Tenon Medical, Inc. Q1 FY2025 earnings call

• Continued progress in building evidence for the Catamaran approach and technique, with the upcoming full launch of the new SE platform in midyear.
• FDA cleared the Catamaran SI Joint Fusion System for an extended indication in augmenting thoracolumbar fusion.
• Received two European patents for the Catamaran SI joint fixation device, expanding the intellectual property portfolio.
• Post-market MAINSAIL study showed statistically significant reduction in SI joint pain and disability, robust safety profile, and high patient satisfaction. The second interim analysis to be published midyear 2025.
• Hosted 34 physicians in Catamaran workshops during Q1 2025.
• Received $7.1 million in gross proceeds from equity financing in March 2025, boosting cash balance to $10.3 million at quarter end.

In the first quarter of 2025, Tenon Medical's revenue was $726,000, an increase of 1% compared to $719,000 in the first quarter of 2024. The increase was due to more implants per surgical procedure, partially offset by a slight decrease in average selling price. Gross profit in Q1 2025 was $323,000, which is 44% of revenue, whereas in the comparable year-ago quarter, gross profit was $470,000, 65% of revenue. Operating expenses were flat at $4 million for Q1 2025 compared to Q1 2024. Net loss was $3.6 million in Q1 2025, same as the prior year quarter. Cash and cash equivalents totaled $10.3 million as of March 31, 2025, up from $6.5 million as of December 31, 2024.

• Anticipate improvement in revenue trajectory due to resolving reimbursement pre-authorization headwinds as coding clarifications come through.
• Upcoming Catamaran SE commercial launch and publication of the second interim analysis of the MAINSAIL study are expected to be growth catalysts.
• Plan to invest in commercial expansion, workshop/training programs, launching the Catamaran SE platform, and completing the MAINSAIL trial.

• Reimbursement pre-authorization headwinds due to coding confusion, which are transient but need time to resolve.
• Dependence on successful commercial launch of SE platform and positive reception of clinical data for market adoption.

Q: How would you describe the trajectory of top-line revenues through the year and expectations for 2Q?

A: Expect incremental growth as reimbursement environment improves with coding clarifications and as commercial resources are onboarded. Reimbursement issues won't be resolved overnight but are anticipated to improve over time.

Q: Is the SE launch an inflection point?

A: Believe the SE launch is an inflection point as it provides a smaller, lower profile implant beneficial for revision surgeries and will bring more physicians into adoption.

Q: How does the new indication for multiple spinal fusion surgeries expand the total addressable market?

A: Augmenting thoracolumbar fusion with Catamaran immobilizes the SI joint, protecting hardware and allowing healing, tapping into a large market of thousands of annual procedures in the U.S.

Q: Reaction from physicians to the new FDA clearance and reimbursement?

A: Physicians are interested as it addresses a hot topic in sacropelvic component of long spinal constructs. Reimbursement is seen as applicable using existing codes for SI joint fusion.

Q: Success in targeting physicians for workshops?

A: Targeting improved by having data to target appropriately and being able to bring training to physicians' clinics using synthetic models for convenient training.