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Hello. Good morning, everyone. Thanks for joining us today. I'm Eduardo Herden. I am part of the Morgan Stanley team. Today I have the pleasure of being joined by Anshul Maheshwari, CEO and CFO of SI Bone. Before we begin, just need to do a little plug for our disclaimers. Please visit morgansanley.com slash researchdisclosures. And with that, let's start with the fun part. Anshule, thank you very much for being with us today So, before we dive into performance, let's start with a big picture question. The company has evolved a lot in the last few years. Could you maybe walk us through that evolution and talk through how you see your products and end markets today? Sure. Eduardo, thank you for having us. We appreciate being invited to Morgan Stanley. It's one of the best conferences we attend every year. In terms of how the company has involved, you're right. If you go back to the start of the company, which goes back to 2008, 2009, we started as a single disease state company, which was addressing a donor disease state with an SI joint dysfunction. We had to build the market. We hadto build clinical evidence. We hadtobuild reimbursement. And we by far are the leading market share owner in the SI joint dysfunction space whether it's on the surgeon side and most recently we've expanded on the interventional side in the last six years what we've done is we've gone from this one disease state one product company to a multi-product platform targeting the pelvic the pelvis and within that we've built out a pelvic fixation franchise which is with granite that was our first breakthrough device product, driving fixation and fusion, the base of deformity and DGEN spine procedures. And then more recently, two years ago, we launched our TNT product, which was a second breakthrough device that was for pelvic ring fractures, for fragility fractures in patients generally, patients who are older with Medicare and poor bone quality. That was our second breakthrough device that we launched specifically targeting towards trauma. Now, as we built that franchise, there were a few common themes there. One, it was understanding the biomechanics of these products that were going into an anatomy that was facing a lot of load. Number two was your sacrum has one of the most poor quality bone, low density bone in a human anatomy. And so being able to drive fixation and fusion required a level of innovation that did not exist before SI bone came out. And number three was because we're going after an unmet need, it was all about clinical data. And then it was about establishing reimbursement. And so we built that core skill set over the last decade and a half, and what you're now seeing us do is take that core skillset and say, what else can we do with it? We are by far the market leader in SI-join dysfunction. We are becoming the standard of care in spinal pelvic fixation. We are becoming a standard ofcare within fragility fractures with our TNT product. What you're now seeing is look at this as a compromised bone franchise, having had the expertise of fusing this low-quality bone in your sacrum, and we're now starting to look at opportunities for patients that have osteoporosis, osteopenia, how can we come up with solutions that help drive fixation and fusion for the patients that suffer from those disease states, still staying within spine and interventional as the core call points. And that's really important for us because we see a lot of unmet needs, areas where you have high failure rates, where we know our technology can improve patient outcomes because of a proven track record. Our product that we've been teasing everybody about for the last one year is this new TAM that we're going after, which actually takes into account all these learnings I just talked about and is targeting a known failure rate in spinal fusion procedures. And we believe this technology is going to have a very significant impact on our TAM. It's going to be a whole new TEM. with the same call point that today works with us on Granite. It's going to have, because it's a third breakthrough device, it's also going to be a third call point and it's going have the potential for new technology add-on payment that we plan to apply for that, assuming if it's approved, will go effective in October of 2027. So that's our first product that's building outside of the pelvis. What we now have also is a pretty robust pipeline of opportunities that we're going after that extend beyond this TAM. Our expectation is, on a very good cadence basis, you will see us come out with new products that are targeting high failure rates in different procedures, again, within Spine and Interventional, at a pretty regular cadence of one to two new TAMs a year going forward. Awesome. That's all super interesting. I certainly will ask a few more questions about the new devices and pipeline. a bit. But maybe before we go into that, let's dive into performance a little bit. So you all have grown a pretty impressive 20% CAGR over the past five years, and you continue to have great updates, including this last quarter, that feel like they're going to keep pushing the company's growth. Could you maybe walk us through some of those updates and how you see them affecting the trajectory? Sure. So we reported our second quarter earnings, and on a year-over-year basis, the worldwide but growth was about 15%. Now, that was worse as a tough cop from last year. If you look at it on a two-year stack, you're looking at high teens' growth rate. On the top line, what was equally impressive was the 19% growth rate we had in our active physician base with close to 720 physicians performing a procedure in a quarter for us. That was a record