SI-BONE, Inc.

Good afternoon and welcome to CYBONE's second quarter 2025 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 Saqib Iqbal, Vice President, FP&A and Investor Relations at CYBONE for a few introductory comments. You may begin.

Earlier today, SI Bone released financial results for the quarter ended June 30th, 2025. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management's remarks today may include forward-looking statements within the meaning of federal securities laws which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, such as our most recent Form 10-K, and actual results might differ materially from any forward-looking statements that we make today. Accordingly, you should not place undue reliance on these statements, These forward-looking statements may speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements except as required by law. During the call, management may discuss certain non-GAAP measures, including the company's adjusted EBITDA results. Unless otherwise noted, any reference to profitability is in terms of positive adjusted EBITDA. For a reconciliation of these non-GAAP measures to GAAP accounting, please see the company's full earnings release issued earlier today. Unless otherwise noted, all results are compared to the comparable period in the prior year. With that, I'll return the call over to Laura.

Thanks, Akev. Good afternoon, and thank you for joining us. Since our inception, our strategy has been to build a unique platform of solutions, targeting some of the most challenging procedures, and patients treated by our physicians. Our proprietary solutions improve surgical outcomes with stronger fixation infusion and lower failure rates. This is recognized and supported by clinical data and favorable reimbursement. We're delivering on that strategy with another quarter of strong and profitable revenue growth supported by the increasing adoption of our platform. We had a record number of US physicians perform our procedures this quarter. reinforcing the expanding reach and clinical acceptance of our differentiated solutions. We added an important growth engine to our international markets with the successful launch of iFuse TORQ in Europe. Our strong top-line growth, coupled with our disciplined operating approach, enabled us to deliver our third consecutive quarter of positive adjusted EBITDA. Alongside maintaining consistent profitability, we reached an important cash flow milestone. We achieved cash flow break-even in the quarter, well ahead of our original timeline. Notably, we accomplished this while continuing to invest in building surgical capacity to support demand for our existing products, as well as invest in product innovation to drive future growth. In the second quarter, we delivered worldwide revenue growth of approximately 22%. U.S. revenue, which accounts for 95% of our business, grew approximately 23%. U.S. revenue growth was supported by a 25% increase in procedure volumes, reaffirming the robust underlying demand we continue to see across our target markets. The volume growth was broad-based. We experienced double-digit percentage growth in volume across all the modalities we serve. This robust volume growth reflects the rapid adoption of last year's new offerings and sustained momentum in our existing solutions. Our surgeon base expanded rapidly in the quarter as we experienced double-digit percentage growth across all our call points. This was also our fifth consecutive quarter of sequential growth in the physician base. Our average territory productivity reached a new high watermark, underscoring the strength of our commercial execution. The high value of our unique solutions is recognized by payers, providers, and regulators, and is reflected in the favorable reimbursement decisions and designations for IFUS Torque TNT and IFUS Bedrock Granite. These decisions validate our leadership and facilitate physician and patient access to our high-quality solutions. With a target of over half a million annual procedures in the U.S., our current portfolio has significant growth potential. Meanwhile, new solutions in the pipeline are poised to target new addressable markets. as we leverage our knowledge of dealing with patients with poor bone quality and deepening penetration of existing target markets by meeting the diverse needs and preferences of physicians. Now, I'd like to highlight the progress we've made on our four key priorities, innovation in key markets, physician engagement, commercial execution, and operational excellence. Starting with innovation in the area of SI joint dysfunction, our commitment to offering the most comprehensive portfolio of solutions tailored to physicians' varied needs and preferences continues to prove effective. In the second quarter, the number of physicians performing our SI joint dysfunction procedure grew by double-digit percentage points. While surgeons account for the majority of our SI joint dysfunction volume, A growing base of interventional spine physicians are engaging us as they incorporate our procedures in the practice. On the product front, IFUSE TORQ has become a preferred solution, especially among the newly trained physicians. IFUSE InterAdoption is growing in markets where the interventional spine physicians initially prefer an in-office or L-graph solution, and the reimbursement for CPT-27278 is clearly defined. On the clinical front, early safety data from our STACY study was published in Pain Medicine. STACY is the first study to evaluate lateral SI joint fusion using our iFuse torque implant when performed by interventional spine physicians. The data is consistent with the published surgical literature supporting the safety and effectiveness of lateral SI joint fusion as performed by this physician specialty. A manuscript detailing the six-month primary endpoint outcomes is currently under peer review at a prominent journal. We're excited to announce that in June, we received regulatory approval to launch iFEWS TORQ in Europe. If early reception from surgeons and interventionalists is any indication of future demand, we expect TORQ to accelerate adoption and growth across our international markets. In July, we completed cases across various European markets, And in several instances, even converted physicians in the past used competitive products. Moving to pelvic fixation, since the launch of the iFuse Bedrock Granite platform in 2022 and the subsequent addition of iFuse Bedrock Granite 9-5 last year, we have led the industry in providing sacral pelvic solutions for spinal deformity and degenerative conditions requiring surgical intervention. Granite has been a stellar success. with the potential to reduce the nearly 24% failure rate of lumbopelvic fixation. Granite 9-5 continues to have a trifecta effect on the business. First, it was a key contributor to our physician growth. Second, it allowed us to build a deeper relationship with our customers. Granite was the crucial driver of the 24% growth in the number of physicians performing more than one type of procedure in the quarter. Third, the number of Granite cases utilizing four implants grew approximately 50% in the quarter. This has contributed to our strong average selling price per procedure. On the reimbursement front, Granite has a