Q3 2025 SI-BONE Inc Earnings Call

Speaker #1: Good afternoon. Welcome to SI-BONE, third quarter, 2025 earnings conference call. At this time, all participants are listening only mode. We'll be facilitating a question-and-answer session towards the end of today's call.

Speaker #1: As a reminder, this call is being recorded for repurposes. I'll now turn the call over to Saqib Iqbal, Vice President, FP&A Investor Relations at SI-BONE, for a few introductory comments.

Speaker #1: Please go ahead.

Speaker #2: Earlier today, SI-BONE released financial results for the quarter-ended, September 30th, , 2025. A copy of the press release is available on the company's website.

Speaker #2: Before we begin, I'd like to remind you that management's remarks today may include forward-looking statements. Within the meeting of Federal Securities Laws, which are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

Speaker #2: These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, such as our most recent Form 10-K and actual results may defer materially from any forward-looking statements that we make today.

Speaker #2: Accordingly, you should not place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements except as required by law.

Speaker #2: During the call, management may also discuss certain non-GAAP measures including the company's adjusted EBITDA results. Unless otherwise noted, any reference to profitability is in terms of positive adjusted EBITDA.

Speaker #2: For a reconciliation of these non-GAAP measures to GAAP accounting, please see the company's full earnings release issued earlier today. Unless otherwise noted, all results are compared to the comparable period in the prior year, with that I'll turn the call over to Laura.

Based on the CMS proposal, we expect the transitional pass through or CPT payment for granite, including a zero dollar device offset to be extended for calendar year 2026.

The <unk> enables facilities to use granite in the outpatient setting and be reimbursed for the full cost of the implants for Medicare patients.

Additionally, the proposed level seven ADC payment of nearly $28000 would compensate hospitals for complex multilevel spine fusion procedures performed on an outpatient basis.

This change should benefit our business is less complexity generative procedures, where granite would be used migrate to lower cost outpatient facilities.

In 2024, we continued to advance innovation with the development of Ice's torque TNT we.

We believe this breakthrough technology will transform the treatment paradigm for patients with sacral insufficiency fractures and nearly $300 million market opportunity.

Since launch TNT has contributed to the three fold increase in the number of trauma surgeons using our solutions.

Given the strong clinical reception multiple large national distributor networks have expressed interest in partnering with us and expanding access to this technology.

On the reimbursement front and new technology add on payment earn tap took effect on October one this.

<unk> of more than $4100 represents up to a 30% increase in hospital reimbursement for pelvic fracture fixation and Medicare patients.

The large untapped market improved reimbursement and growing distributor network positions TNT to be a significant contributor to our growth for the next several years.

Finally, we made meaningful headway on our third breakthrough device, which incorporates much of our engineering and biomechanical learnings from our broader portfolio.

We expect to finalize the design in the coming months, followed by comprehensive testing and validation in the first half of 2026.

We remain on track to submit our five 10-K application for FDA approval in the second half of 2026 with the potential to commercialize as early as the end of 2026.

We believe this revolutionary solution can become the standard of care for addressing one of the most pressing needs in spine surgery.

We have an extensive pipeline of novel technologies under development and we expect to launch several solutions over the next five years to address poor bone quality.

We're enthusiastic about the impact of the expanding platform on the long term growth trajectory of the company.

Next let's move on to physician engagement.

In the third quarter, approximately 1530 physicians performed procedures, using our solutions, representing a 27% year over year increase.

This growth was driven by double digit expansion across all call points.

We added 330 physicians in the quarter, which marks the largest quarterly increase in the Companys history.

We expect this growth to continue based on the interest in our expanding platform across the diverse group of practicing physicians.

Additionally, our academic training program is cultivating the next generation of advocates.

We also saw a 25% increase in the number of physicians performing more than one procedure type.

Of the physicians, who completed an Si joint fusion procedure in the quarter only 25% of them performed at least one other procedure types.

We have a huge opportunity to continue driving procedure density with our sizable Si joint fusion physician base as we expand the application of granite and degenerative spine procedures.

Furthermore, we continue to see physicians, who stay with us longer perform more procedures.

Physicians, who are active in both the third quarter of 2025 in the prior year performed more than twice as many cases per physician compare to those who are active only in the current quarter.

These dynamics demonstrate that our expanding procedure platform is not only attracting new physicians, but also deepening engagement among our existing physicians.

