Q3 2025 Tenon Medical Inc Earnings Call
Speaker #1: Greetings and welcome to the Tenon Medical financial results and corporate update conference call. As a reminder, this call is being President and Chief Executive Financial Officer.
Speaker #1: Mr. Foster and Mr. Williamson will present results of quarter ended September 30th, operations for the third 2025, and provide Q3, 2025 Officer, and Kevin Williamson, Chief recorded.
Speaker #1: results was released today and is available update. Relations—excuse me—Investor Relations A press release detailing these Your hosts today are Steve Foster, section of our company's website at www.tenonmed.com.
Speaker #1: Before we begin the formal presentation, I'd like to remind everyone that statements made on the call, as well as predictions, estimates, and other information provided in the webcasts, may include forward-looking information.
Speaker #1: While these forward-looking statements represent our current judgment on what the differ materially. You are cause actual results to cautioned not to place undue reliance on these to risks and uncertainties that could our opinions only as the date of this presentation.
Speaker #1: Please keep in mind we are future holds, they are subject not obligating ourselves to revise or publicly release the results of any revision to these forward-looking forward-looking statements which reflect statements in light of new information or future events.
Speaker #1: For a more complete discussion of these factors and other risks, you should review our quarterly and Securities and Exchange Commission at call over to Tenon Medical's Chief Executive Officer, Steven Foster.
Speaker #1: For a more complete discussion of these factors and other risks, you should review our quarterly and annual reports on file with the Securities and Exchange Commission, as well as our earnings call. Tenon Medical's Chief Executive Officer, Steven Foster.
Speaker #2: Thank you, Rob, and good afternoon, everyone. I'm pleased to welcome you to 2025 financial results and corporate update
Speaker #2: very exciting time for Tenon progress is really showing through sir. in our financial momentum in executing our strategic growth initiatives. We today's third quarter achieved record revenue of $1.2 million with a Medical.
Speaker #2: 32% increase compared to the The third quarter was a same period last Medical. year. This performance was results, our results demonstrate significant In the first quarter, where our fueled by unprecedented CADMRAM procedure volumes, underscoring strong demand and growing adoption among physicians.
Speaker #2: Additionally, the integration of the Cyvanish portfolio contributed meaningfully to our expansion strategy, enhancing our top-line growth and early delivery. These results affirm the strength of our commercial execution and the increasing recognition of our differentiated solutions in the marketplace.
Speaker #2: earnings conference call, and in line with our commitment to advancing innovation we completed a strategic and expanding our market presence, asset acquisition of As discussed during our second quarter Cyvanish's Symmetry and Symmetry Plus sacroiliac joint fusion technologies during the third quarter.
Speaker #2: marks a pivotal milestone in our growth This transaction strategy, transforming Tenon into a multi-product, multi-approach company capable of of sacral pelvic fixation and addressing a broader spectrum fusion needs.
Speaker #2: platform brings a well-established The Symmetry clinical foundation and a complementing our existing CADMRAM system. differentiated approach to fusion, Importantly, this acquisition has been immediately accretive to revenue and enhances our ability to serve a wider range of We also welcome key members of the physicians and patients.
Speaker #2: Cyvanish leadership team, whose deep experience and expertise will be instrumental in accelerating our commercial execution and driving continued innovation. I'd like to quickly acknowledge the efforts of the newly combined team, for efficiently coming together as one, aggressively competing integration activities, and delivering a strong quarter.
Speaker #2: Another key milestone this quarter was the full CADMRAM FE joint fusion commercial launch of our system, which expands our implant position in the sacroiliac joint fusion market.
Speaker #2: portfolio and strengthens our competitive The CADMRAM FE features a reduced profile, offering physicians greater flexibility when treating anatomy or performing revision patients with smaller SI joint minimally invasive inferior posterior approach, and includes a proprietary instrument set with multiple drilling options catering to a diverse surgical preferences.
Speaker #2: Backed by expanded inventory and field support, bolstered by our recent Cyvanish acquisition, we are well positioned to meet growing market demand. With over 1,000 CADMRAM devices implanted to date, the system continues to demonstrate procedures.
Speaker #2: strong clinical performance across a range of indications, dysfunction, revision, and adjunctive including primary SI joint applications in fusions. The successful transition from alpha testing to full launch reflects our commitment to innovation and our ability complex multilevel spine to execute with speed and This precision.
