Tenon Medical (TNON) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 12, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer - Steven Foster
• Chief Financial Officer - Kevin Williamson

Need a quote from a Motley Fool analyst? Email pr@fool.com

TAKEAWAYS

• Revenue -- $1.4 million, representing a 22% increase year over year driven by the continued adoption of the Catamaran and SImmetry systems.
• Sequential Revenue Growth -- 12%, compared to the second quarter of 2026 reflecting increased procedures and physician users.
• Gross Profit -- $1.0 million, an increase of 23% year over year in dollar terms.
• Gross Margin -- 66.3%, an improvement of 0.4 percentage points as higher revenue further absorbed fixed costs.
• Nine-Month Revenue -- $4.1 million, a 66% increase from $2.5 million in the prior year period.
• Nine-Month Gross Profit -- $2.7 million, more than double the $1.3 million reported in the first nine months of the previous year.
• Nine-Month Gross Margin -- 66.2%, an 11.8 percentage point increase from 54.4% driven by improved manufacturing efficiencies and lower per-procedure costs.
• Operating Expenses -- $4.0 million, a decrease from $4.2 million in the prior year period primarily due to lower professional service fees.
• Loss from Operations -- $3.1 million, an improvement of $300,000 compared to the third quarter of the previous year.
• Net Loss -- $6.6 million, or $5.39 per share, compared to $3.3 million in the same period last year due to noncash warrant and interest expenses.
• Warrant Inducement Expense -- $3.1 million, representing a noncash item related to the warrant inducement transaction completed in September.
• Noncash Interest Expense -- $700,000, resulting from the amortization of debt discount on the company’s convertible notes.
• Capital Raised -- $15.6 million, representing aggregate gross proceeds from multiple transactions including a public offering and warrant exercises.
• Convertible Debt Repayment -- $5.16 million, which retired the senior convertible notes in full ahead of their September maturity date.
• Cash and Cash Equivalents -- $8.3 million at quarter-end, an increase from $3.8 million as of Dec. 31, 2025.
• Alpha Launch Revenue -- $1.2 million, generated from the limited release of the titanium 3D-printed lateral screw from late 2025 to the third quarter of 2026.
• Training Activities -- 36, representing combined physician and distributor training sessions completed within the quarter.
• At-The-Market Capacity -- $7.1 million, reflecting the availability increased subsequent to the quarter end to support future capital needs.
• Patents -- 38 issued U.S. patents, including eight new patents issued by the U.S. Patent and Trademark Office so far in 2026.

SUMMARY

Tenon Medical, Inc. (NASDAQ:TNON) grew revenue through the increased adoption of its primary surgical platforms and expanded physician usage. Management significantly restructured the company’s balance sheet by raising capital and retiring all outstanding convertible debt, which eliminated total debt by quarter-end. The organization is transitioning its research and development pipeline into commercial products, specifically through the full launch of next-generation lateral screw technology and the completion of initial surgical cases for new decortication tools. Leadership also expanded the commercial organization to accelerate salesforce recruitment and distributor onboarding to drive future top-line growth.

• The company hired Thomas Batten Jr. as chief revenue officer effective Oct. 1, 2026, to lead commercial expansion and distributor partnerships.
• Management completed the initial alpha cases for the new Quickstep Decorticator, with CEO Foster stating, "We are targeting full market release of quick step in the first quarter of 27."
• The company plans to submit a differentiated enhancement to the Symmetry Plus implant in early Dec. 2026 to improve lateral and oblique procedures.
• A 510(k) clearance received on July 2 reclassified certain instrumentation to reusable status, which CEO Foster noted reduced per-procedure costs for the Catamaran platform.
• Management regained compliance with Nasdaq stockholders' equity and minimum bid price requirements following a 1-for-35 reverse stock split on Aug. 10, 2026.
• CEO Foster reported that the new 3D-printed lateral screw is the "first component of our next generation lateral SI joint fusion system" as the company moves toward a two-platform offering.

INDUSTRY GLOSSARY

• 510(k) Clearance: A premarket submission made to the FDA to demonstrate that a device is as safe and effective as a legally marketed device.
• Catamaran SI-Joint Fusion System: A medical device platform using a titanium implant for the treatment of sacroiliac joint disorders.
• Decortication: The surgical removal of the surface layer of bone to promote healing or fusion in orthopedic procedures.
• Sacro-pelvic: Relating to the sacrum and the pelvis, the area of the body where the company’s fusion systems are utilized.
• SImmetry+ SI Joint Fusion System: A minimally invasive lateral access solution for treating sacroiliac joint disorders.

Full Conference Call Transcript

Operator: Greetings. And welcome to the Tenon Medical third quarter 2026 financial results and Corporate Update Conference Call. As a reminder, this call is being recorded. Your hosts today are Steven Foster, President and Chief Executive Officer and Kevin Williamson, chief financial officer. Mister Foster and Mister Williamson will present results of operations for the third quarter ended 09/30/2026 and provide a corporate update. A press release detailing these results was released today and is available on the Investor Relations section of our company's website www.tenonmed.com. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates and other information that might be considered forward looking.