Looking ahead with the significant degenerative spine opportunity for granite the launch of our new Si joint dysfunction solution early next year and the anticipated introduction of our third breakthrough device in late 2026, we expect physician density to become an increasingly important growth driver.

Now, let's turn to commercial execution.

Our trailing 12 month average revenue per territory was $2 1 million.

Up 16%.

This marked our 12th consecutive quarter of double digit growth in territory productivity.

We ended the quarter with 88 quota carrying territory managers up from 85 in the last quarter as we expand our platform and deepen penetration within existing accounts, we plan to increase the number of territories over the next year the growth in the number of territories and the expansion of a hybrid network wound.

Sure we capitalize on the sizable market opportunity ahead of us.

Before I hand, it over to onshore I'd like to congratulate all my <unk> colleagues on recently completing 135000 procedures.

Thank you for your relentless pursuit of best in class technologies that address unmet clinical needs.

Which have helped improve the lives of these patients.

With a vast untapped market opportunity and our pipeline of innovative solutions under development, we're going to be able to help hundreds of thousands more in the years to come.

With that I'll, let onshore provide an update on our fourth key priority operational excellence and share our third quarter results and updated guidance in more detail.

Thanks, Laura Good afternoon, everyone. My comments today will highlight the impact of our continued operational excellence.

Third quarter revenue growth.

Profitability and liquidity.

I will then walk through our full year guidance.

All the comparisons provided will be against the prior year period.

Noted otherwise.

Starting with revenue growth.

Our worldwide revenue was $48 7 million in the third quarter representing growth of 26%.

U S revenue was $46 4 million, representing 21, 2% growth driven by procedural volume growth of over 22%.

We continue to benefit from broad based demand with volume across all modalities growing at double digit rates.

International revenue in the quarter was $2 3 million, representing 10, 2% growth.

Based on physician enthusiasm and adoption trend observed in the initial months.

We expect talk to accelerate international growth in 2026.

We are actively pursuing regulatory clearance to commercialize additional products across several international markets, which will have a meaningful impact on international growth in 2027 and beyond.

Moving to profitability.

Our gross profit was $38 8 million, an increase of $6 9 million or 21, 8%.

Gross margin was 79, 8%.

Standing by 75 basis points year over year.

We were able to absorb the higher instrument depreciation and freight costs associated with increased revenue by maintaining our disciplined pricing strategy and.

Ongoing supply chain optimization initiatives.

And overall margin expansion.

Our operating expenses were $44 2 million, an increase of $4 7 million or 11, 9%.

The increase reflects our growth related investments and higher commission from increased revenue.

As well as elevated G&A spending.

We're pleased with the one seven times operating leverage in the quarter, which underscores the strength.

<unk> and scalability of our business model.

Our net loss narrowed to $4 6 million or <unk> 11 per diluted share compared to a net loss of $6 6 million or <unk> 16 per diluted share.

We delivered positive adjusted EBITDA of $2 3 million for the quarter.

Which translates to an adjusted EBITDA margin of approximately 5%.

For the trailing 12 months ended September we delivered positive adjusted EBITDA of $5 7 million.

A dramatic improvement from an adjusted EBITDA loss of $11 $7 million in the comparable prior year period.

Our improvement in profitability over the last 12 months validates our strategy.

We can deliver industry leading growth.

Invest in innovation and do so while expanding profitability.

This momentum gives us confidence as we look ahead to sustaining profitable growth.

Turning to liquidity.

In the third quarter.

We were breakeven on net cash flow basis, and ended the quarter with $145 $7 million in cash and marketable securities.

This was our second consecutive quarter of net cash flow breakeven.

We are proud to have achieved another major cash flow milestone in the third quarter generating.

Generating $2 3 million cash from operating activities.

The earlier than expected inflection in cash flow from operating activities reinforces our confidence in achieving positive free cash flow in 2026.

Year to date, our net cash consumption was $4 3 million.

Compared to a net cash consumption of $15 2 million for the comparable prior year period.

This represents a 72% reduction in cash consumption.

This substantial improvement is an outcome of our increasing scale and asset light business model.

We continue to invest in building surgical capacity.

While remaining focused on working capital efficiency.

Our improving profitability.

Bind with the inflection on cash flow.

Physicians up to self fund our innovation.

Advanced our deep pipeline of novel technologies that address additional unmet needs and consistently deliver robust growth.

Now, let me provide an update on our outlook for 2025.

We're updating our full year revenue guidance to range between $198 million to $200 million.

