Earnings call transcript: Carlsmed’s Q2 2025 revenue surges, stock rises

Carlsmed Inc., a medical technology company specializing in personalized spine surgery, reported a significant revenue increase for Q2 2025, with a 99% year-over-year growth to $12.1 million. The company’s stock rose 1.87% in aftermarket trading, building on its impressive 7.92% gain over the past week. According to InvestingPro data, the stock is currently trading near overbought territory, with analyst price targets ranging from $16 to $21, suggesting potential upside.

Key Takeaways

• Carlsmed’s Q2 2025 revenue grew by 99% year-over-year to $12.1 million.
• The company’s stock increased by 1.87% in aftermarket trading.
• Full-year 2025 revenue guidance is set between $45.5 million and $47.5 million, indicating 67-75% growth.
• Carlsmed continues to innovate with its Aprivo technology platform for spine surgery.
• The company aims to expand its market share with upcoming product launches.

Company Performance

Carlsmed demonstrated robust performance in Q2 2025, with revenue reaching $12.1 million, a 99% increase from the previous year. The company attributes this growth to the successful adoption of its Aprivo technology platform, which has shown an 82.6% reduction in reoperation rates compared to traditional procedures. Carlsmed’s focus on innovation and personalized surgical solutions positions it favorably within the $13 billion lumbar spine fusion market.

Financial Highlights

• Revenue: $12.1 million (99% YoY growth)
• Full-year revenue guidance: $45.5-$47.5 million (67-75% annual growth)
• Gross Margin: 73.4% (down from 75% in 2024)
• GAAP Net Loss: $6.8 million
• Cash Position: $33.5 million, plus $100.5 million from July IPO

Market Reaction

Carlsmed’s stock rose by 1.87% in aftermarket trading, reaching $14.16. This positive movement reflects investor confidence in the company’s growth trajectory and strategic initiatives. The stock’s current price is approaching its 52-week high of $15.2, indicating strong market sentiment.

Outlook & Guidance

Carlsmed projects full-year 2025 revenue between $45.5 million and $47.5 million, representing a 67-75% growth. The company plans to launch its cervical platform commercially in 2026 and continues to develop its personalized spine surgery solutions. Carlsmed is also focusing on integrating artificial intelligence to enhance surgical planning.

Executive Commentary

"We’re aiming to establish the new architecture of surgery, where patient outcomes are not only more predictable but consistently excellent," said CEO Mike Cardoneer. CFO Leo Greenstein added, "We have a great opportunity ahead of us to further capture the market share."

Risks and Challenges

• Decreased gross margin from 75% to 73.4%.
• GAAP net loss of $6.8 million may pose concerns.
• Competitive pressures in the spine surgery market.
• Dependency on continuous innovation and technology adoption.
• Potential economic downturns affecting healthcare spending.

Q&A

During the earnings call, analysts inquired about the seasonality of spine surgery procedures and the company’s pricing strategy. Carlsmed emphasized its commitment to competitive pricing and highlighted its preparations for the cervical platform launch. The company also discussed its investment strategy in artificial intelligence to optimize case design.

Full transcript - Carlsmed Inc (CARL) Q2 2025:

Conference Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Carlsbad Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. As a reminder, today’s program is being recorded. And now I’d like to turn the conference over to your first speaker for today, Caroline Corner, Investor Relations.

Please go ahead, Caroline.

Caroline Corner, Investor Relations, Carlsbad: Thank you, operator. Welcome to Carlsbad’s second quarter twenty twenty five earnings call. Joining me on today’s call are Mike Cardoneer, Chief Executive Officer and Chairman and Leo Greenstein, Chief Financial Officer. Before we begin, I would like to caution that comments made during this call will include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical facts should be considered forward looking statements, including statements regarding the market in which Carlsmed operates, trends, expectations and demand for Carlsmed’s products and Carlsmed’s expected financial performance and position in the market.

