Sign in

You're signed outSign in or to get full access.

SI

SHOULDER INNOVATIONS, INC. (SI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue rose 58% year over year to $11.8M and 7% sequentially, with gross margin at 76.2% and total implant systems sold up 53% to 1,584; management raised FY25 revenue guidance to $45–$46M (+42%–45% YoY) .
  • Versus S&P Global consensus, Q3 revenue materially beat ($11.756M actual vs $9.870M estimate*) while EPS missed (-$0.64 actual vs -$0.365 estimate*); Adjusted EBITDA loss was larger than consensus (company-defined) by a modest amount* .
  • Commercial momentum reflected faster ramp of new surgeon cohorts and higher ASPs, aided by targeted account focus and product mix; CEO highlighted ASC shift to >30% of procedures as an ongoing tailwind .
  • Catalysts: raised guidance, full launch of InSet 70, recent 510(k) clearance expanding fracture indications, and near‑term launches addressing metal hypersensitivity (higher ASP/margin accretive) .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line and unit growth: revenue +58% YoY to $11.8M; implants +53% YoY to 1,584 units; sequential volume +5% despite seasonal slowdown .
  • Guidance raised: FY25 revenue outlook increased to $45–$46M from $42–$44M on accelerating adoption and execution .
  • Product/portfolio milestones: full commercial launch of InSet 70; FDA 510(k) clearance expanding I‑Series indications; management expects new hypersensitivity line to launch near term, with higher ASPs supportive of margins .
  • Quote: “We are very excited about our accelerating momentum… enabling us to increase our full-year revenue guidance.” — Rob Ball, CEO .

What Went Wrong

  • Profitability pressure: SG&A +78% YoY to $15.1M (legal costs, commercial headcount, public company costs); operating loss widened to $7.6M; Adjusted EBITDA loss increased to $7.5M .
  • Legal/IP costs rising into trial; management expects elevated legal expense to persist into Q4 and likely Q1, delaying EBITDA leverage despite revenue upside .
  • EPS remained negative (-$0.64), and missed consensus; operating expense growth and fair-value adjustments on warrants/convertible notes weighed on results .

Financial Results

Quarterly Comparison (prior year vs prior quarter vs current)

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$7.454 $11.013 $11.756
Gross Margin (%)76.5% 76.2% 76.2%
Operating Loss ($USD Millions)$(3.881) $(5.862) $(7.641)
Net Loss Per Share (Company-Reported) ($USD)$(68.31) $(165.53) $(0.64)
Adjusted EBITDA ($USD Millions)$(2.938) $(18.073) $(7.510)
Implant Systems Sold (Units)—1,503 1,584

Notes:

  • Company-reported EPS reflects share count and capital structure effects pre/post-IPO; S&P normalized EPS comparisons are provided below.
  • Q3 ASP was discussed as approximately $7,465; one transcript reference shows “$74,065,” which appears to be a transcription/formatting error (management context and market norms support ~$7.5K) .

S&P Global Consensus vs Actual – Q3 2025

MetricConsensus EstimateActualBeat/Miss
Revenue ($USD)$9,870,000*$11,756,000 • Beat
Primary EPS ($USD)$(0.365)*$(0.64) • Miss
EBITDA ($USD)$(7,117,750)*$(7,510,000) (Adj. EBITDA) • Miss (modest)

Values with asterisks were retrieved from S&P Global.

