SI-BONE, Inc.

Good afternoon, and welcome to SideBone's third quarter 2025 earnings conference call. At this time, all participants are in 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'll now turn the call over to Saqib Iqbal, Vice President, FP&A Investment Relations at SideBone for a few introductory comments. Please go ahead.

Earlier today, SI Bone released financial results for the quarter ended September 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 may 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 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 also 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 turn the call over to Laura.

Thanks, Saqib. Good afternoon, and thank you for joining us. In the third quarter, we continued to advance our vision to provide better outcomes for patients with compromised bone. Our strong performance in the quarter reflects the continuation of healthy demand trends and our disciplined execution over the last several quarters. We delivered another quarter of a robust revenue growth, achieved sustained adjusted EBITDA profitability, and reached a major milestone in delivering positive operating cash flow. Additionally, we successfully commercialized iFuse Torque in Europe and made significant progress on the two new products expected to launch in 2026. Our worldwide revenue reached $48.7 million in the third quarter. representing approximately 21% growth. In the U.S., our revenue grew over 21% to $46.4 million, driven by growing adoption of our solutions. We also experienced a notable increase in international revenue growth in the back half of the quarter, fueled by the launch of iFuse Torque. This consistency of more than 20% annual top-line growth speaks to the strength and balance across our portfolio. Our flagship solutions continue to perform well in a large, under-penetrated market, while our newer products are gaining meaningful traction and accelerating our overall growth trajectory. This is evident in the double-digit volume growth across all modalities and the record number of physicians we added in the quarter. The progress we made on profitability and cash flow is equally exciting. we delivered positive adjusted EBITDA of $2.3 million for the quarter, which translated to an adjusted EBITDA margin of approximately 5%. We also achieved our second consecutive quarter of net cash flow breakeven, and importantly, our first quarter of meaningful positive cash flow from operating activities. Achieving these milestones at a stage in our growth when many companies are still consuming cash to reach scale underscores the real strength of our differentiated platform, hybrid commercial model, and operating discipline. Now, I'd like to highlight the progress we made on our four key priorities, innovation, physician engagement, commercial execution, and operational excellence. I'll begin with innovation. Our platform was built to address complex challenges in sacropelvic anatomy. an area where bone density is often poor and mechanical stability is critical. We're focused on improving surgical outcomes for patients with compromised bone across multiple modalities. Over the last four years, we've harnessed our biomechanical and clinical expertise to create an industry-leading platform We pioneered the sacroiliac joint fusion category and continue to extend our leadership position with both surgeons and interventional spine physicians. Led by iFuse TORC, our growing surgeon procedure volume represents the majority of our SI joint dysfunction business. In parallel, adoption with the interventional call point continues to grow. In the third quarter, our interventional case volume doubled compared to Q3 2024, as physicians recognize the value of our clinically validated solutions and comprehensive commercial expertise. TORC and INTRA have positioned SI-BON as the preferred partner for interventional spine physicians. Over the last year, we believe INTRA has become recognized as the leading percutaneous implant system for SI joint procedures when performed in office-based labs. For 2026, CMS has finalized a 17% increase in reimbursement for office-based SI joint procedures. The growing physician interest and the improved reimbursement environment are strong tailwinds for our interventional business. Building on the learnings from TORQ and INTRA, we recently filed the 510 application for our next generation technology. This solution optimizes the physician workflow across all sites of service. but with a focus on ambulatory surgery centers. Assuming normalized FDA operations, we anticipate launching this product in the first quarter of 2026. We believe this technology will drive market penetration and extend our leadership within this fast-growing site of service. We leveraged our expertise in treating SI joint dysfunction to redefine the standard of care for spinal pelvic fixation with the launch of iFuse Bedrock Granite. Granite has been highly successful in the adult 40 market and remains a key contributor to our revenue and physician growth. Additionally, the number of procedures using more than two granite implants per case grew approximately 40% in the quarter, which resulted in the stronger-than-anticipated procedure average selling price. In October, we received FDA 510K clearance for instruments that enhance procedural flexibility for surgeons, and allow the use of granite and torque within robotic workflows. Early feedback from the field has been encouraging, and we're well-positioned to drive adoption and expand our foothold in this segment. The majority of our granite volume has come from adult deformity procedures. With the introduction of Granite 9-5, we're steadily expanding into the degenerative spine procedure market, which represents nearly 100,000 annual procedures that ended at the sacrum. Physician interest continues to grow, and we're investing in additional surgical capacity to meet rising demand. Proposed reimbursement changes may further benefit Granite in 2026. Based on the CMS proposal, we expect the transitional pass-through, or TPT, payment for Granite, including a $0 device offset, to be extended for calendar year 2026. The PPT enables facilities to use granite in the outpatient setting and be reimbursed for the full cost of the implants for Medicare patients. Additionally, the proposed level seven APC payment of nearly $28,000 would compensate hospitals for complex multi-level spine fusion procedures performed on an outpatient basis. This change should benefit our business as less complex degenerative procedures where granite would be used, migrate to lower-cost outpatient facilities. In 2024, we continue to advance innovation with the development of iFuse Torque TNT. We believe this breakthrough technology will transform the treatment paradigm for patients with sacral insufficiency fractures, a nearly $300 million market opportunity. Since launch, P&T has contributed to the threefold increase in the number of trauma surgeons using our solutions. Given the strong clinical reception, multiple large national distributor networks have expressed interest in partnering with us and expanding access to this technology. On the reimbursement front, a new technology add-on payment, or NTAP, took effect on October 1st. This NTAP of more than $4,100 represents up to a 30% increase in hospital reimbursement for pelvic fracture fixation in Medicare patients. The large untapped market, improved reimbursement, and growing distributor network positions TNT to be a significant contributor to our growth for the next several years. Finally, we made meaningful headway on our third breakthrough device, which incorporates much of our engineering and biomechanical learnings from our broader portfolio. We expect to finalize the design in the coming months, followed by comprehensive testing and validation in the first half of 2026. We remain on track to submit our 510K application for FDA approval in the second half of 2026, with the potential to commercialize as early as the end of 2026. We believe this revolutionary solution can become standard of care for addressing one of the most pressing needs in spine surgery. We have an extensive pipeline of novel technologies under development, and we expect to launch several solutions over the next five years to address poor bone quality. We're enthusiastic about the impact of the expanding platform on the long-term growth trajectory of the company. Next, let's move on to physician engagement. In the third quarter, approximately 1,530 physicians performed procedures using our solutions. representing a 27% year-over-year increase. This growth was driven by double-digit expansion across all call points. We added 330 physicians in the quarter, which marks the largest quarterly increase in the company's history. We expect this growth to continue based on the interest in our expanding platform across the diverse group of practicing physicians. Additionally, our academic training program is cultivating the next generation of advocates. We also saw a 25% increase in the number of physicians performing more than one procedure type. Of the physicians who completed an SI joint fusion procedure in the quarter, only 25% of them performed at least one other procedure type. We have a huge opportunity to continue driving procedure density. with our sizable SI joint fusion physician base as we expand the application of granite and degenerative spine procedures. Furthermore, we continue to see physicians who stay with us longer perform more procedures. Physicians who are active in both the third quarter of 2025 and the prior year performed more than twice as many cases per physician compared to those who are active only in the current quarter. These dynamics demonstrate that our expanding procedure platform is not only attracting new physicians, but also deepening engagement among our existing physicians. Looking ahead, with the significant degenerative spine opportunity for Granite, the launch of our new SI joint dysfunction solution early next year, and the anticipated introduction of our third breakthrough device in late 2026, we expect physician density to become an increasingly important growth driver. Now let's turn to commercial execution. Our trailing 12 month average revenue per territory was $2.1 million, up 16%. This marks our 12th consecutive quarter of double digit growth in territory productivity. We ended the quarter with 88 quota carrying territory managers, up from 85 in the last quarter. As we expand our platform and deepen penetration within existing accounts, We plan to increase the number of territories over the next year. The growth in the number of territories and the expansion of the hybrid network will ensure we capitalize on the sizable market opportunity ahead of us. Before I hand it over to Anshul, I'd like to congratulate all my SI bone colleagues on recently completing 135,000 procedures. Thank you for your relentless pursuit of best-in-class technologies that address unmet clinical needs, which have helped improve the lives of these patients. With a vast, untapped market opportunity and a pipeline of innovative solutions under development, we're going to be able to help hundreds of thousands more in the years to come. With that, I'll let Anshul provide an update on our fourth key priority, operational excellence, and share our third quarter results and updated guidance in more detail.

