2, 2026 CALL PARTICIPANTS Vice President, FP&A and Investor Relations - Saqib IqbalChief Executive Officer - Laura Francis Worldwide Revenue -- $55.7 million, representing 14.5% growth driven by accelerating procedure demand and broader physician adoption.U.S.
Revenue -- $52.8 million, an increase of 13.9% due to 19.5% procedure volume growth partially offset by lower average selling prices.U.S.
Procedure Volume -- Increased approximately 20%, reflecting strength across all procedure types and call point diversification strategies.Active U.S.
Physicians -- 1,770, representing 16% growth year over year and marking nearly six years of consecutive double-digit growth.International Revenue -- $2.9 million, growing 27% supported by the adoption of iFuse TORQ and TNT technologies launched within the last 12 months.Gross Margin -- 79.3%, compared to 79.8% in the prior year period, impacted by procedure and site of care mix.Operating Expenses -- $48.5 million, up 9.7% driven by sales commissions, marketing for new products, and research and development investment.Net Loss -- $3.6 million, or $0.08 per diluted share, an improvement from the $4.6 million loss reported in the prior year period.Adjusted EBITDA -- $3.0 million, a 32.4% increase reflecting operating leverage as revenue growth outpaced spending.Trailing 12-Month Adjusted EBITDA -- $13.6 million (nearly), representing a 140% increase as the company scales efficiently.Cash and Equivalents -- $146.3 million as of Sept.
30, 2026, representing a sequential increase of $400,000.Operating Cash Flow -- $4.4 million generated year-to-date, an improvement of $6.8 million compared to the prior year period.Full Year 2026 Revenue Guidance -- $231 million to $233 million, representing 15% to 16% growth over 2025.Operating Expense Guidance -- Reduced to 10.5% growth for the full year, down from the previous expectation of 12% growth.Estimated Total Addressable Market -- $5 billion annually, expanded by the launch of iFuse Granite Onyx to cover over 650,000 annual procedures.Onyx Market Opportunity -- $1.5 billion, targeting approximately 200,000 annual U.S.
procedures to address screw loosening in spinal fusion.Territory Manager Productivity -- $2.2 million in average revenue per territory, a 7% improvement year over year.Sales Force Capacity -- 93 quota-carrying territory managers at quarter end, with a target of nearly 100 by the end of 2026.Potential Hospital Payment Increase -- Up to $50,000 per qualifying procedure under new Medicare DRGs for complex spinal fusions effective Oct.
1.Average Selling Price -- Impacted by a shift toward the INTRA platform in ambulatory surgery centers and office settings, which carry lower prices than inpatient settings.
Need a quote from a Motley Fool analyst? Email [email protected] Maheshwari stated, "Going into 2027, we do anticipate some modest gross margin pressure," which he attributed to higher noncash depreciation expenses from deploying additional Onyx surgical capacity.
SI-BONE, Inc.
(SIBN -4.76%) reported 14.5% worldwide revenue growth driven by higher U.S.
procedure volume and an increase in active physicians.
Management reported that procedure demand accelerated for the expanded INTRA platform among interventional spine physicians and that the company achieved a record 1,770 active physicians.
The company stated that the recent launch of iFuse Granite Onyx expands the total addressable market to approximately $5 billion while addressing failure points in complex spinal fusions.
Management also indicated that new Medicare reimbursement levels for multilevel spinal fusion procedures became effective in October, creating a more favorable environment for the Granite platform.
Financial results reflected improved operating leverage with adjusted EBITDA growth and positive operating cash flow generation year-to-date.
Francis stated, "The addition of Onyx increases our estimated total addressable market to over 650,000 procedures, representing an annual total market opportunity of approximately $5 billion."Maheshwari noted that worldwide revenue of $55.7 million reflected "robust volume in a seasonally slower quarter" driven by call point diversification.Francis stated that the new Medicare DRGs "recognizing the clinical complexity and the additional costs" could provide up to $50,000 in additional hospital payment per qualifying procedure.Management indicated that in cases using Granite and Onyx together, they are seeing utilization of around six implants per procedure, which increases revenue per case.On the call, management mentioned the company has submitted an application to CMS for a new technology add-on payment for Onyx.Francis noted that early demand for the Onyx platform is tracking ahead of where the Granite platform was during its comparable alpha launch phase.
