NexGel (NASDAQ:NXGL) used a shareholder update conference call to discuss the closing of its acquisition of Celularity’s Degenerative Wound segment, a move CEO Adam Levy described as “transformational” as the company shifts into what he called a more scalable and diversified medical technology business.
Acquisition details and new BioNX Surgical division
Levy said the acquired assets will be organized under a newly formed division, BioNX Surgical, focused on “advanced biomaterials for tendon repair, soft tissue reconstruction, bone regeneration, and, of course, wound care.” He said the portfolio includes six established regenerative biomaterial products that are commercial-stage, have “more than a decade of clinical use,” and have “existing reimbursement pathways.” According to Levy, the products are already approved in approximately 500 hospitals and represent an opportunity to expand in non-orthopedic surgical specialties.
Financing and capital structure
Levy said the company secured capital on “more favorable terms” led by Sequence LifeScience, which he described as a strategic partner with expertise in regenerative medicine, manufacturing, development, and commercialization. He said Sequence’s lead investment totaled $5.5 million.
Levy outlined the financing terms as convertible notes with a $0.60 conversion price and 50% warrant coverage with a $0.80 strike price. In the question-and-answer session, he added that the note is an 18-month convertible note with a 10% coupon.
Asked to clarify the transaction mechanics, Levy said the company paid $5.3 million at closing to Celularity and that Celularity would pay out $2.9 million owed to sales representatives in back commissions, with some of those sales reps reinvesting back into NexGel. Levy also said Celularity received $5 million of the convertible note and then transferred $2.5 million of that note to Sequence to settle a preexisting debt. He said Sequence contributed $3 million in cash to the deal, bringing its total involvement to $5.5 million when including the debt settlement.
Responding to a question about potential dilution, Levy said that based on the $0.60 conversion price and 50% warrant coverage—and assuming full warrant exercise—he estimated that for about every $1 million raised there would be approximately 2.4 million shares. He said the total raise connected to the deal, including purchase price and some working capital, would likely be in the $12 million to $14 million range, implying “somewhere in the 30 million share area.” He noted further details would be provided in company filings as exact figures are finalized.
Financial impact, margins, and profitability outlook
Levy said that on a pro forma basis the acquisition is expected to approximately triple annual revenue to roughly $35 million and be “immediately accretive to profitability upon closing.” In response to a question about 2026 economics, he said that if the acquired business performed similarly to last year and generated $22 million to $23 million, the company’s models show about $4 million to $4.5 million of EBITDA, though he added the company hopes to exceed that level.
Levy discussed the acquired business’s margin profile as a blend of multiple categories. He said the company expects a contribution margin of roughly 52%, which he later defined as cost of goods plus sales commissions and direct sales costs, before fixed overhead. He said fixed overhead is expected to be around $6 million to $6.5 million, including items such as payroll, rent, and SG&A-related budgets.
Levy also said the newly acquired product line is seasonal, with Q1 generally the weakest and Q4 the strongest. He said in historical periods, “Q4 was as big as the rest of the year put together,” attributing the strength to reimbursement dynamics and patients timing procedures later in the year.
When asked whether the combined company would be profitable later this year, Levy said that by the quarter running from July 1 to Sept. 30, the company expects to be “for certain” profitable on an EBITDA basis. He also said the company has no other debt on the books besides the newly issued senior secured convertible notes, adding, “NEXGEL never had debt before this.”
Integration plans, sales force, and growth initiatives
Levy said integration should be relatively seamless because the acquired unit operated as a separate segment within Celularity, with its own personnel, and NexGel is taking “the key people” it wanted from that team. He said NexGel subleased space in the same building as Celularity and does not anticipate initial restructuring costs. He added that a key benefit is gaining access to a sales structure—particularly independent representatives—that can help commercialize both the acquired surgical and wound products and NexGel’s legacy medical devices where appropriate.
Levy said the company has identified the need for, and expects to hire, a new national sales manager to help reinvigorate sales coverage. He also highlighted the prior scale of the acquired business, saying it had reached $50 million in revenue as recently as 2024, before Celularity’s financial issues disrupted sales rep compensation in 2025.
On timing, Levy told investors that sales under NexGel ownership began effectively immediately, saying the effective date was Monday and that “as of Monday, all sales” began generating revenue for NexGel.
Pipeline royalties and R&D approach
Asked about intellectual property and royalties, Levy said there are no royalties on the established products. However, he said there are royalties owed to Celularity tied to the pipeline products:
- 5% royalty on the SPARK project
- 3% royalty on the ORCHID project
- 1% royalty on the FUSE project
Levy said the royalties are expected to sunset after about seven years.
Levy also described a multi-pronged R&D strategy, saying NexGel will develop products internally, continue development work within the acquired lab space, and collaborate with Sequence LifeScience, which he said has its own development capabilities in San Antonio. He said NexGel expects to own patents for certain pipeline programs, including FUSE and ORCHID.
Levy told one caller that NexGelRx—a drug delivery spin-out in which NexGel owns 20%—is separate and not affected by the transaction.
Looking further ahead, Levy said the company views profitability as a turning point that could expand strategic options, including the possibility of stock buybacks “should the right circumstances present themselves,” though he did not commit to a timeline.
About NexGel (NASDAQ:NXGL)
NexGel, Inc (NASDAQ: NXGL) is a development-stage materials science company focused on the research and commercialization of advanced polymer formulations tailored for additive manufacturing and 3D printing applications. Leveraging proprietary expertise in polymer chemistry, NexGel develops high-performance materials designed to meet rigorous mechanical, thermal, and chemical resistance requirements across diverse end markets.
The company’s product pipeline includes custom-engineered resins, powders and elastomeric systems optimized for a range of additive manufacturing processes, including selective laser sintering (SLS), stereolithography (SLA) and fused deposition modeling (FDM).