Thanks, Laura. Good afternoon, everyone. My comments today will highlight the impact of our continued operational excellence on third quarter revenue growth, profitability, and liquidity. I will then walk through our full year guidance. All the comparisons provided will be against the prior year period unless noted otherwise. Starting with revenue growth, our worldwide revenue was $48.7 million in the third quarter, representing growth of 20.6%. U.S. revenue was 46.4 million, representing 21.2% growth, driven by procedure volume growth of over 22%. We continue to benefit from broad-based demand with volume across all modalities growing at double-digit rates. International revenue in the quarter was 2.3 million, representing 10.2% growth, Based on physician enthusiasm and adoption trends observed in the initial months, we expect talk to accelerate international growth in 2026. We are actively pursuing regulatory clearance to commercialize additional products across several international markets, which will have a meaningful impact on international growth in 2027 and beyond. Moving to profitability, our gross profit was $38.8 million, an increase of $6.9 million, or 21.8%. Gross margin was 79.8%, expanding by 75 basis points year over year. We were able to absorb the higher instrument depreciation and freight costs associated with increased revenue by maintaining our disciplined pricing strategy and ongoing supply chain optimization initiatives resulting in overall margin expansion. Our operating expenses were 44.2 million, an increase of 4.7 million, or 11.9%. The increase reflects our growth-related investments and higher commissions from increased revenue, as well as elevated G&A spending. We're pleased with the 1.7 times operating leverage in the quarter, which underscores the strength efficiency and scalability of our business model. Our net loss narrowed to 4.6 million or 11 cents per diluted share compared to a net loss of 6.6 million or 16 cents per diluted share. We delivered positive adjusted EBITDA of 2.3 million for the quarter, which translates to an adjusted EBITDA margin of approximately 5%. For the trailing 12 months ended September, we delivered positive adjusted EBITDA of 5.7 million, a dramatic improvement from an adjusted EBITDA loss of 11.7 million in the comparable prior year period. Our improvement in profitability over the last 12 months validates our strategy that we can deliver industry-leading growth, invest in innovation, and do so while expanding profitability. This momentum gives us confidence as we look ahead to sustaining profitable growth. Turning to liquidity. In the third quarter, we were breakeven on net cash flow basis and ended the quarter with $145.7 million in cash and marketable securities. This was our second consecutive quarter of net cash flow breakeven. We're proud to have achieved another major cash flow milestone in the third quarter, generating 2.3 million cash from operating activities. The earlier than expected inflection in cash flow from operating activities reinforces our confidence in achieving positive free cash flow in 2026. Year to date, our net cash consumption was 4.3 million compared to a net cash consumption of 15.2 million for the comparable prior year period. This represents a 72% reduction in cash consumption. This substantial improvement is an outcome of our increasing scale and asset-light business model. We continue to invest in building surgical capacity while remaining focused on working capital efficiency. Our improving profitability combined with the inflection on cash flow positions us to self-fund our innovation, advance our deep pipeline of novel technologies, that address additional unmet needs and consistently deliver robust growth. Now, let me provide an update on our outlook for 2025. We're updating our full-year revenue guidance to range between 198 million to 200 million. This implies year-over-year growth of approximately 18 to 20% as compared to the previous guidance of approximately 17 to 18%. Given the durability of our gross margin, we are now expecting the full-year gross margin to be at 79.5%. We're maintaining our annual operating expense growth guidance at 10% at the midpoint of the revenue range. With that, I will turn the call over to Laura.

