Executive Summary

Q3 2022 net revenues rose 7% year-over-year to $4.54M, gross margin expanded 11ppt to 67%, and net loss narrowed to $9,376, effectively breakeven, driven by lower cost of revenues and reduced commission rates .
Operating profit reached $44,894 (EBIT margin ~1%), reversing a prior-year operating loss; Adjusted EBITDA improved to $0.13M versus a $(0.63)M loss in Q3 2021, reflecting better mix and instrument depreciation reclassification .
Mix shift toward Retail Cases (~96% of revenue) and Fuse-branded products (50% of YTD revenue) supported margin gains despite pricing pressure and supply chain challenges .
No formal quantitative guidance or earnings call transcript was filed; management emphasized continued product launches (Fuse PSS Pedicle Screw System) and sales force investment as near-term growth drivers .

What Went Well and What Went Wrong

What Went Well

Revenue up 7% YoY and gross profit up 28% YoY; gross margin expanded to 67% from 56% on lower cost of revenues and reclassification of medical instrument depreciation .
Commissions down ~18% YoY (27% of revenue vs 35%) from reduced average commission rates, supporting operating leverage .
CEO highlighted strategic execution: increased Fuse-branded portfolio and launch of Fuse PSS Pedicle Screw System with MIS options; “121% increase in EBITDA over the prior-year period” .

What Went Wrong

Persistent pricing pressure lowered average revenue per case ($4,260 in Q3 vs $4,409 in Q3 2021), requiring volume/mix offsets .
Interest expense rose materially (Q3: $46,992 vs $12,512) due to higher market rates and borrowings on the CNH credit facility; company had reached borrowing base limits by quarter end .
Continued supply chain disruptions increased lead times and pressured product launches; inventory shrink and loss provision were noted earlier in the year, partly offset by branded mix improvements .

Financial Results

Metric	Q1 2022	Q2 2022	Q3 2022
Revenue ($USD)	$4,554,338	$4,668,290	$4,536,595
Gross Profit ($USD)	$2,929,147	$2,944,648	$3,054,947
Gross Margin (%)	64%	63%	67%
Operating Income (EBIT) ($USD)	$(320,467)	$(51,621)	$44,894
EBIT Margin (%)	-7%	-2%	1%
Net Income ($USD)	$(358,281)	$(93,319)	$(9,376)
Net Income Margin (%)	-8%	-2%	0% (rounded)
EPS (Basic) ($USD)	$(0.01)	$(0.00)	$(0.00)

Segment/Channel breakdown (Retail vs Wholesale Revenue):

Segment	Q1 2022	Q2 2022	Q3 2022
Retail Revenue ($USD)	$4,293,756	$4,500,975	$4,333,053
Wholesale Revenue ($USD)	$260,582	$167,315	$203,542
Total ($USD)	$4,554,338	$4,668,290	$4,536,595

KPIs:

KPI	Q1 2022	Q2 2022	Q3 2022
Avg Revenue per Case ($USD)	$4,619	$4,335	$4,260
Retail Revenue Mix (%)	~94%	~96%	~96%

Non-GAAP (Adjusted EBITDA – quarterly):

Metric	Q3 2021	Q3 2022
Adjusted EBITDA ($USD)	$(630,549)	$131,241

Notes: Adjusted EBITDA definition and reconciliation are provided in the press release; management uses it for internal performance evaluation but cautions about material limitations vs GAAP .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2022	Not provided	Not provided	Maintained (no formal guidance)
Gross Margin	FY 2022	Not provided	Not provided	Maintained (no formal guidance)
OpEx	FY 2022	Not provided	Not provided	Maintained (no formal guidance)
Capex/Strategic Investment	Calendar 2022	~$2–$3M strategic growth investment plan	Unchanged	Maintained
Tax Rate	FY 2022	Not provided	Not provided	Maintained (no formal guidance)

Management reiterated strategic initiatives (product commercialization, sales force investment, distribution expansion) but did not provide quantitative revenue or margin guidance ranges .

Earnings Call Themes & Trends

No earnings call transcript was filed; themes synthesized from MD&A across Q1–Q3.

