Operator: Welcome to BONESUPPORT Q3 2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing #5 on their telephone keypad. Now I will hand the conference over to CEO Torbjörn Sköld and CFO Håkan Johansson. Please go ahead.
Torbjörn Sköld: Thank you, operator. Welcome, everyone, to BONESUPPORT's Q3 2026 results call. My name is Torbjörn Sköld, CEO of BONESUPPORT. With me here today is our Chief Financial Officer, Håkan Johansson, and our Chief Medical Officer, Dr. Diefenbeck. Together, we will use the next 30 minutes to guide you through the Q3 presentation and then open the line for questions. Slide two. Before starting the presentation, I would like to draw your attention to the disclaimers covering any forward-looking statements we will make today.
Torbjörn Sköld: Let's look at the financial and operational highlights of the quarter. Q3 reflected solid execution across the business. Net sales came in at 409 million SEK, corresponding to a growth at constant exchange rates of 38% versus Q3 2025. Reported growth was 39%, showing that the currency impact on our figures for the quarter has decreased compared to previous quarters.
Torbjörn Sköld: Our adjusted operating result, excluding incentive program effects, was 139 million SEK, corresponding to an adjusted operating margin of 34%. Reported operating result was 123 million SEK. We saw another quarter of solid cash generation, with operating cash flow reaching 138 million SEK. After the ongoing share buyback program, this resulted in a cash position of 510 million SEK at quarter end.
Torbjörn Sköld: After a period of significant commercial investments, it's encouraging to see the strong operating margin together with the continued strong cash flow as a confirmation of the ability of our business model. We continue to see strong traction for CERAMENT G in the US, with sales reaching 288 million SEK for the quarter, compared with 192 million SEK in Q3 2025.
Torbjörn Sköld: In Europe and rest of the world, we saw solid momentum across all markets and segments, with a growth of 34% at constant exchange rates compared to Q3 2025. The most important event of the quarter was the publication of the SOLARIO study in the New England Journal of Medicine. The study shows that the duration of systemic antibiotic treatment can be reduced significantly without compromising treatment outcomes when local antibiotic therapy is used as part of the surgical treatment.
Torbjörn Sköld: Dr. Diefenbeck will give an overview of what this study shows and why we believe it is a very important milestone and a game changer for patients. During the quarter, important progress was made in the regulatory process for CERAMENT V within the framework of the De Novo process. The supplemental data package requested by the FDA was submitted in September.
Torbjörn Sköld: If granted market authorization, CERAMENT V will constitute an entirely new product category, like CERAMENT G in 2022. Just as in the review of the De Novo application for CERAMENT G, both CDER, Center for Drug Evaluation and Research, and Center for Devices and Radiological Health, are involved, and the lead review team, which sorts under Center for Devices and Radiological Health, remains the same as during the 510(k) process.
Torbjörn Sköld: The dialogue with the agency is constructed, and we look forward to the continued review. In Q3, US CMS confirmed improved reimbursement for the use of CERAMENT G in orthopedic infection surgery, and more specific identification codes for CERAMENT G and CERAMENT V once approved by FDA. Progress on Cerament with antibiotics for spine continues to be solid.
Torbjörn Sköld: The Cerament BVF launch is on track, and the preparations for the studies on antibiotic-eluting Cerament follow plan, an important step as we continue expanding our portfolio of indications and applications. Now, let's move on to the sales development. The chart shows total last 12 months reported sales in SEK by quarter since 2019 in stacked bars per region and product category.
Torbjörn Sköld: As you can see, the launch momentum for CERAMENT G in the US is strong, and Europe has accelerated in the last five quarters. Given that we keep bringing new, strong clinical studies and opening up new market segments and new indications, a product like CERAMENT G will remain in launch phase for many years to come.
Torbjörn Sköld: However, throughout 2025 and in the first half of 2026, we have seen strong influence from the USD to SEK depreciation, which influences the optics of the graph, but not the in-market performance, as you will see in Håkan Johansson's slides later in the presentation. Last 12 months growth in Q3 of 25% in the graph corresponds to an even stronger 31% at constant exchange rates. US Cerament BVF last 12 months sales were flat year over year at constant exchange rate.
Torbjörn Sköld: In total, antibiotic-eluting Cerament grew 39% last 12 months at constant exchange rates. In US, sales amount to 344 million SEK, representing growth of 39% at constant exchange rates. We continue to experience strong growth of CERAMENT G, driven by both increased access through new accounts and new surgeons, as well as wider adoption among existing users.
Torbjörn Sköld: We see growth from all three prioritized market segments, foot and ankle, trauma, and arthroplasty. In Q3, US CMS, Centers for Medicare and Medicaid Services, confirmed its proposed ruling, a full fiscal year 2027 IPPS, Inpatient Prospective Payment System, including changes that improve payments for the use of CERAMENT G in the treatment of orthopedic infections, such as periprosthetic joint infection, fracture infections, and diabetes-related bone infections.
Torbjörn Sköld: More severe injuries result in higher reimbursement. Regardless of severity, the hospital can use the highest codes when claiming reimbursement. This means moderately severe conditions receive the same high reimbursement as when a complex injury is treated. Note that this uplift applies only when CERAMENT G is used. In parallel, CMS confirmed the introduction of more specific procedure and identification codes for CERAMENT G and CERAMENT BVF, consistent with the company's submission.
Torbjörn Sköld: This is very positive for BONESUPPORT, as it validates the uniqueness and value Cerament brings and reduces potential barriers for using Cerament in daily clinical practice. CMS ties the extra reimbursement specifically to on-label use of approved products in this category, where BONESUPPORT currently holds the only approval, strengthening our competitive moat.
Torbjörn Sköld: We have launched a rollout plan with supporting education and communication materials to fully capitalize on the ruling. The ruling came into effect on 1 October 2026. The initial and early feedback we have received from surgeons and administrators is very positive, and we expect it to substantially strengthen the case for broader and deeper use of CERAMENT G in existing and new accounts.
