Si-Bone's Q2 Earnings Call: Smith+Nephew Onboarding Timeline and 2026 Revenue Growth Forecasts at Odds

Date of Call: Aug 3, 2026

Financials Results

• Revenue: $56 million, up 15.2% YOY
• EPS: $0.09 net loss per diluted share, compared to $0.14 net loss per diluted share prior year
• Gross Margin: 79.5%, stable

Guidance:

• Raising low end of 2026 worldwide revenue guidance to $231M-$233M, representing ~15%-16% growth.
• Maintaining full-year gross margin guidance at 79%.
• At revenue midpoint, full-year operating expenses expected to increase ~12%.

Business Commentary:

Revenue Growth and Product Launch:

• SI-BONE reported worldwide revenue of $56 million for Q2 2026, representing 15.2% growth.
• U.S. revenue increased 14.7% to $53.2 million, with U.S. procedure volume up nearly 15%.
• The growth was driven by strong demand across all product lines and the anticipation of a new product launch in the fourth quarter.

Profitability and Operating Leverage:

• Gross profit increased 14.8% to $44.5 million, maintaining a strong gross margin of 79.5%.
• Operating expenses increased 7.7%, resulting in a significant 178% improvement in adjusted EBITDA.
• The improvement in profitability was due to stable average selling prices, product cost optimization, and improved surgical capacity utilization.

Physician Engagement and Market Expansion:

• The number of unique physicians performing at least one procedure increased by 19% year-on-year to 1,715.
• The company achieved double-digit percentage growth across each of its call points.
• This engagement reflects the clinical relevance of SI-BONE's solutions and the effectiveness of their physician engagement efforts, supported by expanding commercial capacity.

Reimbursement and Regulatory Developments:

• Recent proposed CMS changes could increase hospital outpatient reimbursement by $2,300 and ASC reimbursement by $1,000, with OBL reimbursement set at over $20,000.
• The new DRGs for complex spinal fusion procedures could increase the average hospital payment by up to $50,000 per procedure.
• These developments are expected to improve the economics of treating SI joint dysfunction and support the long-term adoption of Granite.

Innovation and Product Development:

• SI-BONE submitted a 510(k) application for a third technology with a breakthrough device designation, targeting a known failure point in complex spine procedures.
• This product is on track for a phased commercial launch in the fourth quarter, leveraging existing commercial infrastructure.
• The focus on innovation is aimed at addressing new disease states and developing AI-driven procedure enablement capabilities, transforming SI-BONE into a broader spinal pelvic company.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted "strength of our core competencies and the momentum they’ve created," "strong top-line growth," "meaningful operating leverage," and "178% improvement in adjusted EBITDA." They also noted multiple upcoming catalysts and raised guidance, stating the business is "well positioned for continued revenue growth and further profitability improvement."

Q&A:

• Question from Matthew O’Brien (Piper Sandler): Concerns about back-half guide implying deceleration in U.S. revenue versus first half, and whether it's due to difficulty penetrating clinicians with the full product portfolio.
  Response: Management feels great about setup entering back half, citing strong physician growth, broad-based procedural demand, and catalysts from new DRGs and product launches, with room for upside.

• Question from Matthew O’Brien (Piper Sandler): On profitability profile of the new third breakthrough device and potential halo effect.
  Response: The new device targets an established call point with no need for extensive training, enabling rapid scaling. Gross margin assumptions remain at 79% for the year, with depreciation starting earlier as revenue ramps.

• Question from Caitlin Roberts (Canaccord Genuity): On drivers of strong procedure volume and sequential increase.
  Response: Growth was broad-based across SI joint fusion, pelvic fixation, and pelvic trauma procedures, with double-digit growth across all call points. Catalysts include new DRGs effective Oct 1 and upcoming product launches.

• Question from Caitlin Roberts (Canaccord Genuity): On future products (two in next 18 months) and focus on internal investment versus M&A.
  Response: Focus remains on organic growth leveraging core competencies in compromised bone, targeting existing call points to increase surgeon density and ASP. M&A is not a current focus.

• Question from Young Li (Jefferies): On internal priorities for expansion and profitability versus commercial expansion, partnerships, and OUS.
  Response: Focus will remain on driving core competencies in product development, clinical education, and reimbursement, with significant R&D investment and continued sales force productivity gains expected.

• Question from Young Li (Jefferies): On how new products will expand TAM.
  Response: New products, including the third breakthrough device, are additive and target existing call points, enabling increased surgeon density and average selling price, not me-too products.

