SI-BONE, Inc. (SIBN) Q2 2025 Earnings Call Transcript

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Overview

The earnings call summary indicates strong financial performance with 25% revenue growth and positive guidance for 2025. The Q&A session highlighted expansion opportunities, strong product adoption, and reimbursement tailwinds, despite some uncertainties in gross margin stabilization. The company's strategic focus on market expansion and new product launches, along with positive adjusted EBITDA expectations, further supports a positive sentiment. These factors, combined with the absence of negative catalysts like margin decline or guidance refusal, suggest a likely stock price increase in the short term.

Key Financial Performance

Worldwide Revenue $48.6 million in Q2 2025, representing growth of 21.7% year-over-year. Growth driven by strong U.S. momentum and international expansion.

U.S. Revenue $46.4 million in Q2 2025, representing 22.8% growth year-over-year. Growth supported by a 25% increase in procedure volumes and double-digit growth across all modalities.

International Revenue $2.2 million in Q2 2025. Growth impacted by later-than-expected regulatory clearance for TORQ in Europe. Expected to boost revenue growth in Europe in 2026.

Gross Profit $38.8 million in Q2 2025, an increase of $7.2 million or 22.9% year-over-year. Gross margin expanded by 80 basis points to 79.8%, driven by improved manufacturing and supply chain efficiencies.

Operating Expenses $45.8 million in Q2 2025, an increase of $4.2 million or 10% year-over-year. Increase due to growth-related investments, higher commissions, and elevated G&A spending.

Net Loss $6.2 million in Q2 2025, narrowed from $8.9 million in the prior year. Improvement attributed to revenue growth and operational efficiencies.

Adjusted EBITDA Positive $1 million in Q2 2025, compared to a loss of $2.7 million in the prior year. Third consecutive quarter of positive adjusted EBITDA.

Cash and Marketable Securities $145.5 million at the end of Q2 2025, up from $144.4 million in the previous quarter. Achieved cash flow breakeven for the first time.

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Operating Highlights

iFuse TORQ: Successfully launched in Europe, with early reception indicating strong future demand. It has become the preferred solution among newly trained physicians in the U.S.

iFuse Bedrock Granite: Continues to lead the industry in pelvic fixation solutions, contributing to a 24% growth in the number of physicians performing multiple procedure types. Granite cases utilizing 4 implants grew by 50%.

iFuse TORQ TNT: Awarded FDA breakthrough device designation and is ramping ahead of expectations. NTAP reimbursement of over $4,100 will be effective October 1, 2025.

U.S. Market Expansion: U.S. revenue grew by 23%, supported by a 25% increase in procedure volumes. Double-digit growth was observed across all modalities.

European Market Expansion: Launch of iFuse TORQ in Europe is expected to boost revenue growth in 2026 and beyond.

Revenue Growth: Worldwide revenue grew by 22% to $48.6 million, with U.S. revenue contributing $46.4 million.

Profitability: Achieved third consecutive quarter of positive adjusted EBITDA and reached cash flow breakeven ahead of schedule.

Operational Efficiency: Gross margin expanded to 79.8%, driven by improved manufacturing and supply chain efficiencies.

Pipeline Innovation: Plans to launch a new SI joint solution in Q1 2026 and file for a groundbreaking spine surgery product in H2 2026.

Leadership Transition: Tony Recupero to retire as President of Commercial Operations in February 2026, with Nikolas Kerr set to take over as Chief Commercial Officer.

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Risk or Challenges

Regulatory Delays: The later-than-expected regulatory clearance for TORQ in Europe impacted revenue growth in the region, delaying the anticipated boost in international revenue.

Reimbursement Challenges: While reimbursement for CPT 27278 is clearly defined in some markets, challenges in other regions could limit adoption of certain products like iFuse venture.

Economic Viability of New Products: The company is investing heavily in new product launches and innovation, which may not yield immediate returns, posing a risk to short-term profitability.

