Shoulder Innovations — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net revenue for the third quarter of 2026 was $16.2 million, a 38% increase compared to $11.8 million in the third quarter of 2025.
• Gross margin improved to 78.5% in the third quarter of 2026 from 76.2% in the third quarter of 2025, driven by higher average selling prices and cost reduction programs.
• Average selling price of implant systems increased 2% year-over-year to $7,616 in the third quarter of 2026.
• Selling, general and administrative (SG&A) expenses increased 14% to $17.1 million in the third quarter of 2026 from $15.1 million in the prior year period, primarily due to commercial organization investments and higher variable selling expenses.
• Research and development (R&D) expenses increased 107% to $3.2 million in the third quarter of 2026 from $1.5 million in the prior year period, attributed to new product development including the InSet Neo robotic platform.
• Operating loss remained unchanged at $7.6 million for the third quarter of 2026 compared to the third quarter of 2025.
• Net loss decreased to $7.0 million in the third quarter of 2026 from $8.7 million in the third quarter of 2025, primarily due to changes in the fair value of preferred stock warrant liability and convertible notes in the prior year.
• Adjusted EBITDA loss narrowed to $5.5 million in the third quarter of 2026 from $7.5 million in the third quarter of 2025.
• Cash, cash equivalents, and marketable securities totaled $92.3 million as of September 30, 2026.
• Long-term debt was $14.8 million as of September 30, 2026, compared to $14.9 million as of December 31, 2025.

Guidance and Future Outlook:

• Full-year 2026 net revenue guidance was raised to $68 million to $70 million, representing approximately 44% to 48% growth over full-year 2025 net revenue.
• The new guidance range replaces the prior guidance of $67 million to $69 million, which represented approximately 42% to 46% growth over full-year 2025.
• Management plans to submit the InSet Neo shoulder-specific robotic platform for FDA approval in 2027.
• The company expects to continue building momentum into 2027 with a deepening product pipeline.

Business Segments and Product Lines:

• Total implant systems sold in the third quarter of 2026 were 2,126, an approximate 34% increase over the third quarter of 2025.
• The company completed the first surgical cases with InSet® Go, its next-generation InSet® anatomic glenoid implant.
• Received FDA 510(k) clearance and initiated commercial launch of the N-22 humeral head, extending the N-22 line for patients with metal hypersensitivity to anatomic procedures.
• Expanded the commercial leadership organization to support new territory expansion.
• Promoted Jon Osborne to Chief Commercial Officer with responsibility for all elements of the commercial organization.

Market and Competitive Landscape:

• The company is a commercial-stage medical technology firm exclusively focused on transforming the shoulder surgical care market.
• Revenue growth was driven by adding new surgeons ahead of plan and higher utilization among existing customers.
• The company maintains a differentiated approach to shoulder surgical care to grow market share.

Risks and Challenges:

• The company has a history of significant net losses.
• Risks include the inability to compete successfully against existing or potential competitors.
• Potential risks involve the failure to develop, retain, or expand an effective dedicated commercial leadership team.
• The business faces risks associated with litigation, including dependence on intellectual property protection.
• Future results are subject to risks regarding third-party manufacturers, demand forecasts, and federal and state healthcare laws.

Management Commentary and Tone:

• CEO Rob Ball stated that third-quarter results reflect the consistency of the commercial model, citing added new surgeons, volume growth within the existing customer base, and a moving product roadmap.
• Management expressed conviction in the ability to grow market share through a differentiated approach.
• The tone regarding the product pipeline was positive, noting it has "never been deeper" heading into the final quarter of 2026.
• Management highlighted partnerships extending the platform's capabilities, including bespoke solutions for complex revision cases.

Other Key Points:

• Announced an exclusive partnership with ALM Ortho to develop additively manufactured solutions for severe deformity and complex revision cases.
• Announced a settlement agreement with Catalyst OrthoScience Inc. to resolve all outstanding patent litigation between the two companies.
• The company hosts a conference call on November 5, 2026, at 4:30 p.m. ET to discuss results.
• The company utilizes Adjusted EBITDA as a non-GAAP financial measure to evaluate performance, excluding interest, taxes, depreciation, amortization, and stock-based compensation.