Aurora Spine Corporation

Good day and welcome to the Aurora Spine first quarter fiscal year 2026 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Adam Lowensteiner, Vice President of Lithum Partners. Please go ahead.

Thank you, Dave, and thanks, everyone, for your patience. Sorry for the delay. Welcome, and thank you for joining us today to conduct an update with the investors and review the financial results for Aurora Spine for the first quarter fiscal year. that ended March 31st, 2026. With us on the call representing the company today are Trent Northup, President and CEO of Aurora Spine, Matt Goldstone, Chief Commercial Officer, and Chad Klaus, Chief Financial Officer of Aurora Spine. Before we begin, I'd like to remind everyone that statements made during the course of this call may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended at Section 21E. of the Securities Act of 1934. These statements reflect current expectations concerning future events and results. Words such as expect, intend, believe, may, will, should, could, anticipate, and similar expressions are words that are used to identify forward-looking statements, but their absence does not mean a statement is not forward-looking. These statements are not guarantees of future performance and are subject to risks and uncertainties and other important factors that could cause actual performance achievements to be material or different from those projected. For full discussion of these risks, uncertainties, and factors, you are encouraged to read Aurora Spine's documents unfiled with CDAR, including those set forth in periodic reports filed under the forward-looking statements and risk factors section. Aurora Spine does not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. On this call, management may refer to EBITDA, adjusted EBITDA, adjusted net income, and adjusted EPS, which are not measures of financial performance under generally accepted accounting principles or GAAP. Management believes that these non-GAAP figures, in addition to other GAAP measures, provide meaningful supplemental information regarding the company's operational performance. Investors should recognize that these non-GAAP figures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to and not as a substitute for or superior to any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP measures is to the most directly comparable GAAP measures in accordance with SEC regulation sheet can be found in the company's earnings release. With that, I'd like to now turn the call over to Mr. Trent Northcutt, President and CEO of Aurora Spine. Trent, please proceed.

Thank you, Adam. I'd like to welcome everyone to this call to update everyone about Aurora Spine. To lay out the agenda for today's call, I plan on updating everyone on the company's operations and then hand the call over to Matt Goldstone, our Chief Commercialization Officer, to review our sales initiatives. After Matt makes his remarks, I will pass the call to Chad Klaus, our chief financial officer, who will then briefly review the company's financials. Afterwards, we will have some brief concluding remarks and then open to the call to answer any questions you may have. My remarks will be brief as we've only been a few weeks since our last conference call. The first quarter results showed some positive, despite a slower than anticipated start to the fiscal year. Some of the sluggishness early in the quarter were weather-related, which was relevant as we booked higher sales the quarter progressed. March was particularly strong, and so without any other sales from the Hydra Aero, it was refreshing to see our core products carry the load, as we obviously not only have loyal customer base, but also making their way into more interventionalists and surgeons' hands. We obviously have more work to do, especially on the spine surgeon side, which has been a bit tippet. But it's expected to pick up in the back half of the new year. Sales representatives that specialize in spine side of the business recently joined Aurora. It is very timely, as we have re-released our Apollo plate, which has helped us selling our DEXA branded products, including the DEXA-C for cervical and DEXA-L for the lumbar procedures. We have high hopes for DEXA-L as subsides occurs more frequently in the lumbar section of the spine due to heavier loads that are put into proportion of the spine. In addition, the CDC estimates that almost half of the U.S. population over 50 years of age will have low bone mass. This equates to millions of patients that need an implant that matches their bone density when having spine surgery. While we are on the topic of DEXA, it is important to note that subsequent to the end of the first quarter, we announced the issuance of a fourth U.S. patent related to our proprietary DEXA technology platform. The recent issued patent titled Bone Density Scan Result Match Orthopedic Implants and Methods of Use. further strengthens the Aurora Spine intellectual property portfolio surrounded patient-specific bone density matched implants selected for use. The patent technology describes methods of obtaining the patient's bone density information, including the DEXA T-score or bone density measurement. Selecting an implant and having bone density levels matched to the patient's native bone at the implantation site and implanting the selected device. By giving surgeons an implant option designed around bone density, Aurora is advancing a more personalized and intelligent approach to spine surgery. Throughout the issuance of this patent, Aurora's competitive position will improve and support the continued development of the next generation DEXA technology-based implant across the company's spinal implant portfolio. We believe the DEXA products will be a key growth catalyst in 2026, especially that our Apollo plate is now in stock and we have fulfilled orders to our current DEXA products. We have begun to ramp up marketing efforts on the platform and expect it to build momentum through the year. The Silo platform, which is primarily dominated by the TFX, continues to be a major contributor to our revenues. While sales of Silo and Q1 are in line with the same quarter a year ago, we are focused on introducing a couple of product extensions to the franchise that will be able to offer more variety of SI joint products for paid interventionalists. The first product that we expect to be ready to go to market over the summer is a product for SI joint, and we will be administrated by using a lateral oblique approach, which is a different approach than TFX uses. The lateral oblique approach is the number two type of approach currently used in the SI joint pain, and the feedback we receive from our sales team has been giving us the The popularity of the lateral oblique approach that demand is for such of a product would be a worthwhile to add to our existing silo franchise. We are excited about the release of this product as we are planning for it to be Aurora's first product with a disposable kit. We are in the midst of lining up doctors to use the product upon launch and believe this will act as a good catalyst back in half of 2026. That concludes my formal comments, and I will now turn the conversation over to Matt Goldstone, Aurora Spine Chief Commercialization Officer. Matt, please proceed.

