Tenon Medical, Inc.

Greetings, and welcome to the Tenon Medical Third Quarter 2023 Financial Results and Corporate Update Conference Call. As a reminder, this call is being recorded. Your hosts today are Steve Foster, Chief Executive Officer and President, and Steve Van Dyck, Chief Financial Officer. Mr. Foster and Mr. Van Dyck will present results of operations for the third quarter ended September 30, 2023, and provide a corporate update. A press release detailing these results was released today and is available on the investor relations section of the company's website, www.tenonmed.com. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, and other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. you are cautioned not to replace undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. For a more complete discussion of these factors and other risks, You should review our prospectus dated April 26, 2022, particularly under the heading Risk Factors, which is on file with the Securities and Exchange Commission at www.sec.gov. At this time, I'll turn the call over to Tenon Medical's Chief Executive Officer, Steve Foster. Please go ahead, sir.

Thank you, Devin, and good afternoon to everyone. I'm pleased to welcome you to today's third quarter 2023 financial results and corporate update conference call for Tenon Medical. During the third quarter, we expanded the adoption of our fully commercialized Catamaran system and experienced an increase in the number of surgical procedures in which the system was used, driven largely by our multifaceted marketing strategy, including ongoing educational programs, informational materials, and interactive workshops. During the third quarter, procedures supported strong revenue growth with an increase of 354% year-over-year and 27% sequentially from the second quarter. In the previous quarter, we marked an important milestone with gross profit and gross profit margin turning positive. Now in the third quarter, Gross profit was up 176% sequentially from the second quarter of 2023 to $535,000. And gross profit margin improved to 57% in third quarter from 26% in the second quarter of 2023. The third quarter marked an important milestone for Tenon as we launched the surgical use of our jib instrument kit for the catamaran SI joint fusion system for initial patient treatment by two leading physicians in the ortho and neuro spine fields. We are encouraged by the overall positive feedback we've received from our physician customers utilizing the system, as well as the encouraging early post-op results. We've developed enhanced tools with a promise to deliver upgraded graft handling, smaller access profile, and enhanced access stabilization. These upgrades will assist our expansion of application into SI revision surgery, adjunct to multi-level fusion, and SI procedures utilizing navigation software in imaging. Continued strong growth and increasing surgical procedures in the third quarter was fueled by our valued physician customers with support from our commercial infrastructure we built. Our mission to deliver refined surgical options for patients with chronic sacroiliac joint pain or degenerative sacrolitis that fail conservative care is continuing to gain traction with targeted physicians. As a reminder, we leverage our relationships with national and local sales managers, clinical managers, and independent distributors, and we conduct frequent local workshop training programs to reach physicians who have been trained on SI procedures or have significant experience with SI surgical technologies. We continue to focus on a combination of our local synthetic model and cadaveric lab workshops to introduce the Catamaran system, creating a timely and efficient process for our physician customers. We supplement these efforts with intensive clinical support and service. Combined, These critical advantages and activities are designed to drive acceleration in the number of procedures completed with the Catamaran system. During the third quarter, our surgical procedures increased 329% compared to the year-ago quarter, confirming a solid return on investment for our strategic approach. Our programs hosted 28 physicians in Catamaran workshops to learn more about how the implant transfixes and stabilizes the SI joint. as well as why the inferior posture approach is the optimized approach to the anatomy. During the workshops, we highlight how this distinct implant system addresses a significant unmet market opportunity and designed to produce broad and demonstrable advantages over market competitors. Building on the momentum of the third quarter, we expect the number of surgical procedures to continue to grow as our sales team broadens our strategic marketing, promotion,

and workshops featuring the catamaran system with that i'll turn it over to mr van dick our chief financial officer to discuss our financials thank you steve i'll give us a sync review of our financial results a full breakdown is available in our press release that crossed the wire this afternoon our revenue was 944 000 in the third quarter of 2023 an increase of 354 percent compared to the 208 000 in the comparable year ago period. Revenue for the nine months ended September 30th, 2023 was 2.1 million, an increase of 412% compared to the 414,000 in the comparable year ago period. The increase in revenue for the three and nine months ended September 30th, 2023 as compared to the same periods in 2022 was primarily due to increases of 329% and 404% respectively and the number of surgical procedures in which the catamaran system is used. Gross profit in the third quarter of 2023 was $535,000 or 57% of revenues compared to the gross loss of $94,000 or a negative 45% of revenues in the comparable year ago quarter. For the nine months ended September 30th, 2023, gross profit was $682,000 or 32% of revenues compared to a gross loss of $434,000 or a negative 105% of revenue in the comparable year-ago period. Gross margin continued to improve due to higher revenues as a result of increase in the number of surgical procedures during the quarter. Operating losses totaled $3.4 million for the third quarter of 2023, compared to a loss of $3.3 million in the third quarter of 2022. For the nine months ended September 30th, 2023, operating losses totaled 12.6 million compared to a loss of 10.8 million in the comparable prior year period. The increase in operating expenses was largely due to higher sales and marketing expenses as the company further developed its sales function, increases the frequency of marketing initiatives, and continues to enhance infrastructure to support future growth. Net loss was $3.3 million for the third quarter of 2023 compared to a loss of $3.2 million in the same period of 2022. For the nine months ended September 30th, 2023, net loss was $12.4 million compared to a net loss of $11 million in the comparable previous year period. We continue to expect to incur additional losses in the future. As of September 30th, 2023, cash and cash equivalents and short-term investments totaled $3.4 million as compared to $6.3 million as of June 30th, 2023. As of September 30th, 2023, the company has no outstanding debt. I will now turn the call back to Steve for his closing thoughts.