Treace Medical Concepts, Inc. (TMCI) Earnings

Management highlights

Entering 2026, Treece Medical has evolved into a comprehensive bunion solutions company. Built on 2025's strategic progress, it expanded its portfolio with new procedure innovations. In Q1, market penetration with new bunion systems is increasing, with about 35% of the lapoplasty surgeon user base incorporating at least one new system since launch. Treece remains focused on advancing lapoplasty, with plans to commercialize Lapoplasty Lightning later this year. It's also expanding offerings, launching new technologies like SuperBite variable pitch compression screw system and SpeedXM fusion system, with full commercialization expected in Q3.

Guidance

Reaffirming full year 2026 revenue in the range of $202 million to $212 million, a decline of 5% to 0% compared to 2025. Expect revenue declines to improve through the year with growth returning in Q4. Reaffirming a loss in adjusted EBITDA in the range of $4 million to $6 million for 2026, and expecting a reduction in cash usage of approximately 50% compared to 2025.

Segment performance

Revenue in the first quarter was $47.2 million, a decrease of 10% compared to the prior year. The decline was mainly driven by the shift in revenue mix towards lower priced, minimally invasive products and lower volume of bunion procedure kits sold. Gross margin was 79.3% in the first quarter of 2026, compared to 79.7% in the first quarter of 2025. Total operating expenses were $54.6 million in the first quarter of 2026, compared to total operating expenses of $57.5 million in the first quarter of 2025. First quarter net loss was $18 million or $0.28 per share compared to a net loss of $15.9 million or $0.25 per share in the first quarter of 2025. Adjusted EBITDA for the first quarter was a loss of $5.5 million compared to a loss of $3.8 million in the first quarter of 2025. Cash, cash equivalents, and market world securities totaled $51.9 million as of March 31, 2026. This represents an increase of approximately $3.5 million from the company's balance sheet of $48.4 million as of December 31, 2025, and compares to an increase of approximately $0.4 million in the first quarter of 2025.

Risks & headwinds

Forward - looking statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied. These include macro pressures on procedure demand and portfolio mix shifts which impacted 2025 and remain present. Also, all forward - looking statements are based upon current estimates and various assumptions, and Treece assumes no obligation to update these statements. Refer to SEC filings for detailed risks.

Analyst Q&A

• Q: Hey, good morning. This is Izzy on for Ryan. I just wanted to start on your ASP and next shift. Mark, it sounded like you are expecting the ASP headwinds to lapse around the fourth quarter, but I was hoping you could speak to that a little bit more and what we can expect moving throughout the year.

  A: Yeah, this is Mark. Thanks for the question. As we began to talk about at the end of last year and we talked about it on our last call, we're really pleased with the launch of our new products. We know that some of these products have lower ASPs and they've been readily adopted by a large portion of our surgeon base. John talked about how around 35% of our current customer base has already adopted some of these new products at these lower ASPs. This is the dynamic that we talked about over the last couple calls. We anticipate to continue to see that until we begin to lap or to have an anniversary of when we made these new products available. It's really in the third quarter of this year. So some of these dynamics we fully anticipate to continue. This is the exact dynamics that we talked about. And so we feel like the strategy is working. We're getting these new products to our surgeons. They're utilizing them. And that's just going to have a temporary headwind in the first part of this year, but that will change in the back half of this year.

• Q: And it looks like gross margins came in a little bit higher than street expectations. So as you guys continue to launch these new products and see the benefits from the products that were launched late in 2025, how should we think about gross margins going forward?

  A: Thanks for taking the questions. Another great question. We are very focused on gross margins here. Our new products, we really have a goal to launch new products that have consistent gross margins with what we've had historically. Some of these margins do fluctuate from quarter to quarter. We benefit in the seasonally strong fourth quarter when we have higher volumes. And there are, of course, lots of pieces and components that impact gross margins overall. But we're pleased with what we did in Q1. They came in strong, a little bit better than what we had anticipated, so we view that as very positive. So we'll continue to launch new products to keep in line with this range of high 70% gross margins, and we believe that we can continue to do that going forward.