Speaker #2: During the quarter, we were proud to share that the second peer-reviewed publication from our ongoing main sales study was safety, efficacy, and durability released.
Speaker #2: of CADMRAM SI joint fusion system. This prospective multi-center clinical trial evaluated patients' This further validated the outcomes in patients with sacroiliac joint disruptions or degenerative sacroiliitis treated with our 12-month data from the first statistically significant improvements in CADMRAM implant.
Speaker #2: reported no serious adverse events, reoperations, or reinterventions in 83% of patients expressed high outcomes. These results reinforce the CADMRAM system's clinical satisfaction with their value and support its role as a reliable, minimally invasive solution for SI joint dysfunction.
Speaker #2: As titanium implants, a robust joint decorticator, and a simplified bone graft delivery system. These enhancements are designed to support authentic arthrodesis through a minimally invasive lateral approach, rooted in established orthopedic fusion principles.
Speaker #2: findings will be instrumental in evidence base, we believe these payer coverage that supports our long-term growth. Subsequent to quarter end, we announced a major regulatory milestone with the FDA driving broader adoption and clearance of our Symmetry Plus 510K we continue to build our clinical builds on the proven foundation of the original Symmetry system and introduces several key advancements, including 3D printed SI joint fusion system.
Speaker #2: With this distinct minimally invasive surgical clearance, Tenon now offers two approaches. Lateral and inferior posterior, through our Symmetry Plus and CADMRAM systems, respectively. This multi-platform strategy significantly strengthens our competitive position and enables physicians to tailor treatment to individual patient anatomy and pathology.
Speaker #2: We're prepared for an alpha launch of Symmetry Plus in the coming weeks. A select group of physician users whose feedback will guide our broader market introduction will be the first to use the technology.
Speaker #2: This milestone not only expands our portfolio but also reinforces our commitment to delivering durable, clinically validated outcomes for patients suffering from sacroiliac joint dysfunction.
Speaker #2: Physician education remains a top priority. In the third quarter, we hosted 26 physicians in various Tenon workshops, including critical peer-to-peer engagements. We ended the quarter with 3.4 million in cash and no debt.
Speaker #2: Subsequent to quarter end, we bolstered our cash position with a $2.85 million pipe financing, primarily consisting of investment from industry partners, giving us the flexibility to continue executing our strategic roadmap with confidence.
Speaker #2: Looking ahead, we remain focused on driving adoption across our expanded product portfolio and leveraging recent regulatory and clinical milestones to support commercial growth. With a strong foundation in place, we're confident in our ability to scale operations and deepen market penetration and deliver continued value in the quarters to come.
Speaker #2: We are actively onboarding sales professionals to the Tenon commercial team through a strategic hybrid structure. And we're already seeing the momentum build into the fourth quarter.
Speaker #2: Driven by the expansion of our commercial footprint and the increased horsepower of our sales organization, and with that, I'll turn the call over to Kevin to discuss our financials in detail.
Speaker #2: Thank you, Steve. I will now provide a summarized review of our financial results. A full breakdown is available in our press release that crossed the wire this afternoon.
Speaker #2: Revenue for the third quarter of 2025 was $1.2 million. An increase of 32.3% compared to 0.9 million in the same period last year. Revenue for the nine months ended September 30, 2025, was $2.5 million.
Speaker #2: In line with $2.5 million in the nine months ended September 30, 2024, the increase in the third quarter revenue was primarily driven by an increase in the number of surgical procedures in which the CADMRAM system was used, as well as the addition of sales in the last two months of the quarter from the newly acquired Symmetry SI joint fusion system.
Speaker #2: The demand for both CADMRAM and Symmetry increased throughout the quarter and has continued into the fourth quarter. Gross profit was $0.8 million, or 66% of revenue, in the third quarter of 2025.
Speaker #2: Compared to $0.4 million or 47% in the prior year quarter, for the nine months ended September 30, 2025, gross profit was $1.3 million, or 54% of revenue, compared to $1.4 million or 54% of revenue, for the previous year's period.
Speaker #2: Gross margin for the quarter improved due to higher revenue absorbing fixed overhead costs in our cost of goods sold. With a similar margin profile for both Symmetry and CADMRAM, we expect our gross margin to continue to improve as revenue increases and fixed overhead costs are further absorbed.