KPIs and Balance Sheet Highlights

MetricQ2 2025Q3 2025
Units Sold (Implant Systems)1,503 1,584
Gross Profit ($USD Millions)$8.393 $8.961
Cash & Marketable Securities ($USD Millions)$39.6 $137.0
ASP ($USD per system)—~$7,465 (mgmt)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$42–$44 $45–$46 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Current Period (Q3 2025)Trend
AI/Technology (ProVoyance)Focus on advanced planning ecosystem; limited detail in Q2 PR “First AI-enabled pre-operative planning…virtually perform procedures” with near-100% case planning penetration Expanding adoption/usage
Supply Chain / Sites of Care—ASC shift >30% post‑CMS reimbursement; SI’s two‑tray system advantage Structural tailwind
Product PerformanceInSet 70 launch noted Full commercial launch of InSet 70; strong early uptake Positive ramp
Regulatory/LegalOngoing litigation noted Legal/IP costs elevated, persisting into Q4/Q1 Near-term headwind
Pipeline / Indication Expansion—New 510(k) clearance for certain fracture indications; near‑term metal hypersensitivity line (higher ASP) Pipeline acceleration
Regional/Market DevelopmentUS-focused shoulder specialists; distributor network Targeting ~1,800 high‑volume surgeons; cohort ramp accelerating Broader penetration

Management Commentary

  • “We are very excited about our accelerating momentum through 2025… enabling us to increase our full-year revenue guidance.” — Rob Ball, CEO .
  • “Our ASC procedures grew from about 10% in December 2023… to over 30%, positioning us well to benefit from the ongoing transition toward ASCs.” — Rob Ball .
  • “We recently received FDA 510(k) clearance that expands our I‑Series humeral implant product line to include certain fracture indications.” — Rob Ball .
  • “Our ASPs were 7,465 in Q3… increased from Q1 to Q2, Q2 to Q3… [and] should stay similar in Q4.” — Jeff Points (management discussion of pricing/mix) .

Q&A Highlights

  • Guidance philosophy and Q4 assumptions: disciplined, data‑driven outlook using proprietary BI; confidence grounded in the same drivers as Q3 (new surgeon adds and increased volumes) .
  • ASP sustainability: targeted account focus drove higher ASP; mix remained close to market between anatomic vs reverse; ASPs improving despite lower ASC pricing, expected to be maintained near‑term .
  • Legal/IP costs and EBITDA trajectory: legal costs accelerated in Q3, expected to persist into Q4 and likely Q1; fair‑value adjustments impacted Q2–Q3; longer‑term leverage expected in SG&A and R&D .
  • New product ramps: InSet 70 already launched; fracture indications limited release early 2026, full launch 1H 2026; metal hypersensitivity line targeted for early 2026, higher ASP/margin profile .
  • Surgeon engagement: largest SI symposium to date; strong conversion intent feedback, expected to drive adoption over coming quarters .

Estimates Context

  • Coverage remains nascent (Q3 EPS estimates: 2; revenue estimates: 4*), increasing the potential for larger beats/misses as the sell-side sharpens models*.
  • Q3 beat on revenue likely prompts upward revenue estimate revisions; EPS miss reflects elevated legal/public-company costs and fair‑value adjustments, tempering near‑term profitability expectations*.
  • Target price consensus held at $19.6*, with normalized S&P EPS providing a cleaner comparison versus company-reported per-share values post-IPO*.

Values with asterisks were retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue momentum is accelerating (Q3 beat and raised FY25 guide) with structural tailwinds from ASC adoption and targeted surgeon cohort expansion .
  • Expect near-term margin headwinds from legal/IP costs and public company expense, but medium‑term leverage (SG&A, R&D) and higher‑ASP products support margin expansion .
  • Pipeline catalysts (fracture indications, hypersensitivity line, enabling tech) should lift ASPs/gross margin and widen SI’s addressable procedures .
  • Commercial execution is the differentiator: BI‑driven targeting, surgeon community programs, and two‑tray instrumentation resonate in ASC settings .
  • Estimates likely move higher on revenue; EPS revisions may lag until legal/IP costs subside—watch Q4/Q1 expense trajectory for EBITDA leverage inflection* .
  • Monitor ASP durability and mix normalization; management expects Q4 ASPs similar to Q3, supporting revenue quality .
  • Balance sheet strength ($137M cash/marketable securities) provides runway to invest and reach cash flow breakeven with cash on hand .