Torbjörn Sköld: As part of our ambition to modernize an outdated standard of care in the US, we have opened one market segment after another, starting with foot and ankle, followed by trauma, now moving into revision arthroplasty. Interest continues to grow for CERAMENT G in revision arthroplasty and periprosthetic joint infections, where the clinical needs remain substantial and the evidence and our antibiotic-eluting technology has resonated strongly with surgeons.
Torbjörn Sköld: We have built a solid foundation for our spine strategy over the past quarters by establishing distributor coverage and preparing the market. The surgeon access and early stages of adoption in spine follow plan and indicate the strength and potential of this segment. As this is a new clinical segment for us, more clinical data is needed to support broader market penetration.
Torbjörn Sköld: Importantly, the performance of CERAMENT BVF in spine will help confirm the value proposition for the Cerament platform, which will pave the way for future antibiotic-eluting Cerament launches. Now, let's turn to Europe and rest of the world. Sales in Europe came in at SEK 64 million, representing 34% growth at constant exchange rates.
Torbjörn Sköld: While part of this reflects a softer comparison base in Q3 2025 and also initial orders from distributor change in Australia and New Zealand, it was still a very strong quarter. We saw strong development across our three market structures: direct, hybrid, and distributor markets. This model is well-suited to the early stage the company is currently in. Our direct markets, including the UK and Germany, delivered solid growth across the board. Our investments in hybrid markets developed well, underlying continued potential ahead.
Torbjörn Sköld: During the quarter, we entered into a distribution partnership with Stryker for Australia and New Zealand, which contributed 3.8 million SEK to sales through a couple of initial startup orders. The partnership strengthens our presence in the region and gives us a good basis to continue developing these markets.
Torbjörn Sköld: Our distributor markets show strong growth, and we see large potential to increase our footprint by increasing penetration in the countries in which we have presence, as well as potential to entering more countries. The SOLARIO study was published the evening before the start of the Joint Congress of the European Bone and Joint Infection Society, EBJIS, and the US Musculoskeletal Infection Society, MSIS, in Porto. It was featured in several presentations and scientific discussions.
Torbjörn Sköld: The response to SOLARIO reinforces our view that a paradigm shift is taking place, and that local antibiotic therapy will play an increasingly important role in the treatment of orthopedic infections. SOLARIO has the potential to be an important catalyst for changing the standard of care and treatment protocols worldwide for the benefit of patients, healthcare providers, and society, not least in antibiotic stewardship. Now, for a deeper scientific and clinical perspective on SOLARIO, I will hand over to our Chief Medical Officer, Dr. Dießenbeck.
Michael Diefenbeck: Thank you, Torbjörn. My name is Michael Diefenbeck. I am Chief Medical Officer at BONESUPPORT. After a bit of waiting, the SOLARIO trial has been published on 16 September. SOLARIO stands for short or long antibiotic regimens in orthopedics. The study was published in the New England Journal of Medicine, one of the highest-ranked journal in medicine. First author is Professor Martin McNally, and senior author is Dr.
Michael Diefenbeck: Matt Scarborough, both from Oxford, England. You are probably familiar with the background. Orthopedic infection is usually managed with surgery, local antibiotics, and a prolonged systemic antibiotic therapy. Exactly this prolonged systemic antibiotic therapy was the focus of the study. The research question was, can the duration of systemic antibiotic therapy be limited to less than 7 days, provided local antibiotics are used?
Michael Diefenbeck: The second objective is if there is an advantage of local antibiotic therapy in terms of adverse events or side effects. This is a multicenter, open-label, non-inferiority trial. Adults who had undergone surgery and implantation of a drug device combination product including antibiotics were randomly assigned to receive postoperative systemic antibiotic therapy long, longer than 4 weeks, or short, less than 7 days duration.
Michael Diefenbeck: The primary outcome parameter is treatment failure by 12 months, assessed according to protocol-defined criteria by a clinical event committee whose members were unaware of the trial group assignments and who were not involved in the treatment of the patient. Next slide, please. Here are the results of the trial. 500 patients were randomized, and 475 were assessed in the primary analysis.
Michael Diefenbeck: The primary outcome parameter is defined treatment failure and occurred in 14.1% in the long group and only in 11.1% in the shorter duration group, which met the pre-specified non-inferiority margin. This means that the short duration was non-inferior to the long duration. Next slide. Here are the results of the secondary outcome parameter.
Michael Diefenbeck: By week 6 after surgery, symptoms potentially related to the treatment had occurred in 45.2% of the patients in the long duration group and only in 17.2% in the short duration group. This was a significant difference. On the graph, you can see that there is a huge difference, especially in the severe and moderate adverse events. This means that the shorter duration of systemic antibiotic therapy is much more patient-friendly than the long duration of treatment. Slide 10, please. The authors of the study came to the following conclusion.
Michael Diefenbeck: Among patients who had undergone orthopedic surgery and received local antibiotics, a short course of systemic antibiotics was non-inferior to a long course with respect to definite treatment failure by 12 months. What do these results mean in a bigger picture? The World Health Organization declared at the end of 2019 that antimicrobial resistance is one of the 10 most urgent global health threats, along with, for example, HIV, climate change, and Ebola.
Michael Diefenbeck: To reduce antimicrobial resistance, or maybe better, the development of antimicrobial resistance, the WHO defined six points. Number 1, shorten the duration of therapy, and SOLARIO has clearly shown that this is possible. Number 2, improve compliance in patients. Well, the device drug combination product, including antibiotics, is implanted directly into the bone, so there is nothing to worry about compliance.
Michael Diefenbeck: The patient cannot remove the antibiotic, and on the other hand, they don't need to be constantly reminded to take their medication. Number 3, narrow antimicrobial choice. Indeed, mainly gentamicin and vancomycin was used. Number 4, avoid underdosing. There is a high antibiotic concentration delivered by the local antibiotics.
Michael Diefenbeck: Number 5, improve targeting. The antimicrobial is exactly at the right spot. They are implanted directly into the bone. Finally, number 6, reduce the total antimicrobial burden. In the study, there was a saving of 6.4 kilogram. Kilogram, not gram, per 100 patients. With this summary, I hand over to Håkan Johansson, BONESUPPORT's CFO, for the financials.