Any forward looking statement provided during this call, including projections for future performance, is based on management’s expectations as of today. Carlsbad undertakes no obligation to update these statements, except as required by applicable law. These statements are neither promises nor guarantees and are subject to known and unknown risks and uncertainties that could cause actual results, performance or achievements to differ materially from those expressed or implied by the forward looking statements. For more detailed information, please review the cautionary notes on the earnings materials accompanying today’s presentation as well as Carl Smith’s filings with the SEC, particularly the risk factors described in Carlsbad’s Form S-one and in Carlsbad’s quarterly report on Form 10 Q for the second quarter ended 06/30/2025. I encourage you to review all Carlsbad’s filings with the SEC concerning these and other matters.

These filings, along with Carlsmed’s press release for the second quarter twenty twenty five results, are available on website at www.callsmed.com under the Investors section and include additional information about Carlsmed’s financial results. A recording of today’s call will be available on the Carlsmed’s website by five p. M. Pacific Time today. Now I’d like to turn the call over to Mike to go over the Carlsmed’s second quarter twenty twenty five business highlights.

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Thank you, Caroline, and welcome everyone to Carlsbad’s first earnings call as a public company. Following our initial public offering where we successfully raised more than $100,000,000 in growth capital, I would like to thank our entire team at Carlsbad, our Board, our surgeon partners and our stockholders for joining us in our mission to improve patient outcomes and reduce the cost of healthcare for spine surgery and beyond. We’re aiming to establish the new architecture of surgery, where patient outcomes are not only more predictable, but consistently excellent for every surgeon, hospital, clinic and patient. Now I’m pleased to report that we delivered a very strong quarter with $12,100,000 in revenue in the second quarter, representing year over year growth of 99%. With this strong momentum exiting the first half of the year, we’re on track to deliver between $45,500,000 and $47,500,000 in revenue full year 2025.

Over the past year, we’ve seen a consistent increase in surgeon adoption with 199 surgeon users that have completed more than one procedure using the Aprivo technology platform by the end of the quarter, which is an increase of approximately 72% over the prior year. With nearly 4,000 spine surgeons in The U. S. And an estimated total addressable market for Aprivoo lumbar spine fusions of more than 13,000,000,000, we believe that we have a long runway ahead of us. Our Aprivoo technology platform is the first available solution to provide personalized digital surgical plans and the accompanying of PRIVO interbody implants that are specifically tailored to each patient’s pathology and vertebral bone topography.

With the predictability of the personalized surgical plan and the three d printed Aprivo interbody implants that are personalized to deliver anatomical alignment to the patient, evidence shows a meaningful improvement in patient outcomes. For example, a recent study published by the International Journal of Spine Surgery comparing Aprivos to non Aprivos procedures showed an eighty two point six percent reduction in reoperation rate after just one year for Aprivoo. With the leading cause of revision surgery being misalignment of the spine, we believe the Carlsbad Aprivoo technology is uniquely tailored to address this much needed patient population. To further support adoption of the Aprivoo technology platform, CMS issued three new MS DRG’s that became effective 10/01/2024 for enhanced hospital reimbursement for the Aprivoo custom made anatomically designed fusion devices, which provide enhanced reimbursement for many single level and multi level qualifying Aprivoo procedures at the higher paying MCC level. This translates to an incremental reimbursement for most procedures from $20,000 to $50,000 depending on the complexity of the procedure and the hospital’s MS DRG payment schedule.

This past July, CMS approved an NTAP or a new technology add on payment for a Prevost cervical spine fusion that goes into effect on October 1. This NTAP is expected to provide up to $21,125 of additional reimbursement to hospitals that utilize a Prevost cervical for patients. We believe that we’ve made great strides in the past year in our innovation strategy with our proprietary digital production system. This manages both the upstream and downstream process involved in producing our Aprivoo interbody implant system and enables us to design, produce and deliver the system typically within ten business days of surgical plan approval or less. This represents a decreased turnaround time from more than four weeks to ten business days or less in just the past year.

With our capital light business model, we can manufacture our personalized PRIVO interbody implants on demand and just in time for surgery. With no surgical trays or stock implants, our highly differentiated business allows us to deploy capital directly towards patient centric innovation and commercial growth. We’re not slowing down. We’re continuing to innovate the Aprivoo technology platform for patients needing cervical spine fusion surgery. We recently completed the first personalized cervical fusion with the Aprivoo technology platform and are planning a commercial launch in 2026.

