ELUTIA INC. Commitments Disclosure

Note 17. Commitment and Contingencies

Cook Biotech License and Supply Agreements

In 2017, Elutia entered into a license agreement, as amended, with Cook Biotech (“Cook”), now owned by Evergen, for an exclusive, worldwide license to the porcine tissue for use in the Company’s Cardiovascular, CanGaroo and EluPro products, subject to certain co-exclusive rights retained by Cook. Along with this license agreement, Elutia entered into a supply agreement whereby Cook would be the exclusive supplier to Elutia of licensed porcine tissue. On October 1, 2025, in connection with the sale of the CIED Business described in Note 2, the Company entered into amendments to both the license (the “Amended License Agreement”) and supply agreements such that the Amended License Agreement removed all products divested with the sale of the CIED Business and includes only the Company’s remaining Cardiovascular products. Both agreements expire on December 31, 2028. Under certain limited circumstances, Elutia has the right to manufacture the licensed product and pay Cook a royalty of 3% of sales of the Elutia-manufactured tissue.  No royalties were due or paid to Cook during the year ended December 31, 2025 or 2024. The Amended License

Agreement includes a final license fee payment of  $0.1 million to be paid by the Company in October 2026. The Company, in its sole discretion, can terminate the Amended License Agreement at any time.

Legal Proceedings

From time to time, the Company may be involved in claims and proceedings arising in the course of the Company’s business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. The Company records accruals for contingencies when it is probable that a liability has been incurred, and the amount can be reasonably estimated. Where the available information is only sufficient to establish a range of probable liability, and no point within the range is more likely than any other, the lower end of the range has been used. When a material loss contingency is reasonably possible, but not probable, the Company does not record a liability, but instead discloses the nature of the matter and an estimate of the loss or range of loss, to the extent such estimate can be made. Accruals recorded are adjusted periodically as assessments change or additional information becomes available, and management's judgments may be materially different than the actual outcomes.

FiberCel Litigation

In June 2021, the Company announced a voluntary recall of a single lot of FiberCel fiber viable bone matrix. Since September 2021, 110 product liability lawsuits or claims have been filed or asserted against the Company involving FiberCel. As of December 31, 2025, five lawsuits or claims are active, 104 have been settled and one case where the statute of limitations to file a lawsuit has expired. Of the 104 cases that have settled, 35 have not yet been fully paid due to one or more scheduled payments being made after December 31, 2025. The unsettled lawsuits allege that the plaintiffs were exposed to and/or contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of FiberCel during orthopedic fusion operations. Such remaining lawsuits were filed in the Superior Court of Marion County, Indiana (collectively, the “Indiana Complaints”) and the Court of Common Pleas, Philadelphia County (“Pennsylvania Complaint).

​

Plaintiffs in the Indiana Complaints allege a cause of action under Indiana’s Product Liability Act, citing manufacturing defects, defective design and failure to properly warn and instruct, and several of the complaints allege loss of consortium.  Plaintiffs in these actions assert that the defendants are strictly liable or have breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing and labeling FiberCel and seek various types of damages, including economic damages, non-economic damages and loss of consortium.  Plaintiffs in one of the Indiana State Complaints allege causes of action for product liability, negligence, breach of express and implied warranties, and punitive damages.  The Pennsylvania Complaint asserts claims for strict liability, negligence, breach of implied warranty, and breach of express warranty, as well as claims under the Wrongful Death Act and the Survival Act, and seeks compensatory and punitive damages.

​

The Company refers to the aforementioned litigation and claim notices collectively as the “FiberCel Litigation.”

​

Viable Bone Matrix Litigation

​

In July 2023, the Company announced a voluntary recall of a single lot of a certain viable bone matrix (“VBM”) product and the market withdrawal of all of its VBM products produced after a specified date. Notice of the voluntary recall was issued to centers after the Company learned of post-surgical Mycobacterium tuberculosis (“MTB”) infections in two patients treated with a VBM product from a single donor lot. Prior to release, samples from this specific lot had tested negative for MTB by an independent laboratory using a nucleic acid test that is designed to specifically detect the MTB organism. Based on our discussions with the CDC, the Company believes that a total of 36 patients were treated with product from the single donor lot. Since August 2023, 28 product liability lawsuits or claims have been filed or asserted against the Company involving VBM. As of December 31, 2025, 11 lawsuits or claims are active, 16 have been settled and one case has been dismissed. Of the settled cases, thirteen have been fully paid and three have not yet been paid as of December 31, 2025. Furthermore, there are four potential claims where the statute of limitation to file a lawsuit has expired. The unsettled lawsuits, which have been filed against Elutia and others, allege that the plaintiffs were exposed to and/or contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of VBM during orthopedic fusion operations. To date, these lawsuits have been filed in California Superior Court

(collectively, the “California State Complaints”), the United States District Court for the Southern District of California (collectively, the “California Federal Complaints”), the United States District Court for the Eastern District of Louisiana (collectively, the “Louisiana Federal Complaint”), the United States District Court for the Western District of Texas (the “Texas Federal Complaint”), the United States District Court for the Western District of Michigan (the “Michigan Federal Complaint”), the Circuit Court of the State of Oregon (the “Oregon State Complaint”) and the United States District Court for the Southern District of New York (the “New York Complaint”).