Thanks, Anshul. We're encouraged by the momentum we see and remain focused on outperformance as we exit 2025. Going into 2026, we're confident in our ability to sustain strong top-line growth expand margins, and inflect on free cash flow. This confidence is driven by the substantial adoption runway for our current portfolio, our promising pipeline of new products, and continued disciplined execution. After pioneering the SI joint space, we expanded our addressable market by adding new applications of our technology and expertise developing solutions for compromised bone. Today, We've built a durable innovation engine capable of funding and developing a broadening array of solutions that help more patients and deliver long-term value for shareholders. With that, we're happy to answer your questions. Operator?

Thank you. At this time, we'll conduct the question and answer session. As a reminder to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. And our first question comes from the line of Patrick Wood from Morgan Stanley. Your line is now open.

Beautiful. Thanks so much, guys. I'd love to start on the physician density side of things, just because you mentioned it. And I guess there's kind of two components to that. You know, I guess one is you know, as we go into next year and the bag gets larger, let's say, do you think there's going to be a halo effect between the different product categories and that side of things? You know, does it demand across the groups? And then two, like, how should we think about operating leverage? You know, you've always been super disciplined with the reps and expansion on that side. How do we think about, you know, leverage down the P&L and then the kind of halo effect between a broader offering for SI Bonin totality?

Thanks. Thanks, Patrick. Good question. Physician density is actually a very important focus point for us. And just given how much our platform has expanded, that's really a very large opportunity for us. So we've obviously broadened out our platform from just SI joint fusion to pelvic fixation and now pelvic ring fractures as well. And as we said, I think only around 25% of our SI joint surgeons are currently performing another procedure type. So there's a lot of opportunity for us to grow just by increasing the use of our technology cross-platform. In addition, we have a product roadmap, and we've talked about a couple of different products that we're going to launch in 2026. And one of those in particular will provide another opportunity to further deepen that relationship with our surgeons. We also talked a little bit about if surgeons are regularly performing our procedures, for example, those surgeons that performed a procedure in this last quarter versus a year ago that they're doing around double the number of procedures. So all of those things really do point to this opportunity to significantly increase physician density in the coming years. We're also obviously growing the number of physicians that we're working with in a significant way, 27% growth in the quarter. It was a record 330 additional physicians were added during the quarter. So we have around 12,000 opportunity with the number of surgeons that we can potentially target for various procedure types. And so we're really just a short way into this whole journey. Now, the last question you asked was more on the leverage side. And certainly by growing density, we have the opportunity for further leverage. And I'll have Anshul talk a little bit more about that.

