Tenon Medical, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead, sir. Thank you, Joe, and good afternoon, everyone.

I am pleased to welcome you to today's second quarter 2026 financial results and corporate update conference call for Tenon Medical. Second quarter revenue was $1.3 million, an increase of 127% over the second quarter last year, and gross profit was $0.8 million, an increase of 232% over the prior year period. Each was the highest we have reported in a second quarter. Gross margin was 64% compared to 43% a year ago. Case volume grew across both the Catamaran and Symmetry Plus platforms, and each incremental procedure is now carrying meaningful more profit. Looking at the first half as a whole, revenue was $2.7 million, an increase of 106% from $1.3 million in the first six months of 2025. Gross profit was $1.8 million, an increase of 210% from $0.6 million at a gross margin of 66% compared with 44%.

Our loss from operations for the six months was $6.6 million, compared with $6.5 million a year ago, essentially unchanged, while revenue doubled and gross profit dollars roughly tripled. Growth on the top line came from a higher number of Catamaran cases and continued meaningful Symmetry Plus contribution since we acquired the SiVantage assets in August of last year. Physician and distributor training is a leading indicator for us, and on that front, our training events increased 98% in the first half of 2026 compared with the second half of 2025. Gross margin expanded substantially year-over-year. At 64%, we are approximately 21 percentage points higher than the second quarter of last year. At 66% for the first half, we are roughly 22 points higher than the same period in 2025.

Increased revenue has contributed through improved absorption of fixed production overhead, and we are also benefiting from more streamlined commercial footprint and stronger field productivity. Beyond the financials, a few items from the quarter are worth noting. First, on the commercial side, our platform offering continues to progress the way we had planned, with physicians evaluating Catamaran and Symmetry Plus as complementary tools, inferior posterior lateral approaches to the same anatomy. As part of our continued investment in commercial activity, we've hired a seasoned professional sales lead to our East Coast sales team and expect to add further sales heads and distributor partners in the back half of the year.

Additionally, we saw a meaningful uptick in our physician and distributor training activity in Q2, driven by our newly opened Tampa sales and training office, which has contributed to a record case volume month in July and a strong start to Q3. Second, as it relates to regulatory matters, subsequent to the quarter end, on July 2nd, we announced that we received FDA 510(k) clearance for the Catamaran SI Joint Fusion System. The updated clearance incorporates various instrument upgrades, as well as the reclassification of certain instruments from disposable to reusable status, which is expected to improve system performance while reducing ongoing per-procedure costs previously associated with disposable instrumentation and improving margin, which we expect to play out meaningfully beginning in Q3. Third, we have had a busy quarter with our R&D initiatives and are nearing multiple launches that we believe will be meaningful in this space.

First, we have an enhanced Symmetry Plus system that includes streamlined decortication, which will become clinically active in Q3 and is a significant improvement to this system. Second, we are nearing the final stages of development and approaching filing for 510(k) approval of an enhanced feature to the Symmetry Plus implant, which will make the implant even further differentiated. Third, we are excited about the progress we have made on a third approach to the space in an additional product offering to Catamaran and Symmetry Plus that we believe meets a large unmet need in a very novel way. Fourth, as it relates to capital, on July 1, we closed a public offering of common stock or pre-funded warrants and common stock purchase warrants for aggregate gross proceeds of $4.2 million.

Net proceeds are expected to be used for partial repayment of our outstanding convertible notes, commercial expansion, clinical research, and general corporate purposes. Looking out over the rest of the year, our focus is narrow: keep growing procedure volumes on both platforms, continue aggressive physician training and education, accelerate key R&D projects, and protect the gross margin gains we have built over the past year as we scale. We have multiple ways to win in this market, and we intend to use them. With that, I'll turn the call over to Kevin to discuss our financials.

Thank you, Steve. I will now provide a summarized review of our financial results. A full breakdown is available in our press release that crossed the wire this afternoon. Starting with the top line, second quarter revenue was $1.3 million, a record for any second quarter in the company's history, and up 127% from $0.6 million a year ago. Revenue for the six months ended June 30, 2026 was $2.7 million, an increase of 106% compared to $1.3 million in the six months ended June 30, 2025. The increase in the quarter was driven by a large increase in the number of surgical procedures performed, as well as the addition of revenue related to the Symmetry Plus system.

Over the past 12 months, we have meaningfully increased our physician user base and surgical case volume, and we expect to continue to build on that momentum through sales force expansion, increased physician and distributor engagement, and future product launches. Gross profit was $0.8 million, or 64% of revenue in the second quarter, compared to $0.2 million or 43% of revenue a year ago. That's a 232% increase in dollar terms and the highest for any second quarter in the company's history. On a margin basis, we picked up about 21 percentage points year-over-year. For the six months, gross profit was $1.8 million or 66.2% of revenue, compared to $0.6 million or 44.0% of revenue, a 210% increase in dollars and roughly 22 percentage points.

The improvement was primarily driven by higher revenue and lower fixed costs in the period, driving further absorption of production overhead costs within cost of goods sold. We continue to expect to see our gross margin expand as revenue increases and we further absorb fixed costs within our cost of sales. Operating expenses totaled $4.2 million in the second quarter, compared to $3.1 million in the second quarter of 2025. For the six months, operating expenses totaled $8.4 million compared to $7.1 million in the prior year period. The increase in the quarter was primarily due to higher sales and marketing expenses associated with higher revenue, in addition to higher research and development expenses as we continue to work towards future product additions.

Net loss was $4.1 million or $12.35 per share in the second quarter, compared to a net loss of $2.8 million or $12.76 per share in the second quarter of 2025. For the six months, net loss was $7.5 million or $23.16 per share, compared to a net loss of $6.4 million or $39.91 per share in the same period a year ago. The increase in net loss was primarily driven below the operating line by $0.9 million of non-cash interest expense related to the amortization of the original issue discount related to our convertible notes, which was not present in the prior year period. We ended the quarter with $1.7 million in cash and cash equivalents, compared to $3.8 million as of December 31, 2025.

Subsequent to quarter end, on July 1st, we closed the public offering with gross proceeds of $4.2 million, which provides additional runway to fund our commercial, clinical, and development priorities. Overall, we believe the financial and strategic actions taken through the first half of 2026 have positioned Tenon to drive continued growth in the second half and into 2027 while sustaining a streamlined and disciplined cost base and executing on our commercial and upcoming product launch initiatives. I'll now hand the call back to Steve Foster for closing comments.