Tenon Medical Q3 2025 Earnings Call - Strategic Acquisition and Product Launch Spur Record Revenue Growth

Rob, Conference Call Moderator: Greetings and welcome to the Tenon Medical Third Quarter 2025 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 third quarter ended September 30, 2025, 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.tenonmed.com. Before we begin the formal presentation, I’d 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 the date of this presentation. Please keep in mind 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’d like to turn the call over to Tenon Medical’s Chief Executive Officer, Steven Foster. Please go ahead, sir.

Steven Foster, President and Chief Executive Officer, Tenon Medical: Thank you, Rob, and good afternoon, everyone. I’m pleased to welcome you to today’s Third Quarter 2025 Financial Results and Corporate Update conference call for Tenon Medical. The third quarter was a very exciting time for Tenon Medical, and the first quarter where our progress is really showing through in our financial results. Our results demonstrate significant momentum in executing our strategic growth initiatives. We achieved record revenue of $1.2 million, a 32% increase compared to the same period last year. This performance was fueled by unprecedented Cadmium procedure volumes, underscoring strong demand and growing adoption among physicians. Additionally, the integration of the Cyvanage portfolio contributed meaningfully to our top-line growth, an early indication of what our portfolio expansion strategy can deliver. These results affirm the strength of our commercial execution and the increasing recognition of our differentiated solutions in the marketplace.

As discussed during our second quarter earnings conference call, and in line with our commitment to advancing innovation and expanding our market presence, we completed a strategic asset acquisition of CyVantage’s Symmetry and Symmetry Plus sacroiliac joint fusion technologies during the third quarter. This transaction marks a pivotal milestone in our growth strategy, transforming Tenon into a multi-product, multi-approach company capable of addressing a broader spectrum of sacral pelvic fixation and fusion needs. The Symmetry platform brings a well-established clinical foundation and a differentiated approach to fusion, complementing our existing Cadmium system. Importantly, this acquisition has been immediately accretive to revenue and enhances our ability to serve a wider range of physicians and patients. We also welcome key members of the CyVantage leadership team, whose deep experience and expertise will be instrumental in accelerating our commercial execution and driving continued innovation.

I’d like to quickly acknowledge the efforts of the newly combined team for efficiently coming together as one, aggressively completing integration activities, and delivering a strong quarter. Another key milestone this quarter was the full commercial launch of our Cadmium FE, a joint fusion system, which expands our implant portfolio and strengthens our competitive position in the sacroiliac joint fusion market. The Cadmium FE features a reduced profile, offering physicians greater flexibility when treating patients with smaller SI joint anatomy or performing revision procedures. This design enhancement supports a minimally invasive inferior-posterior approach and includes a proprietary instrument set with multiple drilling options, catering to diverse surgical preferences. Backed by expanded inventories and field support, bolstered by our recent Cyvanage acquisition, we are well positioned to meet growing market demand.

With over 1,000 Cadmium devices implanted to date, the system continues to demonstrate strong clinical performance across a range of indications, including primary SI joint dysfunction, revision, and adjunctive applications in complex multilevel spine fusions. The successful transition from alpha testing to full launch reflects our commitment to innovation and our ability to execute with speed and precision. During the quarter, we were proud to share that the second peer-reviewed publication from our ongoing Mainsail Study was released. This further validated the safety, efficacy, and durability of the Cadmium SI Joint Fusion System. This prospective multi-center clinical trial evaluated outcomes in patients with sacroiliac joint disruptions or degenerative sacroiliitis treated with our Cadmium implant. The 12-month data from the first 24 patients demonstrated statistically significant improvements in pain and disability scores. VAS scores dropped from 78.8 preoperatively to 23.0 postoperatively, and ODI scores improved from 51.6% to 20.8%.

Notably, 83% of patients showed unequivocal evidence of fusion, with bridging bone across the SI joint at 12-month CT, confirmed by independent radiographic review. The study also reported no serious adverse events, re-operations, or re-interventions, and 83% of patients expressed high satisfaction with their outcomes. These results reinforce the Cadmium system’s clinical value and support its role as a reliable, minimally invasive solution for SI joint dysfunction. As we continue to build our clinical evidence base, we believe these findings will be instrumental in driving broader adoption and payer coverage that supports our long-term growth. Subsequent to quarter end, we announced a major regulatory milestone with the FDA 510(k) clearance of our Symmetry Plus SI joint fusion system.

