Craig Bijou, one of the medical device analysts here at BofA , and I'm happy to present SI-BONE. From SI-BONE, it's Anshul Maheshwari, CFO. Anshul, thank you for coming.
Yeah, thanks, Craig, for hosting us.
Maybe you just want to start with Q1. You reported a couple of weeks ago, very strong results. Revenue growth was 25%, 27% in the U.S. So let's start with just kind of what were the key drivers of that strength that you saw in the quarter?
Yeah, thanks, Craig. So we were really pleased with how the first quarter performed, which, as you know, is seasonally a lighter quarter for us. The growth was broad-based, which was very exciting as well. When you look at the U.S., the U.S. grew 27%. That was led by 27% growth in volume. The volume was also broad-based. It was very strong, double-digit volume growth across all our modalities that we are targeting. Equally exciting was the 1,400+ doctors, physicians that we had in the quarter. Again, we saw record physicians across all our call points: dual procedure, ortho spine, trauma, and interventional. Both of those are two new call points for us. That was really exciting. The next piece was just the growth that we saw in active physicians. We had 300 active physicians added in the quarter versus last year, which was another record as well.
We saw good traction both with our existing solutions as well as accelerating adoption for the new products that we launched in 2024. That was on the top line. As you go below the top line, we had great gross margins, close to 80%. An 80 basis point improvement on the gross margin side. That all translated into positive adjusted EBITDA for the quarter, our second consecutive quarter of positive Adjusted EBITDA. That was great too. Our cash burn declined around 32% for the quarter. Really pleased with how the quarter performed. It provides a really good foundation for the rest of the year.
Got it. I'm going to ask about maybe some of the specifics with and push it a little bit. I doubt I'm going to get great answers or complete answers. I try every time. I think one of the questions that investors have is really trying to understand what is the key driver. I know you say it's broad-based, the strength that you saw and you have been seeing over the last several quarters. Your core business is SI-Fusion. As you've mentioned, you're launching a number of new products that are all contributing. How should we think about the mix of that growth going forward? How much is it that core SI joint fusion, or is that maybe on the lower end of the growth side? Some of the contributions from the new products or new channels is at the higher end.
Any way directionally to kind of help investors think about the key driving factors behind the strong performance?
Sure. SI joint dysfunction remains a large part of the business. When you think about even from a TAM standpoint, SI joint dysfunction is almost 2x the TAM of any other market we're in. The TAM for SI joint dysfunction is about $2.5 billion. The TAM for our pelvic fixation, which is Degen and deformity, is about $1 billion. The trauma market is about $300 million. SI joint dysfunction is continuing to be the biggest market for us. Let's start with that. Number two is when you think about the growth, as I mentioned, it's broad-based with strong double-digit growth across all the modalities, which includes SI joint dysfunction. When you think about that business, we've got new products that we've announced over the last few years.
You had TORQ that came out in 2021, which has been a key driver of growth in the SI joint dysfunction market in 2024 with the introduction of Intra, as well as our foray into interventional. That's been a nice accretive growth driver to the surgeon business within SI joint dysfunction as well. The new product that we want to launch, we plan to launch in Q1 of 2026, is also targeting the SI joint dysfunction market. That business has been doing really well. As I mentioned, growth is coming from existing products that are in the market, but it's also accelerating with the new launches that we did in 2024. Those launches targeted SI joint dysfunction, deformity, Degen, as well as trauma.
Got it. I do want to get into a little later, a little bit more on the interventional strategy. But let's stick with kind of the financials and maybe talk about guidance. So obviously, you talked about the strong Q1. So you had a $2 million beat. You raised the high end by $2 million. So midpoint, let's call it a million. Is that conservatism? Is there anything else that we should be thinking about in the second, well, I guess more than the second half, the final three quarters of the year that we should be contemplating and why maybe you're not as aggressive with raising guidance despite the strong Q1?