This implies year over year growth of approximately 18% to 20% as compared to the previous guidance of approximately 17% to 18%.

Given the durability of our gross margin we are now expecting the full year gross margin to be at 79, 5%.

We're maintaining our annual operating expense growth guidance at 10% at the midpoint of the revenue range.

With that I will turn the call over to Laura.

Thanks, and so we're encouraged by the momentum we see and remain focused on outperformance as we exit 2025.

Going into 2026, we're confident in our ability to sustain strong topline growth expand margins and inflect on free cash flow. This.

This confidence is driven by the substantial adoption runway for our current portfolio, our promising pipeline of new products and continued disciplined execution.

After pioneering the Si joint space, we expanded our addressable market by adding new applications of our technology and expertise developing solutions for compromised bone.

Today, we have built a durable innovation engine capable of funding and developing a broadening array of solutions that help more patients and deliver long term value for shareholders.

With that we're happy to answer your questions operator.

Thank you at this time, we will conduct a question answer session.

Reminder, to ask a question you will need to press star one on your telephone and wait for your name to be announced to charter a question. Please press star one again, please standby, while we compile the Q&A roster.

And our first question comes from the line of Patrick Wood from Morgan Stanley. Your line is now open.

Beautiful thanks, so much guys.

I'd love to start on the physician density side of things just because you mentioned it and I guess, there's kind of two components to that.

One.

As we go into next year in the bag gets larger let's say do you think is going to be a halo effect between the different product categories in that side of things.

Does the demand across the groups and then two like how should we think about operating leverage you've always been super disciplined with the reps.

Expansion outside how do we think about leverage down the P&L and then the kind of halo effects between a broader offering for us have done in totality.

Thanks, Patrick good question.

Physician density is actually a very important focus point for us.

And just given how much our platform has expanded that's really.

Very large opportunity for us so we've obviously broadened out our platform.

From just Si joint fusion to pelvic fixation, and now pelvic brain fractures as well and as we said.

I think only around 25% of Rsi joint Surgeons are currently performing another procedure types. So theres a lot of opportunity for us to grow just by increasing the use of our technology Cross platform.

In addition, we have a product roadmap and we've talked about a couple of different.

Products that were going to launch in 2026.

And one of those in particular will be provided another opportunity to further deepen that relationship with our surgeons. We also talked a little bit about if surgeons are regularly performing our procedures. For example, those surgeons that performed a procedure in this last quarter versus a year ago that they're doing around double the number of procedures.

So all of those things really do point to this opportunity to significantly increase physician density in the coming years.

We're also obviously growing the number of physicians that were working with in a significant way 27% growth in the quarter was a record 330 additional positions were added during the quarter. So.

We have around.

12000.

The opportunity with the number of surgeons that we can potentially target for various procedure type and so we're really just a short way into this whole journey.

Now the last question you asked was more on the leverage side and certainly by growing density.

We have the opportunity for further leverage and I'll have onshore talk a little bit more about that yeah.

Thanks, Laura Patrick Nice to connect in terms of operating leverage in our business. If you look at the midpoint of our guide for the revenue.

Opex growth for the year, you're sort of tracking to about $1. One nine times operating leverage at that midpoint, So really pleased with.

The strong operating leverage in recent years, which is an outcome of our strong revenue growth.

Predominantly the 20 plus percent growth that we've been able to demonstrate.

Over the last several years and just the operational excellence and disciplined.

That's come into the business as well now when you think about.

Operating leverage going forward.

Priority does remain to deliver that strong topline growth.

At or above the levels, we delivered in the last several years.

And.

As we've shared previously we do anticipate operating leverage to sort of a range between let's say one to five and 175 times. So.

Revenue growth outpacing Opex school in that range.

There'll be some natural variation depending on the phase of investments we are in.

Where we are in a product launch cycle.

But we feel pretty good about sort of that leverage and even if you assume an average leverage of one five times that should be able to drive pretty significant margin expansion overtime.

Super Thanks, Angella Thanks, Laura.

Thank you one moment for our next question.

Our next question comes from the line of Killen Roberts of Canaccord Genuity. Your line is now open.

Hi, Congrats on a great quarter and thanks for taking the questions.

I guess just to start off on guidance you raised the midpoint of guidance a little bit more than the beat this quarter can you just talk through the philosophy for the update here and if there are any early signs of momentum into Q4.

Yeah, I'm happy to at least give it a start I'll talk about the quarter and then I'll have onshore talk a little bit more about the guidance philosophy. We're obviously very pleased with how we performed in the quarter, 21% revenue growth overall seeing a nice reacceleration of our international growth with the launch it to work is.

