Executive Summary

Q2 2025 delivered solid topline growth with net revenue up 33% year-over-year to $11.0M, gross margin of 76.2%, and 1,503 implant systems sold; SG&A and non-cash fair value items drove a larger net loss. Guidance introduced for FY 2025 at $42–$44M revenue (33–39% YoY).
Versus Wall Street consensus, revenue was essentially in line/slightly above, EPS missed materially due to non-cash fair value changes, while S&P EBITDA came in better than expected; company-reported Adjusted EBITDA was -$18.1M reflecting add-backs (definition differs from S&P EBITDA). Values retrieved from S&P Global* *
Strategic positives included accelerating adoption, expanded surgeon base (~50% YoY), and strengthened balance sheet via $40M convert, $75M IPO (gross), and post-quarter product expansion (InSet 70).
Stock reaction catalysts: initial guidance issuance, strong procedure growth/ASP stability, capital structure de-risking (convert + IPO), and product portfolio expansion; litigation remains an overhang and margins dipped modestly due to disposable instrument utilization.

What Went Well and What Went Wrong

What Went Well
- Revenue +33% YoY to $11.0M on higher implant volumes and new customers; 1,503 implant systems sold (+34% YoY); gross margin remained robust at 76.2%.
- Management highlighted accelerating adoption and surgeon base expansion (~50% YoY); quote: “Our financial results and operational progress reflect accelerating market adoption… Additionally, we are expanding our base of surgeon customers, which increased nearly 50% year-over-year.”
- Balance sheet strengthened: $40M convertible notes (July), $75M IPO (gross; closed Aug 1), with $39.6M cash, cash equivalents and marketable securities at quarter-end; FY25 revenue guidance introduced at $42–$44M.
What Went Wrong
- Gross margin dipped 70bps YoY to 76.2% (from 76.9%) driven by increased utilization of disposable instruments.
- SG&A +40% YoY to $12.8M, reflecting headcount growth, litigation costs, commissions, and public-company professional fees; operating loss widened to -$5.9M.
- Net loss expanded to -$19.2M due to $11.7M fair value change on Series E purchase option and $1.4M preferred warrant liability change; Adjusted EBITDA loss increased to -$18.1M.

YoY comparison (Q2 2024 vs Q2 2025):

Sequential revenue comparison:

Metric	Q1 2025	Q2 2025
Revenue ($USD Millions)	$10.132 (derived from 1H 2025)	$11.013

Estimates vs actual (Q2 2025):

Notes: Company reports Adjusted EBITDA of $(18.073) ; S&P EBITDA may differ by definition. Values retrieved from S&P Global*.

KPIs and mix:

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	FY 2025	N/A	$42–$44	New
YoY Growth (%)	FY 2025	N/A	~33–39%	New

No other guidance (margins, OpEx, OI&E, tax rate, dividends) was provided in the Q2 release/10-Q.

Note: No Q2 2025 earnings call transcript was available; themes synthesized from the press release and 10‑Q.

Topic	Previous Mentions (Q-2: Q4 2024; Q-1: Q1 2025)	Current Period (Q2 2025)	Trend
Outpatient/ASC shift	CMS added total shoulder arthroplasty to ASC list effective Jan 1, 2024; positive for outpatient demand	Continued focus on ASC settings; stable reimbursement and efficiency benefits	Positive tailwind
Product performance	Sustained procedure growth; ASP stable	1,503 implants (+34% YoY), ASP ~$7,330	Improving volumes
Gross margin drivers	Robust GM mid‑70s; instrumentation depreciation outside COGS	GM 76.2%; dip due to disposable instrument utilization	Slight pressure
R&D execution	Pipeline: fracture-specific system, revision, metal-hypersensitivity implants; ProVoyance platform	Ongoing investment; R&D +21% YoY	Continued investment
Regulatory/legal	Catalyst Orthoscience patent litigation/counterclaim ongoing	Ongoing; legal fees up materially	Overhang
Financing/liquidity	Trinity facility; private rounds	$40M converts; $75M IPO; $39.6M cash & securities at Q2 end	Balance sheet strengthened
Geography	US-only revenue	US-only; international opportunity noted	Expansion optionality

“We are pleased with both our second quarter performance… accelerating market adoption of our advanced implant systems… [and] expanding our base of surgeon customers, which increased nearly 50% year-over-year.” — Rob Ball, CEO.
“With these financings, we are well‑positioned to continue scaling our investments to execute on our growth strategies.” — Rob Ball on convertible notes and IPO.

The company participated in a Morgan Stanley Global Healthcare Conference fireside chat on Sept 9, 2025; no earnings call transcript was available in the document set.

Revenue: Q2 2025 actual $11.013M modestly above consensus $11.003M* (essentially in line). Values retrieved from S&P Global*
EPS: Q2 2025 actual $(0.9428) missed consensus $(0.52), driven primarily by non-cash fair value changes (Series E purchase option $11.7M; preferred warrant liability $1.4M). Values retrieved from S&P Global
EBITDA: S&P EBITDA actual $(5.22)M* better than consensus $(5.69)M*, while company-reported Adjusted EBITDA was $(18.073)M (different definition). Values retrieved from S&P Global* *

Demand momentum: double-digit revenue growth and unit volumes show continued adoption; ASP stable supports revenue quality.
Margins resilient but modestly pressured by disposable instruments; watch mix and instrumentation strategy as scale increases.
Operating leverage timing: SG&A growth reflects commercialization, litigation, and public-company costs; look for revenue growth to outpace OpEx over time.
Non-cash volatility: fair value items materially impacted GAAP loss; focus on cash metrics, Adjusted EBITDA reconciliation, and cash runway.
Liquidity de-risked: $40M converts + $75M IPO (gross), $39.6M cash/securities at Q2 end, plus Trinity facility; funds growth initiatives.
Guidance initiated: FY25 revenue $42–$44M sets bar; trajectory implies continued volume growth; monitor execution vs ASC/outpatient tailwinds.
Litigation watch: Catalyst matter could add cost/margin noise; risk not accrued; monitor developments and legal expense run-rate.

Values retrieved from S&P Global*