Thank you, Trent. We continue to be in the midst of growing our sales team to improve our national coverage. We are excited about all of our new hires. They are rapidly getting up to speed and contributing to Aurora's success. While we are adding more salespeople, we had to backfill underperforming regions from Q4 of 2025 and Q1 of 2026. The first quarter of the year started a bit slower than usual due to the weather-related issues in the northern part of the country. In addition, we had to work through some pricing pressures in the market. Putting these temporary issues aside, the team is focused on developing the spinal surgeon market, specifically with DEXA-C, Aurora's proprietary plate Apollo, and the Alpha launch of DEXA-L. To give an update on where we currently are, we currently have 14 salespeople as of today, and we're excited about the additions to the team. We've added five new salespeople recently and are scheduled to meet our goal of increasing the sales force by 50% this year. We continue to forge forward with our new products and integrating them into the team. The clinical success of our SI joint portfolio and our lumbar fusion products continues to drive Aurora forward. We have a great opportunity ahead of us as many of our product platforms and products for this market are working into emerging markets that are rapidly growing. While we have more work to do, we are excited about our future and have the right products available to deliver the best outcomes for patients. That concludes my formal comments. Now I'll turn the conversation to Chad Klaus, Aurora Spines, CFO, for some comments on financials.

Thank you, Matt. Total revenues for the first quarter of 2026 were $4.44 million, an increase of 0.4% when compared to $4.42 million in the same quarter one year ago. primarily due to increased sales in Zip, Lumbar, Implants, and Aurora Biologics. Gross profit margin was again stronger and came in at 62.6%. In the first quarter, a nice improvement of 460 basis points from 58% for the first quarter of 2025. Gross profit margin was primarily higher due to the company recording more direct sales of products as compared to sales of third-party products through distributors. First margin continues to be at a strong level and believe this level is sustainable as we sell more 5G products and utilize our direct sales channels. Total operating expenses were $2.98 million in the first quarter of 2026, which is slightly up compared to $2.88 million in the first quarter of 2025, showing continued tight expense controls. EBITDAG, a non-GAAP figure. was approximately $107,000 for the first quarter of 2026 compared to a negative $20,000 in the same quarter a year ago. Improvements to EBITDA levels for the first quarter were due to higher risk margin and tighter expense controls. Net loss was $203,000 for the first quarter of 2026 compared to a net loss of $350,000 for the first quarter a year ago. Basic and diluted net income per share was 0.0 per share for the first quarter of 26 and 0.0 per share for the first quarter of 2025. Moving to the balance sheet, we ended the quarter and year with nearly $800,000 in cash. Accounts receivables were significantly lower relative to prior quarters, ending the first quarter just under $3 million, down from $3.3 million at the end of the fourth quarter and $4.2 million at the end of the third quarter last year. Lower receivables have helped our cash flows, and we were able to lower our payables in the last two quarters, putting the company on better footing. We believe the capital structure is sufficient to meet our budgetary needs for the remainder of the year. That concludes my comments.