Well so both of those things bode well I think just to highlight if you think about how we've grown since our IPO in 2018, we have consistently delivered over 20% annual revenue growth.

And it's really a.

An outcome of US building this comprehensive platform starting with the Si joint fusion market, but then just leveraging our technological expertise to expand into these high growth adjacent markets as well in terms of the growth in the quarter I did mentioned it was broad based.

We're seeing the top line momentum dropping to the bottom line with our adjusted EBITDA and net cash flow breakeven.

And it really does highlight the differentiated high margin asset light business model that we have here.

So when.

When we started to think about our guidance for the remainder of the year and then thinking about 2026, we always take a thoughtful approach, but it's based on the knowledge of the continued growth and that we have consistently seen since we've been a public company and I will have onshore will talk a little bit more.

More about the details of the guidance, yes, thanks, Caitlin for the question.

When it comes to guidance, let me just wanted a few key points.

First as you know, we maintain a very thoughtful approach to guidance.

Just to provide some perspective, we started the year with guidance of 192, 5% to $195 5 million and our current updated guidance with 198 to 200 million. So what you've seen is continued outperformance, including the nearly or over four percentage point outperformance in the third quarter as well.

Second again aligned with our philosophy, our updated top end of the guidance incorporates only the $2 million of outperformance in the third quarter.

Which is generally how we've done whatever results both bulk performed by we've put in up in our guidance.

As well so I think being continued thoughtful there is important for US now on the question on the what we're seeing coming into the fourth quarter.

I'd like to highlight it.

7%, both inactive physician base right. So that's significant position momentum coming into the quarter third quarter.

<unk>.

We already have October in the bag and it was a very strong October and the momentum trends in November are also looking very strong. So net net we do expect <unk> to be another strong quarter, but I just want to remind you that it is versus the tougher comp with a very comparable portfolio. So even with that we're feeling.

Really great about the setup in Q4.

That's great and maybe just another quick one.

We generated cash again in Q3 any updates to the cash burn expectations for the rest of the I know you've talked about a little bit of a cash burn expectation for the second half last quarter, but any updates to that.

Yes, so again, Caitlin really really pleased with how.

The strong growth the inflection in profitability.

Discipline on working capital efficiencies translated into our second consecutive quarter of net cash flow breakeven and more importantly, our first quarter of positive cash flow from operating activities now as we get into the fourth quarter like we had said in our prior earnings call. We do expect to use a little bit of cash in the fourth quarter.

That is just based on building up surgical capacity and also building up some capacity for the new product that Laura talked about that we expect to launch in Q1 of next year.

So again really good about where the business is headed from a cash flow standpoint.

Getting increasingly confident there'll being able to get to free cash flow at some point in 2026, as well and then self fund our growth and investment in innovation going forward.

Awesome, Thanks for taking the questions.

Thank you moment for our next question.

Our next question comes from the line of Matthew O'brien of Piper Sandler. Your line is now open.

Okay.

Great. Thanks for taking my question so Laura.

You mentioned all of these different areas, where we're seeing a lot of momentum I mean that physician number in the quarter was unbelievable.

The reimbursement updates et cetera, when I look at the Street I don't want I don't want guidance here for 26, right now, but I look at the street, we're modeling more like mid teens growth next year, I guess why wouldn't it be.

The upper upper teens growth if not better for next year is there something specifically.

That you would call out.

All of this momentum Youre seeing an expanding sales force et cetera, and then I do have a follow up thanks.

I think it's a really good question, we did really have a very strong quarter in a lot of different ways and some of those forward looking metrics give us a lot of confidence on.

Where we're headed as well in Q4 and beyond.

But the way that we're thinking about things from a 2026 perspective is we feel pretty comfortable with where the current consensus is that.

You talked about some of the things that are going to benefit us next year. This combination of favorable reimbursement changes in 2026 were re accelerating our international growth from torque and those are tailwind. Then there is also what I would say is actually.

It'll upside.

That will be based on the timing and the ramp of new products as well so.

Like I said, feeling comfortable with where we're at from a current consensus perspective believe that we have upside based upon the launch of new products as well, but as we always are being very thoughtful about.

How we're setting expectations.

Okay appreciate that and then onshore the gross margin.

Topic came up a lot coming out of Q2 was really strong in Q3 versus expectations.