INDUSTRY GLOSSARY iFuse: Titanium implant system used for minimally invasive sacroiliac joint fusion.Granite: A surgical platform for sacropelvic fixation and complex spinal fusion.Onyx: A breakthrough device designed to reduce screw loosening at the top and bottom of spinal fusion constructs.TORQ: 3D-printed threaded implants for treating pelvic ring fractures and joint dysfunction.INTRA: A product platform optimized for interventional spine physicians in ambulatory surgery centers and office settings.MS-DRG: Medicare Severity Diagnosis Related Group, a system classifying hospital inpatient stays for payment purposes.S2AI: S2 alar-iliac, a surgical technique for achieving pelvic fixation.UIV/LIV: Upper instrumented vertebra and lower instrumented vertebra, denoting the proximal and distal ends of a spinal construct.NTAP: New Technology Add-on Payment, providing additional Medicare reimbursement for qualifying new medical technologies.
Full Conference Call Transcript Operator: Good afternoon, and welcome to SI-BONE's Third Quarter 2026 Earnings Conference Call.
[Operator Instructions] As a reminder, this call is being recorded for replay purposes.
I would now like to turn the call over to Saqib Iqbal, Vice President, FP&A and Investor Relations at SI-BONE, for a few introductory comments.
Saqib Iqbal: Earlier today, SI-BONE released financial results for the quarter ended September 30, 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 Form 10-Q, 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.
Laura Francis: Thanks, Saqib.
Good afternoon, and thank you for joining us.
We delivered a solid third quarter with accelerating procedure demand, broader physician adoption and improving financial performance.
These results reflect disciplined execution of our multiyear strategy to expand our differentiated platform into new clinical applications.
By focusing on anatomy-specific solutions that enable durable fixation and fusion in patients with compromised bone, we're reaching more patients and expanding our growth opportunity.
Worldwide revenue grew approximately 15% to $55.7 million.
revenue increased approximately 14% to $52.8 million.
procedure volume increased approximately 20%, supported by 16% growth in active physicians.
The strong double-digit volume growth across all procedure types demonstrates that our targeted platform expansion and call point diversification strategies are delivering.
In addition to the strong surgeon demand in the third quarter, demand accelerated for our expanded INTRA platform from interventional spine physicians in the office space and ASC sites of care.
Our decision to build differentiated solutions with applications across all sites of care has made INTRA the preferred platform for this call point.
International revenue grew 27% to $2.9 million, supported by continued adoption of technologies launched in the last 12 months.
We converted the revenue growth into stronger financial performance.
Adjusted EBITDA increased 32%, more than twice the pace of revenue growth, while working capital discipline contributed to stronger operating cash flow.
Innovation remains a key component of our long-term growth as we develop differentiated technologies to improve procedural outcomes for high-risk patients with compromised bone quality.
We pioneered minimally invasive treatment for SI joint dysfunction and applied that experience to develop breakthrough devices targeting sacropelvic fixation and complex fusion as well as pelvic fragility fractures.
With the recent launch of iFuse Granite Onyx, we're now taking that proven expertise in developing anatomy-specific solutions beyond the pelvis.
Onyx received FDA 510(k) clearance in September and is our third product to receive FDA breakthrough device designation.
We believe Onyx, which is designed to address the known failure points at the upper and lower ends of the spine fusion construct, represents one of the most significant product launches in our history.
The addition of Onyx increases our estimated total addressable market to over 650,000 procedures, representing an annual total market opportunity of approximately $5 billion.
Onyx is the first of several differentiated technologies that we plan to bring to market that address significant unmet clinical needs and where our expertise in compromised bone gives us a clear advantage.
We initiated the alpha launch of Onyx in October and are extremely pleased with the surgeon interest.
Early demand is tracking ahead of Granite over the comparable launch period.
While we expect a modest contribution in the fourth quarter, as we move to full launch, we see Onyx as a meaningful accelerant to long-term growth.
Recent reimbursement enhancements have added another long-term growth catalyst.
New DRGs for multilevel spinal fusion procedures that incorporate pelvic fixation with Granite took effect October 1.
Depending on patient diagnosis and severity, the increase in the average hospital payment could be up to $50,000 per qualifying procedure.
We believe the reimbursement framework will enable physicians and patients to access our Granite platform, further extending our leadership in the nearly $1 billion target market and allowing us to potentially provide additional solutions such as Onyx in these same procedures.
Together, these developments mark a defining moment for SI-BONE.
We're substantially expanding our addressable market.
The new DRGs have created a more favorable reimbursement environment, and we have a highly engaged physician base, all of which give us confidence in delivering durable long-term growth.
That confidence is also implied in our 2026 guidance, which at the midpoint would imply over 20% revenue growth in the fourth quarter.
I will now discuss our 3 key growth drivers: innovation and market development, physician engagement and commercial execution.
Anshul will then cover our fourth priority: operational excellence inside of financial results and outlook.
