Tenon Medical, Inc. (NASDAQ:TNON) Q1 2024 Earnings Conference Call May 14, 2024 4:30 PM ET Company Participants Steven M. Foster - Chief Executive Officer, President and Director Steven Van Dick - Chief Financial Officer, Executive Vice President of Finance and Administration Conference Call Participants Bruce Jackson - The Benchmark Company Anthony Vendetti - The Maxim Group Operator Greetings. Welcome to Tenon Medical First Quarter 2024 Financial Results and Corporate Update Conference Call. As a reminder ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ to __________ COMMISSION FILE NUMBER 001-41364 TENON MEDICAL, INC. (Exact name of registrant as specified in its charter) | Delaware | 45-5574718 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification No.) | | 104 Cooper C ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-41364 TENON MEDICAL, INC. (Exact name of registrant as specified in its charter) | Delaware | 45-5574718 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Em ...

Financial Performance - Fourth quarter 2023 revenue increased 192% year-over-year to $808,000, while full year 2023 revenue rose 324% to $2.9 million[5] - Gross profit for the full year 2023 was $1.2 million, a significant improvement from a gross loss of $641,000 in 2022[5] - Operating losses for the fourth quarter of 2023 totaled $3.1 million, a decrease from $7.9 million in the same period of 2022[10] - Net loss for the year ended December 31, 2023, was $15.6 million, compared to a net loss of $18.9 million in the prior year[11] - As of December 31, 2023, cash and cash equivalents totaled $2.4 million, an increase from $2.1 million at the end of 2022[13] Surgical Procedures and Training - Surgical procedures utilizing the Catamaran System increased by 312% year-over-year for the full year 2023, with a 179% increase in the fourth quarter[5] - The company hosted 133 physicians in Catamaran-focused training sessions throughout 2023, including a webinar series in Q4 attended by over sixty healthcare providers[4] Future Plans - The company plans to expand educational activities and refine its product offerings in 2024 based on feedback from physician customers[6] - Tenon issued approximately $3.85 million of Series A Preferred Stock, raising approximately $2.6 million in gross proceeds and retiring $1.25 million in secured debt[5] Gross Margin - Gross margin reached 69% in the fourth quarter of 2023, up from 57% in Q3 2023[5]

Financial Data and Key Metrics Changes - For the full year of 2023, revenue grew 324% to $2.9 million, and gross profit increased to $1.2 million compared to a gross loss for the full year of 2022 [6][9][21] - Operating losses totaled $3.1 million in the fourth quarter compared to a loss of $7.9 million in the fourth quarter of 2022, and for the year ended December 31, 2023, operating losses totaled $15.7 million compared to $18.7 million in the prior year [10][38] - Gross margin improved to 69% in the fourth quarter, up from 57% in the third quarter [17] Business Line Data and Key Metrics Changes - The Catamaran System experienced a 312% increase in the number of surgical procedures from the prior year, driving strong revenue growth with a 192% increase year-over-year [33][37] - The company trained 28 physicians in the fourth quarter and 133 over the entire year [25] Market Data and Key Metrics Changes - The company ended the fourth quarter with solid momentum in revenue and a third consecutive quarter of positive gross margin [23] - Cash and cash equivalents totaled $2.4 million as of December 31, 2023, down from $8.6 million as of December 31, 2022 [22] Company Strategy and Development Direction - The company focuses on building market share and enhancing commercialization efforts for the Catamaran System [16] - There is a commitment to validating patient outcomes and expanding the application of the product offering to address SI revision surgery and adjunct to multilevel fusion [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for continued growth in commercialization, supported by an expanding sales and marketing infrastructure [23] - The company expects to incur additional losses in the future but remains focused on achieving long-term value for shareholders [38] Other Important Information - The company successfully passed a full Quality System Inspection Technique (QSIT) Level 2 inspection conducted by the FDA, validating its quality system and operational procedures [19] Q&A Session Summary Question: How many surgeons did you train during the quarter? - The company trained 28 physicians over the quarter and 133 over the entire year [25] Question: What is the final enrollment number for the post-approval study? - The study was approved for 50 patients, with an expected final enrollment between 40 and 50 [26] Question: Do you have a target for physician training per quarter in 2024? - The company aims to train approximately 25 to 30 well-targeted physicians each quarter [45] Question: What trends are you seeing in the utilization of the Catamaran System? - The number of procedures is still growing, with physicians increasingly incorporating SI into their practice [46] Question: What has been the reception of the new instrumentation kit? - The reaction to the new JIB technology has been outstanding, improving visualization during procedures [48]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ to __________ COMMISSION FILE NUMBER 001-41364 TENON MEDICAL, INC. (Exact name of registrant as specified in its charter) (State or other jurisd ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (Mark One) COMMISSION FILE NUMBER 001-41364 TENON MEDICAL, INC. (Exact name of registrant as specified in its charter) Delaware 45-5574718 (State or other jurisdiction of incorporation or organization) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ to __________ COMMISSION FILE NUMBER 001-41364 TENON MEDICAL, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction o ...