I'll now turn it back to Trent.

Thanks, Chad. To summarize, the team at Aurora are highly focused and driven to build this company with the lineup of proprietary products we've developed in the past few years. We are well positioned to take advantage of the emergencies of the minimally invasive procedures for the spine health and for many new proprietary products. We are very pleased about our product offering and believe that they will have meaningful years to come. We are excited for what lies ahead for Aurora and continue to expand and tweak our internal sales team as we continue to expand our territory coverage in the U.S. We are committed In the midst of reworking the sales team and optimizing our efforts, we expect the second quarter revenues levels to be in line or slightly lower than we have reported a year ago. That said, we believe that we are on the right track to enhance the company's revenue growth, rate through new products and offering and including two new product extensions that will be launched later this year. We're very excited about the company's future opportunities and the product lines that we have brought to the market. We will continue to build the sales team efforts and educate the marketplace of our products and the value they bring to patients. We are very excited about the future for Aurora Spine for 2026 and beyond. With that said, operator, we are ready for any questions.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Our first question comes from Tom Feddicklin with Microcap Connection. Please go ahead.

Good morning, guys. Tom Feddicklin. I wanted to ask about forward-looking guidance. I know you had mentioned the next quarter will be slower as you take a step backwards and reorganize the sales team. What's it going to take to increase sales 15% to 20% year over year? I think that's what we've all invested in the story for. I know the facet is not being rolled out at the moment due to some changes, but what's it going to take to get those numbers up?

Well, we're going to have to find the right people who fit into the right areas. Uh, as far as like regional, uh, sales directors in those, in those, uh, markets, we, we do a good job of qualifying people that have a experience or that they have, um, uh, history in the particular market, like either an eventual or it's fine, but then it comes down to, can they execute on that plan? in those areas. During the interview process, we were really diligent. We don't hire quickly. We interview very slow. We go through a process with people in our sales organization that they have to go through a series of interviews. But when you get down to it, when they get hired, the rubber needs to hit the road there where people have to perform on what they've estimated themselves. And so what is it going to take? It's going to take some few more regions that are going to be added online, which Matt Goldstone has done. He's added recently three new individuals into the sales market in areas that were previously either vacated because of lack of performance or in areas that we actually didn't have anyone participating in the sales drives in those locations, such as regional coverage or new distribution opportunities. And I'll let Matt touch on that. to go over more and how we can get to the 20% plus growth.

Thank you, Trent. Yeah, I agree with all of your points. And I really think it is a amount of people carrying the water together. In the past, as we have hired people, a lot of it has been to optimize the regions that we were currently focusing on. But as we have expanded across new territory, that opportunity will drive new revenue. So as we're able to put more people into these markets, that will ultimately be able to press the number up to the expected amount.

When I look at the company year over year and I look at being relatively flat, it begs the question as to the adoption of doctors as you bring on more physicians who use your products. is the longevity there? Are the doctors continuing to use your product year after year? Is there an issue with stickiness or is it just that it's a slow process to ramp doctors up and they just don't convert so quickly?