This next-generation platform builds on the proven foundation of the original Symmetry system and introduces several key advancements, including 3D-printed titanium implants, a robust joint decorticator, and a simplified bone graft delivery system. These enhancements are designed to support authentic arthrodesis through a minimally invasive lateral approach rooted in established orthopedic fusion principles. With this clearance, Tenon now offers two distinct minimally invasive surgical approaches, lateral and inferior-posterior, through our Symmetry Plus and Cadmium systems, respectively. This multi-platform strategy significantly strengthens our competitive position and enables physicians to tailor treatment to individual patient anatomy and pathology. We’re prepared for an alpha launch of Symmetry Plus in the coming weeks. A select group of physician users, whose feedback will guide our broader market introduction, will be the first to use the technology.

This milestone not only expands our portfolio but also reinforces our commitment to delivering durable, clinically validated outcomes for patients suffering from sacroiliac joint dysfunction. Physician education remains a top priority. In the third quarter, we hosted 26 physicians in various Tenon workshops, including critical peer-to-peer engagements. We ended the quarter with $3.4 million in cash and no debt. Subsequent to quarter end, we bolstered our cash position with a $2.85 million pipe financing, primarily consisting of investment from industry partners, giving us the flexibility to continue executing our strategic roadmap with confidence. Looking ahead, we remain focused on driving adoption across our expanded product portfolio and leveraging recent regulatory and clinical milestones to support commercial growth. With a strong foundation in place, we’re confident in our ability to scale operations, deepen market penetration, and deliver continued value in the quarters to come.

We are actively onboarding sales professionals to the Tenon commercial team through a strategic hybrid structure, and we’re already seeing the momentum build into the fourth quarter, driven by the expansion of our commercial footprint and the increased horsepower of our sales organization. With that, I’ll turn the call over to Kevin to discuss our financials in detail.

Kevin Williamson, Chief Financial Officer, Tenon Medical: Thank you, Steve. I will now provide a summarized review of our financial results. A full breakdown is available in a press release that crossed the wire this afternoon. Revenue for the third quarter of 2025 was $1.2 million, an increase of 32.3% compared to $0.9 million in the same period last year. Revenue for the nine months ended September 30th, 2025, was $2.5 million, in line with $2.5 million in the nine months ended September 30th, 2024. The increase in the third quarter revenue was primarily driven by an increase in the number of surgical procedures in which the Cadmium system was used, as well as the addition of sales in the last two months of the quarter from the newly acquired Symmetry SI Joint Fusion System. The demand for both Cadmium and Symmetry increased throughout the quarter and has continued into the fourth quarter.

Gross profit was $0.8 million, or 66% of revenue in the third quarter of 2025, compared to $0.4 million, or 47%, in the prior year quarter. For the nine months ended September 30, 2025, gross profit was $1.3 million, or 54% of revenue, compared to $1.4 million, or 54% of revenue, for the previous year’s period. Gross margin for the quarter improved due to higher revenue absorbing fixed overhead costs in our cost of goods sold. With a similar margin profile for both Symmetry and Cadmium, we expect our gross margin to continue to improve as revenue increases and fixed overhead costs are further absorbed. Operating expenses totaled $4.2 million in the third quarter of 2025, up from $3.6 million in the prior year period. For the nine months ended September 30, 2025, operating expenses totaled $11.3 million, compared to $12 million in the prior year period.

The increase in operating expenses for the quarter was primarily due to higher sales expenses driven by higher revenue and related variable commission expenses, as well as higher marketing and G&A expenses driven by integration efforts in relation to the Cyvanage acquisition. The decrease in operating expenses in the nine months was driven by lower fixed expenses, including lower stock-based compensation across several operating categories. Net loss for the third quarter was $3.3 million, or $0.40 per share, compared to a net loss of $3.2 million, or $3.63 per share, in the third quarter of 2024. For the nine months ended September 30, 2025, net loss was $9.7 million, compared to $10.6 million in the same year-ago period. The year-over-year improvement was largely driven by reduced operating expenses and lower fixed costs, raising operational leverage.

