Oct 27, 2026 earnings call — Super cycle product launches and OPSB expansion
Company raised full-year revenue guidance to $270 million to $273 million after record Q3 revenue of $72.7 million.
Revenue $0.1B (est $0.1B) · EPS $-0.23 (est $-0.21)
Key quotes
"We are extremely encouraged by the revenue contributions of our recent product launches. Such as 3P Hip, Traxeo, and VerteGlide to the third quarter performance."
"OPSB once again delivered an outstanding quarter. With growth above 20%."
"Product launches into EMEA enabled by recent EU MDR approvals are ongoing, and we are still in the early stages of the rollout."
Analyst Q&A 8
EBITDA and cash flow outlook
Q (Caitlin Roberts · Canaccord Genuity): They asked how adjusted EBITDA and free cash flow will reach guidance for the rest of the year and where leverage will come from.
A: Management said higher sales and marketing and commissions drove Q3 costs but some commission timing will reverse in Q4. They highlighted investments in clinics and new products, and said year to date EBITDA improved to $16 million from $10 million last year. They expect to generate about $6 million of positive cash in Q4 and are confident free cash flow will reach breakeven or better for the year.
"So very, very confident that the free cash flow will absolutely get to breakeven or better for the year." — Fred L. Hite
Q4 conservatism and 2027 setup
Q (Frederick Wise · Stifel): They asked why Q4 guidance midpoint might be conservative despite strong product launches and market share gains, and what to expect for 2027 growth.
A: Management said they are keeping guidance conservative and not counting large one-off set sales or past high set sales into guidance. They said new product launches will favorably impact 2027 but they will not assume one-time set or kit sales when forecasting to manage profitability and cash flow.
"Again, we are not gonna count on that and include those dollars in our guidance." — Fred L. Hite
Profit impact of new products
Q (Matthew O'Brien · Piper Sandler): They asked how the innovation pipeline will improve profitability and what drivers (mix, pricing, set efficiency, scale) will matter; and asked about clinic expansion plans and targets.
A: Management said the profitability benefit will come from higher ASPs, better implant margins, contracting leverage and more efficient instrument sets that return cash faster. On clinics, they said they are ahead of plan with 60 plus clinics and see a large runway versus 300 children's hospitals, so they will keep expanding while balancing P&L impact.
"With 60 clinics and 300 children's hospitals, there is an enormous runway of growth opportunities for us." — David R. Bailey (CEO)
Timing of full product launches
Q (U.S. Bancorp BTIG): They asked when limited-release products will move to full launches and what is needed before full launch; and how super cycle products affect international growth.
A: Management said 3P Hip is in full market release and more 3P Hip sets will be launched over the next several quarters, with 3P Small/mini likely moving to full release in the first half of next year. For international, they said super cycle products are mostly not yet contemplated outside the U.S., and current international growth is driven by legacy product approvals like scoliosis items in EMEA.
"So at this stage, we are in full market release of the 3P hip." — David R. Bailey (CEO)
Hospital contracting and sales leverage
Q (Michael Matson · Needham and Company): They asked how many hospital customers are under contract and whether contracts drive market share gains, and whether sales & marketing spending will gain leverage.
A: Management said the majority of hospitals are on some form of contract, often symbol pricing, and contracts allow them to push usage and convert hospitals to single or high dual-vendor positions driving market share and legacy set pull-through. On sales and marketing, management said Q3 was an anomaly and they expect some leverage in Q4 and into next year.
"So the majority of our hospitals are on some form of contract." — David R. Bailey (CEO)
Clinic rollouts and DF2 adoption
Q (Benjamin Haynor · Lake Street): They asked if clinic economics and the mix of acquihire vs de novo have tracked expectations, whether they take every clinic opportunity, and whether DF2 adoption patterns repeat for other OPSB products.
A: Management said unit and location economics have worked as expected; they balance greenfield expense with acquihires and prioritize opportunities that drive faster profitability. On DF2, they said adoption has been unusually fast, DF2 has high margins and no set deployment, and while not every OPSB product will be DF2, they see similar high-value opportunities in the OPSB pipeline.
"I think the unit economics or the location economics have worked as we thought they would work." — David R. Bailey (CEO)
Surgeon training, eLLi timing, EBITDA drivers
Q (Matthew Blackman · TD Cowen): They asked for an update on VerteGlide surgeon training and user mix, timing and potential of eLLi, and how clinics affect EBITDA and drop-through.
A: Management said VerteGlide training continues with growing users from both new and repeat surgeons and they are tracking patient outcomes; eLLi timing depends on FDA IDE approval and early cases look likely in early 27 with broader impact later in 2028–2029. On EBITDA, management said established clinics are profitable while new greenfield clinics have upfront costs, and noted about $700 thousand of Q3 timing that will not repeat in Q4.
"There is probably, I do not know, $700 thousand maybe of timing that fell into the third quarter that is not going to repeat in the fourth quarter, so we will get that advantage." — Fred L. Hite
Gross margin drivers and OPSB go-to-market
Q (Ravi Misra · Truist): They asked how much gross margin beat came from mix vs pricing and volumes, whether Osseo will be distributed OUS, and how OPSB is sold internationally and via clinics.
A: Management said gross margin held at 74% despite 70 set sales and that OPSB has lower gross margin than implant but similar contribution margin; they expect about 73% for Q4. On international, they have not contemplated Osseo OUS yet; OPSB products are sold both directly to hospitals and through clinics, with some products shipped and billed directly and others fitted in clinics and billed to insurance.
"I think 73% is probably the right number for the fourth quarter." — Fred L. Hite