Yeah, no, thank you, Craig. We tend to be very thoughtful about how we set guidance. That's always been the premise for us. When you think about the first quarter performance, it was strong across the board, as I mentioned. We feel really good about the business, not just for the rest of 2025, but even going forward. Because several of the tailwinds in the business that have been around, they're secular. They're specific to SI-BONE. For example, the technology lead that we have with the products that we have in our platform, that's number one, that's specific to SI-BONE. Number two is we're still in the early stages of capturing the physician enthusiasm for the newly launched products. As we put out more surgical capacity, we'll be able to capitalize more on that demand.
Number three is we're also in the early stages of driving density across our physician base, but also are continuing to see strong levels of engagement as we launch out these products and roll them out. Number four is the reimbursement tailwinds, whether it's the NTAP for TNT that's proposed or the TPT for Granite. Those are really strong tailwinds that should allow us to continue to drive strong growth over the long term. When you add on to it the new products that we want to launch, the first in Q1 of 2026, and the second one is the BDD product that we have, which is our third BDD product. The tailwinds are strong. They're secular. We're still early in the year, and given the macroeconomic backdrop, we thought it was prudent to sort of be thoughtful about how we set expectations.
We'll be able to update that as we go through the year, having a few moments in there about.
Okay. I'm going to push it a little bit. But the cadence for the year, let's say, the street is expecting Q2 to be, I think it's up 2%, maybe down 4% in Q3, up 16%. It's similar to what you guys have seen in prior years. One, I guess let me start with, has the street kind of interpreted your comments or your expectations for the rest of the year appropriately?
Yeah, so I won't comment on the street model, but the way we've looked at our business is we've transformed into a platform. Part of the seasonality is impacted by the timing of launch and rollout of new product. That's number one. Number two is some of the markets that we've entered with deformity and trauma, they're less suspect to out-of-pocket deductibles because those aren't really as elective procedures. When you think about the way the business has evolved, Q1, like I said, is sequentially mid to high single digits decline from Q4. What you've seen is that decline has become a bit more moderated. You're sort of seeing low single digit decline in Q1. What you're seeing is sort of the sequential step up and the variability between Q1 and Q2 tends to be moderated as well because of that.
Q3 is an interesting quarter for us always just because there's some macro seasonality built into Q3, which is vacation schedules as well as surgeon and industry conferences. We are being very thoughtful about setting expectations for the third quarter. What we've seen in the past is we've worked through that with just the momentum that we have in the business. We think that's an appropriate position to take right now. We expect Q4 again to be a strong quarter for us.
Got it. Okay. Let's move to maybe the financial piece. You mentioned gross margin was close to 80%. I think that came in a little bit higher than expected. I mean, I guess I really have the same comment on the guidance for the year, which I believe is 78%. So obviously implies a little bit of a step down. There are factors I know that you'll kind of run through. But again, should we think of that as conservative? Or what are the factors that really would drive that to be lower than where you started the year?
Yeah. So again, really pleased with how the gross margins are playing out at close to 80%, which would make them industry leading. We did see an 80 basis points improvement in the gross margins as well in the quarter. Now, when you think about the puts and takes on the gross margin side, the outperformance on the gross margin was because of two factors. The first was ASP being better than what we expected. Part of that is the product and procedure mix. You had a lot more foreign plant cases being performed than we had in our guidance. You had better ASP. And then we've been working on some streamlining initiatives on the supply chain side. You saw some of that benefit flow to the P&L. Now, again, it's the first quarter. We want to see how it plays out for the rest of the year.
In terms of what's implied in our guidance is, again, we took a thoughtful approach to our guidance where we've assumed sort of a low single digit ASP degradation as we go through the year. Part of that is going to be driven by the procedure and product mix, especially as we continue to see demand accelerate in trauma and in degenerative spine. Those tend to be lower ASP procedures. That's number one. We're not assuming the upside potential from additional deformity procedures with foreign plants. You might have some offset there. The second piece is, again, going to the product mix. If you have more Granite in the P&L, it tends to be a bit more expensive from an implant standpoint. That could impact COGS. The third piece being a higher depreciation from new surgical capacity being put out there as we progress through the year.
