Tenon Medical, Inc. Q3 FY2024 earnings call

• Focused on building market share for the Catamaran System and securing capital for growth.
• Third quarter revenue decline due to unexpected reimbursement preauthorization headwinds, but expect coding clarity and clinical data to help.
• Completed commercialization and technical advances, including the Catamaran SE, a second-generation smaller version.
• Received an investment in September 2024, with net proceeds used to expand sales force, advance post-market study, and launch Catamaran SE.
• Completed restructured sales operations in Q2, with momentum continuing.
• Significant progress in clinical research, with interim analysis of MAINSAIL study showing positive outcomes.
• Received three patents related to the Catamaran prosthesis, strengthening competitive position.

In the third quarter of 2024, revenue was $887,000, a 6% decrease compared to the third quarter of 2023. Revenue for the nine months ended September 30, 2024, was $2.5 million, an 18% increase compared to the prior year period. Gross profit in the third quarter of 2024 was $418,000, or 47% of revenue, while for the nine months ended September 30, 2024, gross profit was $1.4 million, or 54% of revenue. Operating expenses totaled $3.6 million in the third quarter of 2024 and $12 million for the nine months ended September 30, 2024. Net loss was $3.2 million in the third quarter of 2024 and $10.6 million for the nine months ended September 30, 2024. As of September 30, 2024, cash and cash equivalents totaled $9.2 million, and the company received net proceeds of approximately $9.6 million within the quarter from an investment and additional equity financings.

• Expect future coding clarity and clinical data to positively impact reimbursement issues.
• Plan to use proceeds to expand sales force, continue post-market study, and launch Catamaran SE.
• Anticipate sustainable revenue growth supported by capital resources, expanding commercial infrastructure, and new SE platform.
• Upcoming patient post-market data to drive payer coverage and sales growth in 2025.

• Reimbursement is regional and can have coding confusion, which may impact revenue.
• Market competition in the SI Joint Fusion space.
• Delays in clinical data publication could affect payer coverage.

Q: What specifically caused the unexpected reimbursement preauthorization headwinds and has it continued into the fourth quarter or been resolved?

A: Reimbursement is regional with coding confusion, which is a transient issue. Anticipate coding clarity from AMA and CMS to help, and data will also aid in coverage. It's regional and improving, but still has some variability.

Q: How would you describe recent physician feedback on the system and have you made changes based on it?

A: Feedback on Catamaran SE has been positive. Catamaran SE is a smaller version to meet different physician needs regarding incision size and implant preference, responding to their desires.