With an estimated 370,000 cervical spine fusion procedures to be performed in The U. S. In 2025, our rapid adoption of the Aprivoo technology platform, compelling clinical data and superior reimbursement, we remain optimistic about our growth for the years to come. With that, I’d like to turn things over to Leo to review our financial performance. Leo?

Leo Greenstein, Chief Financial Officer, Carlsbad: Thank you, Mike, and good afternoon, everyone. Revenue for the 2025 was $12,100,000 compared with revenue of $6,100,000 in the 2024. Our 99% year on year quarterly revenue growth was primarily driven by increased volume procedures performed by our new and existing surgeons, with our average revenue per procedure substantially constant between these periods. Gross margin was 73.4% for the 2025 compared with 75% in the 2024. This modest decrease was primarily driven by expedite production fees charged by our contract manufacturer in the current quarter to meet customer timing requirements and other material costs.

Operating expenses were $15,400,000 in the 2025. This compared with $10,900,000 in the 2024. R and D expense was $4,200,000 this quarter compared with $4,000,000 in 2024. This slight increase was primarily driven by higher personnel costs to support product development and artificial intelligence initiatives, partially offset by lower prototype and materials costs and reduced Compass registry costs following enrollment completion in the 2024. Sales and marketing expense was $7,900,000 this quarter compared with $4,900,000 in the 2024.

The $3,000,000 increase in sales and marketing was primarily driven by additional sales personnel added this quarter and the variable commissions associated with our revenue growth as well as an increase in trade show and other marketing expenses for increased Aprivile awareness with spine surgeons. General and administrative expense was $3,300,000 this quarter compared with $2,100,000 in the 2024. The $1,200,000 increase was primarily due to personnel additions to support our business growth as well as legal, accounting and professional service fees related to our transition to becoming a public company. Our GAAP net loss was $6,800,000 this quarter and was $6,300,000 net loss in the 2024. EBITDA adjusted for stock based compensation was a negative $6,200,000 this quarter and was the same amount in the 2024.

With our planned business growth, we expect improvements to these measures over the next few years as we gain further operating leverage through our make on demand and digital first business model. Moving to our balance sheet, our cash at 06/30/2025 was $33,500,000 In July, we raised $100,500,000 of gross proceeds from our IPO. We believe this provides us with sufficient capital to confidently execute our business strategy and maintain strategic optionality over the next several years. For the first six months of twenty twenty five, our cash used in operating activities was $15,200,000 representing a monthly average cash burn from operations of $2,500,000 this year. This compares to $13,700,000 of cash used in operating activities for the first six months of twenty twenty four.

Our total liabilities at 06/30/2025 were $27,600,000 of which $15,600,000 corresponds to our debt facility that matures in October 2029 with interest only payments until August 2027. With our July IPO proceeds, we believe our balance sheet is in excellent position to drive durable revenue growth through execution of our commercial strategy, while we invest in relentless operational excellence, robust clinical data collection and patient centric innovation. I’d now like to turn to our guidance for the remainder of 2025. With our $22,300,000 sales performance in the 2025, we are providing full year 2025 revenue guidance of $45,500,000 to $47,500,000 representing an annual growth range of 67 to 75% over the full year 2024. With average revenue per procedure of $30,000 expected to remain constant, we expect that increased procedure volume in the prevot lumbar will drive our revenue performance.

With that, I’ll turn it back to Mike.

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Thank you, Leo. We had a very strong quarter as we continue to build the leading next generation med tech company and we’re excited about now being a publicly traded company. Med We will stay hyper vigilant to our mission to improve outcomes and decrease the cost of healthcare for spine surgery and beyond. Thank you. And with that, I’ll turn the call over to the operator for more questions.

Conference Operator: Certainly. And ladies and gentlemen, our first question for today comes from the line of Travis Steed from BofA Securities. Your question please.