​

Plaintiffs in the California State Complaints and California Federal Complaints assert that the defendants are strictly liable or have breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing, and labeling VBM and seek various types of damages, including economic damages, non-economic damages, and loss of consortium damages. The Plaintiffs in one of the California State Complaints also assert claims for fraudulent inducement, misrepresentation, and intentional infliction of emotional distress. Plaintiff in the Louisiana Federal Complaint asserts causes of action under the Louisiana Product Liability Act citing unreasonably dangerous construction or composition, unreasonably dangerous design, and inadequate warning. Plaintiff in this action also alleges claims for breach of implied warranty, breach of express warranty, and negligence. Plaintiffs in the Texas Federal Complaint assert violations of the Texas Business and Commerce Code, citing alleged breaches of the warranties of merchantability and fitness for a particular purpose. Plaintiffs further assert that the defendants breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing, and labeling VBM and seek various types of damages, including economic damages, non-economic damages, exemplary damages, and loss of consortium damages. Plaintiffs in the Oregon State Complaint assert causes of action for negligence, lack of informed consent, medical battery, and loss of consortium. Plaintiffs in the Michigan Federal Complaint assert causes of action for negligence and gross negligence. Plaintiffs in the New York Complaint assert causes of action for negligence, strict liability and breach of implied warranty.

​

The Company refers to the aforementioned litigation and claim notices collectively as the “VBM Litigation.”

​

Medtronic Litigation

​

In June 2024, the Company filed an action against Medtronic Sofamor Danek USA, Inc. (“Medtronic”) in the Superior Court of the State of Delaware.  The Company’s operative complaint alleges breach of the 2019 Tissue Product Supply Agreement (the “Supply Agreement”) between the Company and Medtronic.  In particular, the complaint alleges that Medtronic did not honor its contractual obligations to defend and indemnify the Company for over 100 lawsuits against the Company alleging claims arising from the use of FiberCel products distributed by Medtronic and that Medtronic concealed and misrepresented an insurance policy potentially applicable to those FiberCel-related lawsuits.  The complaint does not specify the amount of damages owed by Medtronic for these breaches.  On July 31, 2024, Medtronic responded to the complaint by denying Elutia’s claims and asserting a single counterclaim alleging that Elutia breached certain representations and warranties under the Supply Agreement and owes ongoing indemnity obligations to Medtronic.  The counterclaim does not specify the amount of any alleged damages. On September 19, 2025, Medtronic filed a partial motion to dismiss some of the claims in Elutia’s current complaint.  Elutia filed an opposition to that motion, and Medtronic filed a reply brief.  The court set a hearing for the motion for February 20, 2026, and its decision on the partial motion to dismiss is expected after the hearing.  Discovery is ongoing in the case.  Given the early stages of this matter and the Company’s intention to vigorously defend Medtronic’s counterclaim, we do not consider a loss to be probable or estimable at this time.

​

Tiger Litigation

​

On October 21, 2025, Tiger Aesthetics Medical, LLC (“Tiger”) filed an action against Elutia in the Superior Court of the State of Delaware. The Complaint alleges breach of contract and related claims related to the 2023 distribution agreement (the “Tiger Distribution Agreement”) between the Company and Tiger as well as the August 2025 letter of intent (the “Tiger LOI”) for the possible sale by the Company to Tiger of certain assets and rights. The complaint does not specify the amount of any alleged damages. On November 13, 2025, Elutia filed a motion to dismiss.  Tiger filed an opposition to that motion, and Elutia filed a reply brief. A hearing on the Company’s motion to dismiss is scheduled for March 23, 2025. Given the early stages of this matter and the Company’s intention to vigorously defend against Tiger’s

claims, Elutia does not consider a loss to be probable or estimable at this time. Elutia terminated the Tiger Distribution Agreement effective October 25, 2025. Additionally, the Tiger LOI expired on October 25, 2025. 

​

Supplier Litigation

​

In October 2024, a former lab and safety equipment supplier filed a lawsuit in California Superior Court (Contra Costa County) against the Company and two co-defendants.  The complaint alleges breach of contract and related equitable claims based on a 2014 agreement that the supplier claims automatically renewed in 2023 for an 84-month term.  The lawsuit seeks specified damages.  On April 1, 2025, the Company filed an answer denying the allegations in the complaint and asserting affirmative defenses.  The court has set a trial for January 2027. Given the early stages of this matter and the Company’s intention to vigorously defend the case, we do not consider a loss to be probable or estimable at this time.