number of physicians that did a procedure for us, so when you think about what we did, and then we had profitability increase increased about close to 180% improvement in adjusted EBITDA. We were free cash flow, negative $300,000, operating cash flow positive, as well close to $1 million. So all the metrics pointing in the right direction. What we're really excited about is all the other things that we did during the quarter that are going to set us up for a strong fourth quarter going into a robust multi-year innovation and growth acceleration cycle, So starting with working on the DRGs for Granite, which is our pelvic fixation product, that product had NTAP that expired in October of 2025. We'd been working with CMS to get DRG reassignments for that procedure. What we did get, and it was finalized and it goes effective October 1st, 2026, is three new DRGs, which would increase reimbursement from anywhere between $20,000 on the low end and over $50,000 in the high end for procedures where Granite is incorporated as part of the procedure. So that's going to be a really nice tailwind for the business going out. The second thing that we were really excited about was the work that we did with the FDA On this third breakthrough device, we did file the FDA application in June, and that gives us confidence about commercializing the product in the fourth quarter and potentially as early as October to the alpha launch. So that should be a really nice, exciting opportunity for us. And then we continue to make progress on two additional devices that we expect to go into design freeze at the end of this year with the potential to commercialize them in late 27, early 2028. And so our focus has been how do we transform SI Bone from this single product, single anatomy company, into a medical device technology platform where we can now start building technology platforms that have applications around a broad set of opportunities. Very nice. So maybe let's hone in on the install base for a second. I think you mentioned 1,700 doctors, 19% growth year-on-year. What do you think is driving the growth of your install base at that scale? And are there any specific areas of the business that are driving that growth more than others? Yeah, so we're really proud of the physician-based growth that we've seen, I'd say, over the last five years. I mean, in 2023, we had 1,700 physicians, less than 1,800 physicians do a case in a year. And we had over 1,900 physicians do A Case in a Quarter. And a large part of that is an outcome of the innovation that we've done. Our innovation with granite continues to attract more physicians into the fold for pelvic fixation. Our expansion into interventional continues to be a really good driver for us with an SI joint dysfunction. Our launch of our TNT product a couple years ago continues to get strong traction, especially with the partnership with Smith & Nephew on the trauma side as well. What we did see is broad-based growth. So you saw double-digit base growth across all call points. And that is really exciting because one of the hardest things to do is to build a customer base of our scale. We've done that. And now as we put out some of these innovative products, it should allow us to now translate that into higher density, so more cases per physician, because we are going after procedures that these physicians perform today and are aware of the challenges that these procedures pose that we can solve. So let's maybe talk about that a little bit more. So I think you're essentially saying that you're thinking about utilization expansion within your physician base. How should we think of that evolution over time, and how do you look at it today? Because I think today we haven't seen it, but I think we're expecting to see some inflection in the near term, correct? Yeah. So from a utilization perspective, where we see an overlap today is physicians that do SI joint dysfunction, 25% of those physicians are doing another procedure type with us. Generally, it's doing pelvic fixation with granite. Now, as we add more product, it will give us an opportunity to be able to do more cases with those docs. And that's what's really exciting for us. So these new products should not only drive the density, but they should also allow us to continue to increase the physician-based number as well. Because if you think about the physician base, there's going to be two levers to the physician base. The first one is you have some episodic physicians. Those that use a product on an episodic basis, you have churn. Generally within the SI joint business where you're not regularly diagnosing patients. With this new product launch, because we're going after a procedure type that these physicians perform all the time in the spinal fusion side, we think you will be able to see a reduction in churn. So that should allow you to drive just an increase in physician base to start with because your denominator is not shrinking first to then grow. And then with these new products that we're putting out there, we do expect more physicians to adopt that technology. Today, granite, if you think about the scope of granite there's about a half a million spinal fusion procedures done in the U.S. Only 130,000 of those, say less than a third of those end at the sacrum or go to the pelvis, right? So that's the subset of physicians we're working with today. With these new products we want to put out there, we can go after procedures that are not ending at the sacrum of the pelvis. So that allows us to also grow the physician base while also go deeper with the physicians who use us today. Right. Got it. So maybe pivoting towards reimbursement, I think you mentioned it a few questions ago that you had some great news with