Grisha Mahoney, Analyst, BofA Securities: Hi, this is Grisha Mahoney on for Travis. Thanks for taking the question and congrats on the first earnings call. I wanted to ask my first question on utilization. How did you see utilization trend in the quarter as you drive penetration in existing accounts, but also had strong new surgeon adoption? And what’s the difference in utilization between those two?

And how should we think about utilization trends for the rest of the year and also into next year? I have one follow-up.

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Thanks for the question. We had, as you can see, a very strong quarter. We outpaced our plan in new surgeon adds as well as utilization. And really, as we look at our ongoing trends, we’re seeing strong uptake as we continue to roll out our commercial strategy.

Grisha Mahoney, Analyst, BofA Securities: Okay, great. And then just maybe a follow-up on guidance. Any kind of color you want to give as a new public company on how you give guidance and how you’re thinking about the key drivers of those assumptions from here to year end? Thank you.

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Yes. I think as we look at our strong performance in Q2 and our bullish guidance going forward, it’s really driven by our key growth drivers that we put in place, our recent CMS decision in getting the enhanced reimbursement, our continued acceleration in our innovation with the digital production system, shortening our delivery times. And as we continue to expand the platform, we have some recent announcement on cervical, and we believe that this will drive ongoing growth durable in the 2026 and beyond.

Grisha Mahoney, Analyst, BofA Securities: Thanks. Congrats again.

Conference Operator: Thank you. And our next question comes from the line of David Roman from Goldman Sachs. Your question please.

David Roman, Analyst, Goldman Sachs: Thank you. Good afternoon, everybody. Mike, I was hoping you could go into a little bit more detail and help us understand the of procedures where you’re seeing the most common adoption for a prevo. Is there a sub segmentation that your customers are doing across patient types? Maybe just help us unpack some of the growth a little bit from a procedure categorization standpoint.

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Thanks, David. Appreciate the question. And if we give a little bit of historical perspective, we initially launched and targeted our technology and specifically the adult deformity, complex procedures, at teaching institutions. As we’ve expanded and advanced the platform, we’ve gotten expanded indications to degenerative disc disease. And we’re seeing a lot of the growth, really in the short construct fusion.

So blended anterior, lateral, posterior access. And as we look at our prior quarter and continued growth trend, we’re seeing a procedure volume mix between short construct and long construct that more closely matches the market and the patient population more broadly.

David Roman, Analyst, Goldman Sachs: Appreciate the additional perspective. And maybe just a follow-up here on the guidance. I know you provided a full year outlook here, but maybe you could help us think through any parameters that we need to consider with respect to seasonality? And are you willing to make any comments on the $11,000,000 number that’s sitting in consensus for Q3?

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Yes. We’re not at this time giving guidance to Q3. However, as we’ve seen in the industry, there is a seasonality procedure volume for Q3 because it is a busy season for the surgeons in the industry. And appreciate the question.

Conference Operator: Thank you. And our next question comes from the line of Richard Newlitter from Truist Securities. Your question please.

Richard Newlitter, Analyst, Truist Securities: Hi, thanks for taking the questions. Maybe just to piggyback off David’s seasonality question, I guess, maybe asked a different way. Are there any characteristics of your business given the nature of the just in time delivery, the customer base or anything about how you guys are doing things differently that we should be thinking about that would lead to more or less pronounced seasonality relative to the industry? Normally, we think of 4Q as kind of the biggest step up. Is that the right way to think of it as we kind of parse out the back half implied guidance 3Q versus 4Q?

Or is it potentially going to be a little bit more evenly spread for you guys for some reason?

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Yes. Appreciate the question, Rich. Good to talk to you. And this is really early days in the commercialization of our technology. We’ve had really good early traction.

And but when we think about the procedures themselves, the patient population that we treat is the same patient population for spine surgery. So we would anticipate the macro trends of spine surgery procedure to be generally applicable to Carlsbad.

Richard Newlitter, Analyst, Truist Securities: Great. And then, I think you said that your surgeon training was ahead of your internal plan as was utilization per surgeon. Can you just benchmark us? What’s your surgeon installed base or the number of new surgeons that trained in the 2025, however you want to convey that? And then how should we think about the number of docs you plan to train for 2025?

