchase one-half of one Class A ordinary share at $5.75 per one-half share. The Private Placement Warrants have terms and provisions that are identical to those of the Warrants sold as part of the Units in the Public Offering, except that the Private Placement Warrants may be exercised on a cashless basis and are not redeemable by us so long as they are held by the Initial Shareholders or their permitted transferees.

The sales of the above securities by the Company were deemed to be exempt from registration under the Securities Act, in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering.

Use of Proceeds ~~from the Offering~~

None.

On October 14, 2016, we consummated our Public Offering of 30,000,000 Units at a price of $10.00 per Unit. Our Public Offering did not terminate before all of the securities registered in our registration statement were sold. Credit Suisse Securities (USA) LLC and I-Bankers Securities, Inc. acted as underwriters for the offering. The securities sold in the offering were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-213465). The SEC declared the registration statement effective on October 7, 2016. On November 28, 2016, the Underwriters partially exercised the Over-allotment Option, and we sold an additional 1,000,000 Units at a price of $10.00 per Unit.

~~Table of Contents~~

From Inception through September 30, 2017, we incurred $833,589 for costs and expenses related to the Public Offering. Additionally, at the closing of the Public Offering and Over-allotment Option, we paid a total of $6,200,000 in underwriting discounts and commissions. In addition, the underwriters agreed to defer the payment of $10,850,000 in underwriting discounts and commissions, which amount will be payable upon consummation of our Business Combination, if consummated. Prior to the closing of the Public Offering, our Sponsor loaned us $300,000 to be used for a portion of the expenses of the Public Offering. These loans were repaid upon completion of the Public Offering out of the $900,000 of Public Offering proceeds that were allocated for the payment of offering expenses other than underwriting discounts and commissions. Other than such loans, no payments were made by us to directors, officers or persons owning ten percent or more of our ordinary shares or to their associates, or to our affiliates. There has been no material change in the planned use of proceeds from the Public Offering as described in our final prospectus, dated October 10, 2016, filed with the SEC.

After deducting the underwriting discounts and commissions (excluding the deferred portion of $10,850,000 in underwriting commissions, which amount will be payable upon consummation of the Business Combination, if consummated) and the estimated offering expenses, the total net proceeds from the Public Offering and the sale of the Private Placement Warrants were $311,166,411, of which $310,000,000 (or $10.00 per share sold in the Public Offering) was placed in the Trust Account.

~~ITEM~~Item 3. ~~DEFAULTS UPON SENIOR SECURITIES~~

Defaults Upon Senior Securities

None.

~~ITEM~~Item 4. ~~MINE SAFETY DISCLOSURES~~

Mine Safety Disclosures

Not ~~applicable.~~Applicable.

Item 5. Other Information

~~ITEM 5. OTHER INFORMATION~~On November 3, 2020, Albert Erani and Maurice Ades each resigned as a member of the Company’s board of directors effective immediately. Mr. Erani was also a member of the compensation committee. Neither Mr. Erani nor Mr. Ades resigned as a result of a disagreement with the Company on any matter relating to its operations, policies or practices.

On November 3, 2020, the board of directors elected David Erani, 32, to fill the vacancy created by Albert Erani’s resignation and Robert Ades, 47, to fill the vacancy created by Maurice Ades’ resignation. David Erani was nominated for election to the board of directors by his father, Albert Erani, and Robert Ades was nominated for election to the board of directors by his father, Alan Ades, pursuant to the terms of the Controlling Stockholders Agreement among the Company, Alan Ades, Albert Erani and Glenn Nussdorf, current and former members of the board of directors, together with Dennis Erani, Starr Wisdom and certain of their respective affiliates, who control a majority of the voting power of the Company’s outstanding Class A common stock. David Erani and Robert Ades will have the benefit of the Company’s standard form of indemnification agreement, but will not receive any compensation for their service on the board of directors.

~~None.~~In connection with these changes to the board’s composition, the board of directors appointed Art Leibowitz as a member of the compensation committee. Following Mr. Leibowitz’s appointment, the members of the compensation committee include Wayne Mackie (chair), Mr. Leibowitz and Alan Ades. The members of the audit committee are unchanged and include Mr. Leibowitz (chair), Mr. Mackie and Josh Tamaroff.

~~ITEM~~Item 6. Exhibits

~~The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.~~


Exhibit ~~Number~~ number	Description
2.1*
3.1	~~Transaction Agreement, dated August 21, 2017, by and among Avista Healthcare Public Acquisition Corp., Avista Healthcare Merger Sub, Inc., Avista Healthcare NewCo, LLC and Envigo International~~Certificate of Incorporation of Organogenesis Holdings Inc. (incorporated by reference to Exhibit ~~2.1~~3.1 to the ~~Registrant’s Current Report~~Company’s Registration Statement on Form ~~8-k~~S-3/A (File No. 333-233621) filed with the SEC on ~~August 22, 2017).~~September 16, 2019)
10.10*
3.2	~~Parent Sponsor Letter Agreement, dated August 21, 2017, by and among Avista Healthcare Public Acquisition Corp., Avista Acquisition Corp., and certain individuals~~Bylaws of Organogenesis Holdings Inc. (incorporated by reference to Exhibit ~~10.10~~3.2 to the ~~Registrant’s~~Company’s Registration Statement on Form S-3/A (File No. 333-233621) filed with the SEC on September 16, 2019)

