SI-BONE(SIBN) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited condensed consolidated financial statements and detailed notes Condensed Consolidated Balance Sheets (Unaudited) Presents the company's financial position, detailing assets, liabilities, and equity | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $230,921 | $230,437 | | Total Liabilities | $60,578 | $63,473 | | Total Stockholders' Equity | $170,343 | $166,964 | Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) Presents the company's financial performance, including revenue, expenses, and net loss | Metric (Three Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :----------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Revenue | $48,630 | $39,969 | $8,661 | 21.7% | | Net Loss | $(6,152) | $(8,939) | $2,787 | -31.2% | | Net Loss per Share | $(0.14) | $(0.22) | $0.08 | -36.4% | | Gross Margin | 79.8% | 79.0% | 0.8% | 1.0% | Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Details changes in the company's equity, including stock-based compensation and accumulated deficit | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Total Stockholders' Equity | $170,343 | $166,964 | | Accumulated Deficit | $(444,048) | $(431,354) | | Metric (Six Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------------- | :------------------ | :------------------ | | Stock-based compensation | $13,321 | $13,428 | Condensed Consolidated Statements of Cash Flows (Unaudited) Presents cash flows from operating, investing, and financing activities | Metric (Six Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | Change ($) | | :--------------------------------- | :------------------ | :------------------ | :--------- | | Net cash used in operating activities | $(4,738) | $(13,905) | $9,167 | | Net cash provided by investing activities | $1,159 | $4,517 | $(3,358) | | Net cash provided by financing activities | $2,336 | $1,881 | $455 | | Cash and cash equivalents at end of period | $34,150 | $25,577 | $8,573 | Notes to Condensed Consolidated Financial Statements (Unaudited) Provides detailed explanations and disclosures for condensed consolidated financial statements 1. The Company and Nature of Business Describes the company's medical device business, product lines, and regulatory clearances - SI-BONE, Inc. is a medical device company that has pioneered a proprietary minimally invasive surgical implant system to fuse the sacroiliac joint for treatment of musculoskeletal disorders of the sacropelvic anatomy[27] - The Company has launched multiple implant product lines, including iFuse-3D (2017), iFuse TORQ (2021), iFuse Bedrock Granite (2022), and iFuse INTRA and iFuse TORQ TNT (2024)[27] - Products have clearances for sacroiliac joint dysfunction, adult spinal deformity, and pelvic trauma in the United States, and sacroiliac fusion, adult spinal deformity, and pelvic fracture fixation in Europe[27] 2. Summary of Significant Accounting Policies Outlines key accounting policies, U.S. GAAP compliance, and segment reporting - The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and SEC rules for interim financial reporting, with certain footnotes condensed or omitted[29] - There have been no material changes to the Company's significant accounting policies as disclosed in the 2024 Annual Report[32] - The Company operates as a single operating and reportable segment, with substantially all revenue derived from U.S. customers (international revenue less than 10%)[33][34] - The Company is evaluating the impacts of new accounting pronouncements: ASU 2023-09 (Income Taxes) effective after December 15, 2024, and ASU 2024-03 (Expense Disaggregation) effective after December 15, 2026[36][37] 3. Marketable Securities Details marketable securities classification, fair value, and unrealized gains/losses - All of the Company's marketable securities are classified as available-for-sale[38] | Marketable Securities | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------- | :--------------------------- | :------------------------------- | | Total Fair Value | $139,215 | $142,420 | - Unrealized losses are generally due to interest rate fluctuations, not credit quality, and are recorded in accumulated other comprehensive income (loss)[39] 4. Fair Value Measurement Explains fair value measurements for financial instruments, including marketable securities - Carrying amounts of cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short maturities[41] | Marketable Securities Fair Value | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------- | :--------------------------- | :------------------------------- | | Level 1 | $135,175 | $140,064 | | Level 2 | $4,040 | $2,356 | | Total | $139,215 | $142,420 | 5. Balance Sheet Components Provides details on key balance sheet items like inventory, property, and accrued liabilities | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------------- | | Inventory | $34,245 | $27,074 | | Property