We ended the quarter with $3.4 million in cash and cash equivalents, compared to $6.5 million as of December 31, 2024. Subsequent to quarter end, Tenon raised an additional $2.85 million in cash to fund future growth initiatives through a pipe financing. The pipe was led by an industry-supported investor cohort that believes in the strategic vision of Tenon and the growth opportunity in front of us. Additionally, Tenon had no outstanding debt as of quarter end, further positioning the company to continue executing on our strategic initiatives, including the development and launch of the CyVantage assets, continuing to build clinical evidence, and expanding our commercial footprint. In summary, we believe the transformational steps taken this quarter, both financially and strategically, position Tenon well to accelerate growth while maintaining a lean and focused cost structure and driving long-term shareholder value.

I’ll now hand the call back to Steve for closing comments.

Steven Foster, President and Chief Executive Officer, Tenon Medical: Thank you, Kevin. In summary, the third quarter was marked by strong execution across our strategic priorities, from record revenue growth and the successful integration of the CyVantage acquisition to the full market launch of Cadmium FE and key regulatory and clinical milestones. We remain focused on expanding our portfolio, deepening physician engagement, and building a robust foundation for sustained growth. With momentum building across our commercial and clinical initiatives, we are confident in our ability to drive long-term value for patients, providers, and shareholders. I thank you all for attending, and I’d like to hand the call back over to our operator to begin the question-and-answer session with our covering analysts. Rob?

Rob, Conference Call Moderator: Thank you. At this time, we’ll be conducting a question-and-answer session. If you’d like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you’d like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Scott Henry with AGP. Please proceed with your question.

Scott Henry, Analyst, AGP: Thank you, and good afternoon. It’s exciting to see the company come together as it approaches greater scale. A couple of questions. First, could you comment on, of the product revenues, how much was the kind of base Cyvanage revenues of the $1.2 million?

Steven Foster, President and Chief Executive Officer, Tenon Medical: Thank you, Scott. I appreciate the question. Yes, so we’re obviously early. We had two months of Cyvanage product contribution, if you will, to the top line, right, in the third quarter. We closed right around August 1, the transaction itself. The primary driver of our revenue was record Cadmium procedures and what have you. We did a little over $1 million, close to $1.1 million in Cadmium revenue, and the rest of the revenue was early Symmetry activity. Keep in mind that the Symmetry activity is base, what I refer to as base Symmetry technology. We’re just now, in the coming week or two, going to initiate the Symmetry Plus alpha, so start seeing revenue build from Symmetry Plus here going forward.

Scott Henry, Analyst, AGP: Okay, great. Obviously, sequentially in fourth quarter, you’ll get another month of the base Cyvanage revenues. You’ll get the Symmetry Plus contribution, even if it’s small at that point. Would you expect Cadmium to grow sequentially from third quarter 2025 to fourth quarter 2025?

Steven Foster, President and Chief Executive Officer, Tenon Medical: We do. Look, the drivers behind Cadmium is data. The Mainsail data continuing to come out and show that Cadmium is delivering on its promises. We do expect Cadmium activity, number of surgical procedures, etc., to continue to grow. To your point, we’ll get the extra month of CyVantage activity in the full fourth quarter. Frankly, what means more to us is this initial phase of the alpha launch of Symmetry Plus. We have physicians who are really excited about getting their hands on that technology. We anticipate it’ll be a good growth driver as we move through alpha.

Scott Henry, Analyst, AGP: Okay, great. When we think about the Symmetry Plus alpha launch, how should I think about that? Should I think of it as a pilot launch at first, or is that a full-scale launch? Just trying to get a sense of how that launch will evolve over the next 6 to 12 months.