Yeah, thanks, Laura. Patrick, nice to connect. In terms of operating leverage in our business, you know, if you look at the midpoint of our guide for the revenue and OPEX growth for the year, you're sort of tracking to about 1.9 times operating leverage at that midpoint. So really pleased with the strong operating leverage in recent years, which is an outcome of our strong revenue growth, predominantly the 20 plus percent growth that we've been able to demonstrate over the last several years, and just the operational excellence and discipline that's come into the business as well. Now, when you think about operating leverage going forward, You know, our priority does remain to deliver that strong top-line growth at or above the levels we've delivered in the last several years. And as we've shared previously, we do anticipate operating leverage to sort of range between, let's say, 1.25 and 1.75 times. So, you know, revenue growth, outpacing OPEX growth in that range. There will be some natural variations depending on the phase of investments we are in. where we are in a product launch cycle. But, you know, we feel pretty good about sort of that leverage. And even if you assume an average leverage of 1.5 times, that should be able to drive pretty significant margin expansion over time. Super clear. Thanks, Anshul. Thanks, Laura.

Thank you. One moment for our next question. Our next question comes from the line of Caitlin Roberts of Canaccord January. The line is now open.

Hi, congrats on a great quarter and thanks for taking the questions. I guess just to start off on guidance, you raised the midpoint of guidance a little bit more than the beat this quarter. Can you just talk through the philosophy for the update here and if there are any early signs of momentum in the Q4?

Yeah, I'm happy to at least give it a start. I'll talk about the quarter and then I'll have Anshul talk a little bit more about the guidance philosophy where obviously very pleased with how we performed in the quarter, 21% revenue growth overall, seeing a nice re-acceleration of our international growth with the launch of TORC as well. So both of those things bode well. I think just to highlight, if you think about how we've grown since our IPO in 2018, we have consistently delivered over 20% annual revenue growth. And it's really a... an outcome of us building this comprehensive platform, you know, starting with the SI joint fusion market, but then just leveraging our technological expertise to expand into these high growth adjacent markets as well. In terms of the growth in the quarter, I did mention it was broad based. We're seeing the top line momentum dropping to the bottom line with our adjusted EBITDA and net cash flow breakeven. And it really does highlight the differentiated high margin asset light business model that we have here. So when we started to think about our guidance for the remainder of the year and then thinking about 2026, we always take a thoughtful approach. But it's based on the knowledge of the continued growth that we have consistently seen since we've been a public company. And I'll have Anshul talk a little bit more about the details of the guidance.

Thanks, Kathleen, for the question. When it comes to our guidance, let me just highlight a few key points. First, as you know, we maintain a very thoughtful approach to guidance. Just to provide some perspective, we started the year with a guidance of 193.5 to 195.5 million, and our current updated guidance is 198 to 200 million. So what you've seen is continued outperformance, including the nearly or over four percentage point outperformance in the third quarter as well. Second, again, aligned with our philosophy, our updated top end of the guidance incorporates only the $2 million outperformance in the third quarter, which is generally how we've done whatever we've outperformed by. We put it up in our guidance as well. So I think being continued and thoughtful there is important for us. Now, on the question of what we're seeing coming into the fourth quarter, you know, what I'd like to highlight is that 27% both in active physician base, right? So that significant physician momentum coming into the third quarter is persisting. We already have October in the bag, and it was a really strong October, and the momentum trends in November are also looking very strong. So net-net, we do expect 4Q to be another strong quarter, but I just want to remind you that it's worse as a tougher comp with a very comparable portfolio. So even with that, we're feeling really great about the setup in Q4.

That's great. Maybe just another quick one. You generated cash again in the Q3. Any updates to, you know, the cash burn expectations for the rest of the year? I know you talked about a little bit of a cash burn expectation for the second half last quarter, but any updates to that?

Yeah, so again, Caitlin, really pleased with how the strong growth, the inflection on profitability, The discipline on working capital efficiency is translated into our second consecutive quarter of net cash flow break-even, and more importantly, our first quarter of positive cash flow from operating activities. Now, as we get into the fourth quarter, like we had said in our prior earnings call, we do expect to use a little bit of cash in the fourth quarter. A lot of that is just based on building up surgical capacity and also building up some capacity for the new product that Laura has talked about that we expect to launch in you know, Q1 of next year. So, again, feeling good about where the business is headed from a cash flow standpoint and getting increasingly confident of being able to get to free cash flow at some point in 2026 as well and then self-fund growth and investment and innovation going forward.

