Treace Medical Concepts — Third Quarter 2026 Earnings Summary

Financial Performance

• Reported third-quarter 2026 revenue of $48.3 million, a 4% decrease from $50.2 million in the same period of 2025.
• Excluding sales to stocking distributors, bunion kit sales volume increased, resulting in mid-single-digit revenue growth compared to Q3 2025.
• Gross profit was $38.4 million in Q3 2026 compared to $39.7 million in Q3 2025; gross margin improved to 79.5% from 79.1%.
• Total operating expenses decreased 10% to $49.9 million in Q3 2026 from $55.4 million in Q3 2025, driven by targeted expense reduction initiatives.
• Net loss narrowed by 23% to $(12.6) million (or $(0.19) per share) in Q3 2026, compared to $(16.3) million (or $(0.26) per share) in Q3 2025.
• Adjusted EBITDA improved by $2.9 million to $0.3 million in Q3 2026, compared to a loss of $(2.6) million in Q3 2025.
• Year-to-date cash usage decreased by 53% or $9.7 million compared to the same period in 2025.
• Cash, cash equivalents, and marketable securities totaled $39.8 million as of September 30, 2026.
• Long-term debt, net, was $56.3 million as of September 30, 2026, compared to $55.6 million as of December 31, 2025.
• The company has an existing credit facility providing up to $115 million of additional borrowing capacity subject to conditions.

Guidance and Future Outlook

• Updated full-year 2026 revenue guidance to $206 million–$210 million, representing a 3% to 1% decline compared to full-year 2025 (previously $204 million–$212 million).
• Updated full-year 2026 Adjusted EBITDA loss expectation to $1.0 million–$2.0 million, an improvement from the previous range of $3.0 million–$5.0 million (full-year 2025 loss was $3.9 million).
• Reiterated expectation for a 50% reduction in cash usage for full-year 2026 compared to full-year 2025.
• Guidance assumes continued case volume growth and improving year-over-year revenue growth rates.
• Management anticipates building momentum and delivering stronger growth to finish the year.

Business Segments and Product Lines

• Achieved double-digit procedure volume growth in the third quarter.
• Approximately 45% of Lapiplasty® surgeon users now incorporate one or more of the three new bunion systems launched in Q3 2025, up from 40% in Q2 2026.
• Announced 5-year results of a prospective, multicenter study demonstrating long-term positive outcomes for the Lapiplasty® procedure.
• Revenue mix shifted toward lower-priced minimally invasive products, contributing to the overall revenue decline despite volume growth.
• New product offerings include SuperBite™ compression screws, expanding the portfolio for broader surgeon customer penetration.
• The company continues to expand its footprint with the SpeedPlate® rapid compression implant platform, IntelliGuide® digital solutions, and systems for midfoot deformities and fusions.

Market and Competitive Landscape

• The company is gaining market share driven by the adoption of its comprehensive range of bunion systems and new technologies.
• The bunion market affects approximately 67 million Americans, with an estimated 1.1 million annual surgical candidates.
• Management notes evolving surgeon and patient preferences for minimally invasive bunion solutions as a key market trend.
• The company faces competition and is actively defending intellectual property rights through patent infringement and unfair competition suits.

Risks and Challenges

• Revenue decline was driven by a shift in mix toward lower-priced products and lower volume of bunion procedure kits sold to stocking distributors.
• Risks include increased competition, supply chain disruptions, and single-source or foreign supplier dependencies.
• Macroeconomic uncertainty and soft consumer sentiment may lead to lower patient demand for elective bunion surgery.
• Potential impacts from changes in tariffs, trade policies, and protracted government or infrastructure shutdowns.
• Risks related to cybersecurity attacks, including those facilitated by artificial intelligence.
• The company faces securities class actions and potential third-party intellectual property infringement.
• Actual results may differ from forward-looking statements due to high variability in excluded non-GAAP items.

Management Commentary and Tone

• CEO John T. Treace expressed encouragement regarding the third-quarter performance, citing accelerated double-digit case volume growth and continued market share gains.
• Management emphasized a balanced approach of disciplined investments in the product pipeline while focusing on profitability and reducing cash usage.
• The tone indicates confidence in the ability to penetrate a broader range of surgeon customers' procedures with new technologies.
• Management highlighted the success of the expanded bunion portfolio and the milestone of the 5-year Lapiplasty® study results.

Other Key Points

• The company reported a net loss of $(46.4) million for the nine months ended September 30, 2026, compared to $(49.6) million in the same period of 2025.
• Adjusted EBITDA for the nine months ended September 30, 2026, was a loss of $8.7 million, compared to a loss of $10.1 million in the prior year period.
• Share-based compensation expense was $6.9 million for the quarter and $21.4 million for the nine-month period.
• Litigation costs related to intellectual property lawsuits were $2.7 million for the quarter and $7.0 million for the nine-month period.
• Restructuring costs were $0 for the quarter and $1.0 million for the nine-month period.
• Accounts receivable decreased to $30.2 million from $42.2 million as of December 31, 2025.
• Inventory increased to $42.3 million from $36.0 million as of December 31, 2025.
• A conference call and live webcast were scheduled for November 6, 2026, at 8:00 a.m. ET.