SI-BONE, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Earlier today, SI-BONE released financial results for the quarter ended June 30th, 2026.

A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management's remarks today may include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, such as our most recent Form 10-K, and actual results may differ materially from any forward-looking statements that we make today. Accordingly, you should not place undue reliance on these statements. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements except as required by law.

During the call, management may also discuss certain non-GAAP measures, including adjusted EBITDA and free cash flow. Unless otherwise noted, any reference to profitability is in terms of positive adjusted EBITDA. For a reconciliation of these non-GAAP measures to GAAP accounting, please see the company's full earnings release issued earlier today. Unless otherwise noted, all results are compared to the comparable period in the prior year. With that, I'll turn the call over to Laura.

Thanks, Saqib. Good afternoon, and thank you for joining us. Our second quarter results demonstrate the strength of our core competencies and the momentum they've created in the business. We founded the company with a clear clinical objective to develop differentiated solutions that enable durable fixation and fusion in high-risk patients with compromised, often osteoporotic bone. Our target patients often live with debilitating pain and diminished quality of life. Our focus has allowed us to identify large addressable markets, establish compelling technical and clinical moats, and create a diversified business with multiple avenues for growth. During the quarter, we continued to translate that strategy into new products and markets. We extended the application of our biomechanical expertise and proprietary technology beyond the sacroiliac joint into high-value adjacencies across musculoskeletal care. In June, we submitted the 510 application for our third technology with breakthrough device designation.

This is our first platform designed for use outside the pelvis and is intended to address a recognized failure point in complex spine procedures. Subject to the 510(k) clearance, we remain on track to begin a phased commercial launch in the fourth quarter, and perhaps as early as October. Additionally, we advanced several development programs targeting new markets we expect to enter over the next 18 months and expanded U.S. field capacity in preparation for the upcoming launches. Second quarter performance was strong across markets. Worldwide and U.S. revenues were $56 million and $53.2 million respectively, both representing approximately 15% growth. Sequentially, U.S. procedure volume increased approximately 9%, marking our strongest second quarter sequential increase in years, dispelling industry concerns regarding the payer environment. International revenue grew approximately 26% to $2.8 million, led by continued demand for our expanded portfolio. The strong top-line growth yielded meaningful operating leverage.

Revenue grew nearly twice as fast as operating expenses, contributing to a 178% improvement in adjusted EBITDA. Looking ahead, we believe the business is well positioned for continued revenue growth and further profitability improvement. Our expanding portfolio, improving reimbursement, and additional commercial capacity should deepen our relevance with physicians, reduce economic barriers, and extend our reach. Together, these factors reinforce our confidence in a strong finish to 2026. We believe the impact should be even more meaningful in 2027 as our new product moves through the adoption curve, the territories added this year become more productive, and reimbursement changes support broader utilization. I will now discuss our three key growth drivers: innovation and market development, physician engagement, and commercial execution. Anshul will then cover our fourth priority, operational excellence, along with our financial performance and updated outlook. Starting with innovation and market development.

Innovation is the cornerstone of our long-term growth strategy and has helped us deliver compound annual revenue growth of more than 20% per year over the past five years. We believe we have one of the industry's broadest portfolios focused on patients with compromised bone. These high-risk patients often face difficult recoveries and elevated revision rates. By improving procedural outcomes, our technologies have the potential to enhance patient quality of life while reducing the economic burden on the healthcare system. We have a track record of developing differentiated technologies, gaining reimbursement coverage, driving physician adoption, and growing significantly faster than the underlying market. In SI joint dysfunction, currently our largest market, the relatively low-density bone of the sacrum makes durable fixation challenging.