Awesome. Thanks for taking the questions.

Thank you. One moment for our next question. Our next question comes from the light of Matthew O'Brien of Piper Sandler. Your line is now open.

Great. Thanks for taking that question. So, Laura, you know, you mentioned all these different areas where we're seeing a lot of momentum. I mean, the position number in the quarter was unbelievable. The reimbursement updates, et cetera. When I look at the street, I don't want guidance here for 26 right now, but I look at the street, we're modeling more like mid-teens growth next year. I guess why wouldn't it be upper team's growth that's not better for next year? Is there something specifically that you would call out with all those moments that you're seeing in expanding Salesforce, et cetera? And then I do have a follow-up.

Thanks. I think it's a really good question. We did really have a very strong quarter in a lot of different ways, and some of those forward-looking metrics give us a lot of confidence on what you know, where we're headed as well in Q4 and beyond. But, you know, the way that we're thinking about things from a 2026 perspective is we feel pretty comfortable with where the current consensus is at. You talked about some of the things that are going to benefit us next year. This combination of variable reimbursement changes in 2026, we're re-accelerating our international growth from TORC, and those are tailwinds. Then there's also what I would say is actually incremental upside that will be based on the timing and the ramp of new products as well. So, like I said, feeling comfortable with where we're at from a current consensus perspective. Believe that we have upside based upon the launch of new products as well. But as we always are, being very thoughtful about how we're setting expectations.

Okay. Appreciate that. And then Anshul. The gross margin topic came up a lot coming out of Q2. It was really strong in Q3 versus expectations. How durable are gross margins? And then I think we had expected them to be down pretty meaningfully in 26. Is that not the case anymore? Will these new products weigh on that metric? And how do we think about gross margins going forward?

Thanks. Yeah, Matt. So coming into this year, our gross margin expectations were between 77% and 78%, and at close to 79.5%. We've not only exceeded our gross margin guidance, but also improved our margins year over year from disciplined execution and benefit from several operational initiatives. So we're starting to feel a little bit more confident about the durability of those gross margins. But look, they're going to be a little bit dynamic over the next few years, given the active pipeline of products. So I'd say over the medium term, we now expect gross margins to sort of stabilize around that 78%, 78.5% area, which is much better than what we had previously expected. And part of that is the durability that we're seeing in our gross margins. Most of that gross margin change in the future years will be driven by the increase in non-cash items, like depreciation from expansion of surgical capacity. What would offset that, though, is the potential for any future implant tray, implant cost reduction initiative, which is not incorporated in sort of that 78% expectation going forward. And then the last thing I would leave you with is as we scale and expand our gap and non-gap operating profit will become more important for us. So, you know, you'll continue to see us invest in surgical capacity and new products because we know they can meaningfully accelerate our revenue growth. And we expect any pressure on the gross margins to be offset by the significant operating leverage we see in the rest of the P&L.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Travis Steed of Bank of America. Your line is now open.

Hey, this is Gratia on for Travis. Thanks for taking the question and congrats on a great quarter. My first question, I just wanted to ask about if there's any more directional color that you maybe wanted to give on the increasing territories for the next year. Thank you.

Yeah, I'm happy to answer that question. In terms of our territory productivity, as you can see, we have been dramatically increasing territory productivity over the last three years. And what we've done is we've developed this hybrid model that includes our territory managers, senior quota-carrying territory managers, and then we added junior reps, our territory representatives, to support those territory managers. And then, in addition, we actually have added a significant number of third-party agents that carry our product, too. And so what's happened is if you look at the territory productivity over these last few years, we've more than doubled that territory productivity and now at around $2.1 million in productivity at this point. In terms of how we are thinking about the future, What we want to do is make sure that we are walking a line in order to continue to first and foremost drive continued growth and penetration into the market while also using this hybrid approach. We're not giving out specific numbers at this point in time, but what we are doing is being thoughtful as we add territory managers. We always kind of thought of that You know, the range that we're in currently, being able to continue to add to that number, I think we're at 88 as of the end of the third quarter, you know, add judiciously to those numbers in the next year in order to drive the growth of the business.

Yeah, the only thing I would add there, Grace, is what we've shared publicly is we want to get to 100 territories over the next 12 to 18 months. That still remains the target for us. And then concurrently, we expect to grow our hybrid model as well as we add more agents to our network as well. And a lot of the expansion of that commercial footprint is in anticipation of the demand that we're seeing for the existing platform, but also preparing for the new product launches in the next year, one of which will allow us to increase adoption within the SIGO and dysfunction space. And the other one, as Laura talked about, our third breakthrough device, which is targeting a whole new town. with the existing call point.

