TMCI Q3 2026 earnings call transcript, November 6, 2026

Good morning, everyone, and welcome to our third quarter 2026 earnings conference call. Participating from the company today will be John Treese, Chief Executive Officer, and Mark Hare, Chief Financial Officer. John and Mark will discuss our third quarter financial results in 2026 outlook.

We'll then host a question and answer session following our prepared remarks. Our press release can be found in the Investor Relations section of our website. at investors.trees.com. This call is being recorded and will be archived in the Investor Relations section of our website. Before we begin, we would like to remind you that's our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends will be protected. as well as our estimated results or performance are forward-looking statements. All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon currently available information and Treece Medical assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings, including our 2025 Form 10-K and our Form 10-Q for the third quarter of 2026, filed before the market opens today, November 6th, which can be found in the investor relations section of our website at investors.treece.com.

for a detailed presentation of risks. With that, I will now turn the call over to John.

Good morning, everyone, and thank you for joining us on our third quarter 2026 earnings conference call. We're encouraged by our third quarter performance, driven by double-digit case volume growth and continued market share gains from increasing adoption of our comprehensive portfolio of best-in-class Bunyan systems and our expanding line of new technologies. During the quarter, we continued to advance our strategic priorities with investments in new products, creating opportunities to build on the foundation that Lappoplastia has established as our surgeon customers adopt more of our new products into their practice. And now we're expanding our presence across a broader range of foot and ankle procedures. We expect the new 2026 product introductions that I will discuss this morning to expand our total addressable market by approximately $700 million. This strategy has allowed us to leverage our commercial resources to pursue high-impact growth opportunities while maintaining disciplined expense management. We believe this approach positions us to enhance our growth trajectory while improving operating performance over time. With that said, we're narrowing our full year 2026 revenue guidance to be in the range of $206 million to $210 million. This compares to previous revenue guidance of $204 million to $212 million. Importantly, this outlook assumes a return to growth in the fourth quarter through continued procedure volume increases and as we begin to both lap the ASP mix shift dynamics related to our 2025 product launches and benefit from our 2026 product launches.

Now taking a closer look at our growth strategy and the progress we're making across our portfolio. We continue to focus on three key initiatives. First, leverage our large existing company. customer base to drive adoption of the three new bunion systems that we launched in Q3 of 2025. Second, continue to build upon our leadership position with Lappoplasti by launching new technologies that can make Lappoplasti even more appealing and attract new surgeon users. And third, expand our product and procedure offerings to expand our TAM and grow wallet share. Now turning to our first initiative, leveraging our existing customer base to drive adoption of our new bunion system. We continue to see a substantial opportunity to increase utilization of our newer bunion systems, namely nanoplasty, percuplasty, and speed MTP across our existing customer base. As we've discussed, lapoplasty has established a strong position in the lapidus fusion segment of the bunion market, but that represents only a portion of the overall bunion procedures performed by our surgeons. Our nanoplasty and percuplasty systems give us differentiated. 3D minimally invasive options in the large volume osteotomy segment of the market, while our speed MTP system extends our reach into the attractive MTP fusion market. These technologies were developed to address different surgeon preferences and procedural approaches, allowing us to participate in a significantly larger portion of the overall bunion market than with lapoplasty alone.

In fact, we estimate that the three new bunion systems we launched in 2025 address I got it. You're awesome. the remaining 75% of procedure volumes beyond lapoplasty. Across our existing customer base, we see an opportunity to increase utilization with this broader portfolio, and the third quarter represented yet another validation that our strategies are working. Through the third quarter, approximately 45% of our lapoplasty surgeons used at least one of these three new bunion systems in their practice, up from 40% in Q2. We also continue to see approximately 30% of surgeons who initially became Treece customers through these new bunion systems now using lapoplasty products, demonstrating the potential for these new systems to create synergies within our business and pull through additional lapoplasty usage. Shifting to our second initiative, advancing our lapoplasty technology and expanding its appeal and adoption across a broader certain audience. Lapoplasty remains a core focal point of our strategy and what we believe to be the gold standard in the lapidus fusion segment of the market. A segment that represents roughly 30% of the estimated U.S. bunion procedures. As such, we intend to keep innovating, training surgeons, and supporting lapoplasty in this largest dollar segment of the bunion market. We also continue to believe in the importance of supporting our technologies with clinical evidence. At the American Orthopedic Foot and Ankle Society's annual meeting in September, we announced results from three clinical

studies that further strengthen our growing body of clinical evidence across our portfolio. Most notably, our five-year Align 3D prospective multicenter study demonstrated positive long-term patient outcomes following the Lappoplasty procedure, including very low radiographic recurrence rates, significant reduction in pain, and significant improvements in key validated patient-reported outcome scores. Our five-year Align 3D data represents a first-in-industry model. milestone for a commercial bunion system. We also shared positive results from our multicenter adductoplasty and speed plate studies, adding to the evidence supporting our broader technology portfolio. Together, these findings continue to build our differentiated clinical library, providing additional proofs around the durability of our procedures, our patient outcomes, and the performance of our technologies. Turning now to our Lappoplasty product strategy. Our Lappoplasty lightning platform is designed to allow for a faster Lappoplasty procedure and to give surgeons even greater control and accuracy in dialing in their 3D correction. We are in final preparations for the anticipated commercial launch of our lightning system in Q1 2027. We're also focused on expanding the capabilities and utilization of the Intelliguide PSI platform. This is our patient-specific planning and cut guide system for Lappoplasty bunion and adductoplasty midfoot corrections.