Speaker #2: Operating expenses totaled $4.2 million in the third quarter of 2025, up from $3.6 million in the prior year period. For the nine months ended September 30, 2025, operating expenses totaled $11.3 million, compared to $12 million in the prior year period.
Speaker #2: The increase in operating expenses for the quarter was primarily due to higher sales expenses driven by higher revenue and related variable commission expenses, as well as higher marketing and G&A expenses driven by integration efforts in relation to the side manage acquisition.
Speaker #2: The decrease in operating expenses in the nine months was driven by lower fixed expenses including lower stock-based compensation, across several operating categories. Net loss for the third quarter was $3.3 million, or 40 cents per share, compared to a net loss of $3.2 million, or $3.63 per share, in the third quarter of 2024.
Speaker #2: For the nine months ended September 30, 2025, net loss was $9.7 million, compared to $10.6 million in the same year-ago period. The year-over-year improvement was largely driven by reduced operating expenses and lower fixed costs, raising operational leverage.
Speaker #2: We ended the quarter with $3.4 million in cash and cash equivalents, compared to $6.5 million as of December 31, 2024. Subsequent to quarter-end Tenon raised an additional $2.85 million in cash to fund future growth initiatives through a pipe financing.
Speaker #2: The pipe was led by an industry-supported investor cohort that believes in the strategic vision of Tenon and the growth opportunity in front of us.
Speaker #2: Additionally, Tenon had no outstanding debt as of quarter-end. Further positioning the company to continue executing on our strategic initiatives including the development and launch of the side manage assets continuing to build clinical evidence and expanding our commercial footprint.
Speaker #2: In summary, we believe the transformational steps taken this quarter both financially and strategically position Tenon well to accelerate growth while maintaining a lean and focused cost structure and driving long-term shareholder value.
Speaker #2: I'll now hand the call back to Steve for closing.
Speaker #2: comments. Thank
Speaker #3: you, Kevin. In summary, the third quarter was marked by strong execution across our strategic priorities from second from record revenue growth and the successful integration of the side vantage acquisition.
Speaker #3: To the full market launch of CADMRAM SE and key regulatory and clinical milestones. We remain focused on expanding our portfolio deepening position engagement and building a robust foundation for sustained growth.
Speaker #3: With momentum building across our commercial and clinical initiatives, we are confident in our ability to drive long-term value for patients, providers, and shareholders. I thank you all for attending and I'd like to hand the call back over to our operator to begin question and answer session with our covering analysts.
Speaker #3: Rob?
Speaker #4: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad.
Speaker #4: A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue.
Speaker #4: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.
Speaker #4: Our first question comes from Scott Henry with AGP. Please proceed with your
Speaker #4: question. Thank
Speaker #5: you. And good afternoon, it's exciting to see the company come together. As it approaches greater scale, a couple of questions. First, could you comment on over-the-product revenues?
Speaker #5: How much was the kind of base side vantage revenues? Of the $1.2
Speaker #5: million?
Speaker #3: Thank you, Scott. I
Speaker #3: appreciate the question. Yes, so we're obviously early. We had two months of side vantage product contribution, if you will, to the top line, right?
Speaker #3: In the third quarter, we closed right around August 1st, the transaction itself. So primary, the primary driver of our revenue was record CADMRAM procedures and what have you.
Speaker #3: We did a little over a million of close to a million one in CADMRAM revenue, and the rest of the revenue was early symmetry activity.
Speaker #3: Keep in mind that the symmetry activity is based, what I refer to as base symmetry technology. We're just now in the coming week or two going to initiate the symmetry plus alpha to start seeing revenue build from symmetry plus here going
Speaker #3: forward. Okay,
Speaker #5: great. And obviously, sequentially in fourth quarter, you'll get another month of the base side vantage revenues. You'll get the symmetry plus contribution even if it's small at that point.
Speaker #5: But would you expect CADMRAM to grow sequentially from third quarter 25 to fourth quarter 25?
Speaker #3: We do. Look, the drivers behind CADMRAM are data. The main sales data continuing to come out show that CADMRAM is delivering on its promises.
Speaker #3: So, we do expect CADMRAM activity, number of surgical procedures, etc., to continue to grow. And, to your point, we'll get the extra month of Side Vantage activity in the full fourth quarter. Frankly, what means more to us is this initial phase of the alpha launch of Symmetry Plus.