and Equipment, net | $21,701 | $20,374 | | Accrued Liabilities and Other | $16,149 | $19,492 | | Allowance for Credit Losses (end of period) | $911 | $588 | - Inventory increased primarily in finished goods. Accrued liabilities decreased mainly due to lower accrued compensation[43][45] 6. Commitments and Contingencies Discloses lease commitments, purchase commitments, and legal contingencies - The Company extended its Santa Clara office lease to July 31, 2026. Total operating lease liabilities as of June 30, 2025, are $1,424 thousand[47][49] | Commitment Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------- | :--------------------------- | :------------------------------- | | Purchase Commitments | $1,900 | $400 | - The Company received a Civil Investigative Demand from the U.S. Department of Justice in October 2024 related to an investigation under the federal Anti-Kickback Statute and Civil False Claims Act[55] 7. Borrowings Details the company's term loan, principal outstanding, and effective interest rates | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :--------------------------- | :------------------------------- | | Principal outstanding (Term Loan) | $36,000 | $36,000 | | Outstanding debt, net of issuance costs | $35,510 | $35,452 | - The Company entered into a Third Amendment to Loan and Security Agreement with First-Citizens in November 2024, refinancing the existing term loan for $36.0 million, with a maturity date of September 1, 2029[61] | Metric (Effective Interest Rate) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------- | :------------------------------- | :------------------------------- | | Effective Interest Rate | 7.3% | 9.3% | - The Company was in compliance with all debt covenants as of June 30, 2025[63] 8. Stock-Based Incentive Compensation Plans Outlines stock options, RSUs, PSUs, and related stock-based compensation expense | Stock Options | June 30, 2025 | | :---------------------------- | :------------ | | Outstanding Shares | 913,617 | | Weighted Average Exercise Price | $11.40 | | Aggregate Intrinsic Value | $7,689 | | Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :------------ | :---------------- | | RSUs Outstanding | 2,514,767 | 1,884,640 | | PSUs Outstanding | 785,457 | 610,541 | | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total | $6,658 | $6,398 | $13,321 | $13,428 | 9. Net Loss Per Share of Common Stock Presents net loss per share calculations and anti-dilutive securities | Metric (Net Loss Per Share, Basic and Diluted) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss Per Share | $(0.14) | $(0.22) | $(0.30) | $(0.48) | - Outstanding stock options, restricted stock units, ESPP purchase rights, and common stock warrants were anti-dilutive and excluded from diluted net loss per share computation due to net losses in all periods presented[73][74] 10. Income Taxes Discusses income tax provisions, valuation allowances, and impacts of new tax legislation - The Company did not have a provision for income taxes for the three and six months ended June 30, 2025 and 2024[75] - A full valuation allowance is maintained against net deferred tax assets due to uncertainty surrounding their realization[75] - The Company is assessing the impact of the 'One Big Beautiful Bill Act' (OBBBA), signed July 4, 2025, on its financial statements[77] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's perspective on financial performance, condition, and future outlook Overview Provides a high-level overview of the company's medical device business and product portfolio - SI-BONE is a medical device company focused on proprietary minimally invasive surgical implant systems for sacroiliac joint dysfunction and pelvic fixation[79] - The product portfolio includes iFuse, iFuse-3D, iFuse TORQ, iFuse Bedrock Granite, iFuse INTRA, and iFuse TORQ TNT, with various regulatory clearances[80] - Over 127,000 procedures have been performed using the Company's products by over 4,600 physicians in the United States and 38 other countries since 2009[81] Factors Affecting Results of Operations and Key Performance Indicators Outlines key drivers and metrics influencing financial performance and strategic initiatives Expand Access to Solutions Focuses on increasing sales force capacity, productivity, and market penetration - The Company is focused on increasing sales managers' capacity and driving sales force productivity by adding clinical support specialists, implementing hybrid models, and placing instrument trays and implants at select sites[84] | Sales Force Component | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | U.S. Territory Sales Managers | 85 | 85 | | U.S. Clinical Support Specialists | 75 | 67 | | U.S. Third-Party Sales Agents | 295 | 204 | | International Sales Representatives | 10 | 11 | | International Third-Party Sales Agents and Resellers | 29 | 29 | - Over 30% of sacroiliac joint dysfunction procedures for the quarter ended June 