Tenon Medical, Inc.

Greetings, and welcome to the Tenon Inc. Second Quarter 2025 Earnings Conference Call. At this time, all assistance is in only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator's assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stephen Foster, CEO and President. Thank you. You may begin.

Thank you, Maria, and good afternoon, everyone. I'm pleased to welcome you to today's second quarter 2025 financial results and corporate update conference call for Tenon Medical. We recently marked a pivotal step forward for Tenon Medical, highlighted by a strategic acquisition on top of a second quarter that included continued clinical validation and meaningful progress towards diversification of our product offerings. Speaking to our recent announcement, a significant focus of our second quarter initiatives was the thorough due diligence and successful completion of the strategic acquisition of SciVantage, which we announced subsequent to quarter end. With integration to take place over the next 60 to 90 days, this transaction delivers active case value, revenue generating technologies, and a robust pipeline that will continue to scale. The deal significantly enhances our commercial organization, It unlocks new pathways through hospital approval processes, distribution networks, and market access. Importantly, the transaction energizes our commercial infrastructure in the tools and talent to drive sustainable top-line growth. In tandem, we continue to advance the CatamRAM platform with real-world adoption in complex fine procedures. Dr. Andrew Trontis completed initial catamaran cases demonstrating successful integration into lumbar fusion constructs. These procedures, now supported by FDA clearance for use as an adjunct to thoracolumbar fixation, validate catamaran's role in preparing and immobilizing the SI joint in preparation for fusion while reducing morbidity, blood loss, and operative time. This expanded indication opens a new market opportunity and expands our footprint in the sacropelvic fixation space. The Catamaran SE, our second-generation low-profile implant, remains on track for full commercial launch in the coming weeks. The SE platform has already shown favorable feedback and alpha review. Combined with the SciVantage assets, we now offer a multi-product, dynamic approach fusion solution that differentiates Tenon in an increasingly competitive sacropelvic marketplace. In addition to the full commercial launch of the Catamaran SE platform this quarter, we are actively preparing for initial alpha surgeries using the newly developed Symmetry Plus system, expected to begin in Q4 this year. Symmetry Plus represents a next-generation fusion platform designed to further enhance our SI joint portfolio with differentiated features for long-term fusion outcomes. We believe the Symmetry Plus system will complement our existing offerings and support our commitment to delivering true fusion solutions tailored to both primary and adjunctive SI joint procedures. Our clinical progress remains equally strong. We continue to collect important clinical validation through both early adopter experience and our main sale post-market study, which remains on track for the publication of the second interim analysis this quarter. As the number of enrolled patients grows, we are confident that primary endpoints of VAS and ODI scores, along with patient satisfaction, will show positive trends. The secondary endpoint of fusion assessed via CT scan and confirmed by independent radiologists will reinforce the inviting by AO principles of arthrodesis pays off. We are confident the inclusion of CT scan fusion data, ODI, and VAS scores will provide powerful evidence supporting our catamaran approach. The CyVantage transaction also brings with it meaningful fusion data that will support the approach and technologies currently under development that is a result of this transaction. Physician education remains a top priority. In the second quarter, we hosted 16 physician workshops, engaging key opinion leaders to support our long-term adoption strategy and accelerate the learning curve for our new users. On the financial side, we reduced our operating expenses by 29% year over year, demonstrating a tighter discipline while preserving investments in our growth strategy. We ended the quarter with $7.8 million in cash and no debt, giving us flexibility to continue executing our strategic roadmap with confidence. Looking ahead, Tenon is entering a period of sustained momentum. Between the SciVantage integration, Cadmiran SE launch, and upcoming mainsail interim data publication, we're poised to execute against key milestones that will expand our addressable market, strengthen our clinical foundation, and drive top-line growth. With that, I'll turn the call over to Kevin Williamson to discuss our financials.

Thank you, Steve. I will now provide a summarized review of our financial results. A full breakdown is available in our press release that crossed the wire this afternoon. Revenue for the second quarter of 2025 was $564,000 compared to $901,000 in the same period last year. Revenue for the six months into June 30, 2025 was $1.3 million compared to $1.6 million in the six months into June 30, 2024. The year-over-year decline was primarily due to lower procedure volumes and account mix headwinds in the second quarter of 2025, driven primarily by the strategic shift in our commercial initiatives with the impending SyVantage acquisition. With the transaction now closed, we are already seeing increased volume and interest in the Tenon story, which we expect to be meaningful moving forward. Gross profit was $245,000 or 43% of revenue in the second quarter of 2025 compared to $470,000 or 52% of revenue in the prior year quarter. For the six months ended June 30, 2025, gross profit was $568,000 or 44% of revenue compared to $940,000 or 58 percent of revenue for the previous year's period. The decline in growth margin was a result of reduced procedure volumes and lower revenue with consistent variable direct product costs and relative fixed production overhead costs year over year. Operating expenses totaled $3.1 million in Q2 2025, down from $4.3 million in the prior year period. For the six months into June 30, 2025, operating expenses totaled $7.1 million, compared to $8.3 million in the prior year period. The 29% reduction in the quarter was driven by lower expenses across G&A, R&D, and sales and marketing. The reduction in G&A and R&D was primarily driven by discipline spending and project timing, as well as a reduction in stock-based compensation, which is expected to continue. The reduction in sales and marketing expenses was driven by lower variable expense due to lower revenue, as well as disciplined investment in our commercial infrastructure and Salesforce, reflecting our focus on the impending acquisition. Net loss for the second quarter was $2.8 million, or $0.36 per share, compared to a net loss of $3.8 million, or $8.16 per share, in the second quarter of 2024. For the six months into June 30, 2025, Net loss was 6.4 million compared to 7.4 million in the same year-ago period. This improvement was primarily attributable to the decrease in operating expenses in the second quarter of 2025. We ended the quarter with 7.8 million in cash and cash equivalents. compared to $6.5 million as of December 31st, 2024. Additionally, the company continues to operate with no outstanding debt, giving us the flexibility to advance our growth strategy, including the integration of SciVantage acquisition, product development and upcoming launches of Catamaran SE and Symmetry Plus, continued focus on clinical data and market access efforts, and rapid expansion of our commercial footprint. In summary, we believe the steps taken this quarter, both financially and strategically, position Penn on well to accelerate growth while maintaining a lean and focused cost structure. I'll now hand the call back to Steve for closing comments.