some new DRGs recently. Maybe can you provide an update and give a little bit more color on where you landed and how we should expect it to impact the business? Yeah, so I'd say we've got multiple reimbursement tailwinds going on in the business. So let's start with the DRGs first. these DRGs will impact any procedure where Granite is used. You will be automatically be able to build to these DRG. Now, unlike NTAP, which is only for Medicare and which is up to three years, these DRGS are more durable. And on a rolling basis, commercial will also adopt these DRGs from a payment standpoint. So it really expands the opportunity for Granite both across commercial, and Medicare. So that's a huge advantage. Now, when you think about how this will impact the business, it's going to impact the business in the following ways. Number one is we know biomechanically two points of fixation. So using two granites on either side is the best way to get fixation and fusion. So we think there should be an uptake in physicians that are doing two points of fixedation because now economics is no longer a challenge. That's number one. Number two is You've got certain physicians, and generally on the commercial side, who will be more selective in using granite because of the reimbursement because there was no end cap for commercial. Over time, as commercial picks up, the reimbursements of these new DRGs, that friction goes away as well. And then with some of the new sites that we're going after, you've got some pushback on the ASP, and we've been very disciplined in maintaining our ASP because we know we've being working on these DRGs. So we think those opportunities will also open up for us because physicians do want to use the product. When you couple that with the clinical data that we have with Paula, where we've demonstrated no school loosening, no breakage of granite, we're really well positioned to accelerate the penetration of granate within deformity and DGEN. So that's on the DRG side with granite which should be a huge tailwind for us starting October 1st, but we think it will have a more meaningful impact as you go into 2027 as the hospital systems and health care systems get educated and update their own internal workflows to adopt these DRGs. The second one is this new product that we want to put out in the fourth quarter. That product is a breakthrough device. It has been grandfathered in because it's been a breakthrough advice already and will be eligible for NTAP, which we plan to apply for, and assuming that's approved, that would be a new technology add-on payment that will go effective October 1st, 2027. So that should be a really nice tailwind for our business there. You already have the NTAP for TNT of up to $4,000 for trauma procedures. So you've got that as a nice tailwing extending into 2027, and then the last piece is on our SI joint dysfunction side. There is the proposal to increase the payments for ASCs and OBLs for 278 and also for 279 between $1,000 and $2,000, and that would be a nice tailwind for that business, assuming it's approved effective January 1st, 2027. And there is also the proposal for 27279 to be eligible for office-based lab procedures. And with the intra-platform that we've built over the last three years, we're really well positioned to service the OBL market and the ASC market for pain or surgeons, and then you've got torque and 3D that's very well suited for the ASCs and outpatient offices. So a lot of tailwinds, it's very unique to have a company at our scale to have that many commercial tailwind, new product tailwind and also reimbursement tailwind. Yep, so maybe let's talk about new products. You mentioned your third breakthrough device. Maybe give us a bit more detail. What is the TAM? How is it different than everything you've done so far? What impact can we expect on 2027? Anything that you can give us? Yeah, I'm not going to talk about the TEM yet. We've been deliberately quiet about the time opportunity or talking much about the product, mostly for competitive reasons. And we'll be able to talk about it once we get FDA clearance. Now, like I said, this is our first product outside of the pelvis. It's a whole new time. It is by far one of the largest unmet needs and an area of failure within spine fusion. And if you think about our history, we've built our history on addressing some of the most challenging issues in any procedure. And this is no different than that. Like I said, what's exciting is it's after the same call point that today uses Granite. So when we think about the advantages this product has vis-a-vis Granite, which has been a very successful product for us, it's been one of the fastest scaling products for us is when we launched Granite we had to build an agent network from a case coverage standpoint. We today have 300 agents that we work with that carry granite. So this product will have access to those agents. With granite, we have to build our presence in academic institutions and also build our presents with physicians who are doing deformity and detent procedures. This product will benefit from that. Because it is a known challenge within spine, We've made sure that it fits the physician workflow. There is no real training requirement for this product. It is literally a trade review, which is what Granite is today. Granite ist literally a trader review where you walk in, you show a physician the tray, they understand the workflow right away, and they want to use the product. So that's a really exciting opportunity for us from that perspective, that you should see a much faster ramp for this project once we get to alpha and beta launch. Great. So maybe you've spoken about the Granite launch, but maybe can we talk a little bit about the Intra