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TM

TREACE MEDICAL CONCEPTS, INC. (TMCI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $50.214M (+11% YoY) with gross margin 79.1%; GAAP EPS was -$0.26, and adjusted EBITDA loss improved to -$2.593M from -$5.057M YoY .
  • Versus S&P Global consensus, revenue modestly beat ($49.597M*) and EPS was better (-$0.281*), aided by ~$3M pull-forward from stocking distributors; however, Lapiplasty volumes faced pressure from surgeon/patient shifts toward MIS osteotomies and elective deferrals .
  • Full-year 2025 guidance was cut: revenue to $211–$213M (from $224–$230M), adjusted EBITDA to a -$6.5M to -$7.5M loss (from breakeven), and cash-use reduction to 43–47% (from ~50%), reflecting mix shifts, competition, and softer demand .
  • Management highlighted >20% adoption of new bunion technologies among surgeon customers and continued focus on portfolio expansion and cost controls; narrative catalysts include guidance reset, distributor stocking dynamics, and MIS adoption trends .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA loss reduced 49% YoY in Q3 (to -$2.593M), with YTD adjusted EBITDA down 54% versus last year, reflecting expense controls and efficiency gains .
  • Portfolio expansion gaining traction: “one-stop shop for all bunion needs” across five instrumented systems; >20% of surgeon customers adopted one or more new technologies one quarter into launch .
  • Clinical evidence and innovation pipeline showcased (ALIGN3D Lapiplasty and MTA3D Adductoplasty interim data; full commercial releases of Nanoplasty, Percuplasty, and SpeedMTP) supporting differentiation and adoption .

What Went Wrong

  • Core Lapiplasty volumes under pressure as surgeon/patient preferences shift to MIS osteotomy; case volume growth mid-single-digit but revenue impacted by mix to lower ASP systems .
  • Elective bunion procedures deferred amid softer consumer sentiment; surgeon survey indicated ~7% YTD decline in bunion volumes through October vs. prior year .
  • FY25 guidance cut across revenue and profitability; distributor stocking benefited Q3 (~$6M sales, ~$3M above plan) but creates Q4 headwind as it will not recur at same level .

Financial Results

Quarterly progression (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$52.570 $47.387 $50.214
Gross Profit ($USD Millions)$41.893 $37.752 $39.706
Gross Margin %79.7% 79.7% 79.1%
Total Operating Expenses ($USD Millions)$57.475 $54.726 $55.382
Net Loss per Share ($USD)-$0.25 -$0.28 -$0.26
Adjusted EBITDA ($USD Millions)-$3.843 -$3.644 -$2.593

Q3 2025 vs prior year and consensus

MetricQ3 2024Q3 2025 ActualConsensus Estimate (S&P Global)*
Revenue ($USD Millions)$45.086 $50.214 $49.597*
EPS ($USD)-$0.25 -$0.26 -$0.281*
Gross Margin %80.1% 79.1% n/a
Adjusted EBITDA ($USD Millions)-$5.057 -$2.593 n/a

Values with asterisks retrieved from S&P Global.

Segment breakdown: Not disclosed in company materials; TMCI reports consolidated results .

KPIs and operational indicators

KPIQ2 2025Q3 2025
Case volume growth YoYNot disclosedMid-single digit YoY growth
Adoption of new bunion systems (% of surgeon customers)Limited release phase>20% adopted one or more new systems
Stocking distributor sales ($USD Millions)n/a~$6.0 (≈$3.0 above plan pulled into Q3)
Gross Margin %79.7% 79.1%
Total Liquidity ($USD Millions)$90.7 $80.6

Non-GAAP note: Adjusted EBITDA excludes D&A, interest, taxes, share-based comp, acquisition-related costs, restructuring, customer credit loss, litigation costs, and debt extinguishment loss. See reconciliation and definitions in Exhibit 99.1 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$224–$230 $211–$213 Lowered
Adjusted EBITDA ($USD)FY 2025Breakeven -$6.5 to -$7.5 Lowered
Cash Used Reduction (%)FY 2025 vs FY 2024~50% 43%–47% Lowered

Drivers of guidance cut: evolving surgeon preference to MIS osteotomy (lower ASP), competition, softer elective demand, and distributor stocking dynamics .

