SI-BONE (SIBN) Q2 2025 Earnings Call August 04, 2025 04:30 PM ET Speaker0Good afternoon, and welcome to CyBone's Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Saqeb Iqbal, vice president, FP and A and investor relations at Saibone, for a few intro ...

Financial Data and Key Metrics Changes - Worldwide revenue for the quarter reached $47.3 million, representing approximately 25% growth compared to the prior year [6][27] - U.S. revenue was $44.8 million, reflecting approximately 27% growth, driven by a 27.3% increase in procedure volume [7][28] - Gross profit was $37.7 million, an increase of $7.8 million or 26.2%, with a gross margin rate of 79.7%, improving by nearly 80 basis points [28] - Net loss narrowed to $6.5 million or $0.15 per diluted share, compared to a net loss of $10.9 million or $0.27 per diluted share in the prior year [29] Business Line Data and Key Metrics Changes - The company experienced broad-based demand for existing technologies and rapid adoption of new solutions launched last year [7][9] - The number of four implant Granite cases grew approximately 69% compared to the prior year period [14] - The introduction of iFuse Torque and iFuse Intra has expanded the market and accelerated procedure volume growth [11][12] Market Data and Key Metrics Changes - The total addressable market has increased to over $3.5 billion, with 25% cumulative procedure volume growth over the last three years [10][11] - The company is targeting nearly 100,000 degenerative procedures annually with the Granite product, which became eligible for transitional pass-through payment starting January 1, 2025 [14] - The pelvic trauma market, with nearly 60,000 potential target procedures annually, represents a $300 million market opportunity [18] Company Strategy and Development Direction - The company focuses on innovation, engagement, commercial execution, and operational excellence as key priorities [10] - A hybrid commercial model combining territory managers and clinical specialists with third-party agents is being utilized to enhance market reach [25] - The company plans to launch new products over the next twelve to eighteen months, including a new SI joint fusion solution and a breakthrough device targeting spine surgery [19][87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for solutions and the ability to maintain strong revenue growth despite macroeconomic uncertainties [32][56] - The company updated its full-year revenue guidance to a range of $193.5 million to $197.5 million, implying year-over-year growth of approximately 16% to 18% [33][34] - Management highlighted the importance of favorable reimbursement trends and the potential for continued growth in procedure volumes [15][56] Other Important Information - The company exited the quarter with $144.4 million in cash and marketable securities, with a total cash usage of $5.6 million, a 31.7% improvement over the prior year [30] - The company does not anticipate any material impact on gross margins or supply chain from proposed tariffs, as most manufacturing is domestic [31] Q&A Session Summary Question: Contribution from new products and channels to growth - Management noted broad-based growth across all modalities, with strong demand for new products launched in 2024 contributing to accelerating growth [39] Question: Drivers of strong gross margin and future expectations - Management attributed gross margin improvement to better-than-expected average selling prices and supply chain efficiencies, while remaining cautious about potential pressures [42][46] Question: Long-term growth potential and guidance - Management expressed confidence in sustained growth potential beyond 2025, driven by technology leadership and expanding physician engagement [55] Question: Sequential growth expectations and guidance update - Management indicated that while they expect to maintain strong growth, they are being prudent in their guidance due to macroeconomic conditions [64] Question: Operating expenses and growth expectations - Management highlighted that increased operating expenses are linked to R&D investments and sales commissions, but they expect to maintain healthy operating leverage [70]

Financial Data and Key Metrics Changes - Worldwide revenue for Q1 2025 reached $47.3 million, representing approximately 25% growth compared to the prior year [6][26] - U.S. revenue was $44.8 million, reflecting approximately 27% growth, driven by a 27.3% increase in procedure volume [7][26] - Gross profit was $37.7 million, an increase of $7.8 million or 26.2%, with a gross margin rate of 79.7% [27] - Net loss narrowed to $6.5 million or $0.15 per diluted share, compared to a net loss of $10.9 million or $0.27 per diluted share in the prior year [28] - Positive adjusted EBITDA of approximately $5 million compared to an adjusted EBITDA loss of $4 million in Q1 2024 [29] Business Line Data and Key Metrics Changes - The company experienced broad-based demand for existing technologies and rapid adoption of new solutions launched in 2024 [7][39] - The number of physicians performing procedures using the company's products grew by 27%, with over 1,400 U.S. physicians engaged [19] - The number of four implant Granite cases grew approximately 69% compared to the prior year period [13] Market Data and Key Metrics Changes - The total addressable market has increased to over $3.5 billion, with a cumulative procedure volume growth of 25% over the last three years [9][10] - The company is targeting nearly 100,000 degenerative procedures annually with its Granite product, which became eligible for transitional pass-through payment starting January 1, 2025 [13][14] Company Strategy and Development Direction - The company focuses on innovation, engagement, commercial execution, and operational excellence as key priorities [9] - The strategy includes diversifying the product platform with unique yet complementary technologies to expand the target modalities and physician footprint [9][10] - The company aims to reach 100 territories over the next 12 to 15 months, leveraging a hybrid commercial model combining territory managers and third-party agents [24][58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong results over the long term, supported by resilient business trends and favorable reimbursement conditions [8][9] - The updated full-year revenue guidance is between $193.5 million to $197.5 million, implying year-over-year growth of approximately 16% to 18% [32] - Management noted that the company is well-positioned to achieve free cash flow in 2026, with a focus on maintaining operational discipline [30][32] Other Important Information - The company has a strong pipeline of novel technologies under development, with plans to launch new products over the next 12 to 18 months [16][18] - The company does not anticipate any material impact on gross margins or supply chain from proposed tariffs, as most manufacturing is domestic [30][31] Q&A Session Summary Question: Contribution from new products and channels to growth - Management noted broad-based growth and strong demand for current solutions, with impressive adoption of new products launched in 2024 [39] Question: Drivers of gross margin and future expectations - Management highlighted better-than-expected average selling price (ASP) and efficiency initiatives as key drivers of gross margin improvement [42][44] Question: Long-term growth expectations - Management expressed confidence in sustained growth potential, driven by technology leadership and expanding physician engagement [53][56] Question: Expected cadence of new guidance and sequential growth - Management indicated that while they do not think about the business in quarters, they expect to manage seasonality effectively with new product rollouts [66] Question: Operating expenses guidance - Management explained that elevated R&D investments and higher commissions linked to revenue growth are driving the expected increase in operating expenses [70][72] Question: Update on surgeon base and engagement - Management reported a record increase in the physician base, with broad engagement across various specialties [76][78] Question: Updates on reimbursement proposals - Management provided insights on CMS proposals and the potential for increased reimbursement rates, which could accelerate adoption of products [80][81] Question: Traction and adoption of TNT product - Management noted that TNT is seeing rapid adoption and is expected to benefit from upcoming reimbursement changes [97]