• Question from David Saxon (Needham & Company): On hiring strategy to reach 100 territories in context of upcoming product launches.
  Response: Hiring is a key focus, using promotions and external hires to grow territory managers to near 100 by year-end, aiming to leverage productivity gains as new products launch.

• Question from David Saxon (Needham & Company): On early feedback from Smith+Nephew partnership and its ramp timeline.
  Response: Partnership is progressing well, with cases underway and collaboration between teams. It takes ~6 months for new territory managers to get productive, aligning with seasonal Q4 strength.

• Question from Richard Newitter (Truist Securities): On suitability of Street's Q3 revenue model and seasonality expectations.
  Response: Historically Q3 sees a 1%-2% sequential decline due to seasonality, which is embedded in guidance, but strong underlying business fundamentals exist.

• Question from Richard Newitter (Truist Securities): On potential upside in Q4 given tailwinds like reimbursement and new product launch.
  Response: Guidance embeds conservatism; potential upside exists from faster DRG impact, larger-than-expected alpha launch of new device, and ASP upside from complementary product use.

• Question from Daniella (UBS): On interventionalist feedback for iFuse INTRA Ti and demand in newly covered states.
  Response: Initial reception is positive; the product's broad reimbursement and flexibility across sites of service bode well, supporting rapid adoption by interventionalists.

• Question from Daniella (UBS): On incremental trauma centers accessed via Smith+Nephew partnership.
  Response: Access to a couple hundred level 1 and 2 trauma centers presents significant growth opportunity, with a symbiotic relationship focused on sacral insufficiency fractures.

• Question from Drew (TD Cowen): On potential for utilization growth and limiting factors heading into 2027.
  Response: Management is most excited about leveraging utilization, expecting product launches to drive independent and combined procedures, increasing surgeon density and case volume per physician.

• Question from Drew (TD Cowen): On 2027 operating leverage expectations relative to the 1.2-1.75x range.
  Response: No specific guidance, but multiple multi-year revenue tailwinds (new products, better reimbursement) provide confidence in continued operating leverage improvement, with timing dependent on product investment cycles.

Contradiction Point 1

Partner Contribution Timeline (Smith+Nephew)

It involves differing expectations for when the new partnership will start contributing revenue, impacting growth forecasts.

David Saxon (Needham & Company) - David Saxon (Needham & Company)

2026Q2: The partnership is progressing well... Cases are underway, and collaboration... is strong. The onboarding cycle is similar to a new territory manager (~6 months), with the focus on preparing for the seasonally strong Q4. - [Laura](CEO)

What is the early feedback on the Smith+Nephew partnership's procedure volumes and ramp, and how meaningful could it be for 2027? - Travis Steed (BofA Securities)

2026Q1: Training and rollout are expected to be complete by end of Q2, with revenue contribution starting in the second half of 2026. - [Laura](CEO)

Contradiction Point 2

2026 Revenue Growth and Cadence

It involves conflicting statements about the expected year-over-year growth acceleration and quarterly revenue patterns.

Richard Newitter (Truist Securities) - Richard Newitter (Truist Securities)

2026Q2: The guidance assumes a 1%-2% sequential decline in Q3... The strong physician base, expanded sales force, and product momentum... provide a foundation to work through this seasonality. - [Anshul](CFO)

Is the implied Q3 revenue (~$55.5M) from the small guidance raise consistent with historical seasonality, and are there any other quarterly cadence comments? - Young Li (Jefferies LLC)

2026Q1: The company expects significant upside and year-over-year growth acceleration in 2026... These factors position the business for strong growth into 2027. - [Anshul](CFO)

Contradiction Point 3

Product Launch Strategy and TAM Expansion

It involves differing characterizations of how new products will impact the business and expand the addressable market.

Young Li (Jefferies) - Young Li (Jefferies)

2026Q2: The new products will be additive to the current business... They address unmet clinical needs and aim to become market leaders in new spaces. - [Laura](CEO)

How do the new products expand the total addressable market (TAM) for surgeons and procedures? - Matthew O'Brien (Piper Sandler & Co.)

2026Q1: The new BDD product... is designed for use in the same cases as Granite, offering the opportunity to increase surgeon density and open a new total addressable market (TAM). - [Laura](CEO)

Contradiction Point 4

Gross Margin Durability

It involves conflicting guidance on the medium-term durability of the company's gross margin.

