Felipe Lamar

Felipe Lamar inquired about the revenue contribution of the aprevo Cervical launch in Q4 2025, expectations for its ramp-up in 2026, and the utilization rates among existing aprevo Lumbar users.

Answer

Michael Cordonnier, CEO and Chairman, stated that the aprevo Cervical launch, initiated just weeks prior, has received a positive response and strong adoption from surgeons and hospitals, bolstered by the New Technology Add-on Payment (NTAP). He anticipates the cervical portfolio, especially with the upcoming personalized Cora plates, will ramp up as planned and become a significant part of Carlsmed's offerings. He also noted that approximately 10% of existing aprevo Lumbar users have already been trained on cervical procedures in a short timeframe, indicating strong cross-platform adoption.

Felipe Lamar asked for details on the cervical portfolio's revenue contribution in the recent quarter and the expected ramp-up in 2026, followed by a question on cervical adoption and utilization rates among existing lumbar users.

Answer

CEO Michael Cordonnier highlighted the positive response and strong adoption of the cervical portfolio since its December launch, noting optimism for its significant future contribution, especially with the upcoming personalized Cora plates. He added that approximately 10% of existing lumbar users have been trained on cervical in a short period, indicating strong cross-platform adoption.

Felipe Lamar asked for an update on the elective procedure environment, specifically regarding any changes in patient appetite for foot and ankle surgery and how typical seasonality is trending.

Answer

CFO Mark Hair reiterated that Q4 remains the seasonally strongest quarter due to patient deductibles and time off, with no change to this pattern expected. He explained that any scheduling shifts from earlier in the year tend to push procedures into Q4, which is a historical trend. He emphasized that this year, the company is better positioned to capture this volume with its newly expanded suite of bunion products.

Felipe Lamar of Truist Securities, on for Richard Newitter, questioned the decision to start with a limited launch for the Type 2 diabetes opportunity, given its large size and Tandem's early-mover advantage.

Answer

President & CEO John Sheridan explained that the pilot was crucial to understand the market and 'get it right from the beginning' to avoid missteps. He noted that pilot territories have already shown better Type 2 adoption. Based on these positive learnings, the company is now significantly expanding its Type 2 commercial efforts to new territories and will continue that expansion through the rest of the year.

Felipe Lamar, on for Richard Newitter at Truist Securities, asked for a reminder of the factors that will impact gross margin in 2026, noting that Street models anticipate some compression.

Answer

CFO Anshul Maheshwari reiterated that while he would not provide specific 2026 guidance, the company expects gross margins to settle in the 76%-77% range over the medium term. He explained this is due to a balance between savings from ongoing efficiency initiatives and the offsetting costs of launching new products, which are initially subscale and have higher associated costs for surgical capacity.

Felipe Lamar from Truist Securities asked if the pharmacy channel's removal of upfront costs is a key driver for new MDI patient adoption and questioned the main driver of the higher gross margin guidance.

Answer

CFO Stephen Feider confirmed that the pharmacy model's lower out-of-pocket cost is a significant tailwind for new patient starts, complementing the product's clinical differentiation. He attributed the improved gross margin guidance primarily to manufacturing scale benefits, which lower the cost per unit and more than offset the headwind from a higher pharmacy mix.

Felipe Lamar inquired about the 2025 goals for training additional physicians on MACI Arthro and its potential revenue impact. He also asked for clarity on the expected growth cadence for Epicel in 2025, given its historical variability.

Answer

CEO Dominick Colangelo noted strong progress in surgeon training (from 150 to 250) and expects to train a meaningful number more, but stated significant upside from MACI Arthro is not yet in the guidance. CFO Joe Mara explained the high single-digit growth guidance for Epicel is a conservative start, primarily driven by price, and acknowledged that quarterly lumpiness is likely to persist.