I think there's a lot of shiny objects that come out that might distract physicians on a momentary basis. But I think the continued clinical success of the Aurora portfolio is sticky. We have phenomenal outcomes with our SI joint patients. We have phenomenal outcomes with our lumbar fusion patients. And I continually hear back from physicians how impressed they are with how well their patients are doing. So that into itself, I think, drives the continued success So I think it really does come down to the manpower and the consistency of coverage.

One of the things that we see through the interventional side of the market, the interventional doctors are still pioneering this space. This particular space of minimally invasive procedures being performed by interventionalists is still brand new. It's not it's not like they've been at this for 20 years now. It's only been going on for a few years. So many of the interventional doctors will start out with a handful of cases and then they'll follow those cases to see how they perform. They're still dealing with the dynamics of that marketplace with the ortho and the neuro community where they're trying to balance that referral base, that, you know, just plain nice inbox approach to medicine. They, It's a dynamic that is still being developed, and it's an exciting market because it's growing and expanding, but it's growing and expanding at a rate that is slower than, say, an ortho and a neuro, how that got expanded into spinal procedures, but expanding from the standpoint that these new doctors are now offering this procedure option to their patients without having to go have a big surgery at the hospital. Mm-hmm.

I got you. I got you. What are the growth drivers that are going to get you to 15% to 20%? I ask you because I think I, like many investors, was looking at the facet thinking that was the growth driver for this year, knowing that that is not being marketed at the moment. And maybe you can give us an update on when you think that will get marketed again. But what will be, other than just having new salespeople, where do you see the growth coming from for the balance of the year?

I think the good news is... Sorry, go ahead. I was just going to point out that our spinal portfolio is maturing. We've had DEXA-C out for a couple of years now, but the launch of DEXA-L at the end of last year, we are well into our alpha launch and we'll be going into a limited launch later this year. So our DEXA portfolio will be driving a lot of growth and getting Apollo back onto the market really allows us to have a procedural solution for an ACDF, which... makes the sell and the opportunity in the OR a lot stronger. Otherwise, we were losing dollars, and a lot of times you didn't need two people in the room to do one case. And so now we're able to really offer a full procedure option.

So that's good. That's good. You were going to say there, Chris?

Yeah, what I was going to say was the –

Silo X product, which is lateral oblique, gives us another shot on goal, which we did not have before. The market had changed from just a pure lateral approach to allograft, which was a posterior approach. But the code in the reimbursement was that headwind that we had talked about. You remember when we had to deal with that. And the oblique approach, which was just putting a couple screws in lateral oblique, approach was a procedure that became more and more familiar with some interventional doctors and even ortho doctors who didn't want to put in three lateral screws. They just wanted to work through a smaller incision versus the old approach. And that was the two that were really driving the SI joint market, which was a posterior approach like silatea.

Some of us just

finding the system, we said, well, you know, we can get an approval on that. We'll just make our own lateral leak system. That way, if there's an objective to using a post-year approach or they're just not familiar with going post-year, then we have another opportunity to present to them. So when that product gets released here in the second half of the year, that's going to be a growth driver for the company because those are really the two fastest growing segments in the SI joint fusion market. The other part of our development of silo is to continue to expand the portfolio, which is what we've done, which we've been talking about for a couple of years now, that we would always stay ahead of it. And that's what we've done.

And can you give us an update on the facet, where we stand with that?

Yeah, the good news is I have no bad news. That's really where we are with it. With the FDA, there may not even have to be a change. It's just a matter of a conversation. So I'm very optimistic about the conversation that we had. We have two very high-end FDA consultants that work for us, and the conversation has been pleasant, hasn't been difficult, and we're making progress. But I don't have a crystal ball in front of me, but the good news is I have no bad news. And we are in the discussion with the FDA. And it might just be something as simple as getting some additional testing, biomechanical testing. And we're hopeful that that could be the result that we need and then to continue to bring the product back into the market. The product is, for the record, still FDA approved. It has not been pulled from the market. It is FDA approved. We are just working with the FDA on some questions that they have that we are answering and addressing.