That's going to have an impact. What we've not put in there is the benefit, like I said, from potential ASP upside of foreign plants and any additional benefit from our supply chain efficiencies that we may see through the year.
Got it. That's helpful. You guys have done a very good job over the last several years of improving profitability. You mentioned EBITDA positive in Q1, second straight quarter. How should we think about positive EBITDA for the rest of the year on a quarterly basis? You did raise OpEx growth to 10% from 9% in your guidance. You'll have some more spend, but it seems like you're still going to deliver some of the leverage. Maybe just talk about some of the things that you've done over the last couple of years that have kind of brought you to this point. Specifically, how we should think about 2025 and kind of how that plays out through the year. I'm going to ask you about 2026.
Yeah. Our operating leverage over the last three years has been linear to our top line growth. If you look at our business throughout the pandemic, we continue to make investments in building out the commercial infrastructure, in building on the operating infrastructure in anticipation of the new product launches that we had coming. What you've seen is you've seen the business inflect really well on consistently driving good operating leverage, which is revenue growth exceeding operating expense growth. Even in Q1, that metric was 3x. Our revenue growth rate was 3x our OpEx growth rate. We feel really good about the leverage potential in the business. In terms of the rest of the year, we do have a lot of R&D work going on for the two products that we have in the works right now.
There are others that are in different stages of development. You will see R&D be a little bit more elevated. Sales and marketing is just variable costs related to higher commissions with the revenue outperformance. You will see that happen as well. G&A, we have bumped it up a little bit just because we saw it run a bit hot in the first quarter. Even with all of that, if you think about the leverage for the year, you are targeting about 1.75 revenue growth to OpEx growth, which is quite healthy. Once you think about beyond that, our algorithm right now is sort of to think about 2025 as a good proxy to be between 1.5-1.75 x OpEx leverage, which is quite healthy. That should translate into good Adjusted EBITDA margin expansion in the future.
Got it. Maybe just a little bit more on EBITDA. I think the street's at $3 million for full year 2025. I think it's still improvement. I think it's 500 basis points of improvement over the prior year, but less than what you have been delivering. I mean, is there anything? I appreciate the comments on the $1.5, the $1.75 this year, $1.75-$1.75 going forward. Any other considerations? I guess the question is, what's your ability to drive some potential upside to that number in 2025? Would any upside then be reinvested in some of the R&D projects or other expenses that you may have?
Yeah, I think if you think about our business, right, we're really focused on driving profitable growth, the emphasis being on growth. If you look at our business today, the areas where we're not going to compromise investments is R&D and clinical. That's been the cornerstone of our growth. Number two is we do expect to expand our commercial infrastructure. We would like to get to about 100 territories over the next 12 to 18 months. That will require investment as well. On the G&A side, you will continue to see some leverage. Being able to get 1.75 leverage is quite healthy, in our opinion. We're going to continue to see that leverage expand as the top line grows faster.
Yeah. On 2026, first, I mean, do you think you can get cash flow positive any quarter in '25? You guys have talked about maybe a year lag between EBITDA positivity and then cash flow break-even. Should we assume that you can get there in 2026?
Yeah. So we've got two consecutive quarters of Adjusted EBITDA break-even at this point. Our algorithm, given that we're an asset-light business, our CapEx footprint is quite limited. With our high gross margins, our algorithm was always 12-15 months after you get to Adjusted EBITDA break-even, you get to free cash flow break-even. Given where we are, we expect to be Adjusted EBITDA positive in 2025. Going forward, we expect Adjusted EBITDA margins to expand. That should translate into free cash flow at some point in 2026.
Got it. Okay. That's helpful. You talked about active physicians in Q1, record level, 300 adds to that number. Obviously, it's a very important physician engagement metric for you guys. You talk about physician density often. You mentioned it again on the call and how utilization has improved. Maybe just talk about what that means, that those figures actually mean to the business for maybe investors that are less familiar with kind of the driver or that as a driver of your top line.