Durable our gross margins and then I think we had expected them to be down pretty meaningfully in 2006 is is that not the case anymore will these new products way on those on that metric and how do we think about gross margins going forward. Thanks.

So coming into this year, our gross margin expectations are between 77%, 78% and our close to 79, 5%.

We have not only exceeded our gross margin guidance, but also improved our margins year over year.

From disciplined execution and benefit from several operational initiatives. So.

We're starting to feel a little bit more confident about the durability of those gross margin, but look theyre going to be a little bit dynamic over the next few years, given the active pipeline of products.

Over the medium term.

We now expect gross margins due to sort of stabilize around that 78%, 75% area, which is much better than what we had previously expected and part of that is the.

The durability that we're seeing in our gross margin most of that gross margin change in the future years will be driven by the increase in non cash items like depreciation from expansion of surgical capacity.

What would offset that go is the potential for any future implant trade and planned cost reduction initiatives, which has not been incorporated in sort of that 78% expectation going forward.

And then lastly, I would leave you with is as we scale.

And expand our GAAP and non-GAAP operating profit will become more important for us. So youll continue to see us invest in surgical capacity and new products, because we know they can meaningfully accelerates our revenue growth.

And we expect any pressure on the gross margins to be offset by the significant operating leverage we see in the rest of the P&L.

Thank you.

Thank you one moment for our next question.

Our next question comes from the line of Travis Steed of Bank of America. Your line is now open.

Hey, this is Greg <unk> on for Tavis, Thanks for taking the question and congrats on a great quarter My.

My first question I, just wanted to ask about if theres any more directional color that you maybe wanted to give an increasing territories for the next year.

Thank you.

Yeah, I'm happy to answer that question in terms of our territory productivity as you can see we have been dramatically increasing territory productivity over the last three years and what we've done is we've developed this.

Hybrid model that includes our our territory managers senior quota carrying territory managers and then we added junior reps our territory Representatives to support both territory managers and then in addition, we actually have added a significant number of third party.

<unk> agents that carry our products to and so what's happened is if you look at the territory productivity over these last few years, we've more than doubled that territory productivity and now at around $2 $1 million in and productivity at this point.

In terms of how we are thinking about the future.

What we want to do is make sure that we are walking a line in order to continue to to first and foremost drive continued growth and penetration into the market. While also using this hybrid approach.

No, we're not giving out specific numbers at this point in time, but what we are doing is.

Being thoughtful as we add territory managers.

And we always kind of thought of that.

The range that we're in currently being able to continue to add to that number I think we're at 88 as of the end of the third quarter.

And judicious lead to those numbers in the next year in order to drive the growth of the business. The only thing I would add there Grace's what we've shared publicly is we want to get to 100 territories over the next 12 to 18 months. So that still remains the target for US and then concurrently we expect to grow our hybrid.

As well as we add more agents to our network as well.

The expansion of that commercial footprint is in anticipation of the demand that we're seeing for the existing platform, but also preparing for the new product launches in the next year.

One of which will allow us to increase adoption within Si joint dysfunction space and the other one is gaurav talked about a third breakthrough device, which is targeting a whole new tam with the existing cohort.

Okay. Thank you.

And then just to follow up a little.

On the last question you, obviously had a great performance and saw didn't see the typical seasonality that you would normally see in Q3 and I think a couple of.

Other people in the spine space has agreed with that just wanted to see if there is.

Anything to call in the market or if you're really sort of offsetting what you would typically see in procedures with that strength in uptake in products. Thank you.

I would say greater than a lot of that is specific to our Si bone. The typical seasonality is there in.

This number with patients and physicians, taking vacations, but what we have been focusing on is how do we execute through that part of that has been.

Making sure that we're putting out surgical capacity, making sure we're engaging physicians across multiple modalities driving sort of that adoption curve across all our call point and what you've seen is a combination of the continued demand in the Si joint dysfunction space, where we've seen double digit volume growth double digit <unk>.

<unk> growth in the quarter. Once again the continued benefit from Grad at 95 that is driving adoption with a granted for both deformity and degenerative spine incrementally and then finally, our G&P product which drove.

Almost a threefold increase in positions that were doing procedures in the quarter on the trauma side. So.

A lot of that is just the execution by our commercial team and just the focus on making sure.

We have the capacity to drive adoption.

Okay. Thank you.

Thank you Malone for next question.

Our next question comes from the line of young Li of Jefferies. Your line is now open.

Alright, great. Thanks for taking my question.

