Tenon Medical, Inc.

Thank you for your patience. We will be beginning the conference shortly. Again, thank you for your patience. We will be beginning shortly. you Greetings. Welcome to 10 on Medical, first quarter 2024 financial results and corporate update conference call. As a reminder, this call is being recorded. Your hosts for 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 first quarter ended March 31, 2024, 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 at www.tenantmed.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 may be considered forward-looking. 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 questioned 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 factors relating to our business that may affect our predictions. For 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 on file with Securities and Exchange Commission at www.sec.gov. At this time, I'll turn the call over to Tenants Medical's Chief Executive Officer, Steve Flester. Please go ahead, sir.

Thank you, Sherry, and good afternoon to everyone. I'm pleased to welcome you to today's first quarter 2024 financial results and corporate update conference call for Tenon Medical. We began 2024 following a year of significant operational progress and continued focus on building market share. Across operations, we've made considerable commercialization and technical advances and remain on the right path as we begin our second year of commercialization. We aggressively monitor our commercial activities and have restructured our sales organization based on our 2023 learnings. During Q1, we had coverage in two of five geographic regions. With the addition of new personnel assigned to these areas, we are now poised to move forward. We continue to gain traction in our go-to-market approach with SI-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 and degenerative sacroilitis. Our first quarter of 2024 financial results reflected continued strong momentum with a 66% increase in revenue year over year, driven by a 42% rise in surgical procedures utilizing the Catamaran system. This is our fourth consecutive quarter of positive gross profit with a steady rate of gross margin of 65% as compared to the prior quarter. As we sustain revenue growth, we believe our stable cost structure will continue to maintain gross margin performance at recent levels. During the quarter, we announced favorable interim results from our ongoing post-market clinical study. The first patients are now reaching their 12-month milestone, which includes a CT scan to assess bone healing. In addition to seeing marked improvements in VAS and ODI scores, we are seeing radiographic proof of bridging bone in these 12-month CT as assessed by an independent radiologist. This is further indication that catamaran delivers on its clinical promises. For those new to Tenon, this prospective multi-center single-arm post-market study evaluates the clinical outcomes of patients with sacroiliac joint disruptions or degenerative sacrolitis treated with the catamaran SI joint fusion system. Patients will be evaluated for a period of up to 24 months, reviewing various patient-reported outcomes, radiographic assessments, and adverse events. As mentioned during our earnings call in March, we are approaching the end of enrollment and anticipate a detailed interim analysis in the fall of 2024. This validation further underscored our confidence that the catamaran's transfissing design, less invasive inferior posterior approach, is functioning as intended to optimize patient outcomes through short-term stabilization and long-term fusion of the SI joint. Of note, The interim data from our study, combined with the over 500 surgeries performed with the catamaran system today is demonstrating an exceptional safety profile benefiting patients and their physicians alike. We continued expansion of our workshop activities during the first quarter, supported by our valued physician faculty and the robust commercial infrastructure we continue to build. 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 hosted 12 physicians and catamaran workshops during the first quarter of 2024. With validation of our system's effectiveness demonstrated in the preliminary results from our post-market study, We have reached a critical inflection point that will drive further adoption of this important technology. Tenon will be broadening our strategic marketing, promotion, and workshop efforts to get the word out that Catamaran delivers. Recently, we welcomed Christine Jakes to our board of directors. Her significant experience in the medical device field, focusing on go-to-market strategies of spine-related technological innovation, will provide valuable insight for our company. We further enhanced our growing patent portfolio for the Catamaran SI joint implant system with receipt of an issuance of a notice of allowance of patent application from the US Patent and Trademark Office, which further encompasses important claims for our system. Currently, we have eight issued US and international patents and 23 pending US and international patents applications. Additionally, during the first quarter, we strengthened our balance sheet to support our accelerated sales and marketing initiatives. We generated proceeds of $2.6 million from our preferred stock raise during the first quarter, as we simultaneously retired $1.25 million in secured debt from the fourth quarter of 2023. With that, I'll turn it over to Mr. Van Dyck, our Chief Financial Officer, to discuss our financials.

Thanks, Steve. I'll give us a sync review of our financial results. A full breakdown is available in our press release across the wire this afternoon. Our revenue was $719,000 in the first quarter of 2024, an increase of 66% compared to the $433,000 in the comparable year-ago period. The increase in revenue for the first quarter as compared to the same year-ago period was primarily due to an increase of 42% in the number of catamaran surgical procedures. Gross profit in the first quarter of 2024 was $470,000, or 65% of revenues, compared to a gross loss of $47,000, or a negative 11% of revenues in the comparable year-ago quarter. Importantly, we have seen gross margins steadily improve due to the revenue growth associated with an increase in the number of surgical procedures which resulted in sustainable operating leverage due to the lower relative fixed costs and the absorption of more overhead into our standard cost. Operating losses totaled $3.5 million for the first quarter of 2024 compared to a loss of $4.9 million in the first quarter of 2023. Decreases in the operating expenses were primarily a result of decreases in research and development expenses and third-party sales and marketing expenses due to Tenon's implementation of an internal commercial infrastructure. Net loss was $3.6 million for the first quarter of 2024 compared to a loss of $4.8 million in the same period of 2023. The company does expect to incur additional losses in the future. As of March 31st, 2024, cash and cash equivalents totaled $4.4 million as compared to $2.4 million as of December 31st, 2023. As of March 31, 2024, the company has no outstanding debt.