Tenon Medical, Inc.

Greetings and welcome to the Tenant Medical second quarter 2026 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 Kevin Williamson, Chief Financial Officer. Mr. Foster and Mr. Williamson will present results of operations for the second quarter ended June 30th, 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.tenanmed.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 would like to turn the call over to Tenon Medical's Chief Executive Officer, Steve Foster.

Please go ahead, sir. Thank you, Joe, and good afternoon, everyone. I'm pleased to welcome you to today's second quarter 2026 financial results and corporate update conference call for Tenon Medical. Second quarter revenue was $1.3 million, an increase of 127% over the second quarter last year, and gross profit was $0.8 million, an increase of 232% over the prior year period. Each was the highest we have reported in the second quarter. Gross margin was 64% compared to 43% a year ago. Case volume grew across both the Catamaran and Symmetry Plus platforms, and each incremental procedure is now carrying meaningful more profit. Looking at the first half as a whole, revenue was $2.7 million, an increase of 106% from $1.3 million in the first six months of 2025. Gross profit was $1.8 million, an increase of 210%, from 0.6 million at a gross margin of 66% compared with 44%. Our loss from operations for the six months was 6.6 million compared with 6.5 million a year ago, essentially unchanged, while revenue doubled and gross profit dollars roughly tripled. Growth on the top line came from a higher number of catamaran cases and continued meaningful Symmetry Plus contribution since we acquired the SciVantage assets in August of last year. Physician and distributor training is the leading indicator for us, and on that front, our training events increased 98% in the first half of 2026 compared with the second half of 2025. Gross margin expanded substantially year over year, at 64% we are approximately 21 percentage points higher than the second quarter of last year and at 66% for the first half we are roughly 22 points higher than the same period in 2025. Increased revenue has contributed through improved absorption of fixed production overhead and we are also benefiting from more streamlined commercial footprint and stronger field productivity. Beyond financials, a few items from the quarter are worth noting. First, on the commercial side, our platform offering continues to progress the way we had planned, with physicians evaluating Catamaran and Symmetry Plus as complementary tools, inferior posterior and lateral approaches to the same anatomy. As part of our continued investment in commercial activity, we've hired a seasoned professional sales lead to our East Coast sales team and expect to add further sales heads and distributor partners in the back half of the year. Additionally, we saw a meaningful uptick in our physician and distributor training activity in Q2, driven by our newly opened Tampa sales and training office, which has contributed to a record case value month in July and a strong start to Q3. Second, as it relates to regulatory matters, subsequent to the quarter end on July 2nd, we announced that we received FDA 510 clearance for the catamaran SI joint fusion system. The updated clearance incorporates various instrument upgrades, as well as the reclassification of certain instruments from disposable to reusable status. which is expected to improve system performance while reducing ongoing per procedure costs previously associated with disposable instrumentation and improving margin which we expect to play out meaningfully beginning in Q3. Third, we have had a busy quarter with our R&D initiatives and are nearing multiple launches that we believe will be meaningful in this space. First, we have an enhanced Symmetry Plus system that includes streamlined decortication, which will become clinically active in Q3 and is a significant improvement to this system. Second, we are nearing the final stages of development and approaching filing for 510 approval of an enhanced feature to the Symmetry Plus implant, which will make the implant even further differentiated. And third, we are excited about the progress we have made on a third approach to the space and an additional product offering to Catamaran and Symmetry Plus that we believe meets a large unmet need in a very novel way. Fourth, as it relates to capital, on July 1, we closed a public offering of common stock or pre-funded warrants and common stock purchase warrants for aggregate gross proceeds of $4.2 million. Net proceeds are expected to be used for partial repayment of our outstanding convertible notes, commercial expansion, clinical research, and general corporate purposes. Looking out over the rest of the year, our focus is narrow. Keep growing procedure volumes on both platforms continue aggressive physician training and education, accelerate key R&D projects, and protect the gross margin gains we've built over the past few as we scale. We have multiple ways to win in this market, and we intend to use them. With that, I'll turn the call over to Kevin 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 across the wire this afternoon. Starting with the top line, second quarter revenue was 1.3 million, a record for any second quarter in the company's history, and up 127% from 0.6 million a year ago. Revenue for the six months ended June 30th, 2026 was 2.7 million, an increase of 106% compared to 1.3 million in the six months ended June 30th, 2025. The increase in the quarter was driven by a large increase in the number of surgical procedures performed as well as the addition of revenue related to the Symmetry Plus system. Over the past 12 months, we have meaningfully increased our physician user base and surgical case volume, and we expect to continue to build on that momentum through Salesforce expansion, increased physician and distributor engagement, and future product launches. Gross profit was $0.8 million or 64% of revenue in the second quarter compared to $0.2 million or 43% of revenue a year ago. That's a 232% increase in dollar terms and the highest for any second quarter in the company's history. On a margin basis, we picked up about 21 percentage points year over year. For the six months, gross profit was $1.8 million, or 66.2% of revenue, compared to $0.6 million, or 44.0% of revenue, a 210% increase in dollars and roughly 22 percentage points. The improvement was primarily driven by higher revenue and lower fixed costs in the period, driving further absorption of production overhead costs within cost of goods sold. We continue to expect to see our gross margin expand as revenue increases and we further absorb fixed costs within our cost of sales. Operating expenses totaled $4.2 million in the second quarter compared to $3.1 million in the second quarter of 2025. For the six months, operating expenses totaled $8.4 million compared to $7.1 million in the prior year period. The increase in the quarter was primarily due to higher sales and marketing expenses associated with higher revenue in addition to higher research and development expenses as we continue to work toward future product additions. Net loss was $4.1 million or $12.35 per share in the second quarter compared to a net loss of $2.8 million or $12.76 per share in the second quarter of 2025. for the six months, net loss was $7.5 million or $23.16 per share compared to a net loss of $6.4 million or $39.91 per share in the same period a year ago. The increase in net loss was primarily driven below the operating line by $0.9 million of non-cash interest expense related to the amortization of the original issue discount related to our convertible notes, which was not present in the prior year period. We ended the quarter with $1.7 million in cash and cash equivalents, compared to $3.8 million as of December 31, 2025. Subsequent to quarter end, on July 1, we closed the public offering with gross proceeds of $4.2 million, which provides additional runway to fund our commercial, clinical, and development priorities. Overall, we believe the financial and strategic actions taken through the first half of 2026 have positioned Tenon to drive continued growth in the second half and into 2027. while sustaining a streamlined and disciplined cost base and executing on our commercial and upcoming product launch initiatives. I'll now hand the call back to Steve for closing comments.