MiMedx Breached Its Bank Covenants While Lining Up $300 Million In Debt For The Sanara Deal
Lenders waived the Event of Default, but the revolver is frozen and the $350 million Sanara purchase faces an FTC Second Request.
MiMedx Group, which makes placental and other tissue-based products for wound care and surgery, was not in compliance with the financial covenants on its Citizens bank credit agreement at September 30, an Event of Default that its lenders have waived, according to its quarterly report filed Wednesday. The disclosure lands as the company works toward buying Sanara MedTech in a deal with an enterprise value of about $350 million.
A waiver that freezes the revolver
The tests cover leverage and fixed charge coverage. The company and its lenders agreed to waive the default until MiMedx regains compliance. Under the waiver, MiMedx cannot borrow on its revolving credit facility until then.
The filing still counts $75.0 million of availability on the revolver, "subject to the terms of the covenant waiver." Nothing was drawn at quarter end, and the company repaid the last $17.3 million of its term loan in July. The prior quarter's report carried no default and no waiver.
MiMedx expects the Citizens agreement to be terminated and repaid once the new Sanara financing closes.
A $303 million cash bill for Sanara
Each Sanara share converts into $33.00 in cash plus 0.4735 MiMedx shares, which adds up to roughly $303 million in cash and about 4.4 million new shares. MiMedx plans to pay for the cash piece with a $300.0 million, six-year first-lien term loan from Hayfin Capital Management at Term SOFR plus 6.25%, plus cash on hand.
The company ended September with $120.8 million in cash and no long-term debt. It warns that after closing, debt service will rise materially.
The costs begin before closing. A ticking fee, a charge on the undrawn commitment, accrues at 1.00% a year from October 2026 and moves to 50% of the margin from January 2027. Termination fees could also apply: $22.5 million payable by MiMedx to Sanara in some circumstances, and $9.7 million flowing the other way in others.
FTC review and a shrinking core business
The Federal Trade Commission sent both companies a Second Request, a demand for more information, on October 15. It extends the antitrust waiting period until 30 days after the parties substantially comply. The merger agreement ends on July 29, 2027, and either side can push that to no later than January 29, 2028.
The backdrop is weak sales. Third-quarter net sales fell 45.2% to $62.3 million from $113.7 million. Wound sales dropped 71.0% to $22.3 million after Medicare reimbursement changes, while Surgical rose 9.1% to $40.0 million. The company posted a net loss of $8.7 million, or $0.06 a share.
MiMedx also reserved $14.1 million for credit losses against $51.4 million of gross receivables, as bad debt from certain legacy customers weighed on results. The company disclosed a patent license deal in which a competitor will pay $25 million in five annual installments of $5 million.
The FTC's review now sets the pace for the Sanara deal, while the Hayfin ticking fee runs until the deal closes or ends.
Sources
- 10-Q Filing — MiMedx Group (MDXG) — SEC EDGAR
- 10-Q Filing — MiMedx Group (MDXG), Q2 FY2026 filed 2026-07-29 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, mdxg-q32026pressreleasev.htm) — MiMedx Group, filed 2026-10-28 — SEC EDGAR
- MiMedx Group Non-GAAP EPS of -$0.01, revenue of $62.2M misses by $6.52M (MDXG:NASDAQ) | Seeking Alpha — seekingalpha.com
- MIMEDX Announces Third Quarter 2026 Operating & Financial — globenewswire.com
- MIMEDX Announces $25 Million Patent License Agreement — globenewswire.com
