BioStem Technologies, Inc. (OTC: BSEM), a regenerative medicine company specializing in perinatal tissue allografts, announced its financial results for the first quarter ended March 31, 2026. The company generated net revenue of $6.1 million, down from $10.1 million in the fourth quarter of 2025 and $16.0 million in the first quarter of 2025. This decline reflects the ongoing integration of assets acquired from BioTissue and a strategic shift toward the hospital market, which accounted for 87% of total revenue ($5.4 million) during the quarter, with physician office revenue contributing $0.8 million.
Gross profit was $3.8 million, representing a gross margin of 61%, compared to 97% in the prior quarter and 95% in the same period last year. The decrease in margin is attributed to the mix shift toward Neox® and Clarix® products, which are subject to a cost-plus markup under the current manufacturing supply agreement. The company expects gross margin to improve significantly upon completion of the planned manufacturing technology transfer in 2027.
Operating expenses totaled $12.6 million, down from $17.3 million in the fourth quarter of 2025 but up from $9.9 million in the first quarter of 2025. The sequential decline was primarily driven by a bad debt expense recorded in the prior quarter, partially offset by costs related to the acquired workforce and the BioTissue asset transaction. GAAP net loss was ($8.8 million), or ($0.52) per share, compared to net income of $3.9 million, or $0.23 per share, in the first quarter of 2025. Adjusted EBITDA was ($5.7 million), versus $7.8 million in the year-ago period.
Chairman and CEO Jason Matuszewski stated, “The first quarter of 2026 marked the beginning of a strategic transformation for BioStem, as we completed our acquisition of the surgical and wound care assets from BioTissue and repositioned the company as a fully integrated, hospital-focused commercial organization.” He added that the company expanded its presence in hospital-based settings, increased exposure to commercially insured patients, and made progress on key priorities including commercial integration. The company also expanded its direct sales force to 35 representatives, up from 18 at the close of the acquisition, and strengthened its leadership with the appointment of Katherine Gorrell as Chief Legal and Compliance Officer. Additionally, BioStem retired outstanding debt with GMA, resolving two promissory notes with an aggregate principal of $3 million and accrued interest of $2.3 million.
On the capital markets front, BioStem completed audited financial statements for 2024 and 2025 during the first quarter and is progressing toward a planned Nasdaq uplisting. The company expects to provide updates as additional milestones are reached. For full year 2026, BioStem forecasts revenue in the range of $25 million to $29 million. In the second half of the year, the company anticipates sequential growth in the hospital business as integration of the acquired BioTissue assets continues, along with salesforce expansion and execution of its strategic plan. The physician office market is expected to stabilize, contributing to sequential revenue growth in the second half of 2026.
As of March 31, 2026, cash and cash equivalents totaled $13.7 million, compared to $29.5 million at the end of the fourth quarter of 2025. The company's quality management system and standard operating procedures have been reviewed and accredited by the American Association of Tissue Banks (AATB), and its portfolio includes brands such as Neox®, Clarix®, VENDAJE®, and American Amnion™. More information is available on the company's website at www.biostemtechnologies.com.