Starting with innovation and market development.
population ages and lives longer, osteoporosis and osteopenia are becoming more prevalent.
This creates a growing need for advanced technologies that enable durable fixation and fusion in compromised bone.
We believe our biomechanical expertise in developing anatomy-specific technology gives us a competitive advantage that is difficult to replicate.
Our Granite and Onyx platforms are clear examples of our disruptive innovation targeting known failures and complex fusions.
Granite was our first major platform targeting failures and complex fusion, starting at the base of spinal fusion procedures.
In the last 4 years, we believe Granite has become the standard of care in sacropelvic fixation.
Onyx expands our complex fusion platform by addressing screw loosening at the upper and the lower instrumented vertebra, another major challenge in spinal fusion.
Published literature reports screw loosening in as many as 27% of spinal fusion constructs with higher risks in patients with osteoporosis.
We've done this before.
In the randomized SILVIA trial, adding fixation across the SI joint alongside S2AI screws reduced new onset SI joint pain from 8.5% to 1.1% following deformity surgery.
With Granite, the PAULA study showed a 3.3% pelvic fixation failure rate at 12 months compared to a 23.7% failure rate at 2 years reported for traditional pelvic screws in large deformity databases.
With Onyx, we're bringing that same osteointegrative approach with the goal of delivering similar results.
Onyx is one of the most technologically advanced solutions we've developed.
We believe the anatomy-specific thread design and implant stiffness tailored to varying vertebral bone density promotes early fixation, which is crucial to reducing implant loosening and also facilitates long-term bone integration.
We estimate the market for Onyx at approximately 200,000 annual U.S.
procedures, representing a market opportunity of approximately $1.5 billion.
Combined with Granite, our total market opportunity in complex fusion now stands at approximately $2.5 billion.
Onyx will also benefit from our substantial commercial footprint and large presence in complex fusion procedures.
When Granite launched in 2022, we had over 700 active physicians, and we were in the early stages of building out our third-party agent network.
Today, we have approximately 1,770 active physicians and over 300 agents.
In the first few weeks of the alpha launch, Onyx is already generating incremental procedures within our existing accounts, while higher implant utilization is increasing overall procedure average selling price.
As more surgical capacity comes online, we're confident that this commercial reach will accelerate Onyx adoption.
From a reimbursement standpoint, depending on the number of levels fused and additional technologies being used, the new DRGs I highlighted earlier may also benefit Onyx, especially in qualifying long spinal fusion cases.
Additionally, as a breakthrough designated device, Onyx is eligible for the alternative pathway for a new technology add-on payment, or NTAP.
We've submitted our application to CMS and if approved, the NTAP would take effect on October 1, 2027.
In SI joint dysfunction, our largest market for minimally invasive surgical procedures, our actions to broaden our portfolio and expand physician call points to also include interventional spine physicians are delivering results.
Our comprehensive portfolio serves both call points across all sites of service and extends our reach to a broader subset of patients.
In the third quarter, surgeons accounted for the vast majority of procedures, but adoption of the INTRA platform among interventional spine physicians was a significant contributor to procedure growth.
We believe INTRA has established a leading position in SI joint fusion among interventional physicians, supported by our comprehensive portfolio, clinical evidence and training programs.
Proposed CMS reimbursement changes could also strengthen demand for our solutions in this market.
Under the proposal, hospital outpatient and ASC payments would increase to more than $20,000 and $16,000, respectively, and in new office payments of $20,000 for CPT 27279 would be established.
If finalized, these changes would take effect January 1, 2027, improve procedure economics and expand patient access.
We expect CMS to issue the final ruling in the coming days.
In trauma, we continue to collaborate with Smith+Nephew on surgeon awareness and education to treat sacral insufficiency fractures using iFuse TORQ TNT.
As we enter the busy season for trauma, our joint commercial actions over the last 6 months are starting to deliver as we're seeing growing adoption of our platform.
Looking ahead, we're advancing several programs targeting large established markets with significant unmet needs and high procedure failure rates.
These solutions apply our compromised bone expertise to new clinical challenges and build on existing physician relationships and commercial infrastructure.
By organizing our innovation around the needs of these high-risk patients, we remain committed to improving procedural outcomes.
Now turning to physician engagement.
We ended the quarter with approximately 1,770 active physicians, representing 16% year-over-year growth.
We're proud of our double-digit physician growth in every quarter for nearly 6 years, which we attribute to the impact of our innovation that is improving patient outcomes, the quality of our targeting activity as well as the prudent investment in physician education and high-quality clinical research.
Given our sizable installed base, we're also focused on deeper physician engagement to increase the number of cases per physician.