Earnings Call Themes & Trends

TopicQ1 2025Q2 2025Q3 2025Trend
Portfolio expansion (MIS osteotomy, MTP fusion)Limited releases announced Full market release of three systems >20% surgeon adoption one quarter post-launch Improving adoption
Lapiplasty volumesCore focus; pipeline (Lightning) discussed Expect ramp; Lightning limited release planned Pressure from MIS shift; mix headwind Worsening mix vs Lapiplasty
Elective procedure timing/macroSeasonality, elective timing Patient scheduling shifts; Q4 compression Softer sentiment; ~7% YTD decline in surgeon-reported volumes Softer macro/demand
Distributor stockingn/an/a~$6M Q3 sales; ~$3M pull-forward headwind to Q4 One-time pull-forward
Guidance postureReaffirmed $224–$230M Reaffirmed $224–$230M Cut to $211–$213M; adj. EBITDA loss Lowered
Litigation/IPLitigation costs noted Patent suits; litigation costs Continued litigation costs Ongoing
Clinical evidenceACFAS interim data ALIGN3D published AOFAS interim data presentations Continuing evidence build

Management Commentary

  • “We have now become a one-stop shop for all bunion needs… with five best-in-class instrumented systems spanning all four classes of bunion deformities” .
  • “Over 20% of our surgeon customers have already adopted one or more of our new bunion technologies” .
  • “Lapiplasty volumes have been impacted as surgeons and patient preferences shift towards minimally invasive solutions… broader macroeconomic conditions and softer consumer sentiment resulting in a greater number of deferrals of elective bunion procedures” .
  • “We recorded approximately $6 million in stocking distributor sales within the quarter… about half… above our plans… creates a headwind for us in Q4” .
  • “We are focused on increasing our topline growth, improving profitability and delivering value to our shareholders” .

Q&A Highlights

  • Lapiplasty softness and MIS shift: Management acknowledged a durable trend toward MIS; strategy is to capture share in MIS and MTP fusion while pulling through Lapiplasty over time, but current mix hurts ASPs and top line .
  • FY26 visibility: No quantitative guidance yet; highlighting case volume growth and product innovation (e.g., Lapiplasty Lightning) as potential 2026 drivers .
  • Cost controls: Reported restructuring charges in Q3; ongoing evaluation of organizational levers given scalable model and high margins .
  • Deferred procedures: Expect to recapture as sentiment improves and sales force deepens engagement across expanded portfolio .
  • Seasonality: Historically strong Q4 due to deductible dynamics and patient availability; this year complicated by stocking pull-forward and softer demand .

Estimates Context

  • Q3 2025: Revenue beat modestly ($50.214M actual vs $49.597M* consensus) and EPS was better (-$0.26 GAAP vs -$0.281* consensus), aided by distributor stocking pull-forward and improved adjusted EBITDA; note SPGI “Primary EPS” actual (-$0.222*) may differ from GAAP EPS (-$0.26) due to methodology .
  • Forward look: Street models Q4 2025 revenue ~$61.763M* and EPS -$0.150*, and Q1 2026 revenue ~$52.017M* and EPS -$0.23*, implying expectations for sequential step-up in Q4 then normalization [GetEstimates].

Q3 2025 Consensus vs Actual

MetricConsensus (S&P Global)*Actual
Revenue ($USD Millions)$49.597*$50.214
Primary EPS ($USD)-$0.281*-$0.26 (GAAP)

Forward consensus (S&P Global)*

MetricQ4 2025Q1 2026
Revenue ($USD Millions)$61.763*$52.017*
Primary EPS ($USD)-$0.150*-$0.230*

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Guidance reset is the primary negative catalyst; expect near-term estimate cuts and a more cautious 2025 exit rate as distributor stocking pull-forward and softer demand weigh on Q4 .
  • Structural mix shift toward MIS osteotomy is real; TMCI’s broader portfolio positions it to defend and gain share, but lower ASPs pressure revenue per case near term .
  • Adoption is progressing (>20% of surgeon customers already using new systems), suggesting medium-term potential for procedure volume expansion and cross-sell pull-through (including Lapiplasty Lightning in 2026) .
  • Profitability trajectory improving (adjusted EBITDA loss halved YoY; cash usage down 17% in Q3 and 58% YTD), with further cost levers identified; monitor litigation costs and restructuring effects .
  • Liquidity remains solid at $80.6M including revolver access, supporting continued commercial and R&D investment through the transition .
  • Trading implications: Post-guide-cut setups often see de-risked expectations; track Q4 volumes, distributor replenishment patterns, and early surgeon feedback on Lapiplasty Lightning to gauge 2026 re-acceleration potential .
  • Medium-term thesis: If MIS adoption translates into sustained case volume gains and Lapiplasty re-accelerates with new instrumentation, TMCI could pivot from mix-driven headwinds to broader share capture; execution on training and sales force productivity is key .

Citations: Q3 2025 8-K and Exhibit 99.1 ; Q3 2025 earnings call ; Q2 2025 8-K and call ; Q1 2025 8-K ; Product/clinical press releases . Values marked with asterisks retrieved from S&P Global.