Tenon Medical's Q3 2025 Earnings Call: Contradictions Emerge on Simmetry+ Alpha Launch, G&A Expenses, Product Revenue Growth, and Reimbursement Strategies

Date of Call: None provided

Financials Results

• Revenue: $1.2M in Q3 2025, up 32.3% YOY (from $0.9M in Q3 2024); $2.5M for 9 months 2025, in line with $2.5M for 9 months 2024
• EPS: -$0.40 per share (net loss) in Q3 2025, compared to -$3.63 per share in Q3 2024
• Gross Margin: 66% of revenue in Q3 2025 vs 47% in Q3 2024; 9 months gross margin 54% in both 2025 and 2024

Guidance:

• Expect Catamaran procedure volumes to grow sequentially in Q4 2025.
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• Gross margin expected to continue improving as revenue rises and fixed overhead is absorbed.
• G&A run-rate expected slightly below Q3 level but higher than historical pre-acquisition quarters.
• No debt; cash strengthened by $2.85M PIPE raised post-quarter.

Business Commentary:

* Revenue Growth and Product Integration: - Tenon Medical reported record revenue of $1.2 million for Q3 2025, up 32% year-on-year. - The growth was driven by increased Catamaran procedure volumes and the integration of the SiVantage portfolio, which contributed meaningfully to the top line.

• SiVantage Acquisition and Strategic Expansion:
• The acquisition of SiVantage's SImmetry and SImmetry+ technologies was completed, transforming Tenon into a multiproduct, multi-approach company.

• This acquisition was immediately accretive to revenue and enhances Tenon's ability to serve a wider range of physicians and patients, supporting the company's growth strategy.

• Clinical Data and Product Validation:
• Tenon shared the second peer-reviewed publication from its ongoing main sale study, validating the Catamaran SI joint fusion system's safety, efficacy, and durability.

• The 12-month data demonstrated statistically significant improvements in pain and disability scores, supporting broader adoption and payer coverage for long-term growth.

• Gross Profit Improvement:

• Tenon's gross profit for Q3 2025 was $0.8 million, or 66% of revenue, compared to $0.4 million, or 47% in the prior year quarter.
• The improvement was due to higher revenue absorbing fixed overhead costs in the company's cost of goods sold.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted "record revenue of $1.2 million, a 32% increase," called the SiVantage acquisition "immediately accretive to revenue," noted product launches (Catamaran SE, SImmetry+ 510(k)), and stated they are "confident in our ability to scale operations" while strengthening cash via a $2.85M PIPE.

Q&A:

• Question from Scott Henry (AGP): Could you comment on product revenue mix — how much of the $1.2M was base SiVantage revenues?
  Response: Approximately $1.1M was Catamaran revenue; the remainder was from ~2 months of base SiVantage (pre-SImmetry+) contribution; SImmetry+ will begin adding revenue going forward.

• Question from Scott Henry (AGP): Would you expect Catamaran to grow sequentially from Q3 '25 to Q4 '25?
  Response: Yes — management expects Catamaran procedures and activity to continue growing in Q4, aided by an extra month of SiVantage sales and initial SImmetry+ contributions.

• Question from Scott Henry (AGP): How should we think about the SImmetry+ alpha launch — pilot or full-scale over the next 6–12 months?
  Response: Alpha is a small, focused pilot (roughly 60–90 days) with select physicians for feedback; refinements will follow before broader expansion.

• Question from Scott Henry (AGP): Is Q3 G&A reflective of the new quarterly run-rate (should we expect ~$2.1M–$2.2M)?
  Response: Q3 included some one-time integration expenses; going forward G&A is expected to be just below the Q3 figure but higher than prior periods — closer to the Q3 level than historical run-rates.

• Question from Thomas McGovern (Maxim Group): How is the SiVantage integration progressing — is it finished or are there milestones remaining into Q4?
  Response: Integration is largely complete for assets, inventory and commercial onboarding; remaining tactical items exist but SImmetry+ alpha being on schedule is evidence of successful integration.

• Question from Thomas McGovern (Maxim Group): Can you quantify commercial headcount additions and explain whether sales will be specialized or cross-trained across products?
  Response: Tenon adopted a hybrid commercial model: key hires plus independent distributors/1099s managed by direct sales; reps will be trained across the full product portfolio (cross-trained).

