CMS Withdraws Skin Substitute Coverage Determinations, MidMedx and Organogenesis Shares Drop

Shares of makers of wound-care products, including MidMedxand Organogenesis, are under pressure on Friday after the Centers for Medicare & Medicaid Services said in a press release that the Medicare Administrative Contractors are withdrawing the skin substitute Local Coverage Determinations, which were due to become effective on January 1, 2026. Craig-Hallum believes this will likely drive some level of disappointment from investors as the LCDs were considered a positive for MidMedx. Meanwhile, BTIG said the firm is more cautious on Organogenesis after CMS ruling on skin grafts, with its confidence on the stock as 2026 Top Pick now being reduced.BOMBSHELL FROM CMS:Craig-Hallum notes that After market close on December 24, the Centers for Medicare & Medicaid Services released "a bombshell" in the form of a very laconic press release announcing that the Medicare Administrative Contractors are withdrawing the skin substitute Local Coverage Determinations, which were due to become effective on January 1, 2026. Without further explanation given in the press release, investors will be wondering what is going on here, the firm argues, adding that this move is particularly surprising considering CMS released a press release just last week essentially confirming that the LCDs would be going into effect. This will likely drive some level of disappointment from investors as the LCDs were considered a positive for MidMedx, Craig-Hallum adds. The firm has a Buy rating on the shares with a price target of $13.MORE CAUTIOUS:BTIG keeps a Buy rating and $9 price target on Organogenesis but notes that the firm's confidence on the stock as 2026 Top Pick is being reduced. BTIG cites CMS announcing that it would not implement the final Skin-Sub LCDs on January 1, 2026, noting that this unexpected update comes just 9 days after CMS announced that the MACs would be implementing the LCDs but with products classified into 3 categories - covered, non-covered, and 12-month status quo - even though the firm still believes that low-cost providers such as Organogenesis will be best-positioned in the market, the firm tells investors in a research note.PRICE ACTION:Shares of MiMedx have slipped more than 3% to $6.84 on Friday, while Organogenesis' stock has fallen almost 10% to $5.30.