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TM

TREACE MEDICAL CONCEPTS, INC. (TMCI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered modest topline growth with revenue of $47.387M (+6.6% YoY) and improved profitability metrics; gross margin was 79.7% and adjusted EBITDA loss improved to $(3.644)M from $(8.747)M YoY .
  • Versus consensus, revenue slightly beat ($47.387M vs $47.077M*) and EPS slightly beat (−$0.28 vs −$0.289*); EBITDA came in below the SPGI consensus (actual EBITDA ≈ −$14.3M vs −$6.1M*) with the company emphasizing adjusted EBITDA progress .
  • Management reaffirmed full-year 2025 revenue guidance of $224–$230M and breakeven adjusted EBITDA, citing back-half weighted demand, “bunion season,” and full market releases for three new systems; inventory and training cadence support acceleration into Q3/Q4 .
  • Strategic catalyst: full market release of Nanoplasty, Percuplasty, and SpeedMTP across all four bunion categories, plus Investor Day on Sept 3 to showcase portfolio breadth; early surgeon enthusiasm and cross-sell into lapoplasty highlighted as drivers .

What Went Well and What Went Wrong

What Went Well

  • Expanded portfolio positioned Treace as a one-stop bunion solutions provider; full market release of Nanoplasty and Percuplasty 3D MIS osteotomy systems and SpeedMTP supports broader surgeon preferences and incremental cases beyond lapoplasty .
  • Continued P&L improvement: adjusted EBITDA loss improved 58% YoY to $(3.6)M and total OpEx fell 4% YoY to $54.7M due to expense management initiatives .
  • Management execution and demand visibility: high attendance at surgeon BunionMasters trainings and confidence in inventory timing for broader Q3/Q4 adoption; quote: “We experienced successful traction…bolsters our confidence…translating to accelerating growth in Q3 and through Q4” .

What Went Wrong

  • EBITDA miss vs SPGI consensus despite adjusted EBITDA improvement, highlighting continued scale/margin headwinds in near-term (actual EBITDA ≈ −$14.3M vs −$6.1M*) .
  • Gross margin decline YoY to 79.7% (from 80.2% in Q2 2024), reflecting mix/pricing and early ramp dynamics of new offerings .
  • Elective procedure timing and broader market softness pushed some cases later in the year, compressing volumes toward Q4 and tempering Q2 growth; CFO reinforced back-half weighted trajectory and ~10% growth in Q3 setup .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$44.455 $52.570 $47.387
Gross Profit ($USD Millions)$35.674 $41.893 $37.752
Gross Margin (%)80.2% 79.7% 79.7%
Total Operating Expenses ($USD Millions)$57.056 $57.475 $54.726
Net Loss ($USD Millions)$(21.206) $(15.922) $(17.398)
Diluted EPS ($USD)$(0.34) $(0.25) $(0.28)
Adjusted EBITDA ($USD Millions)$(8.747) $(3.843) $(3.644)

KPIs and Operating Context:

  • Active surgeon customers: “over 3,100” entering 2025; average penetration ~30% of their bunion volume today .
  • TAM: $5B+; ~1.1M annual symptomatic candidates; current penetration ≈2.8% .
  • Total liquidity at 6/30/2025: $90.7M (cash, equivalents, marketable securities $69.3M; revolver availability $21.4M) .
  • Patent portfolio: 117 granted; 163 pending .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$224–$230M (7–10% YoY) $224–$230M (7–10% YoY) Maintained
Adjusted EBITDAFY 2025Breakeven* Breakeven* Maintained
Cash UsageFY 2025~50% reduction vs 2024 ~50% reduction (supported by lower Q2 and YTD usage) Maintained

Notes:

  • Management commentary: expect ~10% growth in Q3 and a step-up in Q4 due to seasonality and new product availability .
  • Non-GAAP: Adjusted EBITDA definitions and reconciliation provided in 8-K .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
Portfolio expansion (Nanoplasty, Percuplasty, SpeedMTP)Entry into high-volume MIS osteotomy market announced; strong pipeline; training and early LMR feedback positive Full market release commencing, inventory aligned; high surgeon enthusiasm in trainings; broader addressable cases and cross-sell Accelerating
Seasonality and scheduling deferralsYear-end seasonality strong; early signs elective procedures timing variability; back-half weighted growth expected Q2 played out as anticipated; cases pushed into Q4; confidence in back-half ramp and ~10% Q3 growth Consistent; back-half weighted
Competitive dynamics and MIS shiftLapiplasty “gold standard” positioning; emerging competition; plans to broaden solutions to mitigate Strategy targets osteotomy-preferring surgeons; minimal cannibalization expected; broaden share of surgeon cases Mitigated via portfolio breadth
R&D pipeline (Lapiplasty Lightning)Next-gen Lapiplasty announced for LMR late 2025 LMR planned in Q4; “step function” innovation, a 2026 growth driver Building toward 2026
Tariffs/macroLimited tariff exposure; immaterial impact in 2025, reducing with more US manufacturing No change; focus on execution and inventory readiness Stable/immaterial
Clinical evidenceContinued evidence support (Lapiplasty, Adductoplasty) ALIGN3D four-year data peer-reviewed; differentiates Lapiplasty Strengthening

Management Commentary

  • “We delivered strong top line and bottom line financial results and made substantial progress on our strategic initiatives…we’ve laid the groundwork…for continued growth in the second half of the year and beyond.” — CEO John Treace .
  • “Our go forward strategy is centered around increasing procedure volumes…we penetrated about 30% of [customers’] total bunion volumes…focused on more effectively penetrating the remaining seventy percent.” — CEO John Treace .
  • “Second quarter net loss was $17.4 million or $0.28 per share…Adjusted EBITDA loss…was $3.6 million…an improvement of 58%.” — CFO Mark Hair .
  • “We anticipate…roughly 10% growth in the third quarter and a nice step up from there in the fourth quarter.” — CFO Mark Hair .

Q&A Highlights

  • Adoption ramp and surgeon profiles: Management expects increasing volumes and revenue contribution from the three new systems through 2025; targeting incremental osteotomy cases and doubling share of procedures per customer over time .
  • Seasonality and visibility: Cases deferred tend to compress in Q4; Q3 growth ~10% with further step-up in Q4 on full inventory and broader procedures; guidance contemplates this cadence .
  • Lapiplasty Lightning: LMR in Q4; described as “step function” improvement—fewer steps, higher reproducibility, faster procedure; intended growth driver for 2026 .
  • Inorganic options: Company remains opportunistic on tuck-ins and OUS expansion; focus near-term on executing portfolio rollout .

Estimates Context

  • Q2 2025 vs SPGI consensus:
    • Revenue: Actual $47.387M vs Consensus $47.077M* → bold slight beat.
    • EPS: Actual −$0.28 vs Consensus −$0.289* → bold slight beat.
    • EBITDA: Actual ≈ −$14.3M vs Consensus −$6.1M* → bold miss; note company emphasizes adjusted EBITDA improvement.
MetricConsensusActualSurprise
Revenue ($USD)$47,077,050*$47,387,000 +$309,950 (beat)*
Primary EPS ($USD)−$0.28861*−$0.28 +$0.0086 (beat)*
EBITDA ($USD)−$6,091,120*−$14,398,000*−$8,306,880 (miss)*

Values retrieved from S&P Global. For EBITDA, the company’s reconciliation shows EBITDA of −$14.276M—immaterially different from SPGI “actual” used above .

Key Takeaways for Investors

  • Back-half weighted setup with full inventory across three new systems and seasonal Q4 demand should drive sequential growth; management targets ~10% growth in Q3 with a stronger Q4 .
  • Portfolio breadth enables cross-sell into the remaining ~70% of surgeon bunion volumes and incremental access to osteotomy-focused surgeons; early training traction is strong .
  • Adjusted EBITDA trajectory is improving materially YoY; continued OpEx discipline and scale benefits from broader portfolio should support FY25 breakeven target reaffirmed in Q2 .
  • Clinical evidence (ALIGN3D four-year data) strengthens Lapiplasty differentiation amid competitive MIS shifts; medium-term thesis benefits from Lightning launch in Q4 and 2026 ramp .
  • Trading implications near-term: slight revenue/EPS beat vs consensus and reaffirmed guidance are supportive; watch for Q3 progression to ~10% growth and Q4 step-up as key validation milestones .
  • Monitor elective procedure timing/macro sensitivity and mix impacts on margins; EBITDA miss vs consensus underscores importance of adjusted EBITDA execution and cost controls .
  • Upcoming catalysts: Sept 3 Investor Day showcasing new technologies and surgeon testimonials; continued surgeon training and broader commercial rollout through H2 .