Intelliguide brings a personalized surgery experience for patients and is designed to provide surgeons greater confidence and control in managing complex deformities and revisional cases while also reducing valuable OR time. We believe the combination of our Lappoplasty lightning and Intelliguide PSI platforms can continue to differentiate trees as the trusted partner for our surgeons and extend our market leadership position in the lapidus bunion and midfoot deformity segments of the market. And now turning to our third initiative expanding into adjacent foot and ankle procedures. Today we are growing wallet sharing becoming a more comprehensive technology partner for our foot and ankle surgeons. If you look back a year or so ago when we offered the Lappoplasty and the ductoplasty systems alone. We estimate these market leading solutions addressed around 30% of our average customers overall reconstructive foot and ankle surgery volumes. With the expanded bunion. Offerings we launched in Q3 of 2025 plus the additional 2026 product launches I'll discuss next, we believe we now have the opportunity to serve an estimated 80% or more of our average surgeon's reconstructive surgery volumes. Given this, this fourth quarter will be our first opportunity to tap into a broader range of elective foot and ankle procedures outside of bunions while also benefiting from seasonally high bunion case volumes with our expanded bunion portfolio.

I'd now like to elaborate on the new 2026 product introductions that represent the $700 million TAM expansion and the value they bring to our customers. In the third quarter, we fully launched our Superbyte compression screw system. As a reminder, compression screws are core fixation technology used throughout the foot and ankle. Superbyte was designed to make screw fixation more efficient by eliminating the step of drilling before placing the screw, a common and time-consuming step. performed with conventional screw systems. Superbyte has quickly allowed Treece to participate in a wide range of new procedure opportunities, from incremental reconstructive surgeries on the front of the foot, to the back of the foot, and to the ankle. Early in its launch, we're pleased with the adoption we're seeing with Superbyte from our existing surgeon customer base. And in many of these Superbyte cases, the surgeon is also utilizing other Treece products, creating additional pull-through opportunities with our expanded portfolio. With Superbyte screws as an entry point into the mid and hind foot segments of the market, we've built upon this with a new fixation plate offering, namely our Hyperplate XM Dynamic Compression Locking Implant. Fusions of the mid and hind foot bones are generally known for higher nonunion rates. We designed Hyperplate XM implants to provide a highly stable fixation construct through the use of a robust titanium compressing plate with integrated locking screws.

With the goal of improving outcomes for these challenging larger bone fusions. Additionally in Q3, we introduced our VitaFuse Bioactive Glass Graft, a synthetic bone grafting technology that complements our tissue-based Cordafuse graft and our allograft wedges. These biologic offerings are highly complementary and allow trees to more fully service our surgeons' broader bone grafting needs throughout the foot and ankle. Adding to our differentiated suite of mid and hind foot students. We also recently introduced our Cartoblaster line of power joint preparation wraps. These are single-use sterile instruments which connect to a powered surgical saw and are designed to facilitate rapid and thorough removal of the cartilage on these larger bone surfaces to prepare them for fusion. We are seeing that Cartoblaster wraps speed up what historically has been a tedious and time-consuming manual process, thus improving the surgeon's overall experience and saving valuable OR time. We believe these four products, Superbyte, Hyperplate, VitaFuse, and Cartoblaster, the latter two which we expect to fully commercialize within the fourth quarter, collectively expand our U.S. TAM by an estimated $400 million. Rounding out our 2026 portfolio expansion, earlier today we announced successful initial cases with our new TaylorPlasti system. TaylorPlasti is Treece's new minimally invasive instrumented solution for Taylor's bunions.

or bunionettes. Bunionettes are painful deformities of the fifth metatarsal bone and affect an estimated 5% to 10% of the U.S. adult population. When surgical intervention is needed, bunionette surgery is performed either concurrent with a bunion correction or as an isolated procedure. We anticipate full commercialization of this new system within Q1 of 2027. In closing, leveraging our anchor position as the market leader in bunion correction, we are actively... executing our strategy to commercialize an ongoing steady cadence of new product and procedural innovations for 2027 and beyond, and delivering these to our growing base of Surgeon customers through our direct focus sales force to expand our share and presence across the broader foot and ankle surgical market. We appreciate the dedication of our employees delivering this rapid pace of innovation, along with the continued support of our Surgeon customers and our shareholders. We remain focused on executing our commercial strategy, improving operating performance, and building a business that can deliver sustainable growth and long-term value. With that, let me now turn the call over to Mark to review our financial performance. Mark?

We expect to return to revenue growth in our seasonally strongest fourth quarter through procedure volume increases as we begin to lap the ASP mix shift dynamics related to our 2025 product launches and benefit from our 2026 product launches. In addition, we are updating our expectation of a loss in adjusted EBITDA to be in the range of $1 million to $2 million for the full year 2026 as compared to... to a loss of $3.9 million in full year 2025. We are reiterating our expectation of a reduction in cash usage of approximately 50% for full year 2026 as compared to a full year 2025. Supported by a strong and flexible balance sheet, we believe we are well positioned to continue executing our strategic and growth initiatives for the foreseeable future. With that, I'll turn the call over to the operator to open...