transitional pass-through payment, including a $0 device offset, which CMS has proposed to continue for calendar year 2026 procedures. we see additional tailwinds for granted in the significant changes proposed by CMS for hospital outpatient payments. For higher cost lumbar fusion procedures, a level seven APC payment of nearly $28,000 has been proposed to compensate hospitals for complex multi-level spinal fusion procedures performed on an outpatient basis starting in calendar year 2026. In addition, CPT27280 describing open SI joint fusion was removed from the inpatient only list. We believe these changes will provide a tailwind for our business as some of these procedures migrate to the lower cost site of service. Granite will be an economically viable component of these procedures and can be an important part of the outpatient care for these patients. Moving to pelvic trauma, IFUSE TORQ TNT, which was awarded a breakthrough device designation from the FDA, is ramping ahead of expectations as a record number of surgeons use TNT in the second quarter. For an active dialogue to significantly expand our agent partnerships to help trauma surgeons gain access to this breakthrough technology for their patients, which is targeted toward pelvic fragility fractures. With nearly 60,000 potential target procedures annually, the pelvic trauma market has the potential to be a significant growth driver for the business. We're pleased with the finalized new technology add-on payment for inpatient procedures for TNT. The NTAP will be effective starting October 1st, 2025. This add-on payment of over $4,100 translates to a 20 to 30% reimbursement increase to the hospital for pelvic fracture fixation for Medicare patients. We believe higher reimbursement for hospitals by the NTAP will expand access to our technology for trauma patients and provide additional momentum to TNT's already strong start. Turning to our pipeline, innovation remains a core tenant of our long-term growth strategy. We have a track record of applying our proprietary technology, biomechanical expertise, clinical data, and real-world experience to expand into new modalities, We identified pressing clinical needs where our platform technology superior fixation and fusion capabilities can improve surgical outcomes. For the new SI joint solution we mentioned in prior calls, we expect to submit our 510K application to the FDA soon and remain on track for commercial launch later in the first quarter of 2026. The solution leverages our 3D engineering and design expertise, as well as our clinical experience with intra. We believe the solution is optimized for the ASC environment and will allow us to reach an even broader group of physicians and extend our leadership position at that site of service. We're also excited about the significant progress on the technology milestones underpinning our third breakthrough device, which we discussed on the prior earnings call. We believe this novel solution has the potential to become the standard of care for addressing one of the most pressing needs in spine surgery. Based on this encouraging progress, we anticipate filing our 510 for this groundbreaking product sometime in the second half of 2026. Next, let's move on to physician engagement. In the second quarter, a record 1,440 US physicians performed procedures using our products, representing an increase of 25% over the prior year period. The double-digit percentage growth across all our call points highlights the broad-based demand for our differentiated solutions. The elevated level of physician interest is an outcome of our commercial team's efforts to drive deeper engagement with existing customers and successful expansion across all our call points. Our thoughtful platform expansion strategy clearly resonates with our customer base. Our platform supports multiple procedure types and many physicians who adopt one of our solutions increase their utilization over time and are more likely to adopt additional solutions. Physicians who performed a case in the second quarter of 2025 and 2024 averaged nearly five procedures per physician. This was double compared to the number of procedures performed by our physicians who were not active on our platform a year ago. Our academic programs remain a key contributor to our active physician and revenue growth. In the second quarter, revenue generated from physicians who were previously trained as residents and fellows grew by 63% year-over-year, highlighting the outsized impact of these programs. Now let's turn to commercial execution. Our U.S. commercial team delivered another strong quarter, driven by our focused go-to-market strategy and operational excellence across our 85 territories. our trailing 12 months revenue per territory increased to $2.1 million, representing 23% growth over the comparable prior year period. While we will add new territories over the next 12 months, we believe our hybrid commercial model will allow us to drive incremental productivity improvement over time. The hybrid model provides territory managers with the ability to maintain strong connectivity with their customers, focus on market development and expansion opportunities, while also allowing our sales agents to focus on case coverage. In 2022, when we were in the early stages of our hybrid model expansion, we did 11,500 procedures across 85 territories. Procedures have since grown by 70% to 20,000 in the trailing 12 months, while the number of territories is unchanged at 85, demonstrating the effectiveness and efficiency of our hybrid model. Before I hand it over to Anshul, I'd like to provide a leadership update. Tony Recupero, our President of Commercial Operations, has announced his decision to retire. Since joining the company in 2016, Tony has been instrumental in expanding SI Bones' footprint, building a high-performance sales organization, and delivering sustained revenue growth, while significantly increasing the company's influence across the industry. We're deeply grateful for his leadership, vision, and the lasting impact he's made on SI Bone. Tony's retirement will be effective February 2026, at which point he will transition to an advisory role for a 12-month period. I want to thank Tony for his outstanding leadership, partnership, and friendship over the past decade. Nicholas Kerr will take on the role of Chief Commercial Officer effective February 2026. Nick joined SI Bone in 2016, and currently serves as Senior Vice President of Product, Marketing, and Business Development. Throughout his tenure, Nick has been a driving force behind the company's innovation strategy, market expansion, and commercial evolution. With more than 25 years of experience in the medical device industry, Nick brings a unique combination of strategic foresight, customer-centric leadership, and operational expertise. I would like to congratulate Nick on the promotion. We have a seamless transition plan in place. I'm confident that our seasoned sales team will continue to execute and deliver exceptional performance under the direction of our deeply experienced leadership team. With that, I'll hand over the call to Anshul to provide an update on our fourth key priority, operational excellence, and share our second quarter results and updated guidance in more detail.