Håkan Johansson: Thank you, Michael Diefenbeck. Net sales improved from SEK 284 million to SEK 409 million, equaling a growth of 39% in reported sales and a growth of 38% in constant exchange rates. Torbjörn Sköld has already spoken about the performance in both Europe and the US and the major drivers behind the sales growth.
Håkan Johansson: As large overtime movement in US dollars hides the true trajectory in the US, I would like to share the US sales performance for CERAMENT G in US dollars. CERAMENT G is the growth driver in the US, and this slide shows quarterly CERAMENT sales in the US in US dollars, with continued solid performance and a strong sequential growth in this quarter, both in net sales for the quarter and in net sales per workday. The contribution from the US segment improved by SEK 60.2 million versus Q3 2025 and amounted to SEK 171.4 million.
Håkan Johansson: The improved contribution relates to the increased sales after the effect of increased costs. Selling and marketing expenses during the quarter amounted to SEK 152.3 million, compared with SEK 123.6 million previous year, of which sales commissions to distributors amounted to SEK 111.4 million, compared with SEK 85.1 million in the same quarter last year. From the graph at the bottom of the screen showing net sales as bars and gross margin as the orange marker, it can be noted that the gross margin remains stable and strong at 94%.
Håkan Johansson: in Europe and rest of world, a contribution of SEK 9.9 million was reported, compared with SEK 12.5 million previous year. Selling and marketing expenses increased by SEK 6.4 million, mainly related to the previously communicated commercial investments in the Europe booster program. From the lower graph and the orange marker, a minor movement in gross margin can be noted, mainly impacted by market mix.
Håkan Johansson: Selling expenses, excluding sales commission and fees, increased by SEK 12.7 million compared with previous year, following commercial investments in both the US and Europe. Investments aimed at future sales growth, driven both by market opportunity and by sustained high market activity. R&D expenses reflecting a continued high activity level focused on strategic initiatives such as the market authorization submission for CERAMENT V in the US, the research and studies in spine, and future portfolio innovation.
Håkan Johansson: Administrative expenses, excluding the effect from the long-term incentive programs, remaining stable with an increase of SEK 2.5 million compared with previous year. The adjusted operating results amounted to SEK 139.3 million, with only minor currency effects impacting. This is something I will come back to also on a later slide. Gross margin levels returned after a temporary down in previous quarter following inventory write-downs in Q2.
Håkan Johansson: The difference between adjusted and operating results is cost related to our long-term incentive programs, amounting to an expense of SEK 15.9 million in the quarter, compared with an expense of SEK 30.7 million previous year, as you could see on the previous slide. The increase in expense includes mainly a favorable share price development in the period.
Håkan Johansson: Operating cash flow was strong in the quarter and cash position closed at SEK 510.5 million, despite the current share buyback program initiated in September and partially executed during the quarter and impacting the period with SEK 60 million. During the quarter, the Swedish krona has continued to weaken against the US dollar, with only minor gains and losses reported as other operating income and expenses. This graph on this slide shows with gray bars how the relationship between the US dollar closing rate and Swedish krona has varied over time.
Håkan Johansson: This is read out on the Y axis. The blue dotted line, read out on the left I axis, shows adjusted operating results. The adjusted operating result, excluding translation exchange effects, is the orange line and gives a more comparable view on the underlying trend. In the table below the graph, you can see the FX adjusted operating margin of 32.9% in the quarter, compared with 28.6% in the same quarter last year.
Håkan Johansson: From H2 2025 and early 2026, the operating margin has been impacted by the commercial investments made in both Europe and US, and this quarter shows a return to gradually improved operating margins. A solid cash conversion has been reported continuously since Q3 2024, with an average cash conversion of 83%, visible as a dotted line in this graph. Q3 reported a solid cash flow and cash conversion of close to 100%. And with this, I hand back over to Torbjörn.
Torbjörn Sköld: Thank you, Håkan, and thank you, Dr. Diefenbeck. To summarize Q3 2026, sales grew by 38% at constant exchange rates, reflecting steady and consistent progress. US growth was 39%, and Europe growth was 34%. The adjusted operating margin was 34%, and the cash flow was solid, allowing us to buy back shares and still end the quarter with a cash position of north of SEK 0.5 billion.
Torbjörn Sköld: Important clinical and regulatory milestones in the quarter were the publication of the SOLARIO trial, the confirmation of CMS increased reimbursement for CERAMENT G and V, and the submission of the complete data package to answer FDA's questions related to the CERAMENT V De Novo submission. Following combined growth of 33% in constant currencies over the first three quarters, we confirm our previously communicated full-year outlook of sales growth between 33% and 36% in constant currencies.
Torbjörn Sköld: The quarter confirms that the company's position has strengthened and continues to be characterized by low but rapidly increasing market penetration, creating significant room for expansion for many years to come. Now, let's open the line for questions.
Operator: If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Philip Ekengren from Nordea. Please go ahead.
Philip Ekengren: Thank you, operator, and good morning, all. US CERAMENT G increased substantially Q on Q, especially looking incremental growth here from Q2. With new customer recruitment described as rather stable across the indications, could you split up how much of the acceleration come from increased usage among existing surgeons and perhaps also in which indications, please?
Torbjörn Sköld: We do not publicly disclose the numbers, but what we can say is that we see solid growth across all the three segments, foot and ankle, trauma, orthoplastic. We can also say that in all of the three segments, we see a good, healthy balance between the two drivers, meaning new accounts as well as increased usage.
Torbjörn Sköld: Of course, taking into the effect that foot and ankle, that is the segment where we have been in and actively worked on for several years. Trauma is somewhat newer, and then orthoplastic is the newest. But we are very pleased on the growth across the segments as well as by the growth type. That is how much we can say on it, Philip. And sorry, we do not disclose more numbers than that.
Philip Ekengren: No, I appreciate that, Torbjörn. On CERAMENT V, if and when approved, how much of the initial opportunity will come from patients or surgeons it cannot currently reach with CERAMENT G versus perhaps switching existing G procedures to V? Can you tell something about what your European experience suggests here going forward?
