Chief Commercial Officer, and over the past two years, I've had the opportunity to work closely with Jim and the rest of the leadership team in developing and executing the commercial strategy we're pursuing today. I spent more than 30 years in healthcare and medical technology, including senior commercial and operational roles at Medtronic, LimFlow and Endologix. What attracted me to Saluda was ultimately the technology, the patients it can help, and the opportunity to build a very different business in neuromodulation. Over the past two years, I spent a significant time with our customers, our physicians, our field organization, and importantly, seeing the impact this therapy can have for patients living with chronic pain. That experience has increased my conviction in what we are building. We have technology that can objectively measure a patient's neural response to stimulation and automatically adapt therapy based on that response.
We have clinical evidence demonstrating durable outcomes over time. For me, that ultimately is what this is all about, helping more patients access a therapy that we believe can deliver meaningful and durable benefit while building a business capable of bringing that technology to a much larger population. As CEO, my priorities build directly on the strategy we've been executing. Disciplined commercial execution, increasing physician adoption and utilization, expanding awareness of physiologic closed-loop therapy, advancing our product pipeline, and increasingly translating the infrastructure we've built into productivity and leverage. Those are also the priorities reflected in our Q1 activity report. Our first quarter was a solid start to FY 2027. Global revenue increased 26% to $23.1 million. U.S. revenue increased 34%. We implanted 838 U.S. patients, up 55%, while the average number of active implanting physicians increased 47%.
Before getting into those results in more detail, I want to spend a few minutes on what makes Saluda different and why we believe the opportunity in front of us remains significant. This slide really brings together the Saluda value proposition. We believe we have differentiated technology addressing two important challenges that have constrained spinal cord stimulation historically. The first is durability of therapy. The second is the clinical and commercial burden associated with managing that therapy over time. Evoke is fundamentally different because it doesn't simply deliver stimulation. It objectively measures the neural responses created by stimulation and adjusts therapy based on that response. Our clinical data have demonstrated durable outcomes through 36 months, while our commercial experience increasingly demonstrates a substantially lower programming burden. That second point is important because it connects clinical differentiation to the economics of the business.
If we can provide patients with effective, durable therapy that requires less ongoing intervention, that's better for patients and physicians. It also changes the economics for Saluda. Our field team can spend more time supporting new physicians and new patients, and less time on non-revenue generating servicing activities. That's why we describe what we're building as clinically differentiation converging into commercial and economic leverage. We're still early. Our current U.S. physician penetration is approximately 5%, while CAP24, our paddle, adds access to a surgical paddle market representing approximately $670 million of U.S. SCS revenue. We believe there remains significant runway in front of us. Let me briefly explain what's different about the technology. Every patient has a unique neural response to stimulation. With Evoke, the implanted lead both delivers stimulation and measures the resulting neural response.
We use that objective measurement to establish a personalized neural dose for the patient. The system then measures and adjusts stimulation pulse by pulse to maintain the prescribed level of neural activation. Rather than relying solely on subjective patient feedback, Evoke can objectively measure what is happening physiologically and adapt therapy accordingly. That sensing capability is the foundation for the broader platform we are building. One of the places we see practical benefit of that technology is in reprogramming. Our real-world commercial experience continues to show that the requirement for programming visits declines significantly over time to less than one visit per year after the first 12 months. That is important to me because it really brings us back to the patient. Patients do not get SCS because they want another medical device to manage. They want to get back to living their lives.
Reducing the amount of time they need to spend coming back for therapy adjustments is an important part of the value we can provide. It also reduces the burden for the physicians in the clinic, and for Saluda, it allows our commercial organization to spend progressively more time expanding access to therapy. One of the things you will hear both Jim and me talk about is productivity. This is where the technology and productivity story begin to come together. EVA extends the advantage through automated programming. The vast majority of patients are now being programmed using automation, and EVA is now in full commercial use across all of our commercial geographies. EVA uses the objective physiologic data generated by Evoke to automate key elements of programming. For patients and physicians, that can create a more consistent experience.
