Wound Care
If you’re a wound care specialist, the following might sound overly simplified. Send us a message or get onto the Discord if you disagree.
Modern wound care is remarkably fragmented. Dozens of companies claim superior healing with limited clinical evidence. Accelerated pathways allow products onto the market with minimal data. All wounds and skin types are different, and no one knows how a particular wound would have healed without intervention. Ask 10 wound-care doctors how to treat the same ulcer, and you may get 10 different answers.
Normally, wound care would be too niche for us. Then the numbers forced us to pay attention. The industry grew from $256 million in 2019 to more than $10 billion in 2024. That is not incremental growth. That is a meme-stock chart from 2021.
Five years ago, the priciest skin substitute cost about $1,000 per square inch. Today, several products are listed at over $21,000. When you reimburse based on price, people eventually decide that the price should be very high.
Historically, skin substitutes were reimbursed at ASP + 6%. New products had no ASP reference point, so manufacturers simply set whatever number they liked. Six months later, they could rename and relaunch the product, reset the pricing window, and repeat the cycle.
The incentives were clear. Apply large grafts to tiny wounds. Treat minor wounds on patients, unlikely to heal. Repeat the same procedure every week. Sprinkle in a few illegal kickbacks and luxury steak dinners, and the American dream was alive and billing. One Arizona couple managed to rack up $1.2 billion in bills before pleading guilty.
Take a chronic non-healing foot ulcer. A doctor could apply a “skin substitute,” bill Medicare at thousands of dollars per application, repeat weekly, and voilà – the patient might still have the ulcer, but the clinic got a new Porsche.
The 2026 reset
Medicare has noticed this abuse, and starting in 2026, reimbursement of wound care products will be unbundled from reimbursement for the application procedure. With some exceptions, all skin substitutes will now receive a reimbursement of $127.14 per cm2. Over time, Medicare might introduce different prices for different products depending on the approval pathway (PMA, 510(k), or 361 biologics), but for how, $127 per cm2 is the number.
CMS expects total costs to fall by ~90%. Price inflation, weak evidence, and questionable billing were the targets. Public comment periods and uncertainty have already slowed the sector. Providers also seem more focused on explaining their vintage car collections than on treating new patients.
That’s the change we’re flagging. Figuring out how to play it gets a lot more difficult. There is only a handful of pure-play equities in the space.
We’re skeptical that wound care players with large skin replacement portfolios (MDXG, ORGO) can show the kind of earnings in 2026 that won’t scare the market. But listening to their earnings calls, they’ll tell you that the real abuse was among the smaller, private companies, and that they are about to gain market share.
More diversified players like IART market skin substitutes, but they followed the more burdensome PMA regulatory pathway. If CMS introduces tiered pricing by approval type, Integra could be advantaged. If not, they may still absorb the hit better due to scale and product breadth.
Then there’s device manufacturers like Sanuwave (SNWV), which treats wounds through an ultrasound device. Some clinicians love it. Others think it is no better than the standard of care. What is true is that providers are no longer financially incentivized to use the expensive stuff. If half the industry is worried about survival next year, SNWV may suddenly find more willing buyers, distributors, and treatment centers, given that they just had their reimbursement rates confirmed as stable for next year. 2025 might still feel slow, as practitioners either spend their time justifying past billing to auditors or take one last sip of the skin-graft juice.
The simplified takeaway
The golden era of blank-check wound-care billing is ending. 2026 forces an outcome-based market instead of a billing-based one.
Some companies will crash. Some may consolidate and win. A small number could emerge stronger. But they will need products that actually heal wounds, not just reimburse well. And that is where the opportunity lies.