Okay. And the TFX, you had some sort of a legal issue with the company or group that you licensed it from that you were working through that you didn't think was going to be an issue. How is that going? Has that come to a resolution or does it look any closer to a resolution?

It's closer to a resolution. We make progress on it. I don't want to say weekly, but we make progress on it on monthly. And ultimately, I think it'll get resolved.

Okay, fair enough. Yeah, I think that's pretty much it. Other than really just asking, as we look forward, I know you say we're taking a step back. you know, if there's anything that we should be looking for, any metric that we should be asking you, what would that be? Like, what should an investor be focused on as we go into Q2, Q3, even Q4?

Well, we had to make some changes with some of our salespeople. Some people made their own changes and helped make the decision easier for us. We are, we've just added some new salespeople. Some of them had spying experience. We touched on that during the recording that we wanted to add more salespeople that could be focused and have a spying experience background. One of the individuals that we added actually came from a very successful lateral SI joint management. So he had management experience in SI joint. He's now part of the team and he's now in an area that we didn't have any coverage in the actually uh since we started the company so it's in the northeast part of the country which we're really pleased with sorry northwest part of the country and we're very pleased with that so that's a good addition adding these people that are going to be um um focused on either cultivating a new area where there's opportunity because there's already some existing business but now they can really expand on it because there's customers there just haven't been called on because we've been flying people in to cover those cases from across the country. Now having a person in that area, a local, if you will, I think will make a big difference for us in those sales cycles.

Okay. I don't know if Matt wants to touch on that further. Okay, yeah.

Yeah, I would just add that all of the five salespeople that have been added to the team over the last year quarter, you know, are stratified over the last three months, just say. And it takes about that three-month window to start seeing the contribution of, you know, they're getting their feet underneath them, getting their facilities organized, getting engaged with the physicians that they want to target. So we are starting to see contributions from them already, and I expect to see that ramp up substantially over the next three to four months.

All good. And with new sales directors on board and trained up and with the prospects of growth ahead, the one thing that's missing, I think, would be going to different events, whether it be Planet Microcap or whether it be Small Cap Discoveries events or Do you see yourself going on the road and selling the story, Trent? You did a great job at Planet Microcap in Vegas. I don't know of anybody that wasn't impressed. I think there's one thing that I could suggest would be or would suggest is that maybe to get on the road and sell the story. And I think that you would probably attract a lot more people to the stock.

I'm completely on board with that. I did close out the year. I'm sorry, I didn't close out the year. We did have two things that we've done recently. We participated at the Roth Conference up here in Southern California, just north of us. And then we also most recently met the new president of the Toronto Exchange, the CSX, and then the TMX team, which is the Toronto Marketing Exchange team. And we are making changes to the way that we put out our press releases. We're working directly with the TMX on that. We think that that's going to help get us in more areas that we just weren't penetrating, like we just weren't getting out there, the messaging wasn't caring. And then the microcap conference, today I have a handful of one-on-one presentations, and I want to be able to get out to get the story to resonate, because there is a resonating story here, and there is a growth strategy and a growth story that is underway.

Perfect, perfect. Well, guys, thank you for your time. That's all pretty much just the questions I've got. But I appreciate you taking the opportunity to have this call and wish you the very best as we go forward into Q2 and beyond.

Thank you so much. We really appreciate you staying with us and carrying the story yourself.

So thank you for being a big believer in Aurora. No worries. Thanks, guys. Have a great day.

This concludes our question and answer session. I would like to turn the conference back over to Trent Northcutt for any closing remarks.

I want to thank everyone for joining us for today's call. We are very pleased with the way that we are positioning ourselves in Aurora for 2026. If you have any questions, please schedule any more meetings with Adam Lowensteiner at Lithum Partners, and we'll be happy to address your calls.

Thank you, and I'll conclude the call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.