For our commercial organization, it reduces dependence on individual technical skill, supervisor training, and allows representatives to spend more time supporting patients and growing their territories. This becomes more important as we scale. We invested significantly in expanding our commercial capacity during FY 2026. A growing share of those representatives are now trained and progressing through the maturation of their territories. The emphasis increasingly shifts from building capacity to driving productivity from the capacity we built. Turning specifically to Q1, I would highlight several things. Global revenue increased 26% to $23.1 million. U.S. revenue increased 34% to $17.4 million. International revenue grew 7% to $5.8 million. But from a commercial perspective, two metrics are particularly important to me. We implanted 838 U.S. patients, which was a record quarter for Saluda.
That represents 55% growth versus the prior year, and 9% growth sequentially from Q4, despite the normal seasonality of the September quarter. At the same time, our average number of active U.S. implanting physicians increased 47% to 374, and physician utilization increased 5%. Those numbers indicate that we are doing both things we need to do commercially, bringing new physicians to Evoke and increasing utilization across the physician base. Approximately 75% of the U.S. sales force is now fully trained, and approximately half of the viable U.S. territories have at least one fully trained representative, up from 45% at the end of June. There is still substantial territory opportunity ahead of us, even as the organization we have already built continues to mature. We have also moved CAP24, our paddle, into full U.S. commercial release since quarter end, which I will come back to later.
Before I hand over to Jim, I also want to briefly acknowledge the voluntary field action we announced last week. As we said in that announcement, the action relates to a defined population of previously manufactured Evoke closed-loop stimulators impacted by a third-party manufacturing process change. That manufacturing issue has been corrected, and devices manufactured and distributed following the corrective action are unaffected. We believe that action was the right thing to do for patients and our customers. Our activities related to the field action are progressing well. Our focus has been communicating clearly with physicians and supporting them and their patients through the process. While these situations are never ideal, we're focused on doing the right thing for patients and customers, completing the field action appropriately, and continuing to execute the growth strategy in front of us. With that, I'll turn it over to Jim. Jim?
Thanks, Mike. This slide provides a good view of how the business is developing across both revenue and the underlying commercial metrics. Global Q1 revenue was $23.1 million, up 26%. U.S. revenue was $17.4 million, an increase of 34%, while international revenue increased 7% to $5.8 million. Sequentially, revenue declined from $27 million in Q4. There are a couple of things to remember in making that comparison. The September quarter is seasonally softer due to the Northern Hemisphere summer period for patients and physicians. Q4 also included approximately $600,000 of international revenue from recognition of previously deferred European revenue following the EVA launch, which did not repeat in Q1. Against that revenue progression, I think the commercial metrics on the right side of the slide are particularly useful. U.S. implanted patients increased from 769 in Q4 to 838 in Q1, while average active implanting physicians increased from 311- 374.
As we've seen in prior quarters, revenue and patient growth don't necessarily move together because we generally recognize revenue when product is sold to the customer, while the patient metric reflects when the procedure actually occurs. In Q1, certain customers used inventory purchased in prior quarters, and our account mix continued to shift toward higher volume ASCs where we utilize volume-based pricing. That said, ASP remained broadly stable relative to Q4. What we're focused on is the progression of the underlying drivers of the business. We ended the quarter with more active physicians, higher physician utilization, and a growing number of U.S. implanted patients. That continued commercial progression is important as we think about the full year. Turning to guidance. We are reaffirming the full year guidance we provided in August.
We continue to expect FY 2027 revenue growth of 25%-35%, gross margin of 50%-52% and an adjusted EBITDA loss of $101 million to $95 million. I want to spend a little time on operating leverage because I think that is one of the more important components of the Saluda story from here. For the past several years, we've made significant investments to establish the commercial infrastructure required to compete at scale in the U.S. SCS market. We're going to continue adding commercial resources, but at a much reduced rate relative to FY 2026. The focus is increasingly on productivity and reducing territory selling costs as a percentage of the revenue those territories generate. For FY 2027, we expect approximately 90% of the incremental gross profit year over year to translate into improvement in adjusted EBITDA. Importantly, the path to leverage doesn't depend upon us simply stopping investment.