So I mean.

You added a lot of surgeons. So this quarter of 330 I think around three.

300 <unk>.

Orderly basis for the year.

<unk> been over the past two years Youre, probably about maybe in the low two hundreds range from wanting to hear a little bit more about.

What are the biggest drivers for those assets.

<unk> been getting whether it's.

Private practices academic.

Or.

New surgeons versus.

People that have recently graduated from fellowships or privately traded ones coming back.

Thanks for the question young it's really all of the above so what we've seen is pretty broad based.

Growth and that's how we're hitting the numbers that we are so we're now at a 100 500 excuse me 1530 active physicians just in the quarter alone.

And that was 27% growth you're right. It was 330 surgeons that we added year over year and that is the largest increase we've ever had.

I think part of it is just we have expanded the number of physicians that we are.

That we are targeting currently so we started out with spine surgeons around 7500 spine surgeons.

That we have been targeting and Theres a couple of ways that we're reaching the spine surgeons one is with continuing to expand.

The number of surgeons doing Si joint fusion procedures first of all.

And then secondly, those that are interested in doing these adjacent procedures.

In most cases, they are doing pelvic fixation with our granite product if they're using a second modality, but some are also using our solutions for pelvic bring fractures too. So so we continue to further penetrate the surgeon base in those ways.

In addition, the expansion into intervention, we did talk a little bit about that in our prepared remarks, and the number of procedures done by by those.

<unk> doubled year over year, so it actually added to the total addressable market that we were going after we think that there are around 4500 interventional lists that are that are potential targets to perform S. Si joint fusion procedures.

And so if you add it all up there is around 12000 physicians and to be honest I'm, not even including the.

General Ortho trauma surgeons that are also starting to do our TNT procedure as well so we have a pretty significant.

Number of targets that are out there we have a lot more that we can penetrate so it really provides a very nice ups upside for us what we're trying to do at the same time, though is to make sure that we're focusing our sales team and our direct sales force is very heavily focused on.

Si joint fusion, while we do get assistance from third party agents with pelvic fixation and more and more with pelvic bring fracture too so.

Balance that were striking in order to go after a very large number of targets, while also doing that inefficient way.

Alright, great very helpful.

I guess.

Another question.

On your comment on the new product pipeline over the next five years was kind of curious if you can.

Sure a little bit about how much that can expand your.

Market Tam.

The almost $5 million and Youll procedures currently.

Yeah. It's a good it's a good question and right now what we're doing is we're talking more broadly about it we're certainly getting into more details in terms of.

2026, specifically and the first product that were talking about launching in Q1 is an si joint fusion product in its targeted toward.

Physicians that are performing procedures in ambulatory surgical centers. So it's continuing to help us to penetrate that large opportunity with that Si joint fusion.

Which is a big part of that half a million Tam that you just mentioned the second product that we're going to launch in 2026th However, it really does have a significant impact on growing the Tam even further and I won't get into details, but what we're really trying to do is address one of the most pressing needs in spine.

<unk> using our core competencies from an innovation perspective to create.

Create that innovative solution to address this unmet clinical needs. So so that's how we're thinking about 2026 and then as we think about the broader pipeline. It's really more around this concept that we've been talking about are compromised bone.

We started.

Si bone, we started an Si joint fusion why is that relevant to compromise down because the bone in the sacrum is tends to be some of the poorest quality bone in the body. So we've been developing solutions since the inception of the company around core bone quality and so what we're going to do is continue to apply those in ways that.

Focus is on our current call points to address this unmet clinical need.

So more to come on that in 2026th but hopefully that gives you a flavor.

Alright, Thank you very much.

Thank you one moment for our next question.

Our next question comes from the line of Ross Osborne of Cantor Fitzgerald Your line now open.

Hey, Thanks for taking our questions and congrats on the quarter and.

And apologies if I missed this but how does the ASP trend during the quarter.

Yes happy to do that.

Ross on the ASB, sorry, Ralph as you can see our U S volume growth was around 22%, so and the revenue growth was a little north of 21% so modest.

ASP impact in the quarter most.

Most of that was driven by procedure mix.

Our overall implant.

It's quite stable so.

As we've always said, we we start the year and as we progress through the year, we make conservative assumptions on Asp's just.

Because of how the portfolio is evolving several of our procedures use.

To your more implants, but in trauma and indeed, Jan you will generally use anywhere if you wanted to implant so that can impact the ESP, but overall very pleased with how the ESP is trending.