Torbjörn Sköld: Our European experience and why is the European experience relevant, it is because we have had both products available in the market for several years. The European experience indicates that our product mix, so of all the G and V product we sell, around 70% to 75% of that is G, and the remaining is V. That is the product mix that we have.
Torbjörn Sköld: That is our starting point and starting assumption for the US. Now, there are indications that we see in the US market, and this is not anything new for this quarter. We have seen it for several quarters and we have raised this publicly several times, is that there seems to be a tendency or a preference in the US more weighted on V than G. Now, how much of that is based on science versus tradition, history, that remains to be debated on.
Torbjörn Sköld: Our starting point is that we expect to see the US come to a similar mix as we have had in Europe, and then we will see. But it is clear that US surgeons want and need CERAMENT V. We expect the cannibalization to be limited, but there might be some. But clearly, CERAMENT V is expected to be a solid incremental driver of the growth case in the US. I hope that answers the question, Philip.
Philip Ekengren: It does. Thank you very much. Then perhaps a final one for me squeezing it in. With Q3 growth at 38% and full-year guidance unchanged at 33% to 36%, what assumptions distinguish the lower and upper ends here? Do you expect the CMS changes to influence growth already in Q4, or is that more of a 2027 play?
Torbjörn Sköld: I will leave that to Håkan.
Håkan Johansson: Thank you. No, again, I do not think that, Sam, we should or should include material impact from the CMS already in Q4. Sam, the guidance is more related on continued commercial executions on existing baselines. Again, Sam, we have seen volatility in sequential growth in the past. We will continue to see that as well. So the guidance more relates to continued and, in many terms, normalized commercial execution.
Torbjörn Sköld: And on CMS, sorry, I missed that you related to CMS. On CMS, what we have seen is that, and we saw it at ABG Sundal Collier, we saw it at OTA, Orthopaedic Trauma Association in Phoenix, is that US surgeons and the ones that we have talked to are very, very positive towards this ruling. Also, the initial conversations that we have had with administrators are also very positive.
Torbjörn Sköld: So it is definitely going to help us, and it is definitely a strong ammunition for us, especially in the conversations related to when hospitals and administrators simply think that, "Well, it is a very expensive product, and we get a lot of invoices on CERAMENT G, and why do you need that?" Then, of course, the CMS ruling is very, very helpful.
Torbjörn Sköld: Having said that, it is also critical that it is not just something that we talk about to our surgeons and the administrators and the hospitals in 1 month. We expect this ruling to be an important topic for us in the coming quarters. But of course, it is very positive. We are well positioned for the growth journey ahead, not only with CERAMENT G, but also with CERAMENT V, which is actually also included in this ruling.
Philip Ekengren: Perfect. Thank you very much. I will get back into the queue.
Operator: The next question comes from Mattias Badsten from SEB. Please go ahead.
Mattias Vadsten: Hi. Thanks. Thank you, Mattias. First one, just a follow-up on your comment there, Håkan, on the incremental reimbursement for Cerament in the US. I think you said you do not rely on any help from that in Q4, but why would it not help really? Are you just being cautious on that end, or just to clarify, and sorry if I caught it in the wrong way.
Håkan Johansson: All right. Thank you, Mattias, and good that you are asking the question. What I said is, I do not expect this to have a material impact on the revenue in Q4. Of course, it will be helpful, and it is helpful to some in terms of continuing to develop both adoption and access in the US over time. So we are super happy to have CMS, but I do not think that anyone should exaggerate the impact in the very short term. We will make sure that this is a tool in our toolbox that we are using wisely in the market.
Mattias Vadsten: Thanks for that. Also maybe staying on the same note. In Q2, we talked about the go/stop/go dynamic for a bit, and you have touched on it before, but the communication was quite clear around that in Q2. Just how has that developed since then, and also, do you think this incremental reimbursement can change that picture? That is my next question.
Torbjörn Sköld: Yeah. Good. So go/stop/go that you referred to, Mattias, was something that we saw in Q2, but in all transparency, we have seen the dynamics of go/stop/go for many quarters previously. So it is a natural part of the business that we are in, and we see it on a clinician level, and we see it also on an administrative level.
Torbjörn Sköld: What we mean by that is on a clinician level, when they are first exposed to Cerament, and especially Cerament G and V, the surgeons typically want to try it on a relatively narrow indication and on a select group of patients. They try it, and then they watch these patients. So they go, they use it in a couple of cases, and then they stop and evaluate whether it has the clinical impact and the clinical results that they want to see.
Torbjörn Sköld: If they are pleased with the results, they go again. Hence this go/stop/go. That is on a clinician level. It is relatively common. It is very common. We can also see it on the administrative level in a hospital or in a hospital group, even on an IDN level in the US. That is pretty much the same dynamics that we see on a clinician level, meaning that surgeons in the hospital start using the product, then the more they use, they reach a certain level of value that the hospital purchase. Then they typically are flagged to the buyers and the administrators.
Torbjörn Sköld: If the surgeons and the hospital, as well as us, if we have not done the work to prepare the administrators and the buyers and the purchasers what Cerament G and V is, then there could be these effects that we not only saw in Q2, but we have seen previously. So there you have this stop on the hospital level.
Torbjörn Sköld: Then the approach is simply that we go and talk to the administrators, the value approval committees around the value of Cerament G and V. The go/stop/go, both on a clinician level as well as an administrator level, has been there for years. We expect it to continue. We saw some of it in Q2. We continue to see it in Q3, and we expect to see it in Q4 as well as next year as well. So it is part of the business.
Torbjörn Sköld: But of course, Mattias, to your point, to have the ammunition with the CMS ruling, it is a fantastic tool. It is probably the ideal tool to use in that type of conversation, and it really helps strengthen our case in those conversations.
Mattias Vadsten: Thanks. Very clear. My last question is, based on the trajectory you see in trauma patients now, do you believe a market share similar to diabetic foot ulcers is possible or will the long-term market share potentially in foot always be higher, you believe? I appreciate we cannot see into the future, you cannot either. But any insight, sort of what you have seen, surgeon feedback, the uptake so far, what you can share there.