Supply Chain and Manufacturing Costs: Although gross margins improved, the company continues to face challenges in maintaining manufacturing and supply chain efficiencies, which could impact profitability.

Leadership Transition: The upcoming retirement of the President of Commercial Operations in 2026 could disrupt commercial execution and sales momentum during the transition period.

Market Penetration Risks: Despite strong growth, the company faces risks in achieving deeper market penetration, particularly in international markets where adoption rates are slower.

Cash Flow Management: Although the company achieved cash flow breakeven, planned increases in surgical capacity could lead to cash consumption in the second half of 2025, impacting liquidity.

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Guidance & Outlook

Revenue Guidance: The company updated its full-year revenue guidance to range between $195 million to $198 million, reflecting year-over-year growth of approximately 17% to 18%, compared to the previous guidance of approximately 16% to 18%.

Gross Margin Guidance: The company expects the full-year gross margin to be between 78.5% and 79%, compared to the previous guidance of 78%.

Adjusted EBITDA Guidance: The company expects positive adjusted EBITDA for the full year of 2025.

Product Launch in Europe: The company received regulatory approval to launch iFuse TORQ in Europe and expects it to boost revenue growth in Europe in 2026 and beyond.

New SI Joint Solution: The company plans to submit a 10-K application to the FDA soon and remains on track for a commercial launch in the first quarter of 2026.

Third Breakthrough Device: The company anticipates filing a 510(k) for a groundbreaking product in the second half of 2026, which has the potential to become the standard of care for addressing a pressing need in spine surgery.

Pelvic Trauma Market: The company expects the pelvic trauma market to be a significant growth driver, with nearly 60,000 potential target procedures annually. The finalized New Technology Add-On Payment (NTAP) for inpatient procedures for TNT will be effective starting October 1, 2025, providing an add-on payment of over $4,100.

CMS Payment Changes: Significant changes proposed by CMS for hospital outpatient payments are expected to provide a tailwind for the business starting in calendar year 2026. This includes a Level 7 APC payment of nearly $28,000 for complex, multilevel spinal fusion procedures performed on an outpatient basis.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:What are the assumptions underlying the growth guidance for the second half of the year and the cadence between Q3 and Q4?

A:The company is maintaining a consistent and prudent approach to guidance, with tailwinds such as faster-than-anticipated adoption of Granite, low single-digit ASP decline (3-4%), additional TNT surgical capacity, and NTAP effective October 1. For Q3, a sequential decline of about 4% is expected due to seasonality, certifications, and conferences, while Q4 is expected to ramp up as the largest quarter.

Q:How should we think about gross margin guidance and its stability beyond 2025?

A:Gross margin guidance for the year is updated to 78.5%-79%, reflecting sticky improvements from supply chain and manufacturing efforts. However, headwinds include ASP pressure (2%), higher COGS from Granite, TNT capacity, and depreciation from new platforms. Beyond 2025, gross margins are expected to stabilize at 76%-77% due to new product launches and scaling existing products.

Q:Can you provide color on the number of interventional doctors using the product and their usage patterns?

A:The company does not break out the number of interventional doctors but notes strong growth in this segment. TORQ is the product of choice, with some using INTRA in areas with clear reimbursement. Interventionalists are often in regions where surgeons are not performing these procedures, providing a balance. CMS proposed an 18% increase in payment for CPT 27278 in office settings, benefiting INTRA.

Q:What is the opportunity for Granite procedures to move to outpatient settings?

A:Currently, most Granite procedures are inpatient, but CMS has proposed allowing certain higher-cost lumbar fusion procedures in outpatient settings with a Level 7 APC payment of $28,000. CPT 27280 was removed from the inpatient-only list, and Granite's transitional pass-through code with a $0 device offset may drive more outpatient procedures. This is a significant opportunity, especially for short construct degenerative spine procedures.

Q:How quickly do new surgeons ramp up their utilization compared to experienced surgeons?

