Aziyo Biologics Reports Fourth Quarter and Full Year 2020 Financial Results

Aziyo Biologics Reports Fourth Quarter

and Full Year 2020 Financial Results

SILVER SPRING, Md. - March 1, 2021 - Aziyo

Biologics, Inc. (Nasdaq: AZYO), a commercial-stage regenerative medicine company focused on creating the next generation of differentiated

products and improving outcomes in patients undergoing surgery, today reported financial

results for the fourth quarter and full year ended December 31, 2020.

Financial Highlights

"Despite the unprecedented

landscape of 2020, the Aziyo team made meaningful progress throughout the year, resulting in robust top line revenue growth for

our core products and continued gross margin improvement. We were also successful in driving forward our strategic priorities,

including the advancement of our orthobiologic products and CanGaroo platform, increased clinical data, and the expansion of key

partnerships that we believe will enable us to broaden our reach in the regenerative medicine markets. We have also begun to see

the benefit of our contract manufacturing business, which leverages our operational capabilities and contributes positively to

our bottom line," said Ron Lloyd, Chief Executive Officer. "We look forward to building on this traction, as I am encouraged

that we are taking the steps necessary to foster continued success during 2021 and beyond."

Net sales for the fourth

quarter of 2020 were $12.5 million, an increase of 3%, compared to the fourth quarter of 2019. Core products sales were $10.3 million,

an increase of 10% compared to the fourth quarter of 2019.

Gross profit for the fourth

quarter of 2020 was $6.0 million and gross margin was 48%, as compared to $4.9 million and 41%, respectively, in the corresponding

prior-year period. Gross margin, excluding intangible asset amortization (a measure not presented in accordance with U.S. generally

accepted accounting principles ("GAAP")) was 55% for the fourth quarter of 2020, as compared to 48% in the fourth quarter

of 2019. The increase in gross margin in the fourth quarter of 2020 primarily resulted from growth in our higher-margin proprietary

products and improvements in production and inventory management.

Total operating expenses

were $10.0 million for the fourth quarter of 2020, as compared to $8.1 million in the corresponding prior-year period, representing

an increase of 23%. The increase primarily resulted from costs related to operating as a public company and development costs associated

with our program to add antibiotics to our CanGaroo Envelope.

Net loss was $5.4 million

in the fourth quarter of 2020, as compared to $2.8 million in the corresponding period of the prior year. Loss per share

in the fourth quarter of 2020 was $0.57 per share, compared to a loss of $4.30 per share in the fourth quarter of 2019.

balance as of December 31, 2020 was $39.5 million.

Full Year 2020 Financial

Net sales for the full

year 2020 were $42.7 million, a decline of 0.5% compared to full year 2019 net sales of $42.9 million.

Gross profit for the full

year 2020 was $20.6 million and gross margin was approximately 48%, as compared to $19.8 million and approximately 46% in the prior

year. Gross margin, excluding intangible asset amortization (a non-GAAP financial measure) was approximately 56% for the full year

2020, as compared to 54% in the full year 2019.

Total operating expenses

were $34.2 million for the full year 2020, as compared to $28.2 million in the corresponding prior year, representing an increase

Net loss was $21.8 million

in the full year 2020, as compared to $11.9 million in the prior year. Loss per share in the full year 2020, which includes

the accretion of deemed dividends to the preferred stockholders, was $8.88 per share, compared to a loss of $18.48 per share in

Guidance for Full Year

While COVID-19 continues

to pose a risk of uncertainty to the Company's operating results, Aziyo expects total net sales for the full year 2021 to

range between $50 million and $52 million, representing growth of approximately 17% to 22% compared to total net sales for the

Aziyo will host a conference

call at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time on Monday, March 1, 2021 to discuss its fourth quarter and full year 2020

financial results. The call may be accessed through an operator by calling (833) 665-0667 for domestic callers and (914) 987-7319

for international callers using conference ID number 4158569. A live and archived webcast of the conference call will be available

at https://investors.aziyo.com. The archived replay will be available

until February 28, 2022.

About Aziyo Biologics

Aziyo Biologics is a commercial-stage regenerative medicine

company focused on creating the next generation of differentiated products and improving outcomes in patients undergoing surgery,

concentrating on patients receiving implantable medical devices. Since its founding in 2015, the Company has created a portfolio

of commercial-stage products used in cardiovascular, orthopedic, and reconstructive specialties. For more information, visit www.Aziyo.com.

Forward-Looking Statements

This press release contains

forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the

Securities Exchange Act of 1934, as amended. Forward-looking statements are based on management's current assumptions and

expectations of future events and trends, which affect or may affect the Company's business, strategy, operations or financial

performance, and actual results may differ materially from those expressed or implied in such statements due to numerous risks

and uncertainties. All statements contained in this press release that do not relate to matters of historical fact should be considered

forward-looking statements, including statements and information concerning the Company's anticipated financial performance;

possible or assumed future results of operations, including descriptions of the Company's revenues, profitability, outlook,

guidance for the full year 2021 and overall business strategy and expected success; expectations regarding the Company's

operational position, opportunities and deliverables, goals, strategies, priorities and initiatives, including expectations regarding

the Company's partnerships, pipeline, and anticipated new product launches, including platform opportunities and advancement

with respect to CanGaroo, and the potential results thereof. Forward-looking statements are inherently subject to risks and uncertainties,

some of which cannot be predicted or quantified. Factors that could cause actual results to differ materially from those contemplated

in this press release include, but are not limited to, our ability to enhance our products, expand our product indications and

develop, acquire and commercialize additional product offerings; our dependence on our commercial partners and independent sales

agents to generate a substantial portion of our net sales; our failure to maintain our relationships with our existing contract

manufacturing customers and enter into agreements with new contract manufacturing customers, or if existing contract manufacturing

customers reduce purchases of our products; our ability to successfully expand, manage and maintain our direct sales force; our

ability to achieve or sustain profitability; the adverse impacts of the novel strain of coronavirus disease, COVID-19 or any other

future pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide; adverse changes in general domestic

and global economic conditions and instability and disruption of credit markets, including as a result of the current COVID-19

pandemic or any other outbreak of an infectious disease; physician awareness of the distinctive characteristics, benefits,

safety, clinical efficacy and cost-effectiveness of our products; the continued and future acceptance of our products by the medical

community; our ability to obtain regulatory approval or other marketing authorizations by the FDA and comparable foreign authorities

for our products and product candidates; and our ability to obtain, maintain and adequately protect our intellectual property

rights, and other important factors can be found in the Risk Factors section of Aziyo's public filings with the Securities

and Exchange Commission ("SEC"), including Aziyo's Quarterly Report on Form 10-Q for the quarterly period ended

September 30, 2020, as such factors may be updated from time to time in Aziyo's other

filings with the SEC, including, Aziyo's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 to be filed

with the SEC, accessible on the SEC's website at www.sec.gov and the Investor Relations page of Aziyo's website

at https://investors.aziyo.com. Because forward-looking statements are inherently

subject to risks and uncertainties, you should not rely on these forward-looking statements as predictions of future events. Except

to the extent required by law, the Company undertakes no obligation to update or review any estimate, projection, or forward-looking

statement. Actual results may differ from those set forth in this press release due to the risks and uncertainties inherent in

the Company's business.

AZIYO BIOLOGICS, INC.

(Unaudited, in thousands)

AZIYO BIOLOGICS, INC.