Torbjörn Sköld: Yeah, no, a great question. What I can reference is simply the, I think it was a couple of weeks ago, we were at the Orthopaedic Trauma Association in Nashville, US. That was right after the SOLARIO publication, that was right after the CMS ruling. Of course, it is only trauma docs there. There are not a lot of foot and ankle or diabetes doctors there.
Torbjörn Sköld: I do not see any reason why we would not be able to reach the same type of penetration in trauma as we have done in foot and ankle, not at all. Having said that, in foot and ankle, we are still just scratching the surface. Yes, we have reached higher penetration and we have been at many more years. I do not see any reasons why we should be more or less bullish on trauma than we are on foot and ankle.
Torbjörn Sköld: The big question is, of course, how long will it take? This is the beauty of BONESUPPORT, that time is on our side, and the first principle that we always use is that you have to convert surgeon by surgeon, and you have to do it face-to-face. You do not do it with a study only. You do not do it with an email, because these products, they implant in patients. Yeah, we remain very bullish on trauma as we have done previously as well. So no change on that, Mattias.
Mattias Vadsten: Thank you so much.
Operator: The next question comes from Sten Gustafsson from ABG Sundal Collier. Please go ahead.
Sten Gustafsson: Good morning. A number of questions, but I will try to limit it to two. Looking at the CMS ruling, I suppose it is for hospital-only and not outpatient. Maybe that first sort of clarification. Secondly, if you could perhaps tell us your mix there between hospital versus outpatient. I guess I am trying to figure out how much of your business will benefit from these improved reimbursements.
Torbjörn Sköld: Yes. Thank you, Sten Gustafsson. First question, yes. The ruling is only inpatient, and that simply stems for how it is set up and how it is named. It is called the Fiscal Year 27 IPPS, so the Inpatient Prospective Payment System. This ruling relates to 100% inpatient. The majority of our sales is currently inpatient. There is some in outpatient, but to the large extent, it is only inpatient. It relates to that. Then, of course, how fast and how much of the hospital will use it? Time will tell. But we look very positively to this ruling, and it will have positive impact for us in the quarters to come.
Torbjörn Sköld: We have good reasons to believe that the ruling will stay in place a year from now, and then all the work that we do now in the coming years, it will, of course, help us in the long term as well. I hope that answers your questions, Sten.
Sten Gustafsson: No, absolutely. Thank you very much. When it comes to, I remember you had this NTAP and then, obviously, it is only temporary, but you gained it on another segment. Have you noticed a drop in usage among the doctors where the NTAP sort of disappeared after the three-year period?
Torbjörn Sköld: Not at all.
Sten Gustafsson: Very good. In terms of your organization in the US, it looks like given the improved reimbursement, you have a good opportunity here to capture a lot of growth. Will you invest in more salespeople, or how are you going to sort of reach out to all these hospitals?
Torbjörn Sköld: Very good and a relevant question. When we are growing in the US 30%, 40%, then of course, we will need to continue to invest in our commercial organization, including. You bring up a very relevant point, and it comes to the fact that we have just as a company started to step into this somewhat more mature phase where it is not only about the classical face. That is still the core and that is still very important to be in front of orthopedic surgeons and to be in front of the infectious disease. We are not going to sort of slow down on that. That is going to be continued.
Torbjörn Sköld: The point that you bring up is that these kind of conversations when it comes to the CMS ruling, of course, the surgeons are important, but even more important are the administrators, however they are defined and whichever titles they might have. That really depends. In that area, we have invested, and we are continuing to invest simply to make sure that we have the scale and the breadth and the depth in our organization.
Torbjörn Sköld: That is an area that we have already invested. We are bringing on more people with a slightly different profile than the classical clinical sales. That is an area that we have seen investments already done, and we are going to accelerate that in the coming quarter as well as in the next year.
Sten Gustafsson: Perfect. Thank you very much. I get back to the queue.
Operator: The next question comes from Erik Cassel from Danske Bank. Please go ahead.
Erik Cassel: Hi. Good morning. I had a question on the guidance as well as a follow-up to Philip. As he said, the 33% to 36% basically implies anywhere between 32% to 44% growth in Q4. Do you view that full range as possible still? If you do think that, I want to press you a bit on what do you think are the factors to get to either down towards 32% or up to 44%, and do you have any opinions on what is more likely in this sort of range?
Torbjörn Sköld: Thank you, Erik. We provide the guidance simply because that's the guidance where we might end up, and that's why we provide it. So we think it's likely to end up anywhere in that. Otherwise, we wouldn't have provided it. That's the first part. To your second question, what will it take?
Torbjörn Sköld: Well, it's very much the same that took us to deliver what we delivered in Q3, meaning that we continue to drive new accounts and to increase the penetration in existing accounts, that we do it in US as well as OUS, and we do it in all three segments, foot and ankle, trauma, and orthoplastic.
Torbjörn Sköld: Then, we of course will not provide a sub-guidance to the guidance that we've already provided. The guidance is that we will end up in the year between 33% to 36%. We focus more on the long term, and we are very pleased with Q3. We look very positively to Q4, but we build this business for the long term, not just to hit one quarter or the next quarter.
Erik Cassel: Okay. Fair enough. It looks like the BVF products have started to stabilize a bit more here in Q3. Would you say that we have reached the stabilization point that you pointed to back in Q1, and that it now can start to grow again? Or is it expectations a bit for me still in the coming quarters?
Torbjörn Sköld: Sorry, Erik, can you repeat the beginning of the question because I missed that one. Sorry.
Erik Cassel: Oh, yeah, of course. It looks like BVF in the US has started to stabilize, only down like 2% now, down 14% in Q2. You talked about the stabilization happening back in Q1, and then for it to sort of come back to growth, if I recall correctly. Would you say that we have reached that sort of stabilization point now, and that we are looking towards growth again with the BVF product in the US?
Håkan Johansson: I think that, what we've seen, and that is numbers also shared is that when we look at over the last 12 months, BVF has been relatively flat. In a way, that is very much in line with our expectations. Are we reaching that inflection point where BVF will start to grow? Well, again, it's about long term. We don't expect a huge growth from the BVF.