Great. Thank you. And then just to follow up a little bit on the last question, you obviously had a great performance and didn't see the typical seasonality that you would normally see in Q3. And I think a couple of other people in the spine space have agreed with that. Just wanted to see if there's anything to call out in the market or if you're really sort of offsetting what you would typically see in procedures with that strength and uptake in products. Thank you.

I would say, Grace, a lot of that is specific to SI bone. You know, the typical seasonality is there in the summer with patients and physicians taking vacations. But what we have been focused on is how do we execute through that. Part of that has been making sure that we're putting out surgical capacity, making sure we're engaging physicians across multiple modalities, driving sort of that adoption curve across all our call points. And what you've seen is a combination of the continued demand in the SI joint dysfunction space, where we've seen double-digit volume growth, double-digit position growth in the quarter. Once again, the continued benefit from Granite 9.5 that is driving adoption within Granite for both deformity and degenerative spine incrementally. And then finally, our TNT product, which drove... almost a three-fold increase in physicians that were doing procedures in the quarter on the trauma side. So, you know, a lot of that is just the execution by a commercial team and just the focus on making sure we have the capacity to drive adoption.

Great. Thank you.

Thank you. One more for our next question. Our next question comes from the line of Young Lee of Jefferies. Your line is now open.

All right, thanks for taking our questions. So I mean, you added a lot of surgeons this quarter at 330. I think that's around 300 on a quarterly basis for the year. You know, the past two years, you're adding about maybe in the low 200 range. Wanted to hear a little bit more about, you know, what are the biggest drivers for those ads and the type of surgeons that you've been getting, whether it's private practice, academic guys, or new surgeons versus people that have recently graduated from fellowships or priorly trained ones coming back?

Thanks for the question, Young. It's really all of the above. So what we've seen is pretty broad-based and that's how we're hitting the numbers that we are. So we're now at 1,530 active physicians just in the quarter alone, and that was 27% growth. You're right, it was 330 surgeons that we added year over year, and that is the largest increase we've ever had. I think part of it is just we have expanded the number of physicians that we are – that we are targeting currently. So we started out with spine surgeons, around 7,500 spine surgeons that we have been targeting. And there's a couple of ways that we're reaching those spine surgeons. One is with continuing to expand the number of surgeons doing SI joint fusion procedures, first of all. And then secondly, those that are interested in doing these adjacent procedures, In most cases, they are doing pelvic fixation with our granite product if they're using a second modality. But some are also using our solutions for pelvic ring fractures, too. So we continue to further penetrate the surgeon base in those ways. In addition, the expansion into interventional, we did talk a little bit about that in our prepared remarks, and the number of procedures done by those interventionalists doubled year over year. So it actually added to the total addressable market that we were going after. We think that there were around 4,500 interventionalists that are potential targets to perform SI joint fusion procedures. And so, if you add it all up, there's around 12,000 physicians. And to be honest, I'm not even including the general ortho trauma surgeons that are also starting to do our TNT procedure as well. So we have a pretty significant number of targets that are out there. We have a lot more that we can penetrate. So it really provides this very nice upside for us. What we're trying to do at the same time, though, is to make sure that we're focusing our sales team and our direct sales force is very heavily focused on SI joint fusion while we do get assistance from third-party agents with pelvic fixation and more and more with pelvic brain fractures too. So it's this balance that we're striking in order to go after a very large number of targets while also doing that in an efficient way.

All right, great. Very helpful. I guess another question is just on your comment on the new products pipeline over the next five years. I was kind of curious if you can share a little bit about how much that can expand your market, Tim, from the almost half a million annual procedures currently.

Yeah, it's a good question. And right now, what we're doing is we're talking more broadly about it. We're certainly getting into more details in terms of 2026 specifically. And the first product that we're talking about launching in Q1 is an SI joint fusion product, and it's targeted towards physicians that are performing procedures in ambulatory surgical centers. So it's continuing to help us to penetrate that large opportunity with SI joint fusion, you know, which is a big part of that half a million TAM that you just mentioned. The second product that we're going to launch in 2026, however, it really does have a significant impact on growing the TAM even further. And I won't get into details, but what we're really trying to do is address one of the most pressing needs in spine surgery using our core competencies from an innovation perspective to create that innovative solution to address this unmet clinical need. So that's how we're thinking about 2026. And then as we think about the broader pipeline, it's really more around this concept that we've been talking about of compromised bone. When we started SI bone, we started an SI joint fusion. Why is that relevant to compromised bone? Because the bone in the sacrum tends to be some of the poorest quality bone in the body. So we've been developing solutions since the inception of the company around poor bone quality. And so what we're going to do is continue to apply those in ways that focuses on our current call points to address this unmet clinical need. So more to come on that in 2026, but hopefully that gives you a flavor.

All right, thank you very much.

Thank you. One moment for our next question. Our next question comes online of Ross Osborne of Cancer Physio. Your line is now open.