• Question from Thomas McGovern (Maxim Group): How are you balancing clinical data generation, payer coverage efforts, and commercial ramp/headcount additions?
  Response: These efforts run in parallel with separate teams: clinical evidence and payer engagement are prioritized alongside commercial physician engagement and training — both are equally important.

Contradiction Point 1

Simmetry+ Alpha Launch and Commercial Strategy

It involves differing descriptions of the Simmetry+ alpha launch strategy, which could impact market expectations and commercial execution.

Is the Simmetry+ alpha launch a pilot or a full-scale rollout? - Scott Henry(AGP)

20251114-2025 Q3: It's a pilot launch initially, with a small group of physicians providing feedback. This will ensure everything is working as expected before a full-scale launch. We'll then expand aggressively, starting with a focus group before going to a broader audience. - Steven Foster(CEO)

How should we think about the Simmetry+ alpha launch? Is it a pilot or full-scale launch? - Thomas McGovern(Maxim Group)

2025Q3: It will initially be a focused pilot involving a small group of physicians to gather feedback and ensure the technology meets expectations. After refining based on feedback, a broader launch will follow. - Steven Foster(CEO)

Contradiction Point 2

G&A Expense Expectations

It involves differing expectations for G&A expenses, which are crucial for financial forecasting and investor expectations.

Is the third quarter indicative of future quarterly performance? - Scott Henry(AGP)

20251114-2025 Q3: There were some one-time integration expenses, but we expect increased expenses going forward. We'll likely be closer to the Q3 number than previous levels, reflecting the increased expenses. - Kevin Williamson(CFO)

Is the third quarter indicative of a $2.1 million to $2.2 million quarterly run rate going forward? - Thomas McGovern(Maxim Group)

2025Q3: There were some one-time integration expenses in Q3, but G&A expenses will likely stabilize around a level slightly below the Q3 figure, reflecting increased expenses going forward. - Kevin Williamson(CFO)

Contradiction Point 3

Product Revenue Growth Expectations

It involves differing expectations for product revenue growth, which is crucial for understanding the company's financial trajectory and market expectations.

Do you expect Catamaran to grow sequentially from Q3 '25 to Q4 '25? - Scott Henry(AGP)

20251114-2025 Q3: We do. Catamaran's growth is driven by data showing its efficacy. We expect the number of surgical procedures to continue to grow. Additionally, we look forward to the initial alpha launch of Simmetry+, which we anticipate will be a good growth driver. - Steven Foster(CEO)

How will Catamaran’s revenues perform in Q3 and Q4? - Scott Robert Henry(Alliance Global Partners, Research Division)

2025Q2: Tenon anticipates a recovery in Catamaran revenues, with expectations of significant growth in Q3 and beyond. - Steven M. Foster(CEO) and Kevin Williamson(CFO)

Contradiction Point 4

Reimbursement Landscape and Payer Coverage

It concerns the reimbursement landscape and payer coverage strategies, which directly impact the company's financial stability and market penetration.

How are you balancing clinical data and payer coverage with other commercial initiatives? - Thomas McGovern(Maxim Group)

20251114-2025 Q3: We're working on clinical data to support private payer coverage. This is separate from our commercial team, which focuses on physician engagement and training. Both are crucial for growth, and we're working on them in parallel. - Steven Foster(CEO)

What is the reimbursement landscape for Symmetry and Symmetry Plus products, and are there synergies from the acquisition? - Nicholas Sherwood(Maxim Group LLC, Research Division)

2025Q2: The Simmetry products participate with existing CPT codes for SI procedures, similar to the Catamaran system. The acquisition brings valuable data to support the reimbursement pursuit. Tenon is well-positioned to secure proper coverage for its technologies. - Steven M. Foster(CEO)

Contradiction Point 5

G&A Expenses

It highlights inconsistencies in the expectations for G&A expenses, which impacts the company's operational costs and financial forecasting.

Is the third quarter indicative of future quarterly performance? - Scott Henry(AGP)

20251114-2025 Q3: There were some onetime integration expenses, but we expect increased expenses going forward. We'll likely be closer to the Q3 number than previous levels, reflecting the increased expenses. - Kevin Williamson(CFO)

Is the lower G&A expense in Q1 compared to Q4 and other 2024 quarters indicative of the full-year trend, or was there noise in the Q1 number? - Scott Henry(AGP)

2025Q1: The lower G&A expense in Q1 is reflective of the quarter and indicative of future investments, mainly on the sales side, which will contribute to growth initiatives. - Kevin Williamson(CFO)