product platform and how that launch has gone and how the interventional market is going? Yeah, so we entered the intervention market about three years ago, and part of the reason for that was we've always worked with interventional, but more from a referral pattern perspective, back to surgeons. And we do know there's a subset of patients that are with interventionists interventionalists that they want to be able to treat. And so three years ago, we started working with them on TORQ. It was a product that had been out since 2021, targeting towards surgeons. We started working mit interventionalist on that. We actually launched our STACY study, which showcased the safety and efficacy of interventionalism using our TORQL product, and it had good, no SEAs reported, and it was actually really good outcomes. And since then, we've actually launched our intra-platform, specifically targeted towards interventionalists. And that platform actually has a couple of Alicraft solutions, our intraX, our intraV. And most recently, we launched our interTI product that's targeting interventionalist that are in markets where reimbursement for 27278 doesn't exist or is not covered because of LCDs. And that product has done really well for us. So as a whole, the intra-franchise is doing really well for us. Interventional has been a key growth driver for us within the SI joint dysfunction phase. Surgeons still account for the majority of the business, but we're seeing a really good adoption from an interventional standpoint. And we basically use the same playbook that we did with surgeons, which is we wanted to become a one-stop shop comprehensive solution set for surgeons. So we started with the triangle, we added torque, and we've done the same thing with interventionalists. We started with Torque, then we added a couple of allograft solutions, now we've added a metal solution. And our focus is how do you make it simple, how do You make it reproducible, and how do We make it site agnostic? And We've done that very successfully. Very nice. And any lessons learned that can be applied elsewhere as You maybe look to launch Your third breakthrough device or any other products that are maybe in the pipeline? I think what you're going to see us do is you're going to launch products that actually incorporate all the lessons that we've learned. We know changing medicine is one of the most difficult things. We know people are looking for better outcomes. We knows people are focused on healthcare economics. We now adoption accelerates when it's a simplified workflow. What you're are seeing us focus on is we've got this significant, I'd say, a pretty substantial list of opportunities that we're going to go after where there's a known failure rate. We're going to be focused on solving them with unique solutions. We are not going to be a me-too product company. We will maintain our Acid Light Model. We'll maintain our high ASP. We're going to focus on Spine and Interventional. And we're going to focus on making sure that it is within the workflow that they're used to. Understood. And I think you teased this out at the beginning of the conversation, but what should we expect in terms of pace of innovation of new product introductions? Yeah, so we earlier this year talked about this being one of the most exciting phases for SI bone as we transition from beyond the pelvis and we internally call it super cycle and we've externally talked about it being an innovation super cycle and what that entails is sort of looking at potentially at least if not one two products a year at a regular basis each of them targeting a new TAM as well because that's really important we will add incremental technology as we need but what we're trying to do is build platforms that can have broader applications and that we can expand. So, for example, granite was a platform with the 10-5 granite, a larger diameter granite coming out that was targeting D-gen, deformity, sorry, and then the 9-5 smaller diameter targeting DGEN. We did the same thing with the TORC platform, which is we launched with TORCs that was SI joint dysfunction with some application in trauma, then launched the TNT, I've used TNT TORCS that was targeted in trauma specifically. we did the same thing with interventional with the intro platform so what you're going to see has come up with platform technologies and then continue to build new applications and new technologies within that at a pretty regular cadence got it so maybe let's put all together maybe in terms of you know we've spoken about a ton of tailwinds in the business from innovation reimbursement um you know how should we think about growth going forward given all of these tailwinds that you have? Yeah. I mean, look, our growth over the last five years, if you look at our CAGR, was about 20%, like you said at the start of the call. And we believe we are entering a very exciting phase of innovation where we want to be able to deliver strong, durable growth. I'm not going to provide guidance at this point. We're not going put out a long-range plan on what that growth could be. But when you think about the durability of the tailwind, whether it's the existing platform, that will benefit from better reimbursement and continued adoption growth. When you think about the new technology that we want to put out in the fourth quarter, when you think of the new technologies that we're starting to talk a little bit about that will commercialize in late 27, early 28, when you're thinking about the commercial footprint, which will organically grow as we expand our own direct footprint, but also see leverage from our agent network on the spinal pelvic side, but also on the trauma side with Smith & Nephew, And then you've got the reimbursement tailwinds. These are all long-term durable tailwind. And so we feel really good about the setup that we have to accelerate growth, but then also to make sure that it's durable. And then how do you then take that durable growth and translate that into high gross margin dollars and expanded profitability and free cash flow? And understanding you're not going to give guidance on this podium, but anything that you can tell us on how we should think about 2027? I'm going to talk about 2026. 