Håkan Johansson: It will, as we've seen outside the US, in Europe, rest of world, somewhat growing slowly with the market. But the main focus will be on CERAMENT G and hopefully around the corner on CERAMENT V. What we've said, and that still stands, is that with an extending customer base, we also see more surgeons using BVF. But again, not anything that will have material impact or, if I put it that way, accelerates BVF growth. The main focus for any investor should be to follow and see how CERAMENT G and eventually CERAMENT V performs in the US.
Erik Cassel: Okay. Thank you. Lastly from me for now, the SEK 3.8 million from Stryker, was that now a one-off stocking order to sort of get them going? What are your forecasts for the sort of quarterly run rate from them in Q4? Is that likely going to be a much bigger account than the previous distributor that you have? Are the gross margin set up different compared to the previous corporate model that you run there?
Torbjörn Sköld: Excellent question. Yes, you are right. These were two startup orders to get going. We have seen operations do this both in Australia and as well as in New Zealand. It's really nice. It's early days, but it's a really nice startup. We don't provide guidance on a country level, but we're very pleased with the fact that we get faster and better access to the total potential of Australia and New Zealand with a phenomenal player in this industry.
Torbjörn Sköld: Of course we're doing it because we simply think we can do it faster than with the previous setup that we had. On your second question on the margins. For us, this is a very similar, this is as close to a standard contract that you could have. It is from a contractual level and a margin level, it is very similar to the contracts on the distributors and the hybrid models that we already have.
Erik Cassel: Okay, great. Thank you so much.
Operator: The next question comes from Edward Hall from Stifel. Please go ahead.
Edward Hall: Good morning, guys. Thanks for taking my questions. Most of them have been largely asked, but I think maybe just going back to the reimbursement side, and maybe if we were to put ourselves in the foot of the hospital administrators, what is the timeline and the aspects that they need to undergo before they could start to get this updated billing flowing through their P&L? What is the timeline or lag that would need to happen? That would be my first question.
Torbjörn Sköld: Yeah. The ruling is in effect as of 1 October, so it is open now. As long as they have been trained, they know what to do, they know how to code the surgeries, they know which surgeries to pay extra attention to, everything else is set up. It is also about making sure that you get access to the right people, inform them about what it means and how to do it.
Torbjörn Sköld: It is not very complicated, it is just they use the same software and the groupers that they are used to. It is just making sure that they are informed about it. Some hospitals will move very fast. Some hospitals will probably take a bit longer. What is very interesting to see when we have done the analysis on hospital basis, so we use the hospital's own patient volumes historically, then it is a no-brainer to use it.
Torbjörn Sköld: But-
Edward Hall: I get
Torbjörn Sköld: to make someone understand that it is a no-brainer, there is a process to get there.
Edward Hall: Absolutely. I guess what I am trying to understand is when we had the NTAP payments, there was a certain number of hospitals that either did not acknowledge that, did not understand the NTAP payment was around. Would it be fair to assume that this obviously is a broader code, it is more widely used, so that issue that you have had historically may not be an issue going forward?
Torbjörn Sköld: I think the way that you should see it is that some hospitals will jump very fast on this, especially the ones that are on top of their operations. They are on top of their case mix, they are on top of their P&L, and what drives profit and what does not drive profit. I think those hospitals are easier to convince. The ones that are not, as call it, have that focus or are as operationally savvy, it will take time. It is hard for us to compare it with the NTAP. NTAP, from our perspective, had a much smaller reach and much less importance
Edward Hall: Yeah
Torbjörn Sköld: than the CMS ruling, obviously.
Edward Hall: Okay, perfect. Maybe just, I think maybe it is an obvious question, but I just wanted to clarify it from you. With these reimbursement changes, what do you see as the greater impact for your business? Is it new surgeon recruits or is it greater surgeon utilization? I am sure it is probably a mix of both, but if there is any sort of leading indicator of either, that would be interesting.
Torbjörn Sköld: Yeah. It is both, Ed, and unfortunately, we wish we had the data to say that it is more of this than the other, but however wise, it is both, and it is as positive on both.
Edward Hall: Okay, perfect. Very clear. Thank you very much.
Operator: The next question comes from Mattias Thärn from Brummer & Partners. Please go ahead.
Mattias Thärn: Hi. Good morning. Thank you very much for taking my questions. Congrats on the DRG decision being in effect and on the SOLARIO. I would be interested to hear, when you discuss SOLARIO with surgeons, how do you describe the findings across the carriers in the trial? Did the investigators look at the outcome by carrier type? That's my first question, if I may.
Torbjörn Sköld: Okay. Very good. If we start with the carrier types, do you want to start with that one, Dr. Diefenbeck, in terms of which carrier types that were included and what can SOLARIO actually say related to the products? How was the study designed?
Michael Diefenbeck: Yes, sure. Thanks for the question. It is a practical study. It was not focused on one single antibiotic-eluting bone graft substitute. Even PMMA, the bone cement, was included in the study. This is a study focusing on, in total, 17 different products. This is what I meant in the beginning. It is practical for the class of local antibiotics. So far there are no sub-analyzes published which show the differences. This is not what it is made for. It is not to identify the performance of one single antibiotic. It is on the group. The task was to show that if local antibiotics are used, the systemic duration can be shortened.
Torbjörn Sköld: Correct. It is definitely not a Cerament study. Clinically and scientifically, you cannot draw any conclusions on whether Cerament versus the other products did well or not. However, what you can say is that it clearly indicates that you can reduce the time of systemic antibiotics. Then you can also look at the number of patients that had CERAMENT G and/or V, and that was 70% of the total population in the study.
Mattias Thärn: Thank you very much. Then I would like to bring up a topic. There was recently a peer-reviewed article in the Journal of Bone and Joint Surgery, where some researchers had effectively reanalyzed the foundational study, Stravinskas from 2016. A foundational study in the sense from which BONESUPPORT has repeatedly cited its sustained antibiotic release properties of CERAMENT G.