We're seeing good traction in granite, especially with multiple important pieces, so more than two implants per procedure and that brings the coral.

Here as well.

Okay, Great and then for a second question would you remind us the breadth of your torque European launch to date, and then touch on how Youre thinking about next year does the game plan to drive deeper penetration within existing geographies or beginning adding new regions.

Yeah. So <unk> is really just started in the E U.

As Youre, probably aware the earlier months in the quarter July and August in Europe tend to be quieter months.

And so we've really just started to see the momentum in September.

And so what we would what we would expect is.

To see that continue to build in Q4 as well as into 2026.

Internationally, it's just a small percentage of our business, but we do see it as an important market and if you think about how we built the business there they had only been selling IQ <unk>.

While ICU since the inception of the company and then <unk> has been on the market for seven years. So it was really important for us to put to work out there and and become a meaningful accelerator for growth. So we are very optimistic given the early torque adoption that we've seen and as I said it was real.

More of the months of September where we were truly started to see the impact.

And do expect for it to be a meaningful contributor in 2026, and then we're also evaluating the potential for other products across various international markets.

Now that we've gone through that whole <unk> process in particular.

It is a it is a cumbersome process. It does give us the ability to take some of our other products internationally as well. So we're excited to do that and see the long term potential of our <unk> business to drive growth.

Thank you.

Thank you one moment for our next question.

Our next question comes from the line of David Saxon of Needham <unk> Company. Your line is now open.

Great. Good afternoon, Thanks for taking my questions and congrats on another strong quarter here. So I wanted to ask on the TNT and tap So would love to hear how you guys are thinking about that as it relates to TNT adoption and then.

I believe that just became effective in October so.

Any trends you would call out.

After that effective date that kind of gives you confidence in that ramp.

Yeah. Thanks for the question David.

Yes.

We're pretty excited about the end tab in particular, so it was effective as of October <unk>, it's around $4100 that translates to up to 30% improvement in reimbursement in the hospital setting for pelvic fracture for Medicare patients. So.

So we do think that this is an important driver.

And more importantly, PNC is considered one of the most exciting innovations in trauma in recent history. There. There. It is just another example of our ability to develop a unique anatomies specific solution that addresses an unmet clinical need.

And so I think the and tap is important in terms of making sure that the health economics are appropriate there, but in addition from an adoption perspective with the ramp ahead of US what's really important is to see.

The expansion of the further expansion of our commercial footprint here and I mentioned.

With an earlier question, how we're thinking about continuing to grow our business while focus our sales team and so what we're doing is we're fielding inbound interest right now from multiple large national distributors that want to partner with us and expand access to the technology and these are distributors.

That have a footprint specifically in trauma. So it's another way for us to leverage.

Our hybrid model in order to capture the opportunity that's here, while also being efficient and continuing to gain operating leverage in our business.

Okay, great. Thanks for that and then maybe entre one for you and I'm not sure if I'm really going to get an answer here, but just on the longer term profitability.

You are 5% EBITDA margin now.

Yeah.

You guys have talked about kind of your capital light model as it relates to longer term profitability like do you think <unk> can be more or less profitable than kind of a traditional spine company.

Yes, so let's just start with our business model David first we look at unmet clinical needs second we come up with unique solutions that can carry high ESP.

Third because.

We don't focus on the two products, we can leverage some of this hybrid commercial infrastructure, Laura talked about and get.

P&L leverage.

And then our asset like model, where because of the high ASP low footprint of our trees and influence that allows us to get a lot of leverage on the working capital side as well because these are really unique to our si bone and sort of differentiate us from what people see traditional spine.

So I'm going to give that backdrop, then when you think about the future.

Focus remains to deliver the revenue growth at or above the levels that we've demonstrated we've got a huge tam that's untapped.

New products on the horizon that will further expand the Tam as well.

So.

We think that revenue growth is what's going to drive leverage down on a prior question I did talk about some of the operating leverage in the business.

Ranging between 125 times to 175 times.

Depending on where we are in the investment cycle, but even with that.

Kind of leverage you see margin expansions at a pretty healthy clip in the outer years.

So we're not going to put an anchor on what that EBITDA margin or adjusted EBITDA margins should be but we know that with the business model that we have that topline growth can translate into pretty good expansion there.

David I think that's a great.

And that you're asking to end and if you just look at what we've been able to accomplish to date in terms of being at the revenue levels that we're at being adjusted EBITDA profitable for the last few quarters, starting to see an inflection on cash we just look very different from a lot of the work.