Yeah. No, thank you. So we've actually had four years of double-digit active physician growth. Over the last two years, we've effectively doubled our active physician base. That's a very important metric for us because it provides a good forward look into the potential demand of our portfolio. We expect that metric to continue to grow. Generally, we think about it as your training is a really good indicator of where that growth is going to go. We've had some really strong trainings all through 2024, as we've talked about publicly. Q1, Q2 of last year were record levels of training that we had seen. You're seeing some of that inflect in the active physician base. That's number one. Number two, equally important as we've expanded our portfolio is to focus on going deeper with our call point. We think about density in two ways.
When we think about density in terms of the number of docs that are doing multiple modalities, so multiple procedure types. In Q1, we had a 40% + increase, close to 45% increase in the number of docs that are doing multi-modality procedures. That is a really good indicator for us in terms of driving broader adoption of the overall portfolio. The second density metric that we now look at and share externally is same-store sales. Because what you will see is if you look at the number of surgeons, the denominator has grown at such a healthy clip that at an absolute level, you look at density being flat.
When you look at same-store sales, which is docs that did a procedure in Q1 of last year and that did a procedure in Q1 of this year, you've seen a 30% increase in the number of procedures, 30% higher procedure volume from those docs versus the average. That, to us, is a very encouraging indicator as well. One, we're seeing more docs being part of the same-store metric. Number two is, as they stay with us, they're doing more procedures. Both of these are very encouraging, forward-looking indicators for demand.
You guys have had a stated goal of $2 million revenue per territory. You hit that in Q1. I guess help us understand what that means from reproductivity, reaching that point. How have you gotten there? How much of the physician density is part of that revenue?
Yeah. Our commercial team has actually done a phenomenal job in terms of driving reproductivity. Just about three years ago, we were sub $1 million. And we've hit the $2 million mark this quarter on a trailing 12-month basis. Really proud of that. That's allowed us to see that inflection on profitability as well. Now, what's driving that reproductivity? As you know, we've evolved as we've expanded our portfolio into a hybrid commercial model. A lot of that hybrid focus is more on the deformity and increasingly on the trauma side. What that's done is it's actually created bandwidth for our territory managers to not have to spend as much time in the OR, specifically for these longer procedures, which could be seven, eight hours in case of deformity, and actually be out there training doctors, building new relationships, and driving deeper engagement.
That's allowed us to get to that $2 million productivity number.
Got it. I want to shift to your strategy focusing on interventional docs. I would say a year ago, it was probably viewed differently than it is today. I think the reaction to it was probably not what you guys had expected. Over the past year, you've driven that. It seems you've driven that channel. That's really become an asset for you guys. Maybe just talk about, if we step back, the need to go into that channel and how you're approaching that channel and the results that you've seen over the last year, specifically within that channel.
Sure. Our interventional strategy sort of started about two years ago when we started engaging interventional spine physicians with TORQ. We launched the STACI study in 2023, in July of 2023, which was interventional spine physicians using TORQ to perform SI joint dysfunction procedures. Look, we're the market leader in this space. We want to make sure that we have a comprehensive set of solutions available to all call points so patients can get access to our solution. Our strategy with interventionalists was always to go after a subset of the interventional spine docs that were not passing on patients to surgeons, that were not doing referrals to surgeons and were performing procedures in their ASCs. That has actually worked out well for us. We always approached interventionalists as an incrementally accretive opportunity to what we do with spine surgeons on the SI joint dysfunction side.
That still remains the vast majority of our business is the spine surgeon side. The interventionalists, because we were so targeted and because we led with TORQ and then added Intra in 2024, it's actually worked really well for us because we've become the one-stop shop for interventionalists as well, just like we did for spine surgeons with solutions that can support 27279 CPT code. That is where TORQ plays. The new CPT code, 27278, where our Intra product plays as well. We've worked really hard to train interventionalists on both solutions. What we've seen is TORQ in 2024 was the leader. In 2025, with the launch of Intra, specifically in markets where reimbursement is very clearly defined and you've got interventionalists that want to do an allograft first before they do a metal, it's actually worked really, really well for us.
