Good morning, everyone, and thank you for joining us at the Canaccord Genuity MedTech and Diagnostics Conference. My name is Caitlin Roberts, and I am one of the MedTech analysts here at Canaccord Genuity. With us today is MiMedx, a regenerative medicine company with a portfolio of amniotic and umbilical tissue-based technologies for wound care and surgical recovery. With me today are MiMedx's CFO, Doug Rice, and Head of IR, Matt Notarianni. We will start here with a presentation. If there is any time, we will leave a few minutes for Q&A, but otherwise, we will have Doug here to present. Before we begin, I want to remind everyone of any relevant disclosures, which can be found on our conference and our firm website. With that, I will turn it over to management.
Thank you. Thanks for the introduction, Caitlin, and thank you to you and your Canaccord team for the invitation to present the MiMedx story today at this conference. Welcome to you all. I am Doug Rice. I am the Chief Financial Officer at MiMedx, and pleased to update everybody on the MiMedx story this morning. Before I begin, I want to caution you that today my comments will include forward-looking statements as well as Non-GAAP measures. I would refer you to our SEC filings and the GAAP to Non-GAAP reconciliation tables that we have available in our press releases and on our website. With that out of the way, I would like to introduce or reintroduce MiMedx.
It has been a while since we have had the opportunity to be in front of many of you, and a lot about our business has changed, and it will continue to change as we head into 2027 with our pending near-term acquisition of Sanara. Before diving into the story of 2026 and setting the stage for 2027, I want to provide some context around who MiMedx is organically today. We are a regenerative medicine company with a singular focus, helping humans heal. That is our company's why statement and drives everything we do across our surgical and wound franchises. We have an expanding surgical footprint that has become 2/3 Of our revenue base and has been gaining momentum with our existing expanding product offering over the last several years.
In the advanced wound care space, we are truly an industry pioneer with our innovative placental tissue offering, which is backed by our robust IP and the largest compendium of scientific and clinical evidence in the industry. Our team has strong financial discipline, having right-sized our infrastructure earlier this year, enabling a swing back to positive adjusted EBITDA and positive free cash flow in the third quarter with $121 million of cash and no debt at the end of the third quarter. We think the investment rationale can be broken down into the following five pillars, which I will go into some more detail covering in the next several slides. Taken together, we see this as a compelling case for our company, and we are bullish about our future. First, we are addressing a large growing collection of surgical subspecialties or markets.
There are nearly 100 million surgical procedures a year in the U.S., and we aspirationally believe that our products could be used in all of them in some way. Our competitive moat is important, and it's underpinned by a broad IP portfolio, a robust vertically integrated mature supply chain, broad commercial reach, and leading payer coverage. We're in the process of acquiring Sanara MedTech, another regenerative medicine business that significantly accelerates our surgical footprint, revenue base, and opportunity for continued growth. In the first year of our combination, we believe that this deal turns us into roughly a $400 million top-line surgical-led company with greater than 20% adjusted EBITDA margins, and we believe this makes us the largest truly dedicated regenerative medicine company in this space.
Our leadership team is very experienced in this landscape, and the group has scaled and integrated other MedTech businesses before, bringing a solid track record of execution. Finally, we have built a strong balance sheet that has provided our ability to facilitate financing for our pending Sanara acquisition, which also enabled other strategic opportunities like our share repurchase earlier this year. First, let me start with where we are as of two weeks ago with some quick comments on our third quarter results. We delivered net sales of $62 million in the quarter, of which 2/3 came from our surgical franchise, which grew 9% in dollars and mid-teens in volume year-over-year. We continue to benefit from above-market growth in our particulate lineup. Our mature wound franchise has been hit particularly hard in 2026 due to clumsy Medicare reimbursement reforms.
Despite the challenging year-over-year comparisons, we have seen promising signs that we are taking share in this setting that patients are seeking care in. We recently received confirmation through the 2027 PFS and OPPS, which sets rates for Medicare reimbursement in private office and outpatient settings, that the 2026 reform measures remain status quo for next year. Structurally, our P&L is solid and is anchored by a gross margin of 80% in Q3, and our cost discipline resulted in significant sequential swing in adjusted EBITDA for the quarter. Outside of the P&L, we've been pleased to report a recent favorable court ruling surrounding one of our surgical products, AXIOFILL, and recently also announced a structured $25 million settlement with a wound care competitor around IP infringement allegations.
With this standalone backdrop, I'd like to now spend a little time talking about our pending acquisition of Sanara MedTech, which we first announced alongside our second quarter results in late July. Before jumping into the specifics, we view Sanara as an incredibly promising accelerator of our strategic objectives, with a business that has a terrific surgical product lineup, attractive financial profile, and meaningful new product pipeline. The deal provides immediate accretion to both our revenue growth and our financial profile. Sanara's business is 100% operating room focused today. On a combined basis, its existing revenue base, coupled with our surgical franchise, would represent about three-quarters of the total combined company revenue.
Sanara is pursuing a series of addressable markets that we don't play in today, and as a result, the acquisition helps us to unlock over $4 billion in incremental addressable markets, including differentiated no-rinse irrigation and bone fixation products. Our combination with Sanara strengthens our product offering with a leading particulate product, a broader overall portfolio, and an innovative R&D pipeline that is completely aligned with our surgical ambitions. A little more here on Sanara. This is over a $100 million revenue business with incredibly attractive gross margins and improving adjusted EBITDA margins. The commercial engine we look forward to leveraging is comprised of several hundred third-party agents, and with its product offering, the prepare, promote, protect framework means that Sanara seeks to have one or more products that can be used at multiple steps of the same procedure, potentially growing share of wallet within a given surgery.