Topic	Previous Mentions (Q1 2022)	Previous Mentions (Q2 2022)	Current Period (Q3 2022)	Trend
Pricing pressure/Avg revenue per case	Pricing pressures; avg revenue per case $4,619; emphasis on Retail Model	Continued pressure; avg revenue per case $4,335; Retail mix ~96%	Pricing pressure persists; avg revenue per case $4,260; Retail mix ~96%	Ongoing pressure, mitigated by mix
Retail vs Wholesale mix	Retail 94% of revenue; strategy to increase Retail Cases	Retail ~96% of revenue; continued focus	Retail ~96% of revenue; margin benefit	Sustained shift to Retail
Fuse-branded products	Emphasis on manufactured Fuse portfolio; product launches planned	Continued expansion; commercialization through Retail Model	Fuse PSS Pedicle Screw System launch; Fuse-branded ~50% YTD revenue	Increasing branded mix
Supply chain constraints	COVID-related supply chain delays impacting launches	Continued uncertainties and delays; sourcing alternates	Ongoing uncertainty; mitigation efforts continuing	Persistent but being managed
Seasonality and elective surgeries	Higher revenue expected in last two quarters; elective surgery dynamics	Same; planning around deductibles seasonality	Same; seasonal uplift supports H2	Seasonal tailwind in H2
Credit facility/liquidity	CNH facility in place; working capital supported	Borrowing limit reached based on base limitations	Borrowing limit reached; minimum liquidity covenant; effective rate 6.15%	Tight but stable liquidity

Management Commentary

“We are pleased with our third quarter performance, as highlighted by a 7% increase in revenue, an 11% increase in gross profit, and a 121% increase in EBITDA over the prior-year period. Our implementation and achievement of strategic initiatives, which includes increasing our portfolio of Fuse branded and manufactured products, is evidenced by the third quarter initial launch of the Fuse PSS Pedicle Screw System with minimally invasive options, and reflected in our third quarter results.” — Christopher C. Reeg, CEO .
“Our growth for the remainder of 2022, and into 2023 is focused on continued design and development of unique medical devices for commercialization, new product launches... investing in our direct sales force, and expansion of our national distribution footprint.” .
Forward-looking caution and Adjusted EBITDA usage/disclaimer reiterated in press materials .

Q&A Highlights

No analyst Q&A section was available in the filings; key clarifications are embedded in MD&A regarding pricing pressure, mix shift, supply chain mitigation, and seasonality .

Estimates Context

Wall Street consensus EPS and revenue estimates for Q3 2022 via S&P Global were unavailable; as a result, estimate comparisons cannot be provided and may reflect limited coverage for an OTC Pink-listed issuer .
Near-term estimate revisions, if any, would likely consider gross margin expansion to 67%, improved commissions mix, and operating breakeven trends, but formal consensus data was not accessible in our data set .

Key Takeaways for Investors

Margin inflection: Gross margin expanded to 67% with EBIT turning positive, supported by Retail mix and branded products; sustaining this mix is key to medium-term profitability trajectory .
Volume over price: Persistent pricing pressure requires ongoing volume/mix strategies; watch case growth and branded penetration to offset ASP headwinds .
Liquidity watch: Facility borrowing base constraints and rising interest costs warrant monitoring; effective rate at 6.15% and reached borrowing limits as of Q3 .
Product pipeline execution: Fuse PSS launch and SAB-driven R&D suggest continued commercialization; execution could be a near-term stock catalyst in absence of formal guidance .
Operating leverage: Commission rate reductions and SG&A discipline provide leverage at modest revenue growth levels; breakeven net income in Q3 underscores sensitivity .
Seasonal lift into Q4: Historically stronger H2 elective surgeries may aid Q4; monitor supply chain constraints that could temper conversion .
Non-GAAP lens: Adjusted EBITDA turned positive; use caution per company’s caveats, but trend supports improving core profitability .

Cross-reference note: All core Q3 figures in the press release (revenues, gross profit, net loss, Adjusted EBITDA) reconcile to the Q3 10‑Q financial statements furnished as Exhibit 99.1 to the Form 8‑K .

Fuse Medical, Inc. (FZMD)·Q3 2022 Earnings Summary