Steven Foster, President and Chief Executive Officer, Tenon Medical: Yeah, I appreciate that question. Absolutely. The physicians that informed us and partnered with us to give us feedback on what they wanted the system to do, etc., will be the first users of the technology. It is a relatively small and focused group in the first, call it, 60-90 days of the alpha. We get feedback and make absolutely sure, "Hey, is everything working as expected? Are refinements required? Are there tweaks required?" etc., to make sure this is ready for prime time, if you will, and to go to a broader audience. At that point, we will start expanding things pretty aggressively. It is exactly what you said, right? It is a bit of a pilot, if you will, for a short period of time to make sure we got everything right and that the instruments and the implants are meeting expectations.

Scott Henry, Analyst, AGP: Okay, great. And just the final question, perhaps for Kevin. G&A, do you think third quarter is reflective of what we’ll start to see on a quarterly basis? Or I know you’ll have another month of Cyvanage, but it looks like maybe there was some one-time stuff in there as well. Should we be thinking about $2.1-$2.2 million a quarter?

Kevin Williamson, Chief Financial Officer, Tenon Medical: Yeah, good question, Scott. Fair on both of your comments. A little bit of some one-time more integration-type expenses in there, but also some increased expenses going forward. Probably somewhere just south of that number we posted here in Q3, but closer to that number than where we were previously, given some of the increased expenses going forward.

Scott Henry, Analyst, AGP: Okay, great. Thank you for that color. Thank you guys for taking the questions.

Steven Foster, President and Chief Executive Officer, Tenon Medical: Thank you, Scott.

Rob, Conference Call Moderator: As a reminder, if you’d like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Thomas McGovern with Maxim Group. Please proceed with your question.

Thomas McGovern, Analyst, Maxim Group: Thank you. Yeah, so it sounds like you guys are well on your way to integrating Cyvanage. I just want to get maybe an update on how that process is going. Is it fully done? Are there additional milestones you’re looking to achieve in this integration process? Maybe just kind of high-level how you view it moving into the fourth quarter.

Steven Foster, President and Chief Executive Officer, Tenon Medical: Yeah, thanks for the question, Thomas. Yeah, look, I’m really, really proud. I mentioned it in the prepared statements here, and I’ll reinforce it here. I’ve lived through a lot of integrations, bringing people together and getting them to, if you will, take the risk to dive in, to trust each other, to get after it, and start performing as one is really the biggest challenge in these integrations, right? I’m just really, really pleased with the progress that we’ve made. Sure, there’s all kinds of stuff to do, the audit itself, just some of the tactical stuff that has to be done as part of an integration. It’s really about winning hearts and minds. This team is coming together really nicely as one and starting to check all the boxes so we can perform as an integrated team going forward.

Just super, super proud of the work that’s being done. Kevin can comment a little bit, but I think largely we are finished now. A good indicator of that, probably the best indicator of that, is bringing the Symmetry Plus alpha in on time and executing on that in the course of all the integration activities going on. We’ll initiate that here this month, and we’re super excited about seeing what Symmetry Plus can do out there with physicians that prefer a lateral approach. All of those things are coming together, Thomas, and I’m just really thankful to the Cyvanage folks, the Tenon folks coming together and becoming the new Tenon. It really has been a pleasure to work with everybody.

Thomas McGovern, Analyst, Maxim Group: Great. I appreciate that answer.

Kevin Williamson, Chief Financial Officer, Tenon Medical: Yeah, I’ll just quickly add, Paul, I can just quickly add, to keep in mind, even though this was a business combination, we really acquired just the assets of Cyvanage. Integrating the assets, the inventories, into our quality system and into our commercial team was really the main focus. Obviously, a focus on launching Symmetry Plus as we acquired those products right before this launch coming up here in the coming weeks. Then integrating the customer base, the physician base, distributor base to continue and accelerate sales. I think we feel very good about how that played out throughout the quarter and how we’re rolling up here so far in Q4.

Thomas McGovern, Analyst, Maxim Group: Great. Glad to hear it. Again, thank you guys for answering that. Next question for me. You guys mentioned adding commercial sales professionals. Just curious if you could maybe quantify, just give us an idea of the scope of these headcount additions. Maybe a little bit more on kind of how you guys plan to balance marketing for Cadmium versus CyVantage and Symmetry Plus. Are there going to be specialized salespeople for specific products, or are these going to be cross-trained salespeople? Just kind of give us an idea of your strategy as you move forward.