A:New surgeons ramp up utilization faster due to broader experience and literature. On average, it takes about 3 years for a surgeon to fully ramp up to the overall average. Surgeons who performed a procedure a year ago now average over 5 procedures per quarter, nearly double the average.

Q:What are the plans for expanding territories and agents?

A:The company plans to expand to about 100 territories over the next 15 months, driven by new product launches and the third breakthrough direct device. The hybrid commercial model with agents and distributors will continue to provide bandwidth for case coverage while territory managers focus on market development.

Q:What is the momentum across the product portfolio and the impact of reimbursement tailwinds?

A:The company is experiencing broad-based growth with strong demand for existing solutions and rapid adoption of new products. Granite 9.5 is becoming a preferred solution, and TNT is seeing record physician adoption. Reimbursement tailwinds include increased DRG payments, NTAP effective October 1, and proposed outpatient payment increases.

Q:What is the role of international markets and the impact of the TORQ rollout in Europe?

A:International markets are small but important. TORQ, launched in Europe in Q3, is expected to reignite growth in 2026. Early indications from surgeons and interventionalists are positive, and training is ongoing. Minimal impact is expected in Q4, with acceleration anticipated in 2026.

Q:How is the company prioritizing capital deployment?

A:The company is prioritizing investments in R&D (around 10% of revenue), expanding the direct sales force, and leveraging the hybrid commercial model. Cash flow breakeven was achieved in Q2, and investments are focused on organic growth initiatives, including new product launches and surgical capacity.

Q:What is the profile of new surgeons, and how does their utilization ramp compare to experienced surgeons?

A:Most new surgeons are experienced practitioners, though some are recent graduates. Residents and fellows trained since 2019 are adopting procedures early in their careers. Utilization ramps faster for new surgeons due to early adoption, with significant runway for increasing active users and procedural density.

Q:What is the status of Granite's reimbursement and the potential for a new code?

A:CMS increased spinal fusion DRGs by 6%-8%, reflecting the increased use of pelvic fixation. The NTAP extension and Level 7 APC for outpatient settings are significant tailwinds. CMS is analyzing data for a new code, and the company is confident in its data and working closely with CMS.

Q:What are the factors impacting gross margin in 2026?

A:Gross margins are expected to stabilize at 76%-77% over the next 2-3 years. Factors include savings from ongoing initiatives, costs of new products, and subscale surgical capacity. The company has outperformed 2023 expectations, with updated guidance of 78.5%-79% for the year.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the number of interventional doctors using the product, citing strong growth but not breaking out figures. Additionally, they did not provide specific 2026 gross margin guidance, only general expectations for stabilization at 76%-77% over the medium term.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

SIBN Transcript

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The company raised its guidance midpoint due to strong Q3 performance and expects continued positive momentum in Q4. They achieved positive cash flow from operating activities and have a strong product pipeline with international growth prospects. Gross margins exceeded expectations, and they anticipate further improvement. Despite some vague responses, the overall sentiment from the Q&A is positive, with strong growth drivers and strategic initiatives in place.

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SI-BONE, Inc. (SIBN) Q2 2025 Earnings Call Transcript

Positive8-5

SI-BONE, Inc. (SIBN) Q1 2025 Earnings Call Transcript

Positive5-5

The earnings call summary reflects strong financial performance with 25% revenue growth and improved margins. The guidance is optimistic with expectations of positive adjusted EBITDA in 2025. The Q&A session highlights broad-based growth and strong product adoption, despite management's cautious stance on long-term guidance. No major risks were identified, and the absence of a share repurchase program is a minor negative. Overall, the company's strong growth, margin improvements, and optimistic guidance suggest a positive stock price movement.

SIBN Slides

Si-Bone Q1 2025 slides: revenue jumps 25%, achieves positive EBITDA

2025-05-05

SI-BONE Q2 2025 slides: Revenue jumps 22%, raises full-year guidance

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SIBN Report

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