It comes from generating more revenue and gross profit from the infrastructure we've built. That means maturing representatives. It means adding physicians and driving increased utilization within existing accounts. It means technologies like Closed-Loop Therapy and EVA reducing the ongoing service burden. It means introducing products like CAP24, our paddle lead, that allows the same commercial infrastructure to access a larger portion of the SCS market. That is the economic model we're working to demonstrate. Let me also address cash flow. We ended Q1 with $73.6 million of cash compared with $116.4 million at the end of Q4. Cash used in operations was $42.7 million during Q1, compared with $28.9 million in Q4.
Q1 included a number of payments concentrated in the quarter, including $4.5 million of annual employee incentive payments associated with FY 2026, $2 million of previously disclosed executive retention payments, approximately $2.4 million associated with two large non-recurring project related payments, and approximately $2.5 million arising from the timing of inventory related payments around quarter end. For that reason, we don't believe Q1 cash use is representative of the remaining quarters of FY 2027. As we said in today's release, we expect cash usage over the remaining three quarters to revert to levels similar to prior quarters. I want to be equally clear that improving the underlying economics of the business remains an important priority for us. The expanded commercial organization represents a significant investment. Our focus is increasingly on driving productivity and revenue growth from that investment, and translating incremental gross profit into improved EBITDA performance.
Based on our FY 2027 guidance and current operating plan, we estimate our existing cash resources provide runway to approximately June of 2027. We recognize that our path to profitability will require additional capital. Managing that capital requirement while continuing to execute the business and demonstrate improving commercial productivity and operating leverage is an important priority for us. Ultimately, we believe continued execution is the most important thing we can do to strengthen our position as we manage the company's future capital needs. That brings us naturally to the longer term growth model. A question we get frequently from investors is where growth comes from beyond simply adding sales representatives. We think about four principle levers. The first is expanding into new territories. After the significant expansion in FY 2026, approximately half of the viable U.S. territories now have at least one fully trained representative.
That still leaves meaningful white space.
The second lever is expanding within our existing physician base. This is particularly important because the economics become progressively more attractive if an established representative can drive greater utilization across an existing physician base without a proportional increase in service requirements. That's the connection between the clinical and commercial story Mike described earlier and the financial story. The third lever is new products. EVA is commercially deployed. CAP24, our paddle lead, is now in full U.S. commercial release, and we continue to progress additional product development projects. The fourth lever is additional channels and market segments. That includes higher volume ASCs, the orthopedic and neurosurgical segment owned by CAP24, and the longer-term opportunities such as competitive replacements, as shown on this slide. What makes these four levers particularly interesting to us is that they reinforce each other rather than operating independently. More trained territories create greater reach.
More physicians create the opportunity for increased utilization. EVA and the low reprogramming burden can improve field productivity as the installed patient base grows. Additional products and channels allow us to generate more opportunity from the commercial infrastructure we've already built. When we talk about the path to sustainable growth and operating leverage, that's the model we're describing. Mike, I'll hand it back to you to talk about CAP24.
Thank you, Jim. CAP24 is a great example of how those growth levers come together. We received FDA approval for CAP24 in June and began with a limited commercial release in selected centers. We initially worked with approximately 10 U.S. accounts, expanding that number during Q1, and since quarter end have moved into full commercial release. The feedback we received from physicians during limited release regarding device performance and integration into clinical practice was positive. CAP24 matters strategically because it gives us access to a portion of the market we historically haven't addressed. The surgical paddle segment represents an estimated $670 million in U.S. SCS revenue, or approximately 30% of the U.S. market. CAP24 is the first and only FDA-approved surgical paddle lead designed for physiologic dose-controlled closed-loop therapy.