30, 2025, were performed at ambulatory surgery centers (ASCs) or Office-Based Labs (OBLs)[86] Physician Engagement Describes strategies for educating physicians and growing product adoption through training - The Company engages and educates physicians and healthcare professionals on the clinical merits and patient benefits of its solutions to grow physician adoption[87] - Training methods include hands-on cadaveric and dry-lab training, as well as the SI-BONE SImulator[88] | Physician Training | June 30, 2025 | June 30, 2024 | | :----------------- | :------------ | :------------ | | U.S. Physicians Trained | >3,600 | >2,900 | | International Physicians Trained | >1,100 | >1,000 | | Surgical Residents and Fellows Trained (since Aug 2018) | ~2,000 | N/A | Expand Addressable Markets Details efforts to expand sacropelvic solutions and clinical trial results for new products - The Company is expanding its platform of sacropelvic solutions to address sacroiliac joint dysfunction, pelvic fixation, and pelvic trauma with a comprehensive product portfolio[91] - Clinical trial results: SILVIA study showed iFuse-3D reduced new-onset SI joint pain; SAFFRON study showed higher mobility recovery with iFuse TORQ for sacral fragility fractures; STACI study showed low adverse event rate and early pain/function improvement with iFuse TORQ[92][93][94] | Research and Development Expenses (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------- | :----------------------------- | :----------------------------- | | R&D Expense | $8,843 | $8,697 | | R&D as % of Revenue | 9% | 11% | Enhance Employee Experience and Engagement Focuses on talent recruitment, development, retention, and workplace culture - The Company focuses on recruiting, developing, and retaining highly skilled talent through a diverse and inclusive workplace, competitive compensation, and health and wellness programs[96] - Strategies include establishing feedback mechanisms, enhancing people manager skills, improving internal communications, and providing ongoing learning and leadership training opportunities[97][98] Gain Operational Efficiency Aims to improve business processes, sales force productivity, and asset utilization - The Company is evolving business processes to identify, measure, and improve operational efficiency, increase sales force productivity, and improve asset utilization[99] | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Trailing Twelve Month Average Revenue per Territory Sales Manager | ~$2.1 million | ~$1.7 million | - Initiatives include working with suppliers to reduce lead times for implants, optimizing product design for manufacturing, and integrating demand planning and manufacturing systems[101] Components of Results of Operations Defines key financial components constituting the company's results of operations Revenue Describes factors influencing implant sales revenue and seasonal variations - Revenue from implant sales fluctuates based on case volume, discounts, U.S./international sales mix, implant pricing, and the number of implants used per patient[102] - The business is affected by seasonal variations, with lower sales in summer and higher sales in the last quarter of the fiscal year, though seasonality does not materially impact annual financial results[103] Cost of Goods Sold, Gross Profit, and Gross Margin Defines cost of goods sold components and their impact on gross profit and margin - Cost of goods sold primarily includes costs of implant components, instruments, instrument tray depreciation, royalties, scrap, inventory obsolescence, and distribution expenses[104] - Cost of goods sold historically increases with case levels and changes in product mix[104] Operating Expenses Outlines operating expense categories, including sales, marketing, R&D, and G&A - Operating expenses consist of sales and marketing, research and development, and general and administrative expenses, with personnel costs being the most significant component[105] - The Company anticipates certain operating expenses will continue to increase to support growth and strategic plans[105] Interest Income Explains interest income sources from cash and marketable securities investments - Interest income is primarily related to investments of excess cash in money market funds and marketable securities[110] Interest Expense Details interest expense components related to borrowings and debt issuance costs - Interest expense is primarily related to borrowings, amortization of debt issuance costs, and accretion of final fees on the First-Citizens Third Amended Loan Agreement[111] Other Income (Expense), Net Covers net foreign exchange gains and losses on international transactions - Other income (expense), net primarily consists of net foreign exchange gains and losses on foreign transactions[112] Results of Operations Detailed comparative analysis of financial performance for reported periods Comparison of the Three Months Ended June 30, 