<unk> or find companies that are out there with with our asset light model. So I really do think it's worth highlighting that and reinforcing how important that is and if it's not just talk where you can see it in the results that we've shown in terms of bottom line and cash flow.

Great. Thanks.

Thanks, so much.

Thank you one moment for our next question.

Our next question comes from the line of Richard <unk> of <unk> Securities. Your line is now open.

Alright, Thank you for taking the questions.

Ravi here for rich if I could.

I want to kind of follow on to that profit question. Laura you said youre kind of comfortable with where the street is for next year.

So, let's just say you were able to outperform that.

Should we think about the kind of like the high end of that 175 being the case or.

Kind of given the comments on being able to self fund R&D kind of from the cash flow of operations.

The thing that we're all trying to get at is how quickly.

And EBITDA is flat for this company given the growth seems to be sustaining at a pretty nice trajectory here and Paul. Thank you.

Yes.

So I can take this question.

From a leverage back when going into next year, let Laura said we're comfortable.

Where consensus is on the revenue side now we do have two big launches next year and and there is a lot of.

R&D work going on to be able to get those products commercialized.

One in the first quarter and the second one commercialize as early as potentially end of 2026, so what I would say is.

You should expect leverage to be a little bit on the lower end of that range that I mentioned in the one five to 175 times. So maybe in the one three times range at the consensus revenue numbers right now from 2006 now that leverage does grow at a pretty.

<unk> systemically.

These new products start to contribute meaningfully to revenue in 2728 and 29.

And I think that's very consistent with our focus on growing our way to profitability right. We have a very significant growth opportunity here with these two products coming out in 2026, and we want to lean into them, while still being cognizant of the bottom line and cash flow.

Great. Thanks, very much and then maybe one on the interventional. His comments I think you mentioned 45 4500 docs doing Si joint cases. So this is an area at least from our checks we picked up some significant interest from conventional pain docs do these cases.

Understand a little bit maybe the trade offs between that call point and the others in kind of the customers that you go again to see.

Who is actually going to be doing these cases, I guess, what we're trying to figure out.

How market expansionary and could that be or are you kind of just moving the case from one doctor to the other and then I guess the last question would be.

Regarding the products coming out next year, it sounds like kind of given your trajectory.

Is there any sort of special coding or payment or reimbursement terms that we should be looking for as these things get closer to launch. Thanks.

Yeah, great there's a lot there.

But let me let me start on the interventional side at least so we were definitely pleased with the level of engagement with intervention with the 4500 physician number I gave was really the entire universe of targets and so what we initially did was we went after around a thousand of them.

The physicians, who were already regularly performing surgical procedures and and so we've been really pleased with what we're seeing is that as as time goes on we're seeing deeper and deeper penetration into that 4500, there's a lot of interest by interface.

Interventional spine physician to perform well.

Dangerous and specifically Si joint procedures, and more and more of them are becoming comfortable and being trained appropriately to do that so it is a very significant expansion opportunity and our Si joint fusion business and we believe that we have the products a bit.

Ah Ah can.

Appeal to different positions and we also we really have the strongest commercial infrastructure here.

Other thing you asked about is is whether it's just taking business away. The intervention list that we have been working with have been in areas, where there are not physicians are already performing the procedure or specifically spine surgeons performing the procedure. So it is additive to our surgeon last.

Our led business and as I said comprehensive portfolio and gives us a lot of confidence that this is gonna be a growth driver. You also asked about reimbursement and CMS proposed a 17% increase in the payment for Si joint fusion procedures performed in office and our.

Intra product, we believe is the leading percutaneous.

Si joint fusion procedure done in office based labs, so that reimbursement effective January one we believe is a nice tailwind for us.

And then more broadly you were asking about new products.

And reimbursement there.

If I talk about new products is the product that we're going to launch towards the end of 2026 is a breakthrough device and so we will be seeking a new technology add on payment for.

That particular technology as well so a lot of tailwind that we have in the business with new products with reimbursement with a new call point, that's additive here that really bode well for the business in 2026 and beyond.

Yeah.

Okay.

Thank you I'm showing no further questions at this time.

Turning it over to Laura for closing comments.

I just want to thank everybody for participating in the call today and also really appreciate your interest in Si bone, we look forward to seeing you all at upcoming conferences. Thank you goodbye.

Yeah.

Thank you for your participation in today's conference. This concludes the program you may now disconnect.