Mattias Thärn: This was done by the researchers obtaining the raw data from this study, and then disproved, according to them, by a quite robust mathematical analysis. So not necessarily from any animal model as has been cited before. The reason why I ask is, this may or may not be correct, but on that basis, the product would effectively then function as a bone void filler with a short but potent pulse, and presumably outcomes would be much more driven by debridement quality, soft tissue coverage, and systemic therapy.
Mattias Thärn: So far, we have not heard the company publicly comment on this, nor have I seen any analyst written about this, which is surprising itself. So I would like to ask, I am aware that one of your board members wrote a letter commenting on this, but it only touched the abstract, and it did not in any way refute the principal conclusion of this very concise and mathematical argument that refuted the elution property of CERAMENT G.
Mattias Thärn: So I was wondering if the company could publicly just respond to how they stand against this. I shall add that in discussions that we have had with US surgeons and others, one of the principal qualities that is brought up of CERAMENT G is precisely the perception of a unique elution profile.
Mattias Thärn: And I should also add that it is very evident that the company, including the CEO, you have commented on this on many occasions, recently in the Capital Markets Day 2026, where quite a large passage was devoted to the sustained elution properties of CERAMENT G. So, if you do not mind, how important is this for the customer proposition of CERAMENT G and CERAMENT V, respectively? And, to what extent is this conclusion valid that has been now brought up in the recent JBJS study? Thank you.
Torbjörn Sköld: Thank you for the question, Mattias, and that was a comprehensive background. Let us break it down, and first of all, for those of you who are not informed of which study this relates to, it is the so-called mouse study, published by a group in Denmark, Aarhus, in the publication of Journal of Bone and Joint Surgery.
Torbjörn Sköld: The study was published in mid-August, and I think it is very relevant to bring up that the majority of the authors are not only part of the university there, they are also part of a company that is called Precision Antibiotics, and they have their own technology related to antibiotics and antibiotic elution. The technology is called CarboCel. We know of the company really well, and we have been made aware of this study early on.
Torbjörn Sköld: I will start with the clinical relevance or how we see the clinical relevance of this, and then Dr. Diek will comment on some of our views on that study. First of all, from a commercial point of view, what we have seen is that we see very limited feedback or questions from the market on this. Very few.
Torbjörn Sköld: That is number 1. Number 2, the reason why we believe it is commercially not really relevant is simply due to the fact that it is a preclinical study done on mice where they have used CERAMENT G off-label, meaning not in a way that the product is intended to be used in soft tissue in mice, and where they have used very small amounts of the product compared to the amounts that would be the typical case for when the product is used in patients.
Torbjörn Sköld: That sort of summarizes why we simply do not think that this study has any meaningful clinical relevance to CERAMENT G. That is fundamental. If we then go to the next steps, what is important when we sell our products is not preclinical. We stopped using preclinical data to sell our products. Actually, we have never used preclinical data to sell our products.
Torbjörn Sköld: What matters to customers is the clinical data, in general and specifically by segment and by indication. So it is really the clinical data that is important. I think what is also good data points to have in mind is, for example, when this study was presented at MSIS, what was the feedback from the audience, including Professor McNally from the SOLARIO trial? I think that is important feedback. So, that is sort of the statement that we have from our side. Now, from a more clinical and scientific point of view, Dr. Diefenbeck, would you be happy to share your thoughts?
Michael Diefenbeck: Sure. Torbjörn mentioned already very important points. Looking at the study, it has two parts, a bench testing and an animal study, and as mentioned already, in the animal study, the bone void filler was tested in soft tissue, which is not indicated for use, and of course, it should be obvious that a device needs to be tested according to the indication.
Michael Diefenbeck: A bit on a more general base, if we look at what testing you can do with bone void fillers, you would start in a lab with bench tests. For example, you would look at the mechanical properties, the setting time, and elution. The next step would be the biocompatibility or now called biological evaluation, where you test against cells or bacteria. Then you come to small animal models. This is the area where the mouse study was done.
Michael Diefenbeck: The next step is large animal models. Then, of course, clinical studies, which reaches everything from case reports to randomized controlled trials. Here, this is a very early stage of the research. Now, if you want to start in a lab and compare this elution on the concentration of implants, you need to test, of course, the same volumes, the same volume of the test substance and of the liquid.
Michael Diefenbeck: This has not been done. The volumes were completely different, which were tested. Very small sizes were tested in the publication, so it is not comparable to what has been tested before. Then, as you already right said, a mathematical model was provided without any measurements. Just according to what I told you before, the mathematical model is almost before the bench testing, so very early results. As Torbjörn said, no impact for the clinical performance of the product.
Torbjörn Sköld: Thank you. Next question, please.
Operator: The next question comes from Erik Cassel of Danske Bank. Please go ahead. There are no more phone questions at this time. I hand the conference back to the speakers for any written questions and closing comments.
Torbjörn Sköld: Very good. Thank you, operator. Let us go through some of the questions that we have online. The first question is: Can you quantify how much of the US growth is driven by increased utilization of existing hospitals versus new hospital customers, and how much potential remains within your current hospital network?
Torbjörn Sköld: Again, we do not quantify it split, but what we say is that it is a healthy balance driven by both factors, and that is the same picture across the different segments in the US. The next question is: US gross margin declined from approximately 95.3% to 94% year over year. What explains this decline, and should we consider it temporary or structural? Håkan.
Håkan Johansson: Thank you. It is a very good question. The main reason why there is a decline in gross margin over time mainly relates to increased manufacturing costs. The market price has been extremely solid and stable over the time, so the main impact is coming from the increase in manufacturing cost. There has been some impact from US tariffs, and that impacted Aatona, when here we expect returns to come in later part of this year. The gross margin as reported in this quarter and compared also in Q2, gives a good indication of a sustained gross margin in the US.
Torbjörn Sköld: Good. Very good. Let's see, scroll down. Next one. US market penetration on level 1 trauma center. Can you provide an update or penetration of level 1 trauma centers and your estimate of how much of the addressable US market you have reached so far? Okay. On a quarterly basis, we don't provide updates on the level 1 trauma centers, but what we can say is the numbers and the growth that we have in the quarter gives a good indication of how we're doing.