2025 and 2024 Compares financial performance for the three months ended June 30, 2025 and 2024 | Metric (Three Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :----------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Revenue | $48,630 | $39,969 | $8,661 | 21.7% | | Gross Profit | $38,807 | $31,576 | $7,231 | 22.9% | | Gross Margin | 79.8% | 79.0% | 0.8% | 1.0% | | Total Operating Expenses | $45,811 | $41,654 | $4,157 | 10.0% | | Interest Income | $1,520 | $2,015 | $(495) | -24.6% | | Interest Expense | $(666) | $(880) | $214 | -24.3% | - Revenue increase was primarily driven by a $8.6 million increase in U.S. revenue from increased case volumes due to an expanded product portfolio[113] - Operating expenses increased due to a $2.5 million increase in sales and marketing commissions/personnel costs and a $1.4 million increase in general and administrative personnel costs/stock-based compensation, along with a $0.9 million increase in legal and consulting fees[115][117] Comparison of the Six Months Ended June 30, 2025 and 2024 Compares financial performance for the six months ended June 30, 2025 and 2024 | Metric (Six Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :--------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Revenue | $95,920 | $77,836 | $18,084 | 23.2% | | Gross Profit | $76,502 | $61,441 | $15,061 | 24.5% | | Gross Margin | 79.8% | 78.9% | 0.9% | 1.1% | | Total Operating Expenses | $90,986 | $83,562 | $7,424 | 8.9% | | Interest Income | $3,112 | $4,128 | $(1,016) | -24.6% | | Interest Expense | $(1,328) | $(1,761) | $433 | -24.6% | - Revenue increase was primarily driven by a $18.0 million increase in U.S. revenue due to increased case volumes from an expanded product portfolio[121] - Operating expenses increased due to a $4.2 million increase in sales and marketing commissions/personnel costs and a $2.5 million increase in general and administrative personnel costs/stock-based compensation, along with a $1.7 million increase in legal, consulting, and bad debt expense[124][126] Liquidity and Capital Resources Discusses financial position, debt, cash flow, and ability to fund future operations | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :-------------------------- | :------------------------------ | | Cash and Marketable Securities | $145.5 | $150.0 | | Outstanding Debt | $35.5 | $35.5 | | Accumulated Deficit | $(444.0) | $(431.4) | - The Company expects existing cash and marketable securities to fund operating expenses and capital expenditure requirements over the next 12 months[131] Term Loan Details outstanding debt, refinancing terms, maturity, and future principal payments - The Company's outstanding debt is related to a Third Amended Loan Agreement with First-Citizens, which refinanced the existing term loan for $36.0 million in November 2024, maturing on September 1, 2029[135] | Future Principal Payments (in thousands) | | :--------------------------------------- | | 2027: $6,000 | | 2028: $18,000 | | 2029: $12,000 | | Total: $36,000 | | Contractual Obligations | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------- | :--------------------------- | :------------------------------- | | Total | $47,600 | $48,100 | Cash Flows Analyzes cash flow activities from operations, investing, and financing | Cash Flow Activity (Six Months Ended June 30,) | 2025 (in thousands) | 2024 (in thousands) | Change ($) | | :--------------------------------------------- | :------------------ | :------------------ | :--------- | | Net cash used in operating activities | $(4,738) | $(13,905) | $9,167 | | Net cash provided by investing activities | $1,159 | $4,517 | $(3,358) | | Net cash provided by financing activities | $2,336 | $1,881 | $455 | - The decrease in net cash used in operating activities was mainly due to decreased net loss, net of non-cash items, and improved collections, partially offset by higher inventory build-up and lower accrued liabilities[141] Critical Accounting Policies, Significant Judgments, and Use of Estimates Highlights critical accounting policies and significant management estimates - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts[144] - There have been no material changes to the descriptions of critical accounting policies, judgments, and estimates since the 2024 Annual Report[145] Seasonality Discusses historical seasonal sales patterns and their impact on financial results - The Company historically experiences lower sales in the summer months and higher sales in the last quarter of the fiscal year[146] - Seasonality does not have a material impact on the Company's financial results from year to year[146] Item 3. Quantitative and Qualitative Disclosures About Market Risk Describes exposure to market risks, specifically foreign currency and interest rate risk Foreign Currency Exchange Risk Assesses exposure to foreign currency fluctuations and their potential impact - The Company has foreign currency risks related to revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the Euro[148] - Changes in exchange rates, particularly a strengthening U.S. dollar, may negatively affect revenue and operating results[148] - Foreign currency gains or losses were not material, and a hypothetical 100 basis point change in exchange rates would not have a material impact[149] Interest Rate Risk Evaluates exposure to interest rate changes on investments and floating-rate debt - Exposure to interest rate changes relates to interest earned on cash/investments and interest paid on the floating-rate Third Amendment Term Loan[150][151] - The Company's investment policy focuses on capital preservation and liquidity, not trading or speculative purposes[150] - A hypothetical 100 basis point change in market interest rates would not have a material impact due to the low-risk profile of investments and the amount of the term loan[151] Item 4. Controls and Procedures Details disclosure controls and procedures, including effectiveness and internal control changes Evaluation of Disclosure Controls and Procedures Describes the design and effectiveness of disclosure controls and procedures - Disclosure controls and procedures are designed to ensure information required for SEC reports is recorded, processed, summarized, and reported timely[152] - The CEO and CFO concluded that, as of June 30, 2025, the Company's disclosure controls and procedures were effective at the reasonable assurance level[154] Changes in internal control over financial reporting Reports on any material changes in internal controls over financial reporting - During the quarter ended June 30, 2025, there were no material changes in the Company's internal controls over financial reporting[155] PART II - OTHER INFORMATION Item 1. Legal Proceedings Discloses legal proceedings, noting no material adverse effects except for a disclosed investigation - The Company is involved in various claims, complaints, investigations, and legal actions arising in the normal course of business[156] - Except for the Investigation mentioned in Note 6, no material legal proceedings are pending that would have a material adverse effect on the Company[156] Item 1A. Risk Factors Updates significant risks, including supply chain, manufacturing, and stock price volatility - No material changes from the risk factors previously disclosed in the 2024 Annual Report, but additional risks and uncertainties may exist[157] - Disruptions in the supply of materials and components (e.g., titanium) or sterilization services by third-party suppliers could adversely affect the business[158][159] - Various factors outside direct control, such as sterilization failures, transportation risks, supply chain disruptions (including inflation), and natural disasters, may adversely affect manufacturing and distribution[160][162] - The price of common stock may be volatile due to macroeconomic factors, company performance, industry trends, and potential securities litigation[161][163] - Inadequate funding for the FDA and other government agencies, or disruptions to their workforces, could hinder product development and commercialization[164][166] - Uncertainty in the coverage and reimbursement environment for sacroiliac joint fusion procedures (CPT Codes 27279 and 27278) may decrease demand for products and negatively impact the business[168][170][171] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds States no unregistered sales of equity securities or use of proceeds to report - None[172] Item 3. Defaults Upon Senior Securities Indicates no defaults upon senior securities during the reported period - None[173] Item 4. Mine Safety Disclosures States that mine safety disclosures are not applicable to the company - Not Applicable[174] Item 5. Other Information Discloses Rule 10b5-1 trading arrangements by certain Section 16 officers and directors - Michael Pisetsky (Chief Business & Legal Affairs Officer) adopted a Rule 10b5-1 trading arrangement on June 13, 2025, for up to 238,985 shares[176] - Jeffrey W. Dunn (Chairman of the Board of Directors) adopted a Rule 10b5-1 trading arrangement on May 8, 2025, for up to 240,000 shares[176] - No other directors or executive officers adopted Rule 10b5-1 trading arrangements during the three-month period ended June 30, 2025[177] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including corporate documents and certifications - Exhibits include Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws, and various agreements[178] - Certifications of Principal Executive Officer and Principal Financial Officer (31.1*, 31.2*, 32.1*) are filed or furnished[178][179] - Inline XBRL Instance Document and Taxonomy Extension Documents are included[178] SIGNATURES Contains official signatures of CEO and CFO certifying the Form 10-Q filing - The Report was signed by Laura A. Francis (Chief Executive Officer) and Anshul Maheshwari (Chief Financial Officer) on August 5, 2025[184][185]