​

Contingent Liability for Legal Proceedings

​

FiberCel Litigation

​

Since August 2022, the Company has engaged in a process to negotiate and attempt to resolve many of the cases in the FiberCel Litigation.  In total, through December 31, 2025, settlement agreements have been reached in 104 of the cases and full or partial settlement payments of $28.8 million have been made by Elutia, with $9.6 million of such total settlement outlays having been paid through insurance proceeds. As of December 31, 2025, the Company has a total liability for FiberCel Litigation of $6.8 million which is recorded within Contingent Liability for Legal Proceedings in the accompanying consolidated balance sheets. Such liability includes $5.8 million for 35 cases in which the settlements have been reached but had not yet been fully paid and $1.0 million for the five cases which have not yet been settled or adjudicated and for which the Company has estimated a probable loss for those cases as of December 31,2025.

​

In order to reasonably estimate the liability for the unsettled FiberCel Litigation cases, the Company, along with outside legal counsel, has assessed a variety of factors, including (i) the extent of the injuries incurred, (ii) recent experience on the settled claims, (iii) settlement offers made to the other parties to the litigation and (iv) any other factors that may have a material effect on the FiberCel Litigation. While the Company believes its estimated liability to be reasonable, the actual loss amounts are highly variable and are dependent upon the relevant facts and case-by-case resolutions. As more information is learned about asserted claims and potential future trends, adjustments may be made to this Contingent Liability for Legal Proceedings as appropriate. Management believes that it is reasonably possible that the Company could incur liabilities in excess of amounts accrued and the ultimate liability could be material to the Company’s financial position, results of operations and cash flows in the period recognized. The Company, however, is unable to estimate the possible loss or range of loss in excess of the amount recognized at this time.

​

VBM Litigation

​

Since June 2023, the Company has also engaged in a process to negotiate and attempt to resolve many of the cases in the VBM Litigation. In total, through December 31, 2025, settlement agreements have been reached in 16 of the cases and settlement payments of $1.5 million have been made by Elutia, all of which has been paid through insurance proceeds.

​

As of December 31, 2025, the Company has a total liability for VBM Litigation of $4.4 million which is recorded within Contingent Liability for Legal Proceedings in the accompanying consolidated balance sheets. Such liability includes $1.0 million for three cases in which settlements have been reached but had not yet been paid and the remaining 15 cases, including unasserted claims that the Company believes are probable of assertion, and for which an estimation of probable loss is required as of year-end. The expense related to this estimate was recorded within Litigation costs, net in the accompanying consolidated statement of operations, with the entirety of such expense offset by insurance recoveries received or receivable as further described below.

​

In order to reasonably estimate the liability for the unsettled VBM Litigation cases and unasserted claims, the Company, along with outside legal counsel, has assessed a variety of factors, including (i) the extent of the injuries incurred, (ii) recent experience on the settled claims, (iii) settlement offers made to the other parties to the litigation and

(iv) any other factors that may have a material effect on the VBM Litigation. While the Company believes its estimated liability to be reasonable, the actual loss amounts are highly variable and are dependent upon the relevant facts and case-by-case resolutions. As more information is learned about asserted and unasserted claims and potential future trends, adjustments may be made to this Contingent Liability for Legal Proceedings as appropriate. Management believes that it is reasonably possible that the Company could incur liabilities in excess of amounts accrued and the ultimate liability could be material to the Company’s financial position, results of operations and cash flows in the period recognized. The Company, however, is unable to estimate the possible loss or range of loss in excess of the amount recognized at this time.  

​

Defense costs for both the FiberCel Litigation and VBM Litigation are recognized in the accompanying consolidated statements of operations as incurred, with the entirety of such expense related to the VBM Litigation offset by insurance recoveries received or receivable as further described below.

​

Insurance Receivables of Litigation Costs

​

The Company has purchased insurance coverage that, subject to common contract exclusions, provided coverage for the FiberCel Litigation and VBM Litigation product liability losses as well as legal defense costs. When settlements are reached and/or amounts are recorded in the related Contingent Liability for FiberCel Litigation, the Company calculates amounts due to be reimbursed pursuant to the terms of the coverage and related agreements, and pursuant to other indemnity or contribution claims, in respect of product liability losses and related defense costs. The probable amounts of reimbursement or recovery from this calculation are recorded as receivables. The determination that the recorded receivables are probable of collection is based on the terms of agreements reached in respect of indemnity and contribution claims as well as the advice of the Company’s outside legal counsel. These receivables as of both December 31, 2025 and 2024 totaled $4.8 million and are recorded as Insurance Receivables of Litigation Costs in the accompanying consolidated balance sheets.

​

As of December 31, 2025, all amounts recorded as Insurance Receivables of Litigation Costs relate to the VBM Litigation, and additional insurance remains available to cover the future cost of the VBM Litigation and related defense costs. Conversely, the Company has no more insurance to cover the cost of the FiberCel Litigation and the related defense costs.

​

As of both December 31, 2025 and 2024, the Company was not a party to, or aware of, any legal matters or claims with material financial exposure, except for the FiberCel Litigation, VBM Litigation, and the matters involving Medtronic, Tiger and a former supplier.

​