And then anything you want to say going forward?

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Thanks, Rich. And yes, so we did outpace our plan internally through the first half. We had 47 new surgeons added, which got us to 199 exiting the first half. And as we continue to make further investments in our education program, Actually, really excited to talk about some of the education initiatives that we’re doing. We talk about the surgeon population that is really excited about this technology and has given a really great retention rate to us.

We’ve launched our fellows training program, which has been very successful in really training the next generation of future surgeons as well as we’ll soon announce our Center of Excellence that we’ve launched with the program in conjunction with UCSD, which will include now live surgery observation that we can bring surgeons through for the training program.

Richard Newlitter, Analyst, Truist Securities: Okay, thanks. I’ll jump back in.

Conference Operator: Thank you. And our next question comes from the line of Ryan Zimmerman from BTIG. Your question please.

Ryan Zimmerman, Analyst, BTIG: Good afternoon, and congrats on your first quarter here as a public company. If I could ask a little bit more on guidance, Leo, pricing came in a little bit better, I think, than maybe we expected that some combination of multi level lumbar fusions you’re seeing. And appreciate your color on pricing. But maybe what’s underpinning kind of the high and the low end of or what’s the swing factor in that low and high end of guidance there?

Leo Greenstein, Chief Financial Officer, Carlsbad: Yes. Thank you, Ryan. This is Leo. So when you think about our average revenue per procedure, it’s underpinned by a fixed pricing schedule. So what really ends up driving the average revenue per procedure are the levels treated in the patient and from time to time some ancillary items like screws that are part of our overall revenue per procedure.

So on a blended basis as we’ve mentioned, it’s a relatively constant amount quarter over quarter. Historically, it’s been averaging around $30,000 of average revenue per procedure. We expect that to roughly be the same as we think about future growth of the business in the prebuilt lumbar.

Ryan Zimmerman, Analyst, BTIG: Okay. That’s very helpful. And then two other quick ones for me. One, Mike, as you prepare for this launch in cervical, how are you derisking that? What are you doing?

What should investors know as you prepare for that launch in 2026 that you’ve learned from maybe, say, the lumbar launch of APRIVA? And then just one quick follow-up.

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Yes. So appreciate the question, Ryan. Lots of things to talk about on cervical. As we previously reported, we have five ten clearance now on the interbody, both inter fixated, non inter fixated. We recently, just last week, submitted five ten for the personalized cervical plate, which will be both available in a segmental and multi level plate configuration, and anticipate clearance and launch full launch of the platform in the 2026.

With the recent announcement from Medicare that we are receiving a new technology add on payment for the cervical platform that goes into effect Q4. We also have a preliminary feedback from Medicare with the transitional pass through payment that would go into effect in Q1. These having the product, the technology, the advancements we’ve done in the digital production system and the sales force training all in place, will be well suited for a successful launch in the 2026.

Ryan Zimmerman, Analyst, BTIG: Very helpful. And then just last quick one for me, I’ll sneak it in. Leo, you mentioned something about artificial intelligence costs and just NVIDIA is so topical. I’m just curious, is that something you guys have I’m curious kind of if you have a sense of what the cost would be, if that’s additive or anything like that in your P and L, just because I know those things are not cheap. And so just curious kind of if those artificial intelligence costs are going higher, maybe a little more than we was contemplated?

Leo Greenstein, Chief Financial Officer, Carlsbad: No. We don’t expect there to be an investment that disproportionately affects our P and L. Any investment we make in artificial intelligence ultimately translates to the scalability of our business as we think about the increased procedure volume over time and the ability to use our current label for use of artificial intelligence in case design in greater proportion to the number of cases that deploy that technology. So any investment in AI we see an equal or better offset of course in the long term human labor cost for case design.

Ryan Zimmerman, Analyst, BTIG: Yes. Okay. Appreciate taking the questions. Thank you.

Conference Operator: Thank you. And our next question comes from the line of Matthew O’Brien from Piper Sandler. Your question please.