Speaker #3: We have physicians who are really excited about getting their hands on that technology. We anticipate it'll be a good growth driver as we move through alpha.
Speaker #5: Okay, great. And when we think about the symmetry plus alpha launch, how should I think about that? Should I think of that as like a pilot launch at first, or is that a full-scale launch?
Speaker #5: Just trying to get a sense of how that launch will evolve over the next 6 to 12 months.
Speaker #3: Yeah, I appreciate that question. Absolutely. It's the physicians that informed us and partnered with us to give us feedback on what they wanted the system to do, etc.
Speaker #3: will be the first users of the technology. So it's a relatively small and focused group in the first, call it 60 days to 90 days of the alpha.
Speaker #3: Then we get feedback and make absolutely sure, hey, is everything working as expected? Are refinements required? Are there tweaks required, etc.? To make sure this is ready for prime time, if you will, and to go to a broader audience.
Speaker #3: And at that point, we'll start expanding things pretty aggressively. So it's exactly what you said, right? It's a bit of a pilot, if you will, for a short period of time to make sure we got everything right and that the instruments and the implants are meeting expectations.
Speaker #5: Okay, great. And just the final question, perhaps for Kevin, G&A do you think third quarter's reflective of what we'll start to see on a quarterly basis, or I know you'll have another month of side vantage, but it looks like maybe there were some one-time stuff in there as well.
Speaker #5: Should we be thinking about 2.1, 2.2 million a quarter?
Speaker #3: Yeah, good question, Scott. And fair on both of your comments. So, a little bit of some one-time, more integration-type expenses in there, but also some increased expenses going forward.
Speaker #3: So probably somewhere just south of that number we posted here in Q3. But closer to that number than where we were previously, given the some of the increased expenses going
Speaker #3: forward. Okay, great.
Speaker #5: Thank you for that color. And thank you, guys, for...
Speaker #3: Thank you, Scott.
Speaker #1: As a remark, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions.
Speaker #1: Our next question comes from Thomas McGovern with Maxim Group. Please proceed with your question.
Speaker #6: Thank you. Yeah, so it sounds like you guys are well on your way to integrating side vantage. I just want to get maybe an update on how that process is going.
Speaker #6: Is it fully done? Are there additional milestones you're looking to achieve in this integration process? Maybe just kind of high level how you view it moving into the fourth quarter.
Speaker #3: Yeah, thanks for the question, Thomas. Yeah, look, I'm really proud. I mentioned it in the prepared statements here, and we'll reinforce it here. Lived through a lot of integrations.
Speaker #3: Bringing people together and getting them to, if you will, take the risk to dive in, to trust each other, to get after it, and start performing as one is really the biggest challenge in these integrations, right?
Speaker #3: And I'm just really, really pleased with the progress that we've made. Sure, there's all kinds of stuff to do. The audit itself, it's just some of the tactical stuff that has to be done as part of an integration.
Speaker #3: But it's really about winning hearts and minds. And this team is coming together really nicely as one, and starting to check all the boxes so we can perform as an integrated team going forward.
Speaker #3: So just super, super proud of the work that's being done. Kevin can comment a little bit, but I think largely we are finished now.
Speaker #3: And a good indicator of that, probably the best indicator of that, is bringing the symmetry plus alpha in on time. And executing on that in the course of all the integration activities going on.
Speaker #3: We'll initiate that here this month, and we're super excited about seeing what symmetry plus can do out there with physicians that prefer a lateral approach.
Speaker #3: So all of those things are coming together, Thomas. And I'm just really thankful to the side vantage folks, the tenon folks coming together and becoming the new tenon.
Speaker #3: It really has been a pleasure to work with.
Speaker #3: everybody. Great.
Speaker #1: I appreciate
Speaker #1: that. Apologies
Speaker #3: there. I can just quickly add, to keep in mind, even though this was a business combination, we really acquired just the assets of side vantage.
Speaker #3: So integrating the assets, the inventories, the into our quality system, and into our commercial team was really the main focus. And obviously, a focus on launching symmetry plus as we acquired those products right before this launch coming up here in the coming weeks.
Speaker #3: And then integrating the customer base, the physician base, and the distributor base to continue and accelerate sales. So, I think we feel very good about how that played out throughout the quarter.
Speaker #3: And how we're rolling up here so far in
Speaker #3: Q4. Great.