Torbjörn Sköld: In terms of how much of the addressable US market we have reached so far, I still think the numbers that we provided on the Capital Markets Day is still relevant. I would refer to that on that question. Then we have another question. Operating leverage, long-term profitability. With adjusted EBIT margin now above 34% and sales commissions declining as a percentage of US revenue, how do you assess the long-term EBIT margin potential while continuing to invest in market expansion? Okay, Håkan, you take that.
Håkan Johansson: A good question. Again, I think that the question is well-phrased because it's all about the long-term EBIT margin potential. Because as we've seen also during the last year, we will have periods where we invest, especially in our commercial organization structures, that will slow down the EBIT improvement that we've seen also over time. We haven't given any guidance on the long-term potential, but I think that the gradual improvement in EBIT margin and the high level of operating leverage gives a fair indication on a long-term potential.
Torbjörn Sköld: Good. Then I think we have one more question on the line. Operator, I get a message here that Kristofer Liljeberg-Svensson from Carnegie is on the phone. Would you care to open the line for Kristofer?
Operator: The next question comes from Kristofer Liljeberg-Svensson from Carnegie. Please go ahead.
Kristofer Liljeberg-Svensson: Thank you very much for that. I was in the queue from the beginning. I really would like to go back to the accelerating US growth this quarter. I think you had $4 million higher sales quarter-over-quarter. Previous record was $2.7 million. 12-month rolling trend has been $2 million after the Q2. So would you describe this as a temporary effect or something more sustainable going on right now?
Håkan Johansson: I think that, Kristofer, as with any month, that is a difference to what you have seen previously. It is just one month. So I do not think that you should see this as a sustained acceleration. It is a period where we have seen less impact of the underlying mechanics as we saw in Q2 in go, stop, go, et cetera. It is a period where new access and new distributors have performed well in the quarter.
Håkan Johansson: I really recommend, I look forward to continue having the discussion in the future quarter reports and see what that can represent in future run rates. I think that here and now it is a strong confirmation on the commercial structure that we have the potential to have, and we still have a lot of market opportunity to go after and how that will develop quarter by quarter. Let us come back to that and see.
Kristofer Liljeberg-Svensson: Great. Then just a quick one. There was a question early on the call regarding the CERAMENT V potential if that is approved. So do you see this as an incremental opportunity, or do you think a large part of the 20% to 25% of total sales will come from switching from current Cerament use in the US?
Torbjörn Sköld: It is incremental.
Kristofer Liljeberg-Svensson: Okay, great. That is all. Thank you.
Torbjörn Sköld: Okay, good. Thank you, Kristofer Liljeberg-Svensson. Let us continue with the questions that we have on the chat. The next one is R&D and CERAMENT V. Given your strong cash flow and net cash position, do you see opportunities to accelerate R&D investments in CERAMENT V, spine applications, and next generation products without requiring additional shareholder capital?
Torbjörn Sköld: Can you provide an update on the remaining FDA regulatory steps for CERAMENT V? Okay, I will start with the last part, and then we will get into the other. The last remaining steps on CERAMENT V is very much related to that. We have now submitted the package, FDA is reviewing it, and we stay in contact, we stay in dialogue, and we look forward to what they will say. We expect a formal reply from the FDA on this sometime in Q4 or in Q1. Those are the remaining steps.
Torbjörn Sköld: Once we get an approval, then the next step for us is simple, is to produce the product, ship them to the US, do the required trainings internally, externally, and start selling the product. We expect a couple of months between an FDA approval to actually when we start selling the product. If you go up a bit, sorry, Håkan Johansson, you are too fast for me.
Torbjörn Sköld: I am still on the first part of that previous question. The question was, given your strong cash flow, do you see opportunities to accelerate R&D? R&D investments in CERAMENT V, no, we go as fast as we can, and if we could, we would go faster and we have the cash. It is not cash constrained in any way. We go as fast as we can.
Torbjörn Sköld: On spine applications, again, it comes back to that we need the clinical evidence to be able to, number one, get the required regulatory approvals. Number two, to also go to market with evidence that make a meaningful difference. If the question relates to, well, could we accelerate CERAMENT V? Strategically, we want to focus on the antibiotic products in spine, that's where we see the big potential.
Torbjörn Sköld: BVF is a great product, but it's a very, very competitive marketplace in that segment, so on spine is with antibiotics. Next-generation products, absolutely. That's an area that we are continuing to invest in and want to go as fast as possible. We don't need any more capital. We have more cash at hand to invest everything, both commercially as well as clinically, scientifically, and from a research and development point of view. So we're in a very good place.
Torbjörn Sköld: More questions here. Regarding CERAMENT V, have you had any further communication or feedback from the FDA since submitting the complete response package on 21, and has anything changed regarding your expected timeline? We stay in contact, but nothing material or controversial with the FDA, and the expected timeline remains as previously communicated.
Torbjörn Sköld: Another question here. As BONESUPPORT continues to grow and strengthen its market position, is your long-term ambition to remain an independent Swedish company, or would you consider becoming part of a larger global med tech group? Have you received any strategic approaches or acquisition interest from larger industry players? The second question, we of course cannot answer that. So we leave that. Our ambition whether to remain an independent Swedish company or consider becoming part of a larger global med tech group.
Torbjörn Sköld: We're a publicly listed company, so if a larger med tech group would be interested to buy us, they could do that. That's easy. We are running this company with a purpose to make sure that our unique and innovative technology with Cerament reaches as many patients as possible.
Torbjörn Sköld: We think it makes a very, very big difference to patients, to hospitals, as well as to society when we think about the antimicrobial resistance. That's what we focus on, and our strategy is not including to become part of a bigger company if they want to acquire us company. I don't know, can that be explained in a better, smarter way?
Håkan Johansson: I think you explained it very well.
Torbjörn Sköld: Okay. Thank you very much. I think we have gone through all the questions on the chat as well as on the line. Then, thank you all for your interest, and have a great rest of the day.
Operator: The host has ended this call. Goodbye.