What that's translated into is a record number of interventionalists working with us and doing our procedures. Q1, again, was a record number of procedures that interventionalists performed in the quarter, surpassing what we did in Q4 of last year.
Got it. You also talked about a new product for interventionalists specifically. I think you said, or Laura said on the Q1 call, that it simplified the workflow specifically for interventionalists. Maybe just, I mean, could you elaborate or expand on kind of what that product is and what solutions or concerns that it could be addressing?
Yeah. As a market leader in the space, our strategy has always been to provide a comprehensive set of solutions that fit the workflow of our physicians and provide them options to address their preference. With TORQ, with iFuse 3D, with TORQ, and Intra, we've been able to provide that. This new product that we expect to launch in Q1 actually builds on our learnings from our 3D technology as well as our application of Intra. I'm not going to talk a lot more about how it simplifies workflow and how it fits in from a code perspective. Our approach has been we want to be reimbursement code agnostic. We want to be able to provide solutions that can support the physicians across multiple reimbursement codes. This will fit right into that channel.
Maybe a follow-up on that. What does it do in terms of attracting interventionalists? Is it more for the interventionalists that are already kind of bought into SI joint procedures? Or is it something where you're going to bring in new interventionalists from sidelines that may have been more apprehensive about doing the procedure?
I think it's going to open up the funnel for interventionalists who've expressed interest in working with us on SI joint dysfunction diagnosis and treatment. Like I said, for us, it's going to be providing them one more alternative to address their preference based on patient's anatomy.
Got it. Okay. You've highlighted a couple of different pipeline products. I wanted to touch on those. I know you're not going to provide a ton of detail. There are two that I know you're not giving detail, but you talk about them a lot and then highlight them. Maybe just talk about the SI joint product. I guess just talk about both and what they are.
Yeah. If you look at the company as a whole, we've really evolved into becoming a platform, a platform of unique solutions that are anatomy-specific, that are based on our understanding of the biomechanics of the anatomy. What that's allowed us to do is get favorable reimbursement in terms of whether it was an NTAP for Granite, whether it was TPT for Granite. Now there is an NTAP potentially for TNT. We've now got a proven track record of coming up with these innovative solutions. We want to make sure we continue to innovate. That innovation for us will allow us to get deeper dialogue with the physicians and go deeper in with them even on the procedure level. A lot of our innovation is coming out of the feedback that we get on unmet clinical needs as well.
I already talked about the product that we want to launch in Q1 of 2026, which is going to be targeted towards SI joint dysfunction, which, again, remains our biggest STEM. Really exciting opportunity there. The next product that we've talked about externally is this product that we got BDD on. We're proud to say that amongst publicly traded companies in the orthospine space, I think we're the only one that has a third BDD product and speaks volumes to our R&D capabilities to be able to identify unique needs and develop those products. We're still in early stages of development of that product. I'm not going to talk a lot about that. It is really exciting. It's, again, addressing one of the most pressing issues within the spine industry.
It builds on our core competencies of 3D printing as well and understanding the biomechanics of the anatomy. It is targeting the same call point. There is a lot of opportunity to get leverage on the P&L, on the call point, and the sales force with this product.
Got it. Helpful. Timing. I think the SI joint dysfunction product you said was 2026. I don't know, when did you say specifically when in 2026?
The SI joint dysfunction product was Q1 of 2026.
Q1.
Is when we expected. This BDD product, we're not going to be talking about timeline. We'll provide updates at future dates. Like I said, we're still in development state. So we've got a lot of work to do ahead of us. But we're feeling good about the progress that we've made so far.
Got it. Maybe last one on the SI joint dysfunction product. Have you submitted that to the FDA? Where are you in that process?
We're still working through the development of that one. More will come on that as we progress through the year.
Got it. I think we have a minute left. So maybe we'll stop it here so we don't go over. But Anshul, thank you.
Thank you, Craig, for hosting us.
Yeah.