Speaker #6: Glad to hear it. And again, thank you guys for answering that. Next question for me: you guys mentioned adding commercial sales professionals. So just curious if you could maybe quantify, just give us an idea of the scope of these headcount additions.
Speaker #6: And then maybe a little bit more on kind of how you guys plan to balance marketing for Catamaran versus side vantage and symmetry plus?
Speaker #6: Are there going to be specialized salespeople for specific products, or are these going to be cross-trained salespeople? Just kind of give us an idea of your strategies as you move
Speaker #6: forward. Excellent.
Speaker #3: Yeah. So first to the scope. Of commercial additions, right? So one of the many upsides to the side vantage activity in the transaction that we did is onboarding some really key commercial members.
Speaker #3: Nate Growy, White Guys, really experienced people that come on board that have an entire network of relationships through their years of experience, etc. It's going to greatly enhance what we're doing out there.
Speaker #3: We're committed to a hybrid commercial structure, meaning we'll be engaging independent distributors and 1099 resources and that'll be managed by our direct sales management team led by Nate Growy as our chief commercial officer.
Speaker #3: So we see the scope of that continuing to grow really quickly. Onboarding these distributors and getting them trained, etc. To your second question, these folks will be informed and trained across Tenon and all of our products in the portfolio, right?
Speaker #3: What we want to be able to do is present ourselves to a physician as having a tool bag that will allow them to choose what they prefer in treating patients with these sacral pelvic disorders.
Speaker #3: Right? They prefer lateral approaches. We want to have the state-of-the-art solution for what they're looking for. If they prefer an inferior posterior approach, we have that with Catamaran, etc.
Speaker #3: And what we rally around, Thomas, are the principles of an authentic fusion, right? You'll see all of these products. Check the boxes, AO principles, of Arthrodesis, right?
Speaker #3: We don't dance around that topic. We don't just put a screw in and say, "There." These are technologies surgical techniques and instruments that deliver across those requirements.
Speaker #3: So the distributors that we're interfacing with rally around those principles. And they will be trained on all aspects of what tenon has to offer.
Speaker #6: Understood. I appreciate the thorough response there. And last thing for me, you guys highlighted again your clinical data. Obviously, great in terms of not only educating physicians, but also pursuing additional payer coverage decisions.
Speaker #6: So, just curious, how are you weighting that as you're looking at several commercial ramp-ups, the commercial pilot program or the pilot launch, if you will, of Symmetry Plus?
Speaker #6: How do you balance your focus on that, expanding headcount and integration along with using this data to pursue additional payer coverage? Just kind of want to understand how you're stacking your priorities maybe in the next several months.
Speaker #3: Yeah, sure. So the priorities were more strategic in the last two to three years as it related to engaging the process and making sure big picture coding issues were addressed.
Speaker #3: And that codes became clear so that things could be done accurately out in the field. That's fantastic. But if you have a medical device technology, it has to be backed by prospective data in order for it to be accepted in most cases and covered by the private payers in particular.
Speaker #3: And so we're in that stage now with the publication of the Catamaran data with the data that the data set that's in place for symmetry technology.
Speaker #3: We can have a very thorough discussion with private payers and commercial payers and make sure these technologies are recognized and covered within their policies.
Speaker #3: So there's a great deal of work going on there. It's not the fastest work in the world. I wish it was, but it's not.
Speaker #3: But working through all of that takes time and effort from a focused group. But that's a separate group from our commercial organization. Our commercial organization is really focused on engaging physicians providing world-class training opportunities for them so they can be fully informed of world-class peer-to-peer opportunities so they can learn from physicians.
Speaker #3: Who have adopted these technologies, etc. That's really a separate set of activities. Thomas. And so really, we're doing those things in parallel out there and really one's not prioritized over the other.
Speaker #3: both equally important and exceedingly They're important to drive our opportunities to grow going forward.
Speaker #6: Got it. Well, thanks for answering all my questions and congrats on the quarter, I
Speaker #6: guess.
Speaker #3: Thanks,
Speaker #3: Thomas. We have reached the end
Speaker #1: now like to turn the call back over to Steven of the question and answer session. I'd Foster for closing
Speaker #3: Thank you, Rob. I'd like to thank each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress and growth.
Speaker #3: If for some reason we were unable to answer any of your questions, please reach out to our IR firm, MZ Group. We'll be more than happy to assist.
Speaker #3: And with that, I wish everybody a good evening.