Treace(TMCI) - 2025 Q2 - Quarterly Report

Special Note Regarding Forward-Looking Statements Forward-Looking Statements Overview This section highlights forward-looking statements about the Company's business, operations, and financial performance, subject to risks and uncertainties - The report contains forward-looking statements concerning business, operations, and financial performance, identifiable by terms like 'anticipate,' 'expect,' 'plan,' and 'will'[10] - Key forward-looking statements include expectations for product use, business growth, profitability, market share, expense control, new product development, balance sheet strength, seasonality, economic impacts, reimbursement, and intellectual property protection[11][15] - Actual results may differ materially from expectations due to unpredictable events and factors, including those outlined in the Annual Report on Form 10-K and the 'Risk Factors' section of this Quarterly Report[12] Part I: Financial Information Item 1. Condensed Financial Statements This section presents Treace Medical Concepts' unaudited condensed financial statements, covering balance sheets, income, equity, and cash flows Condensed Balance Sheets Condensed Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------ | :---------------- | :---------------- | :--------- | | Total current assets | $147.6 | $161.4 | $(13.8) | -8.55% | | Total assets | $206.4 | $217.1 | $(10.7) | -4.91% | | Total current liabilities | $41.9 | $34.9 | $7.0 | 19.97% | | Total liabilities | $108.8 | $104.2 | $4.6 | 4.44% | | Total stockholders' equity | $97.6 | $112.9 | $(15.3) | -13.53% | - Cash and cash equivalents decreased from $11.4 million at December 31, 2024, to $8.1 million at June 30, 2025, a decrease of 29.05%[18] - Accounts receivable, net, decreased from $40.8 million at December 31, 2024, to $30.3 million at June 30, 2025, a decrease of 25.67%[18] Condensed Statements of Operations and Comprehensive Loss Condensed Statements of Operations and Comprehensive Loss (in millions, except per share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Revenue | $47.4 | $44.5 | 6.6% | $100.0 | $95.6 | 4.6% | | Gross profit | $37.8 | $35.7 | 5.8% | $79.6 | $76.7 | 3.9% | | Loss from operations | $(17.0) | $(21.4) | -20.6% | $(32.6) | $(40.4) | -19.3% | | Net loss | $(17.4) | $(21.2) | -18.0% | $(33.3) | $(39.9) | -16.5% | | Net loss per share, basic and diluted | $(0.28) | $(0.34) | -17.6% | $(0.53) | $(0.64) | -17.1% | - Sales and marketing expenses decreased by 12.2% for the three months ended June 30, 2025, and by 11.3% for the six months ended June 30, 2025, compared to the same periods in 2024[20] - General and administrative expenses increased by 13.5% for the three months and 11.7% for the six months ended June 30, 2025, compared to the same periods in 2024[20] Condensed Statements of Stockholders' Equity Changes in Stockholders' Equity (in millions) | Item | December 31, 2024 | June 30, 2025 | | :------------------------------------ | :---------------- | :------------ | | Total Stockholders' Equity | $112.9 | $97.6 | | Accumulated Deficit | $(190.0) | $(223.3) | | Additional Paid-In Capital | $303.0 | $321.5 | | Common Stock Outstanding Shares | 62,361,710 | 63,042,314 | - Net loss for the six months ended June 30, 2025, was $(33.3) million, contributing to the accumulated deficit[23] - Share-based compensation expense totaled $18.3 million for the six months ended June 30, 2025, increasing additional paid-in capital[23] Condensed Statements of Cash Flows Condensed Statements of Cash Flows (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $1.1 | $(21.1) | | Net cash provided by (used in) investing activities | $(5.2) | $26.2 | | Net cash provided by (used in) financing activities | $0.7 | $0.1 | | Net increase (decrease) in cash and cash equivalents | $(3.3) | $5.2 | | Cash and cash equivalents at end of period | $8.1 | $18.2 | - Operating activities generated $1.1 million in cash for the six months ended June 30, 2025, a significant improvement from a $21.1 million cash usage in the prior year period[26][121][122] - Investing activities used $5.2 million in cash for the six months ended June 30, 2025, primarily due to purchases of marketable securities and property and equipment, contrasting with a $26.2 million cash generation in the prior year[26][123][124] Notes to Condensed Financial Statements 1. Formation and Business of the Company Treace Medical Concepts, Inc. is a medical technology company focused on surgical management of bunion and midfoot deformities - Treace Medical Concepts, Inc. is a medical technology company focused on advancing surgical management of bunion and related midfoot deformities[28] - The company pioneered the Lapiplasty® 3D Bunion Correction System, which corrects bunion deformities across three planes and secures the unstable joint[28] - Product offerings have expanded to become a comprehensive bunion solutions company, further penetrating the bunion market[28] 2. Summary of Significant Accounting Policies This section outlines the company's significant accounting policies, including adherence to U.S. GAAP and SEC regulations for interim financial reporting - The unaudited interim condensed financial statements adhere to U.S. GAAP for interim financial information and SEC regulations for Form 10-Q[29] - Management makes estimates and assumptions affecting reported amounts, which may materially differ from actual results[32] - The company operates as a single reportable segment, focusing on medical devices for bunion and midfoot deformities[37] 3. Recent Accounting Pronouncements The company is evaluating the impact of new accounting standards, ASU 2023-09 and ASU 2024-03, on its financial statements and disclosures - ASU 2023-09 (Income Taxes) requires public entities to disclose specific categories in rate reconciliation and additional information for material reconciling items, effective for annual periods beginning after December 15, 2024[39] - ASU 2024-03 (Expense Disaggregation Disclosures) mandates tabular disclosure of certain natural expenses (inventory purchases, employee compensation, depreciation, intangible asset amortization) and qualitative descriptions for remaining captions, effective for annual periods beginning