Our iFuse 3D, iFuse TORQ, and iFuse INTRA product families provide a comprehensive portfolio of metal and allograft solutions for surgeons, as well as the fast-growing base of interventional spine physicians across all sites of service. In spinal pelvic fusion, our fastest-scaling market, there is an increasing number of patients with bone-compromising conditions such as osteoporosis and osteopenia. With Granite, we believe we have the best-in-class solution for pelvic fixation in spine fusion procedures. Within pelvic trauma, where the majority of our target patients are being treated for low-intensity sacral insufficiency fractures, iFuse TORQ TNT is gaining adoption among surgeons. Our next major catalyst for further accelerating growth is the launch of our first non-pelvic solution. As I highlighted earlier, we submitted the 510(k) application in June. We are working with suppliers to build surgical capacity, and we are on track for the phased commercial launch.

Because the solution targets accounts where our team already has established relationships, we expect to leverage our existing commercial infrastructure to support an efficient launch. We also have several programs at different stages of development targeting large, established markets where current treatment approaches leave meaningful room for improvement. We expect two additional solutions to progress toward design freeze later this year, with potential commercialization targeted over the next 18 months. As we look forward, our longer-term vision extends beyond titanium and allograft solutions. We pioneered 3D-printed titanium implants and helped create a new product category. We're actively exploring and testing additional materials to address new disease states and developing AI-driven procedure enablement capabilities. Collectively, these initiatives are transforming SI-BONE from a leader in sacral pelvic solutions into a broader spinal pelvic company focused on procedural solutions for compromised bone.

By organizing our innovation around the needs of these high-risk patients, we remain committed to improving procedural and long-term clinical outcomes. Before turning to physician engagement, I'd like to briefly update you on reimbursement. We're pleased by the recent proposed CMS changes affecting SI joint fusion procedures. Today, the majority of SI joint fusion procedures are performed in hospital outpatient departments, ASCs, and office-based labs or OBLs. CMS has proposed increasing hospital outpatient reimbursement by approximately $2,300 to more than $20,000. For ASCs, they've proposed an increase of approximately $1,000 to nearly $16,000. CMS has also proposed establishing OBL reimbursement of over $20,000 for CPT code 27279. If finalized, these changes would improve the economics of treating SI joint dysfunction across all outpatient care settings, expand physician choice, and make these procedures accessible to more patients.

The new family of DRGs for complex spinal fusion procedures, including procedures incorporating Granite, is encouraging. Depending on the patient's diagnosis and severity, these new DRGs could increase the average hospital payment by up to $50,000 per procedure. We believe this framework better reflects the complexity and resource requirements of treating these high-risk patients, reduces economic objections of our hospital customers, and supports the long-term adoption of Granite. The reimbursement framework is also relevant to the third breakthrough device, which is intended to address another important source of failure in complex spine procedures and may be used independently or with Granite. Let me discuss the progress on physician engagement. Physician adoption and utilization remain important leading indicators of future procedure growth. In the second quarter, 1,715 unique physicians performed at least one procedure using our technologies, an increase of approximately 19% versus the same quarter a year ago.

For context, the quarterly physician count exceeded the number of unique physicians who used our technologies during full year 2023. We achieved double-digit % growth across each of our call points. This broad-based engagement reflects the clinical relevance of our solutions as well as the effectiveness of our physician engagement and customer engagement efforts. Our concerted efforts to grow physician awareness and adoption continue to deliver. In the quarter, the number of physicians performing more than one type of procedure increased approximately 15%. Physicians active in both the current and prior year quarters averaged approximately three times the case volume of physicians performing their first procedure with us during the quarter. In aggregate, growth in our physician base, broader use of our portfolio, and increasing utilization create a strong foundation for sustained procedure and revenue growth.

As we introduce additional products that address physician-identified procedural challenges, we expect case volume per physician to become an increasingly important contributor to revenue growth and overall execution efficiency. Let's turn to commercial execution. We ended the quarter with 93 quota-carrying territory managers who were supported by over 400 agents and junior representatives. We designed the hybrid model so that our territory managers lead clinical education and cultivate high-value physician relationships, while third-party agents and junior representatives provide procedural support and extend our reach across accounts and geographies. Trailing 12 months revenue per territory was approximately $2.2 million, reflecting continued productivity gains and the scalability of our hybrid commercial model. We remain on track to exit 2026 with nearly 100 territories. This is a deliberate expansion ahead of multiple product launches planned for the next 18 months.