With full commercial release now underway, the focus is moving product from introduction to execution, activating additional accounts, and creating patient volume with those accounts. For me, that's an important theme of where Saluda is today. We spent several years building the technology, the evidence, the commercial infrastructure, the physician relationships. The opportunity now is to turn those assets into broader adoption. I'll finish where I started. What gives me confidence in this business is the combination of the technology, the patient benefit, and the commercial opportunity. We believe Saluda addresses two structural challenges that have constrained SCS. The first is durability of outcomes. Evoke objectively measures the neural response and adjusts stimulation in real time, and our clinical evidence demonstrates durable outcomes through 36 months. The second is the cost and burden associated with managing therapy.
Our real-world experience demonstrates less than one programming visit per year after the first 12 months, while EVA increasingly automates the programming process. That matters for patients, it matters for physicians, and it creates the potential for a more scalable commercial model. At the same time, we're still early in the opportunity. Our U.S. physician penetration remains approximately 5%. Our commercial organization continues to mature. We're increasing activity in higher volume ASCs, and CAP24 gives us access to approximately $670 million U.S. market segment that Saluda historically has not addressed. Q1 was another step in that progression. We delivered 26% global revenue growth. U.S. revenues grew 34%. U.S. patients grew 55% to a record 838 patients. Active physicians grew 47%, and today we're reaffirming our FY 2027 guidance. I've had the benefit helping build and execute this commercial strategy over the last two years.
What excites me about taking the CEO role is the opportunity to lead the next phase. Expanding access to Evoke, executing consistently for our customers, continuing to innovate, translating the differentiated technology and commercial infrastructure we've built into sustainable growth and increasing financial leverage. Most importantly, we can't lose sight of why we're doing it. There's patients living with debilitating chronic pain who need better options. I believe deeply in what this technology can do for patients and in the opportunity Saluda has to expand access to it. We have a lot of work ahead of us, but I'm excited about where we are and the opportunity in front of us as a company. That concludes our prepared remarks. I'll now turn it back over to Sam Wells to begin the Q&A.
Great. Thanks very much, Mike and Jim. As a reminder, the audience may ask questions via the Q&A function at the bottom of your Zoom screen, and covering research analysts may raise their hands should they wish to ask a verbal question of the management team. We'll endeavor to get to all questions asked, in some cases, combining questions on the same or similar topic, and we'll kick off now with some questions already in the queue. First question on cash and funding. Cash runway is now into June 2027. How should we think about the funding requirements of the business through the balance of the financial year?
Yeah, I'll take that one, Sam. Yeah. To be clear, as we said on the call and in our release, based on the guidance we've got, our current operating plan, the cash that we have, we believe provides us runway into approximately June of 2027. Importantly, the Q1 cash usage in the quarter doesn't really represent what we think is the ongoing basis for the next couple of quarters. We had some one-time elevated concentrated payments in that quarter. We think the remaining quarters will come down, and that's sort of how we support getting into that June timeframe. But look, the underlying question is we're very aware of the capital demands that the company has, what it's going to take to provide additional financing to the business. We talk about this routinely with the board, and what those funding options and potential timelines can look like.
We're not naive to it. We've been very focused in building what we think is the right size and scale of organization that can compete in what is a big market, but with big other four competitors that we're going against. We talked about this at the time of the IPO, that building out a sales force that can compete at scale was going to be an important part of being able to win. We think we've done that. We know we're very focused on what the cost of the business needs to be going forward and controlling that, and being thoughtful with that spend.
I can say, although we didn't put a P&L in our quarterly, obviously, from a Financial P&L perspective, I think you'll find that when we get to that half year and we're able to put that out there, that it's very much in line with where spending has been. This has been more of a sort of one-time payments of costs that were from a prior period. Ultimately, we're going to continue to be focused on this from a financing standpoint, and really continue to focus on execution at this point.
Great. Thanks, Jim. Since your Evoke field action announcement a week or two ago, has there been any early reactions or observations from engagement with implanting physicians or ASC accounts, in particular that you can share?