Adding our leading franchise to this mix only strengthens this sales pitch. We have talked about the strong business alignment that makes this deal such good sense for us, but to reiterate, Sanara expands our product offering with differentiated, innovative regenerative medicine technologies. We gain access to significant commercial scale through the company's agent networks. The deal is immediately accretive to our revenue growth and profitability, and the team is incredibly talented. We have really enjoyed getting to know the Sanara team over the last few months, which has also confirmed our belief in the cultural fit with this combination.
This next slide covers the transaction detail some, but the punchline here is that we have all the requisite approvals that we need, with the exception of the FTC, and we are working constructively with that agency through their Second Request, with the goal of completing the acquisition as quickly as possible. We believe Sanara's business is a terrific fit with our existing regenerative medicine business, and I'd like to walk you through our company and the opportunities we're pursuing on a standalone basis. Starting with the surgical opportunity. There are over 91 million surgical procedures in the U.S. every year, and around 25% of these are in general surgery alone. The opportunity for using our products in these procedures is significant.
Our surgical business generated $40 million of top line in the third quarter and continues to generate double-digit volume growth and continues to benefit from the expansion of evidence articulating compelling beneficial health outcomes and cost and complication avoidance for a growing number of procedures. We have been actively expanding our surgical offerings inorganically as well, with HELIOGEN and G4Derm Plus, which have been additive to that growth profile. Additionally, we have two 510(k) submissions at FDA right now for surgical innovations that we are excited to bring to market in the near term. I mentioned the studies we have collaborated with leading surgeons on to help make compelling arguments in the surgical community supporting the use of our products, and this is a great example. Anastomotic leaks are one of the most feared complications in GI surgery.
The consequences can be bad for everyone, the surgeon, the hospital, and most importantly, the patient. In published data, patients who receive our AMNIOFIX grafts had leak rates lower by roughly half and almost equivalent reduction in 30-day hospital readmissions. That is the sort of evidence that we think resonates with surgeons and hospital value analysis committees. Fewer complications, fewer readmissions, using a product that represents an ounce of prevention worth a pound of cure. Our team, in collaboration with leading surgeons across subspecialties, continues to churn out studies and publications that similarly resonate in other disciplines. This remains a core focus area for the company and one that we will look to accelerate as we bring new innovations to the market, like our 510(k) products and the Sanara portfolio. I want to spend some time on our wound franchise as well.
As I mentioned, the wound industry has seen a complete overhaul this year due to Medicare reimbursement changes implemented effective January 1st. While that has dramatically reduced spending and made the recovery non-linear, the punchline remains that chronic and hard-to-heal wounds remain large and a growing problem for the aging population, and our products, which we believe are the most studied human placental allografts in the world, are very efficacious. We combine our portfolio of evidence with a vertically integrated national tissue supply network, a best-in-class manufacturing process, and a number of tools to make it easier for our customers to do business with us. On the research front, publications for our wound products were recognized by the MACs for being among the best in the industry last year, and we continue to expand that library of data. Our RCT for EPIEFFECT is expected to publish later this year.
Our legacy in the regenerative medicine space has enabled us to fully integrate our tissue processing, beginning with C-section deliveries through our donor recovery network. As I mentioned before, our IP portfolio is very strong, as evidenced by our recent infringement settlement with a competitor. Finally, we are customer-centric with support services, and we believe alleviating administrative burdens can be a real differentiator in this chaotic marketplace. Our CEO, Joe Capper, has focused the company on two strategic priorities that serve as our North Star: keep innovating across platforms and keep shifting our mix towards surgical, which is more durable and growing faster. Despite the turbulence that we have experienced, particularly in the wound market, we have executed these initiatives to drive growth and a return to positive cash flow this year. We believe the acquisition of Sanara accelerates our achievement of these objectives.
Our management team has built, scaled, and integrated med tech businesses before across large and smaller companies, and this combination of med tech experience is the right fit for us to achieve the goals we have set out. To wrap up, there are three things I would like you to take away. First, the Medicare reimbursement reset in wound is behind us, and while the recovery in this market has been very sluggish, our Q3 results represented an important inflection point, with margins and adjusted EBITDA improving significantly. Second, surgical is now our engine, and we believe that the pending combination with Sanara will soon make us a $400 million top-line, three-quarters of which will be surgical company with greater than 20% EBITDA margins.
Third, we're weathering the storm in wound and forging ahead in surgical from a position of strength, strong cash position, positive free cash flow, committed financing, and IP that's generating cash. We think that's a very different MiMedx than many of you remember. Thank you again for your time today. Caitlin, thank you.
Just on the wound care environment, was there anything from a strategy perspective that you've had to change over the year as the implementation has gone into place, or has that not?
We've changed. The question is, has the wound reset impacted our strategies and operating plans? And yes, they have. We reorganized our company earlier this year to better align with where we believe the markets were going from a wound perspective. The new dynamic is encouraging patients to migrate into the wound care center. We were excited to continue to see increased year-over-year volume growth in that care setting, and our strategies are taking effect, and there doesn't look to be much change next year, but we believe that we're still a leader there and are positioned to win. Thank you.