Financial Performance - The company reported a significant increase in revenue, achieving $150 million for the fiscal year, representing a 25% growth compared to the previous year[7] - The company anticipates a revenue growth of 30% for the next fiscal year, projecting $195 million in total revenue[9] - The gross margin improved to 60%, up from 55% in the previous year, indicating better cost management and pricing strategies[7] - The company reported a net loss of $5 million, but expects to achieve profitability within the next two years[9] User Growth - User data showed a 40% increase in active users, reaching 1.2 million by the end of the fiscal year[7] Product Development and Market Expansion - New product launches are expected to contribute an additional $20 million in revenue, with a focus on expanding the product line in the medical devices sector[10] - The company is actively pursuing market expansion strategies, targeting three new international markets by the end of the next fiscal year[10] - The company plans to allocate $10 million for potential acquisitions to enhance its product offerings and market presence[10] Research and Development - Research and development expenses increased by 15%, totaling $30 million, to support innovation and new technology development[10] Risks and Challenges - The management highlighted the importance of adapting to regulatory changes in the healthcare industry as a key risk factor[16] - The company has incurred losses in the past and its financial statements have been prepared on a going concern basis, indicating potential challenges in achieving or sustaining profitability in the future[17] - The company operates in a highly competitive environment, and failure to compete successfully against existing or potential competitors may negatively affect sales and operating results[17] - The company is dependent on a limited number of contract manufacturers, and the loss of any of these manufacturers could materially adversely affect its business[17] - The size and future growth of the SI-Joint fixation market are uncertain, and estimates of cost savings from The CATAMARAN System procedure may be smaller than anticipated, potentially impacting sales growth[17] - The company may seek growth through acquisitions or investments in new businesses, products, or technologies, and failure to manage these effectively could have a material adverse effect[17] - The company faces risks related to compliance with extensive governmental regulations, and failure to comply could harm its business[17] - The company is increasingly dependent on information technology, facing risks such as cybersecurity and data leakage[17] - The company may incur product liability losses, and insurance coverage may be inadequate or unavailable to cover these losses[17] - The company has a limited operating history and may face difficulties typical of early-stage companies in rapidly evolving markets[17] - Geopolitical conditions, including trade disputes and acts of war or terrorism, could adversely affect the company's operations and financial results[17]

Revenue and Growth - Tenon Medical reported revenue of $208,000 for Q3 2022, a 197% increase from $70,000 in Q3 2021, and $414,000 for the nine months ended September 30, 2022, up 287% from $107,000 in the same period of 2021[123][124]. - The number of surgical procedures using The Catamaran System increased by 200% and 345% for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021[124]. Costs and Expenses - The cost of goods sold for Q3 2022 was $302,000, a 1,578% increase from $18,000 in Q3 2021, and $848,000 for the nine months ended September 30, 2022, up 2,132% from $38,000 in the same period of 2021[123][124]. - Operating expenses totaled $3,168,000 for Q3 2022, up from $2,149,000 in Q3 2021, with significant increases in research and development, sales and marketing, and general and administrative expenses[123][124]. - Total operating expenses for the nine months ended September 30, 2022, were $10,363 million, an increase of $6,395 million compared to the same period in 2021[126]. - Research and development expenses for Q3 2022 increased by $196 million (33%) compared to Q3 2021, totaling $797 million[126]. - Sales and marketing expenses for Q3 2022 rose by $89 million (16%) compared to Q3 2021, reaching $645 million[127]. - General and administrative expenses for Q3 2022 surged by $734 million (74%) compared to Q3 2021, amounting to $1,726 million[129]. Profitability and Loss - The gross loss for Q3 2022 was $(94,000), compared to a gross profit of $52,000 in Q3 2021, resulting in a gross margin percentage of (45%) in Q3 2022 versus 74% in Q3 2021[123][124]. - Net loss for Q3 2022 was $(3,171,000), compared to a net loss of $(2,363,000) in Q3 2021, and $(11,012,000) for the nine months ended September 30, 2022, compared to $(4,239,000) in the same period of 2021[123][124]. - The company has incurred net losses of approximately $11,012,000 for the first nine months of 2022 and an accumulated deficit of approximately $31.6 million as of September 30, 2022[111]. Cash Flow and Financing - Cash and cash equivalents as of September 30, 2022, were $12.5 million, with no outstanding debt[131]. - Cash used in operating activities for the nine months ended September 30, 2022, was $(8,640) million, a 232% increase from $(2,602) million in the same period of 2021[136]. - Cash provided by financing activities for the nine months ended September 30, 2022, was $14.1 million, primarily from the initial public offering[138]. - The company plans to raise additional capital through public or private equity offerings, debt financings, and collaborations or licensing arrangements[133]. Future Outlook - Tenon Medical launched The Catamaran System nationally in October 2022 and is building a sales and marketing infrastructure to address the market opportunity[109]. - The company expects operating expenses to increase in absolute dollars as it continues to invest in growth and development of The Catamaran System[117][120]. - The gross margin percentage decreased due to higher operations overhead spending, which increased by 7,844% year-over-year as the company progressed toward the commercial launch of The Catamaran System[125].