Hey, thanks for taking our questions, and congrats on the quarter. And apologies if I missed this, but how did ASP trend during the quarter?

Yeah, happy to take that loss. On the ASB side loss, as you can see, our U.S. volume growth was around 22%, and the revenue growth was a little north of 21%, so modest ASB impact in the quarter. Most of that was driven by procedure mix. Our overall implant ASB remains quite stable. As we've always said, we start the year, and as we progress through the year, we make conservative assumptions on ASBs, just because of how the portfolio is evolving. Several of our procedures use three or more implants, but in trauma and in DGEN, you will generally use anywhere between one and two implants, so that can impact ASP. But overall, very pleased with how the ASP is trending. We're seeing good traction in granite, especially with multiple implant cases, so more than two implants per procedure, and that brings the overall ASP higher as well.

Okay, great. And then for a second question, would you remind us the breadth of your TORC European launch to date and then touch on how you're thinking about next year? Does the game plan to drive deeper penetration within existing geographies or beginning adding new regions?

Yeah, so TORC has really just started in the EU. As you're probably aware, the earlier months in the quarter, July and August, in Europe tend to be quieter months. And so we really just started to see the momentum in September. And so what we would expect is to see that continue to build in Q4 as well as into 2026. International is just a small percentage of our business, but we do see it as an important market. And If you think about how we built the business there, they had only been selling iFuse 3D, well, iFuse since the inception of the company, and then iFuse 3D has been on the market for seven years. So it was really important for us to put Torque out there and become a meaningful accelerator for growth. So we are very optimistic given the early Torque adoption that we've seen. And as I said, it was really more the month of September where we we truly started to see the impact and do expect for it to be a meaningful contributor in 2026. And then we're also evaluating the potential for other products across various international markets. You know, now that we've gone through that whole EUMDR process in particular, and it is a cumbersome process, it does give us the ability to take some of our other products internationally as well. So we're excited to do that and see the long-term potential of our OUS business to drive growth.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of David Saxon of Needham Company. Your line is now open.

Great. Good afternoon, Lauren, Anshul. Thanks for taking my questions and congrats on another strong quarter here. So I wanted to ask on the TNT and TAP. So we'd love to hear, you know, how you guys are thinking about that as it relates to TNT adoption. And then I believe that just became effective in October. So, you know, any trends you'd call out, you know, after that effective date that kind of give you confidence in that ramp?

Yeah, thanks for the question, David. It sounds We're pretty excited about the NTAP in particular. It was effective as of October 1st. It's around $4,100. That translates to up to 30% improvement and reimbursement in the hospital setting for pelvic ring fractures for Medicare patients. We do think that this is an important driver. You know, more importantly, TNT is considered one of the most exciting innovations in trauma in recent history. It's just another example of our ability to develop a unique anatomy-specific solution that addresses an unmet clinical need. And so I think the NTAP is important in terms of making sure that the health economics are appropriate there. But in addition, from an adoption perspective, with the ramp ahead of us, what's really important is to see the expansion, the further expansion of our commercial footprint here. And, you know, I mentioned with an earlier question how we're thinking about continuing to grow our business while focus our sales team. And so what we're doing is we're fielding inbound interest right now from multiple large national distributors that want to partner with us and expand access to the technology. And these are distributors that have a footprint specifically in trauma. So it's another way for us to leverage our hybrid model in order to capture the opportunity that's here while also being efficient and continuing to gain operating leverage in our business.

Okay, great. Thanks for that, Laura. And then maybe on to one for you, and I'm not sure if I'm really going to get an answer here, but just on longer-term profitability, you know, your 5% EBITDA margin now, you know, just, you know, you guys have talked about kind of your capital light model. As it relates to longer-term profitability, like, do you think SI Bone can be more or less profitable in than kind of a traditional spine company?

Yeah, so let's just start with our business model. David, first, we look for unmet clinical needs. Second, we come up with unique solutions that can carry high ASB. Third, because we don't focus on me to products, we can leverage some of this hybrid commercial infrastructure Laura talked about and get P&L leverage. And then, you know, our asset-like model where because of the high ASP, low footprint of our trays and implant sets allows us to get a lot of leverage on the working capital side as well. So these are really unique to SI bound and sort of differentiate us from what people see in traditional spine. So I want to give that backdrop. And then, you know, when you think about the future, you know, our focus remains to deliver the revenue growth at or above the levels. that we've demonstrated. We've got a huge TAM that's untapped. We've got new products on the horizon that will further expand the TAM as well. So, you know, we think that revenue growth is what's going to drive leverage. Now, on a prior question, I did talk about sort of the operating leverage in the business ranging between 1.25 times to 1.75 times, depending on where we are in the investment cycle. But even with that, kind of leverage, you see margin expansions that are pretty healthy cliff in the outer years. So we're not going to put an anchor on what that EBITDA margin or adjusted EBITDA margin should be. But we know that with the business model that we have, that top line growth can translate into pretty good expansion there.