While we continue to see steady increases in the number of physicians performing multiple procedure types, Onyx has the potential to materially accelerate this trend.
Even in this limited launch period, Onyx is already driving an increase in the number of cases as well as the increase in the number of products used per case among existing Granite physicians.
Next, let's turn to commercial execution.
We ended the third quarter with 93 quota-carrying territory managers.
Our trailing 12-month average revenue per territory was $2.2 million, representing 7% improvement.
These productivity gains reflect the operating leverage in a hybrid model strategy as our direct team focuses on physician education and relationships while third-party agents extend procedural coverage and market reach.
We're targeting to exit 2026 with nearly 100 territories.
The added field capacity will allow us to capture the anticipated Onyx demand, deepen physician engagement, capitalize on the interventional momentum and prepare for future launches.
Before I hand it over to Anshul, I want to thank our colleagues for their dedication and execution.
I especially want to recognize our teams involved in the development and launch of Onyx.
I also want to compliment our market access team whose work helped secure the new granite DRGs.
Onyx marks the beginning of our next wave of innovation, and I'm excited about what we can accomplish.
We're helping physicians treat thousands of patients and improve their quality of life.
Now Anshul will discuss our financial results and outlook for the rest of the year.
Anshul Maheshwari: Thanks, Laura.
Good afternoon, everyone.
Our third quarter results demonstrate our ability to drive strong procedure growth, improve profitability and generate operating cash while investing in future opportunities.
Let me provide additional details on our financial performance.
Starting with revenue growth.
Worldwide revenue was $55.7 million, representing 14.5% growth.
revenue increased 13.9% to $52.8 million, driven by 19.5% procedure volume growth, partially offset by lower average selling price.
The robust volume in a seasonally slower quarter for the industry reflects the benefits of our strategy to build a diversified portfolio serving both surgeons and interventional pain physicians.
With nearly 650,000 annual target procedures that can benefit from our highly differentiated technologies, we believe we are in the early stages of accelerating procedure volume growth.
The ASP was impacted by procedure mix, which drives the average number of implants per case as well as the site of care mix as our INTRA platform adoption increased in faster-growing ASC and in-office settings, which typically carry lower ASP.
International revenue increased 27% to $2.9 million, driven by growing TORQ and TNT procedure volume.
Turning to profitability.
Gross profit increased 13.7% to $44.2 million.
Gross margin was 79.3%, continuing to track ahead of guidance.
The minimal change in gross margin reflects the site of care and procedure mix I highlighted earlier, partially offset by the improving surgical capacity utilization and implementation of production workflow changes to reduce implant costs as well as optimize instrument costs.
Operating expenses increased 9.7%, well below revenue growth of 14.5%, demonstrating our ability to scale efficiently.
Higher spending reflected sales commissions, marketing activities to support new products and continued R&D investment.
Based on the trends through the first 3 quarters, we believe 2026 operating leverage will be better than our expectations at the beginning of the year.
Net loss narrowed to $3.6 million or $0.08 per diluted share compared to a net loss of $4.6 million or $0.11 per diluted share.
Adjusted EBITDA increased 32.4% to $3 million, representing an adjusted EBITDA margin of 5.5%.
Over the trailing 12 months, our adjusted EBITDA increased approximately 140% to nearly $13.6 million, and adjusted EBITDA margin more than doubled.
Going forward, we expect strong revenue growth and continuing operating leverage to drive further margin expansion and move us towards GAAP profitability.
Turning to liquidity and cash flow.
Our working capital discipline and asset-light operating model are converting improved operating performance into cash.
We ended the quarter with $146.3 million in cash and equivalents, up approximately $400,000 sequentially.
Year-to-date, we generated approximately $4.4 million in operating cash flow compared with $2.4 million used in the prior year period, an improvement of $6.8 million.
Our robust balance sheet and progress towards consistent free cash flow generation positions us to fund our planned development programs while maintaining significant financial flexibility.
Turning to 2026 outlook.
We are reaffirming our 2026 worldwide revenue of $231 million to $233 million as well as our gross margin expectations at 79%.
While we are making growth-oriented investments related to Onyx launch and ongoing R&D projects, based on the year-to-date performance, we now expect our operating expenses to grow 10.5% versus our prior expectation of 12%.
The midpoint of our annual worldwide revenue guidance implies over 20% year-over-year revenue growth in the fourth quarter.
As we enter our seasonally strongest quarter, our fourth quarter growth acceleration is anchored by the strengthening and broad-based procedure demand, a growing base of active physicians, an expanded commercial footprint and modest contribution from new products.