Matthew O’Brien (Piper Sandler) - Matthew O’Brien (Piper Sandler)

2026Q2: The device has inherent advantages... Gross margin assumptions for the year are held at 79% - [Anshul](CFO)

What is the profitability profile of the third breakthrough (non-pelvic) device, and will it impact margins, require significant working capital, or create a halo effect on the portfolio? - Matthew O'Brien (Piper Sandler)

20251111-2025 Q3: Gross margins have improved to 79.5% (vs. prior guidance of 77-78%). Durability is now expected around 78-78.5% medium-term - [Anshul Maheshwari](CFO)

Contradiction Point 5

Operating Leverage Forecast

It involves differing expectations for the range and drivers of future operating leverage.

"Drew from TD Cowen, what are your thoughts on the current market conditions for Mathew Blackman?" - Drew (TD Cowen) [for Mathew Blackman]

2026Q2: The business is set up for multi-year catalysts... These will support continued improvement in operating leverage. The timing of investment cycles will influence the exact leverage ratio (1.3x vs. 1.5x) - [Anshul](CFO)

Okay, let me try to figure this out. The user wants me to rewrite the input into a single, concise earnings-call question. The input is a question already, but maybe it's a bit wordy. Let me read it again: "Given R&D spending and rep hiring, should we think about 2027 operating leverage at the lower end (1.2x) of the historical range, or could it be better?" First, I need to make sure I understand the key elements here. The main points are R&D spending, rep hiring, 2027 operating leverage, lower end of historical range (1.2x), and whether it could be better. The user is asking if, considering these two factors (R&D and hiring), the operating leverage for 2027 should be expected to be at the lower end of the historical range or if it might be better than that.Now, the task is to make this into a more concise question. Let me see. The original question is a bit long. Maybe I can rephrase it to be more direct. The core is asking about the expected operating leverage for 2027 given the R&D and hiring. The options are lower end (1.2x) or better. So, possible rephrasing: "Considering R&D spending and rep hiring, will 2027 operating leverage be at the lower end (1.2x) of the historical range or higher?" Wait, the original says "should we think about... or could it be better?" So "better" would mean higher than 1.2x. So replacing "better" with "higher" might make it more precise. Also, "should we think about" can be phrased as "will" or "is expected to be". Another angle: "Given increased R&D and rep hiring, is 2027 operating leverage expected to remain at the lower end (1.2x) of the historical range, or could it exceed that level?" But maybe even more concise. Let me check the rules again. Must be exactly one line, only the final question text, end with "?" if possible. Also, if the input is not a question, etc., output as-is. Here, the input is a question, so we can rewrite.Another version: "With R&D spending and rep hiring, will 2027 operating leverage stay at the lower end (1.2x) of the historical range or improve?" Yes, "improve" implies better, which would mean higher leverage. That's concise. Let me check if that captures all elements. R&D and rep hiring are the factors, 2027 operating leverage, lower end (1.2x), and whether it could be better. The rewritten question uses "stay at" and "improve", which seems accurate. Is there a way to make it even shorter? Maybe "Given R&D and rep hiring, will 2027 operating leverage remain at 1.2x or improve?" But the original specifies "lower end of the historical range", so including that might be important for context. However, the user wants it concise. Maybe "historical range" is redundant if we just say 1.2x. But the original question mentions the historical range, so perhaps it's better to keep that in. Alternatively, "Given R&D and rep hiring, is 2027 operating leverage expected to be at the lower end (1.2x) of the historical range, or could it be higher?" That's a bit longer but includes all key points. The user's example output in the rules might prefer brevity. Let me compare. The original input is a bit wordy, so the rewritten question should be more concise. The original input is 25 words. The example output I thought of earlier is: "Considering R&D spending and rep hiring, will 2027 operating leverage be at the lower end (1.2x) of the historical range or higher?" That's 19 words. Alternatively, "With R&D spending and rep hiring, will 2027 operating leverage stay at 1.2x or improve?" That's 14 words. But does it lose the context of the historical range? The original question is about the historical range's lower end. If we just say "stay at 1.2x", it's okay, but maybe the historical range is important. However, the user wants it concise. I think the key is to include the two factors (R&D and rep hiring), the time frame (2027), the metric (operating leverage), the lower end (1.2x), and the comparison (could it be better). The most concise way would be to phrase it as "Given R&D spending and rep hiring, will 2 - Patrick Wood (Morgan Stanley)

20251111-2025 Q3: Operating leverage has been strong (1.7x in Q3). Future leverage is expected to range between 1.25x and 1.75x, with an average of 1.5x driving margin expansion. - [Anshul Maheshwari](CFO)