While these forward looking statements represent our current judgment of what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward looking statements. Reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events. For a more complete discussion of these factors and other risks, you should review our quarterly and annual reports on file with the Securities and Exchange Commission at www.sec.gov.

At this time, I will turn the call over to Tenon Medical's chief executive officer, Steven Foster. Please go ahead, sir.

Steven Foster: Thank you, Joe, and good afternoon, everyone. I am pleased to welcome you to today's Third Quarter 20 financial results and corporate update conference call for Tenon Medical. Third quarter revenue was 1.4 million, an increase of 22% over the third quarter of last year and 12% sequentially from the second quarter. Gross profit was $1 million, an increase of 23% over the prior year period. Gross margin was 66.3%, an improvement of 0.4% compared to the 65.9% a year ago. We delivered this growth while reducing operating expenses, compared to both the third quarter of 25 and the second quarter of this year. Improving our loss from operations in the period compared to both prior periods.

Looking at the first 9 months as a whole, revenue was 4.1 million, an increase of 66% from the 2.5 million in the first 9 months of 25. Gross profit was 2.7 million more than double the 1.3 million in the prior year period. At a gross margin of 66.2% compared with 54.4%. Growth on the top line came from continued adoption of our Catamaran and Symmetry platforms, and completed more cases with more physician users in the quarter compared to the third quarter of 25 and Q2 of this year. Physician distributor training remains a leading indicator for us, with 36 combined training activities completed within the quarter.

The improvement in gross margin was primarily driven by 2 factors: higher revenue which continues to absorb fixed costs and the benefit of lower cost of sales within our Catamaran platform. Driven by the 510 clearance we announced in early Q3 which reclassified certain instrumentation to reusable status. We believe both factors will continue to have positive impact on our gross margins as we continue to grow. Beyond the financials, a few items from the quarter are worth noting. First, on the commercial side, our investments are focused on the commercial aspect of our business. As such, we have introduced a new commercial leader to the organization. Mister Thomas Batten junior, joined Tenon as chief revenue officer effective 10/01/2026.

Tom brings significant experience in building commercial teams and corporate roles, as well as an independent distributor. With particular expertise in the sacropelvic space. We plan to continue adding to our commercial organization under Tom through the hiring of direct sales representatives and onboarding of independent distributor partners as we move forward. This move also allows us to deploy other team members focus on the important product launches we are planning for through the first half of 27. On September 30, we announced a full commercial launch of our new titanium 3D printed lateral screw for the Symmetry Plus SI joint fusion system.

Following a successful limited launch alpha launch, that generated approximately $1.2 million in revenue from late Q4 25 through Q3 26. The new screw is the first component of our next generation lateral SI joint fusion system our 2 platform offering continues to progress the way we had planned. With physicians evaluating Catamaran and Symmetry Plus as complementary tools offering inferior, posterior, and lateral approaches to the same anatomy. Second, as it relates to our product pipeline, we are progressing on the launches we outlined last quarter. Subsequent to quarter end on October 28, we announced the completion of the initial alpha cases of our new quick step decorticator.

Which is designed to streamline SI joint decortication and simplify the Symmetry Plus surgical workflow. We are targeting full market release of quick step in the first quarter of 27. We also anticipate an early December 26 submission for a highly differentiated enhancement to the Symmetry Plus implant We believe the Symmetry Plus platform will deliver differentiated benefits in lateral and oblique procedures, with integrated decortication and grafting, combined with threaded implant technology, and anti rotation capabilities. Third, specific to intellectual property. On October 15, we announced that the US Patent and Trademark Office issued 8 new patents to the company so far in 2026, bringing our portfolio to 38 issued U. S. Patents and 9 international patents.

With 31 US and foreign patent applications pending. These patents include both system and method claims covering the catamaran system, and we believe they strengthen our position as an innovator in the sacral pelvic fusion market. Fourth, as it relates to capital, we significantly strengthened our balance sheet during the quarter. We raised approximately $15.6 million in aggregate gross proceeds through a multitude of multiple transactions in the quarter. Through the prepayments made in August and September, we repaid our convertible notes in full ahead of the September 11 maturity. And regaining compliance with Nasdaq stockholder equity requirements as well as its minimum bid price requirements following our 1-for-35 split reverse split in the year.

We ended the quarter with $3.8 million in cash, and cash equivalents Looking out over the balance of the year, our priorities remain consistent. Expanding physician training and adoption, across both platforms, advancing our product pipeline, and maintaining discipline on our spend. With our convertible notes that now behind us, our attention is fully on growth. We believe we have multiple ways to win in this market, and are excited about what is to come. And with that, I will turn the call over to Kevin to discuss our financials.