10.1	Separation Letter Agreement, dated August 24, 2020, between Organogenesis Holdings Inc. and Timothy M. Cunningham (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-37906) filed with the SEC on August ~~22, 2017).~~ 24, 2020)
31.1*
31.1†	Certification of ~~Chief~~Principal Executive Officer ~~Pursuant~~pursuant to ~~Rules~~ Rule 13a-14(a) ~~and~~ or Rule 15d-14(a) ~~under~~ of the Securities Exchange Act of 1934, as ~~Adopted Pursuant~~adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002
31.2*
31.2†	Certification of ~~Chief~~Principal Financial Officer ~~Pursuant~~pursuant to ~~Rules~~ Rule 13a-14(a) ~~and~~ or Rule 15d-14(a) ~~under~~ of the Securities Exchange Act of 1934, as ~~Adopted Pursuant~~adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002
32.1*
32.1†	Certification of ~~Chief~~Principal Executive Officer ~~Pursuant~~and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as ~~Adopted Pursuant~~adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
32.2*		~~Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
101.INS* 101.INS†	XBRL Instance Document XBRL
101.SCH*
101.SCH†	XBRL Taxonomy Extension Schema Document
101.CAL*
101.CAL†	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
101.DEF†	XBRL Taxonomy Extension Definition Linkbase Document

~~Table of Contents~~

101.LAB*
101.LAB†		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
101.PRE†		XBRL Taxonomy Extension Presentation Linkbase Document

†	Filed herewith

~~Filed herewith.~~

~~Table of Contents~~

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Dated: November 9, 2020	~~Avista Healthcare Public Acquisition Corp.~~		Organogenesis Holdings Inc.

~~Date: November 14, 2017~~	~~By:~~		(Registrant)

			/s/ ~~David Burgstahler~~Henry Hagopian
				~~David Burgstahler~~Henry Hagopian
				Interim Chief ~~Executive~~Financial Officer ~~(Principal Executive Officer)~~

~~Date: November 14, 2017~~			~~By:~~	~~/s/ John Cafasso~~
		~~John Cafasso~~
		~~Chief Financial Officer (Principal~~(Principal Financial and Accounting Officer)


	As of		As of
	September 30, 2017		December 31, 2016
	(Unaudited)

ASSETS
Current assets
Cash	$	117,728	$	1,040,068
Prepaid expenses		242,302		395,843
Total current assets		360,030		1,435,911

Cash and cash equivalents held in trust account		311,658,037		310,000,000
Accrued interest receivable held in trust account		39,744		—
Total assets	$	312,057,811	$	311,435,911

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Offering costs payable	$	—	$	427,578
Accrued expenses		2,696,066		50,782
Total current liabilities		2,696,066		478,360

Deferred underwriting commission		10,850,000		10,850,000

Total liabilities		13,546,066		11,328,360

COMMITMENTS
Class A ordinary shares subject to possible redemption, $0.0001 par value; 29,191,301 and 29,510,755 shares at conversion value at September 30, 2017 and December 31, 2016		293,511,740		295,107,550
Shareholders' equity
Preferred shares, $0.0001 par value, 1,000,000 shares authorized: no shares issued and outstanding at September 30, 2017 and December 31, 2016		—		—
Ordinary shares, $0.0001 par value, 220,000,000 shares authorized
Class A ordinary shares 200,000,000 shares authorized; 1,808,699 and 1,489,245 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively, (excluding 29,191,301 and 29,510,755 shares subject to possible redemption at September 30, 2017 and December 31, 2016, respectively)		181		149
Class B ordinary shares, 20,000,000 shares authorized; 7,750,000 and 7,750,000 shares issued and outstanding at September 30, 2017 and December 31, 2016		775		775
Additional paid-in capital		6,828,715		5,232,937
Accumulated deficit		(1,829,666)		(233,860)
Total shareholders' equity		5,000,005		5,000,001
Total liabilities and shareholders' equity	$	312,057,811	$	311,435,911



	For the		For the		For the		For the
	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Formation and operating costs	$	2,853,131	$	14,492	$	3,293,587	$	30,542
Loss from operations		(2,853,131)		(14,492)		(3,293,587)		(30,542)
Other income:
Interest income		736,128		—		1,697,781		—
Net loss	$	(2,117,003)	$	(14,492)	$	(1,595,806)	$	(30,542)
Weighted average number of shares outstanding, basic and diluted (1)		9,278,550		7,500,000		9,259,196		7,500,000
Basic and diluted loss per share	$	(0.30)	$	(0.00)	$	(0.35)	$	(0.00)


	Three Months		Nine Months
	Ended		Ended
	September 30, 2017		September 30, 2017

Net loss	$	(2,117,003)	$	(1,595,806)
Less: Income attributable to ordinary shares subject to redemption		(693,179)		(1,598,724)
Adjusted net loss	$	(2,810,182)	$	(3,194,530)

Weighted average shares outstanding, basic and diluted		9,278,550		9,259,196

Basic and diluted net loss per ordinary share	$	(0.30)	$	(0.35)