Yeah, I'll take it, Jim, Sam. I mean, it's still early, but our engagement with our physician community has been constructive. Our priority remains to communicate as clearly and as early, as often and make sure our customers understand the defined nature of this issue. We need to support our physicians, we need to support our patients through the process. Importantly, the manufacturing issue has been corrected. We remind our physician base and devices that we've manufactured and distributed after this corrective action obviously are unaffected. But the early communication has been extremely constructive. We've acted because we believe it's the right thing to do for patients, and our customers in return are applauding and cheering us for doing that. These situations are never ideal, obviously, but so far our communication with our physician community, again, I'm stating it, has been constructive.
We are completing our field action requirements on time, and I continue to emphasize that our customer feedback has been constructive, and we will continue to execute on the business initiatives that we have underway at this point in time.
Okay, great. Thank you. Next question is coming from Melissa and Kieran at Barrenjoey. You referenced some inventory stocking being utilized in Q1, hence the patient volume to revenue growth disconnect. What portion of Q4 FY 2026 revenue do you anticipate was this inventory pull forward? Do you expect this to be a pattern in future, or was this a specific dynamic driving this, and is this related to high volume ASC sites bulk ordering devices?
Yeah, look, I will take that, Mike. A couple things. We have talked about this a little bit in past quarters. I think it is not the first quarter where we have had somewhat of a disconnect between patient growth and the revenue growth. Just to be clear, we do this very intentionally. We, of course, talk about revenue. Revenue is generally recognized when we sell the product. Buying patterns at customers can vary quite a bit. Then we disclose patients implanted for that very reason to try to give an insight into the real underlying driver of the business, the number of patients that are getting implanted with the device. Ultimately, our customers have their own individual buying patterns.
A couple of things I will say is, as we are adding new accounts, and in the back half of FY 2026, we were adding quite a few new physicians, if you just go back and look at active physician growth. As you are adding more and more customers, new customers often like to put some amount of initial stock onto their shelf to start to support the volume going forward. Whether they are buying forward a quarter beyond, shorter is very customer dependent. You are always going to have some variability quarter to quarter as to whether we have added more new customers putting inventory on the shelf versus customers that might have been using shelf inventory at a bit higher rate.
What I will say is specific to Q4 of last year, part of the question there was, there was no specific rebate incentive guided to try to drive volume in the fourth quarter. What is natural for us and for most med device companies is as you get to the fourth fiscal quarter of the year, you do have salespeople that are trying to hit quotas and plans. You may have a little bit more of a push at the end of the year from the sales force, just naturally trying to hit their numbers, beat their numbers, things like that. I know we had a little bit of that in the fourth quarter, driving some of that volume. The last part of that question was it ASC volume?
Certainly the high volume ASCs that we have been talking about over the last several quarters do often have higher buying patterns. They will often put inventory on the shelf because they have got a higher volume going through their clinic. They generally have a high volume of patient flow right behind it. So it is maybe a long answer to a question, but I think as we look at FY 2027, you will continue to see some potential variability, but as we are adding new accounts, adding new paddle accounts, I would expect there to be some additional product that may end up on shelves a bit going into 2027 as we continue to add new accounts. So I think this disconnect may vary quite quarter to quarter.
Okay, great. Thank you. Another follow-up from Melissa and Kieran. On the sales force productivity metric provided at the FY 2026 results, what was the fully loaded cost as a percentage of territory of revenue into Q1 FY 2027? Has the proportion of territories sub 40% cost rate grown since the end of FY?
Yeah. Look, this is the metric we talked about at year-end, and we will continue to talk about because here at the quarter we are disclosing cash flow and revenue, but we have not disclosed a full P&L. We sort of intentionally did not get into this metric, and the intent is to get into it a little bit more at the half-year when we have got the context of a full P&L to be able to give you. I guess what I will say is the 30% we referenced at the end of the year is an annualized number based on the fourth quarter performance. So we are trying to give people progression, and it was the 30% as a percentage of our fully trained territories.
The denominator is also changing, so the percentage of that is going to vary a little bit as we go. So it is just more of a precursor to when we get into the detail. I am not going to quote what the percentages are in Q1. What I will say is, we are seeing really good progression from our early sales classes and how they are projecting up their productivity curve. Some of our more senior territories that are driving volume are continuing to own much of that volume. So we like what we are seeing, I guess is what I will say without giving a metric answer to the number. As we get into the half year, I think we will be able to give people a little bit more color with the context of what the P&L looks like as well.