The new branded DRGs and a broader rollout of Onyx offers additional growth potential, both in terms of volume and procedure ASP upside.
Early indications from these catalysts in October reinforce our confidence in a strong finish to 2026 and significant operating momentum entering 2027.
With that, I will turn the call over to Laura.
Laura Francis: Thanks, Anshul.
We're entering our next phase of growth with a differentiated portfolio, deeper physician engagement and a more favorable reimbursement environment.
We've built the commercial scale to capture these opportunities, and our results demonstrate the operating leverage that growth can deliver.
Looking ahead, we're very confident in our ability to accelerate growth, improve profitability and help more patients achieve better outcomes.
With that, we're happy to answer your questions.
Operator? Operator: [Operator Instructions] Our first question will be coming from the line of Patrick Wood of UBS.
Patrick Andrew Wood: Just 2 upfront.
First one on Onyx.
Obviously, an alpha launch at the moment, but I'd love any extra color you guys have from the clinician and surgeon feedback and if you're going to change anything as you go into full release, anything you're going to tweak.
Just feedback there would be great.
And then secondly, big picture, you mentioned several times, obviously, accelerating procedure growth.
Q4, the implied guide is for a nice acceleration.
How much is Onyx going to keep that momentum as we move through into next year even before the NTAP actually comes online? Laura Francis: [Audio Gap] the answer is yes to that question.
So that's number one.
Number two, we wanted to see if physicians that are using Onyx, are they using Onyx when they don't go to the pelvis where they typically don't use Granite, and the answer is yes to that as well.
And then finally, we want to see if nonusers of Granite are wanting to use Onyx.
And the answer is yes to that question, too.
So we're really excited by what we're seeing here just in the last 30 days or so.
So they're early trends and all of the things that we talked about in terms of increasing procedure volumes and seeing implant utilization per case increase with Onyx is happening in the early stages.
And also what gives us a lot of encouragement is Granite has been a huge success for us.
And when we compare the demand for Onyx to the early demand for Granite, it's actually tracking ahead of where Granite was as well.
So maybe not that surprising because we've built such a strong number of physicians who are using our technologies, once again, as I said in the preprepared remarks, we had around 700 physicians that were active when we launched Granite, and now we're at almost 1,800, right? And also just the footprint that we have in the United States as well with the larger number of territory managers and territory reps, but also our third-party agents as well.
I think all of those things are really important.
So the excitement is really evident with our commercial team.
We have actually quite a bit of inbound demand already for Onyx.
And so, for us, it's really deploying additional surgical capacity out there in November and December, and then we expect the full launch in January.
Anshul Maheshwari: And then, Patrick, on the guidance side, you're correct.
The midpoint of our full year guidance implies a 20% revenue growth in the fourth quarter.
Now the acceleration that we expect to see in the fourth quarter is actually a buildup of all the activities we engaged in throughout the year.
It started with the meaningful physician base growth that we've seen.
Just comparing third quarter to third quarter, we've added nearly 250 additional physicians.
The expansion into interventional, as Laura said in her prepared remarks, is actually doing well.
The INTRA platform is really accelerating adoption within the interventional space, and we saw that happen in the third quarter, which tends to be a slow quarter generally.
So that bodes well for the fourth quarter.
The last piece would be on the trauma side, we've been working very closely with Smith+Nephew to sort of build the foundations entering a busy trauma quarter as well.
And coming into the fourth quarter, we're seeing the benefit of that as well.
And then the last piece on Onyx, what's incorporated in the guidance, when we started the year, we had said Onyx would be available at some point late in the fourth quarter.
We're obviously ahead of track on that, given that Onyx was in alpha launch in October.
And the color Laura provided, it's actually doing quite well for us.
So I think, net-net, we're positioned really well.
Now the 2 things that could provide potentially additional upside would be the impact of new DRGs on Granite.
Especially as we think about the third quarter, we had more Granite cases with 2 implants.
As we continue to drive awareness in the DRGs, can we move that to 4.
And then as we continue to broaden our alpha launch with more surgical sets out there for Onyx, could that be additional upside for us as well.
So I think we feel very good about the setup ending the year and then also what it sets us up as we look out the next few years from a growth perspective.
Operator: The next question will be coming from the line of Matthew O'Brien from Piper Sandler.
Matthew O'Brien: Maybe just to keep going on Onyx for a second here.
Laura, you mentioned the 1,800 active docs roughly that you have now.
How quickly can you access those clinicians? That would seem like that's the low-hanging fruit versus going after people that had not been working with you in the past.
So is there any kind of metric we should think about in terms of how many you can get to by the middle of next year, by the....