David, I think it's a very good question that you're asking too. And if you just look at what we've been able to accomplish to date in terms of being at the revenue levels that we're at, being adjusted EBITDA profitables for the last few quarters, starting to see an inflection on cash, we just look very different from a lot of the orthopedic or spine companies that are out there with our asset-light model. So I really do think it's worth highlighting that and reinforcing how important that is. And it's not just talk. You can see it in the results that we've shown in terms of bottom line and cash flow.

Great. Thank you. Thanks so much.

Thank you. One moment for our next question. Our next question comes online of Richard Newiter of True Securities. The line is now open.

Hi. Thank you for taking the questions. This is Robbie here for Rich. So I guess I want to kind of follow on to that profit question. You know, Laura, you said you're kind of comfortable with where the street is for next year. So, you know, let's just say you were able to outperform that. Should we think about kind of like the high end of that 1.75 being the case or, you know, kind of giving the comments on being able to self-fund R&D kind of from the cash flow of operations? I guess the thing that we're all trying to get at is, you know, how quickly, Can you reflect for this company, given the growth seems to be sustaining a pretty nice trajectory here? I have a follow-up. Thank you.

Yeah, no, Robbie, thanks. I can take this question. From a leverage standpoint going into next year, like Laura said, we're comfortable sort of where consensus is on the revenue side. Now, we do have two big launches next year, and there's a lot of R&D work going on to be able to get those products commercialized. One in the first quarter, the second one commercialized as early as potentially end of 2026. So what I would say is, you know, you should expect leverage to be a little bit on the lower end of that range that I mentioned in the 1.25 to 1.75 times. So maybe in the 1.3 times range at the consensus revenue numbers right now for 2026. Now that leverage does grow pretty systemically as these new products start to contribute meaningfully to revenue in 27, 28, and 29.

And I think that's very consistent, Javi, with our focus on growing our way to profitability, right? We have a very significant growth opportunity here with these two products coming out in 2026. And we want to lean into them while still being cognizant of the bottom line in cash flow.

Great. Thanks very much. And then maybe one on the interventionalist comments. You know, I think you mentioned 4,500 docs doing SI joint cases. You know, this is an area, at least from our checks, we've picked up some significant interest from interventional pain docs to do these cases. Yeah, let's understand a little bit maybe the trade-offs between that call point and the others in kind of the customers that you go against to see, you know, who's actually going to be doing these cases. I guess what we're trying to figure out is, you know, how market expansionary could that be, or are you kind of just moving the case from one doctor to the other? And then I guess the last question would be regarding the products coming out next year, sounds like kind of given your trajectory, is there any sort of special coding or payment or reimbursement terms that we should be looking for as these things get closer to launch? Thanks.

Yeah, great. There's a lot there. But let me start on the interventional side at least. So we're definitely pleased with the level of engagement with interventionalists The 4,500 physician number I gave was really the entire universe of targets. And so what we initially did was we went after around 1,000 of those physicians who were already regularly performing surgical procedures. And so we've been really pleased. What we're seeing is that as time goes on, we're seeing deeper and deeper penetration into that 4,500. There's a lot of interest by interventional spine physicians to perform procedures and specifically SI joint procedures, and more and more of them are becoming comfortable and being trained appropriately to do them. So it is a very significant expansion opportunity in our SI joint fusion business, and we believe that we have the products, that can appeal to different positions. And we also, we really have the strongest commercial infrastructure here. The other thing you asked about is whether it's just taking business away. The interventionalists that we have been working with have been in areas where there are not physicians already performing the procedure or specifically spine surgeons performing the procedure. So it is additive to our surgeon-led business. And as I said, comprehensive portfolio and gives us a lot of confidence that this is going to be a growth driver You also asked about reimbursement, and CMS proposed a 17% increase in the payment for SI joint fusion procedures performed in office. And our intra-product, we believe, is the leading percutaneous SI joint fusion procedure done in office-based labs. So that reimbursement effective January 1st, we believe, is a nice tailwind for us. And then more broadly, you were asking about new products and reimbursement there. If I talk about new products, the product that we're going to launch toward the end of 2026 is a breakthrough device. And so we will be seeking a new technology add-on payment for that particular technology as well. So a lot of tailwinds that we have in the business with new products, with reimbursement, with a new call point that's additive here that really bode well for the business in 2026 and beyond.

Thank you. I'm showing no further questions at this time. I'll now turn it over to Laura for closing comments.

I just want to thank everybody for participating in the call today and also really appreciate your interest in SI Bone. We look forward to seeing you all at upcoming conferences. Thank you. Goodbye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.