Tenon Medical, Inc.

Greetings and welcome to the Tenon Medical Fourth Quarter and Full Year 2023 Financial Results and Corporate Update Conference Call. As a reminder, this call is being recorded. Your hosts today are Steve Foster, President and Chief Executive Officer, and Steve Van Dyck, Chief Financial Officer. Mr. Foster and Mr. Van Dyck will present results of operations for the fourth quarter and full year and December 31, 2023, and provide a corporate update. A press release detailing these results was released today and is available on the investor relations section of our 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 place 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 information 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.scc.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, Paul, and good afternoon to everyone.

I am pleased to welcome you to today's fourth quarter and full year 2023 financial results and corporate update conference call for Tenon Medical. The conclusion of 2023 marks a successful first full year of nationwide commercialization of the Catamaran system and operating Tenon Medical as a public company. This success is highlighted by Tenon's significant progress in our revenue growth and improving gross margins. We've entered 2024 from a position of operational strength and continue our focus on building market share. We've made considerable commercialization and technical progress and continue to gain traction in our go-to-market approach with SIA-focused physicians and network partners, adopting our proprietary catamaran system, which we believe has broadened the competitive field of surgical options available for patients with chronic sacroiliac joint pain, or degenerative sacralitis. During the fourth quarter, the catamaran system experienced a 312% increase in the number of surgical procedures from the prior year, which drove strong revenue growth with an increase of 192% year over year. The quarter was also highlighted by a third consecutive quarter of positive gross profit. Moreover, as mentioned in prior quarterly updates, our revenue growth and largely fixed cost structure will continue to fuel our gross margin performance to be sustainable at recent levels. We believe our fourth quarter was a good proof point, as we achieved 69% gross margin, representing a significant sequential increase from 57% gross margin in the third quarter. For the full year of 2023, revenue grew 324% to $2.9 million, Gross profit increased to $1.2 million as compared to a gross loss for the full year of 2022. Continued expansion of our workshop activities during the fourth quarter was supported by our valued physician customers and the robust commercial infrastructure we built. As a reminder, we take a precise go-to-market approach through our workshop and training programs in order to address physicians and medical professionals with extensive backgrounds and experience in SI surgical technologies. We continue to focus on a hybrid approach with 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 activities are designed to drive acceleration in the number of procedures completed with the Catamaran system, which we've experienced since we began the initiative. Our programs hosted 133 physicians in Catamaran workshops during the full year of 2023. During the fourth quarter, we enhanced our marketing initiatives with participation in a series of immersive physician webinar training programs featuring the Catamaran system. attracting over 60 healthcare providers. Our partnership with Dr. Matthew Davies of Orthopedic Associates of Duluth, Minnesota, provided a physician's perspective of our system as he discussed his clinical experience performing over 50 catamaran procedures. In addition to the presentation, Dr. Davies provided a demonstration of the simple inferior-posterior implantation technique of our unique transfixing SI joint implant. Building on the momentum of the quarter, we expect the number of surgical procedures to continue to grow as our sales team broadens our strategic marketing, promotions, and workshops featuring the Catamaran system. Additionally, we continue to enroll patients in our post-market multi-center clinical study and expect this enrollment to be finalized in the coming quarter. We expect a preliminary glimpse of early data in the coming weeks. Operationally, in November, we were proud to pass a full quality system inspection technique, or Q-SIP, level two inspection conducted by the U.S. Food and Drug Administration. The Q-SIP inspection assesses the medical device manufacturer's compliance with quality system requirements and related regulations. The FDA's pass grade is validation of our ongoing and stringent focus on our quality system, standardized controls, and strict operational procedures at Tenon Medical. Additionally, during the fourth quarter, we entered a $1.25 million secured note financing led by Ascent Special Ventures, which has been fully repaid by the issuance of Series A preferred stock announced in February. We deeply value this investment and vote of confidence from a distinguished investor syndicate as veterans in the medical device industry. With the $2.6 million in proceeds received from the February Series A preferred offering and this corresponding extinguishment of debt, we've bolstered our cash position and refined our balance sheet as we track toward Tenon's next stage of development and growth and commercialization. With that, I'll turn it over to Mr. Van Dyck, our Chief Financial Officer, to discuss our financials.