Anna, Analyst, Piper Sandler: Hi there. This is Anna on for Matt. Thanks for taking our questions. Just two from us. So hate to ask another guidance question, but if you look at the back half of the guide, even the high end of the range implies a sequential deceleration in your revenue growth rate.

So I was just wondering if you could sort of

Caroline Corner, Investor Relations, Carlsbad: speak to what’s

Anna, Analyst, Piper Sandler: driving the guide there as it relates to your performance in the first half and what you’ve seen historically? And then I

Ryan Zimmerman, Analyst, BTIG: have a follow-up.

Leo Greenstein, Chief Financial Officer, Carlsbad: Yes. So this is Leo. The law of larger numbers in terms of absolute percentage performance definitely becomes a little higher bar to achieve. But from a nominal dollar perspective, obviously, the growth is quite substantial compared to the 2024. So at the high end of the guidance, of course, 75% growth over 2024 with that $47,500,000 top end of the range.

We see ongoing demand for our business within the Prevost lumbar and of course the cervical opportunity in 2026 combining for yet a larger TAM than the massive one that we currently have within lumbar of over $13,000,000,000 As you recall, we have over 4,000 active spine surgeons doing lumbar fusion procedures of which with our recent additions, we’ve reported 199 active surgeons as of June 30 using a Prevost lumbar. So we have a great opportunity ahead of us to further capture the market share and ultimately a proportion of that TAM that will translate to long term growth in our business.

Anna, Analyst, Piper Sandler: Got it. Thank you. That’s super helpful. And then I guess just switching to reps. I know you’ve mentioned in the past maybe roughly doubling the sales force over the next couple of years.

I was just wondering how long it takes for a rep to reach full productivity and how you see sort of new rep additions as you try to go after more surgeons?

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Yes. I think that’s a great question. And we have a very effective commercial channel. And we really think about it in the three pillars of our business, pre op, intra op and post op. And that’s how we’ve aligned our commercial channel.

And so as we’ve discussed in the past, we do have a hybrid sales force where we have sales agents that are contracted that are in every procedure. And that gives us leverage and broad footprint to be able to service the entire continuity of the procedure. And so we’re able to digitally work with all surgeons in the planning phase and have a very effective sales force that supports the surgeons before they go into the Operating Room. And then in the Operating Room, we’re able to leverage our sales agents to support the cases. And what that does, that gives us broad coverage to be able to go both deeper into current surgeons’ accounts by giving them support through the entire patient cycle as well as the opportunity to scale with our independent sales agent force.

Anna, Analyst, Piper Sandler: Great. Thanks and congrats on the quarter.

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Thank you.

Conference Operator: Thank you. And our next question is a follow-up from the line of David Roman from Goldman Sachs. Your question please.

David Roman, Analyst, Goldman Sachs: Thank you. I appreciate you taking the follow-up. Just one for me. Maybe just to take a step back and contextualize the outlook for the rest of the year in the business model here. And maybe just helpful to reflect on how you tie surgeon adds to future revenue performance.

Is the right way to think about the revenue for the back half of the year? Appreciate that there’s a seasonality component to it. But as we think longer term or the time it takes to get a physician up and running, is Q3 revenue effectively the result of the surgeons you had at really March 31 and the ones you gained over between in the second quarter really become productive in Q4? Like can you help us think about that kind of ramp up your physician or how to tie physician adds to forward revenue?

Mike Cardoneer, Chief Executive Officer and Chairman, Carlsbad: Thanks, David. Yes. And I think that’s a good question. We do have a surgeon based revenue forecast. And as we continue to accelerate our surgeon adds, it does drive the fourth quarter revenues.

So as we really think about the time that it takes to onboard, train a surgeon and then ultimately get to productivity, I think you’re thinking about this the right way and new surgeons adds in the current quarter drives continued revenue scale in forward quarters.

David Roman, Analyst, Goldman Sachs: Great. Thank you.

Conference Operator: Thank you. This does conclude the question and answer session as well as today’s program. Thank you, ladies and gentlemen, your participation. You may now disconnect. Good day.

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