Tenon Medical, Inc.

Greetings and welcome to the Tenon Medical First Quarter 2026 Financial Results and Corporate Update Conference Call. As a reminder, this conference call is being recorded. Your hosts today are Steve Foster, President and Chief Executive Officer, and Kevin Williamson, Chief Financial Officer. Mr. Foster and Mr. Williamson will present results of operations for the first quarter ended March 31, 2026, 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. For a more complete discussion of these factors and other risks, You should review our quarterly and annual reports 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, Saatchi, and good afternoon to everyone. I'm pleased to welcome you to today's first quarter 2026 financial results and corporate update conference call for Tenon Medical. We are off to a solid start in 2026. We delivered strong first quarter revenue and gross profit, which were the highest for any first quarter in the company's history. First quarter revenue came in at $1.4 million, nearly double the prior year period. The gross margin reached 68.5%, up from 44.5% a year ago. Two dynamics drove the quarter. more procedures across both of our platforms, and a meaningful, more efficient cost base behind those revenues. On the top line, growth came from two places, a higher number of catamaran cases and the first full quarter of meaningful Symmetry Plus contribution since we acquired the SciVantage assets late last August. Physician engagement is a leading indicator for us as well, and on that front, we trained 21 physicians across both systems this past quarter. The most notable development this quarter is the expansion in gross margin. At 68.5%, we are approximately 24 percentage points higher than a year ago. While increased revenue has contributed to improved absorption of fixed production overhead, we are also benefiting from a more streamlined commercial footprint and stronger field productivity. We expect these structural gains to persist going forward. Beyond the financials, a few items from the quarter that are worth noting. First, our two-platform offering is increasingly working the way we had hoped. Physicians are evaluating Kedwin and Symmetry Plus as complementary tools in both primary and revision procedures. These systems provide optionality in both inferior posterior and bilateral approaches to the same anatomy, and we are seeing this translate into adoption at several leading centers. Specific to capital, in March, we closed a $4.3 million senior convertible note placement with a group of institutional and high-net-worth investors. That financing extends our runway, gives us the flexibility to keep investing behind commercial expansion, product launches, and our clinical programs without further distraction. Taken together, the quarter gives us a healthier balance sheet broader products set actually in the market and clearer evidence that our cost work is sticking. Our intellectual property position continues to strengthen. The U.S. Patent and Trademark Office issued multiple notices of allowance during the quarter on applications expected to grant later in 2026, on top of the 10 patents that issued in 2025. Our portfolio today stands at 29 U.S. patents and and nine international patents granted, with another 31 applications pending. That depth matters for a small-cap medical device company. It protects what we have built around Catamaran and Symmetry Plus. In addition, we have dramatically accelerated our R&D project work. This includes significant incremental additions to the Symmetry Plus lateral and oblique platform that will be launched in the back half of 2026. Additionally, in the spirit of providing comprehensive optionality to our physician customers, we are moving towards regulatory submission and subsequent alpha activity of a third approach to the sacral pelvic anatomy. Lastly, our aggressive commercial activity is highlighted by the addition of an experienced senior sales professional to manage the eastern part of the lower 48. He will join other members of our commercial team at a newly established training and education center in the Tampa, Florida area designed intentionally to accelerate our physician and distributor education activities. Looking out over the rest of the year, our focus is very narrow. Keep growing procedure volumes on both platforms, aggressively educate our physician and distribution partners, and protect the gross margin gains we've made this quarter as we scale. We have multiple ways to win in this market, lateral and inferior poster now, and additional innovations to come. With that, I'll turn the call over to Kevin to discuss our financials in some detail.

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. Starting with the top line, first quarter revenue was $1.4 million. an increase of approximately 90% from 0.7 million a year ago. Two factors are at work here. First, catamaran surgical procedure volumes saw strong year-over-year growth, driven primarily by new physician adoption. And second, Q1 was the first quarter to fully reflect Symmetry Plus revenue since we closed that acquisition in August of last year and Alpha launched the system in Q4 2025. Further product enhancements and a full commercial launch of Symmetry Plus are planned for in the back half of 2026, which we expect to support continued growth this year and into 2027 and beyond. Gross profit was $0.9 million or 68.5% of revenue versus $0.3 million or 44.5% of revenue in the first quarter of last year. That is an approximately 193% increase in dollar terms and the highest for any first quarter in the company's history. On a margin basis, we picked up about 24 percentage points year over year. The driver is straightforward. Higher revenue is spreading our fixed production costs over a larger base, and we expect to see continued margin expansion as revenue scales. Operating expenses came in at 4.2 million, modestly above the $4.0 million we ran in the first quarter of 2025. The step-up is primarily driven by higher sales and marketing expenses, reflecting increased commercial activity related to higher revenue, as well as supporting the Symmetry Plus rollout, while partially offset by lower stock-based comp versus a year ago. When normalizing stock-based comp expense year-over-year with an R&D, development-related expenses increased in the first quarter versus Q1 2025. driven by project-related activities tied to future product launches, primarily related to assets that were acquired in the acquisition we closed in August last year. Net loss for the quarter narrowed to $3.5 million, or $0.31 per share, from $3.6 million, or $1.01 per share, a year ago. The per share figure benefits from a larger share count, but on a dollar basis, the improvement is real. stronger revenue and gross profit more than offset higher OpEx and the interest expense from the March convertible note issuance. We ended the quarter with $4.6 million in cash and cash equivalents compared to $3.8 million as of December 31st, 2025. In March 2026, the company closed a private placement of senior convertible notes for gross proceeds of $4.3 million which provides additional runway to fund our commercial and clinical priorities deep into the year. Overall, we believe the financial and strategic actions achieved this quarter have positioned Tenon with initiatives to drive faster growth while sustaining a streamlined and disciplined cost base.