2027, when I get into 2027 right now, focus is be heads down, deliver up Q3 that's strong, and then focus on the new product launch in Q4. If you think about where consensus is, that should give you a good indication of where 2027 could land up. Fair enough. Maybe as you think About gross margin and the gross margin trajectory, you have some new product launches. is, how are those going to affect your gross margins? Yeah, so let's start with the baseline. We have industry-leading gross margins at close to 79.5%. And so we're really proud of that. That's actually come up since the last 18 months. It was sort of closer to 78.5%, 79%. So we've done a good job in getting gross margins up. Now, when we think about the next few years, what we've talked externally is gross margins sort of ranging in that 77%, 78% range. Most of the impact coming from non-cash-related gross margin implications, which is depreciation. When you're putting out new products, you're going to put out surgical capacity. That surgical capacity is going to hit your depreciation before you really see a ramp from a terms and asset utilization perspective in the outer years. So you'll see some of that. But what's exciting for us is the operating leverage you can get in the middle of the P&L, despite giving up some of the gross margin, is quite significant, and you should see a pretty significant drop through to the bottom line from an adjusted EBITDA standpoint, but eventually from an EBITD stand point and operating earnings standpoint. Now, we're equally focused on, as we scale these new products, that you should have operational efficiency initiatives that will allow you to bring the cost of these products down. Because when you start a new product launch, your cost of the implants is much higher because it hasn't scaled. Over time, you make enhancements that get those costs down to now. My guidance expectation is the median in terms of 77% to 78% does not account for benefits from those activities that could drive upside. Got it. And so maybe, you know, you touched on profitability, and SI Bone is sort of in the unique position that not many in MedTech can say. You've had both high growth and emerging profitability at the same time, and usually there's a tradeoff there. So how have you been able to achieve both at the same time? I think for us it starts with innovative growth. We've grown our way to profitability. If you look at our profitability and leverage trajectory, it's been pretty linear to our top-line growth. And there are certain unique themes about our business that we hold as gospel. Number one is making sure we have a differentiated platform. That allows us to charge a premium ASP. that allows us to maintain our industry-leading gross margins. And because we are so differentiated, we can leverage this hybrid sales model, which allows us a lot of operating leverage in the middle of the P&L. And then you tack on, so that's what gets you to your profitability side. And then, you tack a focus on being asset-light from a business model perspective, make sure we're not heavy working capital, heavy capex business model, which is what traditional spine has been plagued by. you can see that translate into pretty significant improvement on a free cash flow basis as well, and we've been able to demonstrate that. So I think you'll see that continue to evolve. We've publicly talked about operating leverage being sort of in that 1.2 to 1.7 times, depending on where we are in the innovation cycle. But if you extrapolate that, you get a significant amount of dollars dropping to the bottom line over the medium term. Got it. And anything that you can tell us in terms of how we could think about long-term profitability? Like I said, from our perspective, I'm not going to give you guidance on where long-term profitability goes, but again, you think about the operating leverage in the business, the potential for durable, strong top-line growth, and sort of a sustained gross margin base, you should be able to see a pretty significant ramp in operating profitability over the medium term. Perfect. And I think maybe just with our last minute or two here, what do you think is the most underappreciated part of the story that you'd want investors to take away from SI Bone? I'd say actually there's a growing appreciation as we've talked to investors throughout this year on SI Bone not being a single disease state, single anatomy company, and actually being a medical technology platform that's going after significant markets with several unmet needs. They're realizing the uniqueness of the platform, which is different from traditional spine. Like I said, it's a high ASP, high gross margin. less commoditized, high clinical evidence-based business that's allowing us to do things that are atypical of companies in our space that is being able to inflect on profitability, continue to expand profitability, inflect in cash flow, expand cash flows, all while continuing to invest in growth. And I think that's starting to resonate a little bit more with investors, and it will continue to evolve as they see these new products being put out there. Excellent. Well, thank you very much for taking the time. And we appreciate you being at our conference. Of course.