Stock market today: Stocks fall as investors rotate out of tech into Jackson Hole
MARIETTA, Ga. - The Centers for Medicare and Medicaid Services (CMS) has proposed a significant change to skin substitute reimbursement in its CY 2026 Physician Fee Schedule proposal, according to a statement from MiMedx Group, Inc. (NASDAQ:MDXG), a profitable healthcare company with an impressive 82% gross margin and strong financial health according to InvestingPro analysis.
The proposal, published Monday, would replace the current Average Sales Price (ASP) methodology with a fixed price of $125.38 per square centimeter for all skin substitutes, regardless of product type.
The proposed change comes amid concerns about market practices and rapidly increasing Medicare expenditures. According to the statement, Medicare spending for skin substitutes in private office and associated care settings increased from approximately $1.5 billion in 2022 to nearly $10 billion in 2024.
"Reform in this category is long overdue," said Joseph H. Capper, MiMedx Chief Executive Officer, in the press release. He referenced "unsavory business practices" in the skin substitute market, noting recent enforcement actions in the sector. Despite market challenges, InvestingPro data shows MiMedx maintains robust financial health with a current ratio of 4.7, indicating strong liquidity. The stock currently appears undervalued based on InvestingPro’s Fair Value analysis.
The public comment period for the proposal will remain open until September 13, 2025, with implementation scheduled for January 1, 2026.
The proposal is part of broader changes affecting the skin substitute market, including the Wasteful and Inappropriate Service Reduction (WISeR) model and pending Local Coverage Determinations, both also set for implementation on January 1, 2026.
The CY 2026 Hospital Outpatient Prospective Payment System, while referenced in the Physician Fee Schedule, has not yet been published but is also expected to be implemented on January 1, 2026.
MiMedx indicated it would discuss the proposal’s implications during its upcoming second quarter earnings call, scheduled for August 5, 2025. For deeper insights into MDXG’s financial health and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.
In other recent news, MiMedx Group reported its first-quarter earnings for 2025, meeting analyst expectations with an earnings per share of $0.06 and surpassing revenue forecasts with $88.2 million. This reflects a 4% year-over-year growth in net sales, driven by a 16% increase in surgical sales, though wound sales declined by 2%. Meanwhile, the Centers for Medicare & Medicaid Services (CMS) proposed significant changes to Medicare reimbursement policies for skin substitutes, which could impact MiMedx’s business model. The proposal suggests treating these products as "incident-to supplies," potentially reducing spending on them by nearly 90%. Cantor Fitzgerald has reiterated its Overweight rating on MiMedx, maintaining a price target of $11.00, indicating confidence in the company’s outlook despite these changes. BTIG analyst Ryan Zimmerman noted that the CMS proposal might lead to market consolidation and a clean-up, although he described the initial market reaction as harsh. Additionally, MiMedx anticipates high single-digit revenue growth for the full year, with expectations of higher growth rates in the second half of 2025. The company remains focused on advocating for Medicare reform while continuing to innovate and expand its product portfolio.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.