Okay, great. Thank you. Maybe just one follow-up question there somewhat related on rep coverage. About 75% of the reps are fully trained, but only 50% of viable territories with at least one fully trained rep. With hiring slowing into FY 2027, how do you close the coverage gap and what coverage would you expect by, say, December this year or the end of financial year in June next year?
Maybe I'll just remind on the metrics for people, and then Mike, I'll let you take a stab at sort of how we're thinking about coverage. Just to be clear, we had been talking about what percentage of the sales force fully trained. We're at 75% here at the end of Q1. The coverage metric, we have historically talked about how many viable U.S. territories there are, somewhere in the 180 range. So we're at coverage of around 50. That's how many territories do we have at least one fully trained person covering it. We've now started to transition to a period where we are able to hire some support reps, where some of these territories that are getting more evolved are able to be supported with maybe lower cost clinical support reps. So the mix is something that we focus on as well.
How we think about that mix of adding to current territories and coverage, Mike, maybe I'll let you just add a little bit of your thoughts about how you think about that when building the sales force.
Yeah. We're shifting our thinking from just simply adding headcount. It's really about how to support a maturing organization. So it's not really about closing territory coverage gap, it's about how deep can we go into territory and support the territory. The advantage we have with our less than one time after 12 months of reprogramming, our sales force doesn't need as much service support. As we look at our adding headcount, we'll add headcount, but not at the rate we did in FY 2026. We'll look at supporting territories as they grow based on their run rate, on how many trial patients they're supporting, how many procedures they're supporting, and then the opportunity in each individual territory. So depth of adoption is one of our most important strategies in fiscal 2026.
If you think about the two things we have to do simultaneously, it is about driving adoption with new physicians, which paddle opens up an entirely new physician opportunity for us. That is a near term, and then our largest near term opportunity is to take physicians that over the last 12 months have been using us and driving that to deeper utilization, both with the new paddle opportunity and supporting that territory. So it is less about just adding headcount, it is more about supporting an organization that is maturing, and driving deeper into individual territories.
Great, thank you. Maybe just turning to CAP24 with the paddle entering commercial launch, can you give some color around expectations and how the limited launch experience has played out?
Yeah. Strategically for us, paddle opens up an estimated $670 million opportunity in the U.S. in the SCS market. Our limited market release, looking at two things, procedural and clinical outcomes. Procedurally the feedback has been outstanding and then clinically, where the lead is placed closer to the spinal column, our ECAP visualization is even more effective than percutaneous. So being able to get patients in a tight closed-loop therapy consistently in this patient population has made for outstanding outcomes. So we are excited about what we saw in our limited market release, and now that we are in full market release, we continue to have positive feedback on the performance of the lead. We continue to support our reps and support our customers as we bring that therapy to the market.
Again, strategically for us, it opens up territories that are largely paddle that we have not had opportunities in before. Our team is extremely excited about it, and the clinical and procedural utility of the technology has been outstanding thus far.
Great. Thank you. That concludes our Q&A session for today. If there were any other questions, please feel free to email me and we will endeavor to get back to you. And maybe with that, Mike, I will just pass it back to you for any closing comments.
Well, I think again, having been appointed the CEO recently, I would tell you just from an operating standpoint, there has just been a lot of continuity. We have a strong commercial leadership in place. Strategies that we have been executing for the last two years prior to this appointment as the Chief Commercial Officer in line with the senior leadership team, has just been about discipline execution and physician adoption, and we are continuing to be disciplined in both those areas. And I am extremely excited about this therapy. I came here for this company because of the therapy and the value proposition it solves, which is durability outcomes and efficiency of the model, both for us as a company, but more importantly for our patients. And I am grateful for the opportunity, I look forward to our next conversation.
Great. Thanks everyone for joining Saluda Medical's Q1 results webinar. That concludes today's session. Enjoy the rest of your day. Goodbye.