Kevin Williamson: Thank you, Steven. I will now provide a summarized review of our financial results. A full breakdown is available in our press release that crossed the wire this afternoon. Starting with the top line, third quarter revenue was 1.4 million, up 22% from $1.2 million a year ago, and up 12% sequentially from the second quarter of this year. Revenue for the 9 months ended 09/30/2026 was 4.1 million, an increase of 66% compared to 2.5 million in the 9 months ended September 30, 2025. The increase in the quarter was driven by the continued adoption of our Catamaran and Symmetry systems.

Within the quarter, we saw increased procedures, and physician users compared to both the third quarter of 25 and the second quarter of this year. We expect to continue to build on our momentum through recent and upcoming Salesforce expansion increased physician and distributor engagement, and future product launches. Gross profit was 1 million or 66.3% of revenue in the third quarter, compared to 800 thousand or 65.9% of revenue a year ago. A 23% increase in dollar terms. On a margin basis, we are up about 0.4 percentage points year over year.

For the 9 months, gross profit was 2.7 million or 66.2% of revenue, compared to 1.3 million or 54.4% of revenue, a 102% increase in dollars, and roughly 11.8 percentage points of margin improvement. The increase in gross margin in the quarter and year to date periods was primarily driven by increased revenue further absorbing fixed costs within our cost of goods sold, while the third quarter also saw benefit from improved catamaran per procedure costs driven by a 510(k) clearance the company announced receiving on July 2 which reclassified certain instruments to reusable status. Moving forward, we believe our gross margin will continue to expand as revenue increases and further absorbs fixed costs.

Operating expenses totaled $4 million in the third quarter, compared to $4.2 million in the third quarter of 25. For the 9 months, operating expenses totaled 12.4 million compared to $11.3 million in the prior year period. The decrease in the quarter was primarily due to lower G&A expenses primarily reflecting lower professional service fees, partially offset by higher sales and marketing expenses which were associated with increased revenue and higher R&D expenses, as we continue to work towards future product additions. Loss from operations for the third quarter improved by $300 thousand to $3.1 million from $3.4 million in the prior year period.

For the 9 months, loss from operations improved by $200 thousand to $9.7 million from $9.9 million in the prior period. Net loss was $6.6 million or $5.39 per share in the third quarter compared to a net loss of $3.3 million or $14.17 per share. In the third quarter of 25. For the 9 months, net loss was $14.2 million or $22.48 per share compared to a net loss of $9.7 million or $51.72 per share in the same year ago period. As a reminder, all per share figures reflect the 1-for-35 reverse stock split we affected on August 10, 2026. The increase in net loss was primarily attributable to noncash items below the operating line.

Including $3.1 million of expense related to warrants, issued as inducement consideration in connection with our September warrant inducement transaction and $700 thousand of noncash interest expense from the amortization of debt discount on our convertible notes which we repaid in full during the quarter. We ended the quarter with $8.3 million in cash and cash equivalents, compared to $3.8 million as of 12/31/2025, During the quarter, we raised approximately $15.6 million in aggregate gross proceeds and repaid in full our senior convertible notes, which had an aggregate principal amount of approximately $5.16 million ahead of their 09/11/2026 maturity date. This left us with no outstanding debt as of quarter end.

Additionally, subsequent to quarter end, we increased our ATM capacity to approximately $7.1 million of availability, which we expect to support our capital needs in the future. Overall, we believe the financial and strategic actions taken during the third quarter most importantly, retiring our convertible notes and strengthening our cash position, have improved our ability to drive continued growth while sustaining a streamlined and disciplined cost base as we fund our commercial, clinical, and development priorities. I will now hand the call back to Steven for closing comments.

Steven Foster: Thank you, Kevin. To conclude, Tenon is delivering top line growth with a strengthened balance sheet a disciplined cost structure that we believe will support efficiencies as we expand our offering. Our R&D investments are now converting into launches. With the full commercial launch of our 3D printed Symmetry Plus lateral screw. And quick step targeted for full market release in first quarter of 27. And additional launches that we are planning over the coming quarters. We believe our focus on commercial expansion and execution positions Tenon to build on this momentum and deliver meaningful value to patients providers, and our shareholders. I thank all of you for attending.

And now I would like to hand the call back over to our operator and begin our question and answer session with covering analysts. Joe?

Operator: Thank you, sir. Ladies and gentlemen, if you would like to ask a question. Please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question. Before pressing the star keys. 1 moment please while we poll for questions. Thank you. There are no further questions at this time. And I will turn the call back over to Steven Foster for closing remarks.

Steven Foster: Thank you, Joe. I would like to thank each of you for joining our earnings conference call today. Look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions. Please reach out to our IR firm, M and Z Group, who will be more than happy to assist. Thank you

Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.