TREACE MEDICAL CONCEPTS, INC. (TMCI)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered modest top-line growth with improved profitability trends: revenue $52.6M (+3% YoY) and adjusted EBITDA loss narrowed to $(3.8)M from $(8.3)M; GAAP EPS improved to $(0.25) from $(0.30) .
• Both revenue and EPS were modest beats vs S&P Global consensus, supported by higher bunion procedure kit volumes and tighter OpEx; management reaffirmed FY25 revenue of $224–$230M and breakeven adjusted EBITDA, with growth weighted to 2H as new systems scale .
• Product cycle is the key catalyst: limited market releases of three specialized bunion systems (Nanoplasty, Percuplasty, SpeedMTP) showed positive surgeon reception; full commercialization slated to expand addressable cases and accelerate growth beginning Q3 .
• Liquidity remains ample at $98.6M (cash & securities $76.1M plus revolver availability), with tariffs expected to be immaterial to COGS in 2025; management targets ~50% lower cash burn in 2025 and reiterated EBITDA breakeven for FY25 .

What Went Well and What Went Wrong

• What Went Well

  • Early validation for three new systems (Nanoplasty, Percuplasty, SpeedMTP), with “unprecedented interest” and oversubscribed BunionMasters training events; expanding portfolio aims to address nearly 100% of bunion case preferences from Q3 onward .
  • Profitability progress: adjusted EBITDA improved 54% YoY and OpEx declined YoY on cost discipline; third consecutive quarter of adjusted EBITDA improvement per CFO .
  • Strengthening clinical moat: positive interim data for Lapiplasty, Mini Lapiplasty, and Adductoplasty presented at ACFAS, reinforcing outcomes and differentiation with surgeons .

• What Went Wrong

  • Gross margin compression sequentially (80.7% in Q4 → 79.7% in Q1) and vs pcp (80.2%) amid mix and inventory/timing; still high-70s/low-80s range but a watch item .
  • Sequential revenue down from seasonally strong Q4; management flagged deferred elective procedures and guided Q2 YoY growth roughly in-line with last year (~6%), implying softer Q2 vs Street before back-half re-acceleration .
  • Continued GAAP losses (net loss $(15.9)M) and negative adjusted EBITDA (though improving), underscoring reliance on 2H product ramps and execution to hit FY25 breakeven target .

Financial Results

Sequential trend (prior two quarters and current)

Year-over-year comparison (Q1)

Versus S&P Global consensus (Q1 2025)

*Values retrieved from S&P Global.

Segment breakdown: Not applicable; Treace operates as a focused bunion and midfoot correction solutions platform (no reported segments) .

KPIs and operating indicators

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We expect 2025 to be a transformational year for Treace… beginning in Q3, we have the opportunity to target virtually 100% of surgeon and patient preferences for bunion correction with 5 best-in-class instrumented systems.” — John Treace, CEO .
• “We are reiterating our revenue guidance for 2025… We anticipate our most substantial growth and contribution to come in the fourth quarter.” — John Treace .
• “Adjusted EBITDA loss for the first quarter was $3.8 million… This marks our third consecutive quarter of adjusted EBITDA improvements… toward our improved profitability goals of 2025.” — Mark Hair, CFO .
• “We continue to expect breakeven adjusted EBITDA for full year 2025 and expect our cash burn to decrease by approximately 50% for full year 2025 versus 2024.” — Mark Hair .
• “We estimate that tariffs will result in an immaterial impact on cost of goods sold in 2025… with additional manufacturing moving to the U.S. this year.” — Mark Hair .

Q&A Highlights

• Competitive landscape and cannibalization: Management sees minimal cannibalization; MIS systems primarily address surgeons not biased to Lapiplasty; Lapiplasty remains market leader backed by outcomes data .
• Quarterly cadence vs Street: Company indicated Q2 YoY growth roughly in-line with last year (~6%); analysts flagged implied ~$2–$3M below Street for Q2, with management emphasizing back-half acceleration as new products scale and as deferred elective procedures shift late-year post-deductibles .
• Reimbursement and SpeedPlate: Early, anecdotal ASC reimbursement benefits (too early to quantify); SpeedPlate becoming majority of fixation mix with MicroQuad and new SpeedAkin broadening use-cases .
• Guide framing: Comfortable at midpoint of FY25 range; upside at top-end if new systems ramp faster post full supply in Q3 .
• Profitability drivers: Ongoing OpEx efficiency, sales & marketing leverage, and continued R&D investment to support rapid product release cadence underpin path to EBITDA breakeven and lower cash burn .

Estimates Context

• Q1 2025 results vs S&P Global consensus: Revenue $52.57M vs $52.07M*; GAAP EPS $(0.2468) vs $(0.3024)* — both modest beats .
• Near-term Street setup (as of current data): Consensus for Q2 2025 revenue ~$47.08M*, EPS ~$(0.2886); Q3 2025 revenue ~$49.60M, EPS ~$(0.2806)*, consistent with management’s cadence calling for softer Q2 and step-ups in 2H as new systems fully launch .
• Implication: Street models appear aligned to management’s back-half weighting; upside risk if adoption curves or training throughput outpace expectations; downside if case deferrals persist or gross margin mix dilutes more than anticipated.

*Values retrieved from S&P Global.

Note: Q2–Q3 actuals shown above reflect subsequent reported periods per S&P Global dataset; consensus values are for context only. Values retrieved from S&P Global.

Key Takeaways for Investors

• The story shifts to execution on a robust product cycle: full commercialization of Nanoplasty, Percuplasty, and SpeedMTP in Q3 aims to expand Treace’s addressable bunion procedure share well beyond the ~25% average currently captured by Lapiplasty/Adductoplasty alone .
• Near-term cadence: expect a softer Q2 vs Street with back-half acceleration; the setup favors momentum into Q4 “bunion season” as supply, training, and reimbursement dynamics converge .
• Profitability inflection remains in sight: three consecutive quarters of adj. EBITDA improvement, OpEx control, and reiterated FY25 breakeven target plus ~50% lower cash burn frame a de-risking path if volumes scale as planned .
• Watch gross margin mix: sequential dip to 79.7% warrants monitoring as MIS and ancillary product mix ramps; manufacturing localization and tariff immateriality are supportive .
• Competitive risk mitigants: expanding IP portfolio, active litigation, and differentiated clinical evidence (ALIGN3D/Mini3D/MTA3D) underpin positioning vs “Lapiplasty-like” competitors .
• Liquidity adequate to fund the ramp: $98.6M total liquidity and access to revolver provide runway through product launches and training cycles .
• Stock catalysts: 2H adoption curves (training throughput, surgeon conversions), Lapiplasty Lightning LMR late 2025, and potential estimate revisions tied to Q3/Q4 ramps and gross margin trajectory .

Appendix: Source Highlights

• Q1 2025 Press Release (8-K 2.02): revenue, margins, OpEx, EPS, adjusted EBITDA, guidance reaffirmation, liquidity .
• Q1 2025 Earnings Call: product cycle strategy, training momentum, cadence/back-half weighting, tariff immateriality, EBITDA breakeven and cash burn .
• Other Q1-relevant Press Releases: ACFAS innovations and clinical outcomes (ALIGN3D, Mini3D, MTA3D) .
• Prior Quarters: Q4 2024 and Q3 2024 releases for trend baselines .