Steven Foster, President and Chief Executive Officer, Tenon Medical: Excellent. Yeah. First to the scope of commercial additions, right? One of the many upsides to the Cyvanage activity and the transaction that we did is onboarding some really key commercial members. Nate Rowley, wife guys, really experienced people that come on board that have an entire network of relationships through their years of experience, etc. It’s going to greatly enhance what we’re doing out there. We’re committed to a hybrid commercial structure, meaning we’ll be engaging independent distributors and 1099 resources, and that’ll be managed by our direct sales management team led by Nate Rowley as our Chief Commercial Officer. We see the scope of that continuing to grow really quickly, onboarding these distributors and getting them trained, etc. To your second question, these folks will be informed and trained across Tenon and all of our products in the portfolio, right?

What we want to be able to do is present ourselves to a physician as having a tool bag that will allow them to choose what they prefer in treating patients with these sacral pelvic disorders, right? If they prefer lateral approaches, we want to have the state-of-the-art solution for what they’re looking for. If they prefer an inferior-posterior approach, we have that with Cadmium, etc. What we rally around, Thomas, are the principles of an authentic fusion, right? You’ll see all of these products check the boxes of AO principles of arthrodesis, right? We don’t dance around that topic. We don’t just put a screw in and say, "There." These are technologies, surgical techniques, and instruments that deliver across those requirements. The distributors that we’re interfacing with rally around those principles, and they will be trained on all aspects of what Tenon has to offer.

Thomas McGovern, Analyst, Maxim Group: Understood. I appreciate the thorough response there. Last thing for me, you guys highlighted, again, your clinical data, obviously great in terms of not only educating physicians, but also pursuing additional payer coverage decisions. Just curious, maybe how are you weighting that as you’re looking at several commercial ramp-ups, the commercial pilot program or the pilot launch, if you will, of Symmetry Plus? How are you balancing your focus on that, expanding headcount and integration, along with using this data to pursue additional payer coverage? Just kind of want to understand how you’re stacking your priorities maybe in the next several months.

Steven Foster, President and Chief Executive Officer, Tenon Medical: Yeah, sure. The priorities were more strategic in the last two to three years as it related to engaging the process and making sure coding, big-picture coding issues were addressed and that codes became clear so that things could be done accurately out in the field. That’s fantastic. You have a medical device technology. It has to be backed by prospective data in order for it to be accepted in most cases and covered by the private payers in particular. We are in that stage now with the publication of the Cadmium data, with the data set that’s in place for Symmetry technology. We can have a very thorough discussion with private payers and commercial payers and make sure these technologies are recognized and covered within their policies. There is a great deal of work going on there. It’s not the fastest work in the world.

I wish it was, but it’s not. Working through all of that takes time and effort from a focused group. That is a separate group from our commercial organization. Our commercial organization is really focused on engaging physicians, providing world-class training opportunities for them so they can be fully informed, world-class peer-to-peer opportunities so they can learn from physicians who have adopted these technologies, etc. That is really a separate set of activities, Thomas. We are doing those things in parallel out there. Really, one is not prioritized over the other. They are both equally important and exceedingly important to drive our opportunities to grow going forward.

Thomas McGovern, Analyst, Maxim Group: Got it. Thanks for answering all my questions and congrats on the quarter, guys.

Steven Foster, President and Chief Executive Officer, Tenon Medical: Thanks, Thomas.

Rob, Conference Call Moderator: We have reached the end of the question-and-answer session. I’d now like to turn the call back over to Steven Foster for closing comments.

Steven Foster, President and Chief Executive Officer, Tenon Medical: Thank you, Rob. I’d like to thank each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress and growth. If for some reason we were unable to answer any of your questions, please reach out to our IR firm MZ Group. We’ll be more than happy to assist. I wish everybody a good evening.

Rob, Conference Call Moderator: This concludes today’s conference. You may disconnect your lines at this time. We thank you for your participation.