• Q: Good morning, guys. Thanks for taking the questions. You know, great to see that so many of the folks have adopted these new solutions. I guess, what are you seeing once they do? I mean, do they immediately kind of swing the pendulum to their ultimate adoption of, you know, the osteotomy solutions versus laparoplasty? Do they swing too far? Do they... work their way towards the ultimate mix, or how does that track from what you've seen thus far?

  A: Hi, Ben. It's John. Thanks for the question. We've seen, in general, strong adoption by our customer base with these new products. Once they get trained on them, do a couple cases, they tend to be pretty sticky. And we're pleased with the way that's going there. And it's still early days. But as mentioned, we've got now 35% of our base lapoplasty customers now using one of these three new solutions in their practice. And we're working on getting more of them using two and three over time. We want them to be full portfolio surgeons as we move through time. We've also seen, and it's early, but some adoption of lapoplasty technologies with surgeons that came in initially to treat through using one of those new three products. So too early to say what the materiality of that is going to be. We'll maybe comment on that as we get more experience later through the year. But it is good to see that dynamic as well.

• Q: And then, you know, as you bring out more and more solutions in the portfolio, I'd want to see folks adopt the full portfolio, of course. I mean, I guess what percentage or proportion of the foot and ankle cases that are done every year could the current and, you know, to be launched in the near future, Trees products find their way into? I mean, is it, you know, 50%, 70%, 90%? What does that look like?

  A: Yeah, thanks, Ben. John here. It's hard to say the exact percentage, but as we launch products like Super Bite, and now we have the broad portfolio that includes MTP fusion solutions, as well as, you know, three different ways to treat a bunion, four different ways to treat a bunion, you're definitely getting into a large, being able to cover a large percentage of the surgeons, you know, workhorse foot and ankle cases, I would say. And, you know, the sales force is pretty excited about that. The addition of Super Bite For instance, in the early innings here, you know, they're displacing some competitors that used to sit in the room, you know, just to use that compression screw technology, and now they have their own. So I think it's going to be interesting to play out over time, and we do definitely appeal to a much broader base of the surgeon's overall caseload as we work through the year and get these products out.

• Q: And on the SuperBite set or kit platform, How many SKUs are in that? How does that stack up versus competitive offerings on the screw side?

  A: Yeah, Ben, we've tried to do this in a very capital efficient and inventory efficient way. As we thought about launching a compression screw system, we didn't want to have high capital, high inventory burden. Traditionally, these systems have a lot of SKUs, hundreds and hundreds, maybe 1,000. So we've tried to design this and bring forth a system that I don't have the exact number of SKUs, but it's probably in the range of 100 or so sellable items in our system. And that makes it very lean and very efficient and something we can manage very well. And we can provide in good volumes to the field so they can really make maximum impact as we get these out.

• Q: Good morning to you both. I wanted to dig a little more into the sales cadence outlook for this year and with your patience, talk about the setup for 27. I mean, it seems like, John, the strategy clearly is visible. It seems to be working. We're in the early days of the strategy becoming increasingly visible. So sort of a two - part high - level looking at the forest kind of question. You beat the first quarter. You beat and raised. As you look at the rest of the year, how do we think about the outlook and your confidence? I know you want to stay conservative, but if you continue this first quarter pattern in the second, the third, hopefully in the fourth quarter, is it going to be you're going to do a little better potentially because of penetration? Is it going to happen on the product side? Is it something to do with your execution? Just help us understand where more of the same could happen as we go through 26. And I'll ask Mark the tough question. Mark, I know it's hard to talk about 27 in precise terms, but my numbers, my current numbers, have you growing careful, I'm being cautious, Here the consensus numbers are more like 9% or 10%. I mean, is 5% to 10% the right way to think about the potential for 27% if you execute well and all these products roll out and you see the trends we're seeing now? It sounds potentially very conservative. Help us think through all that. Sorry for the long - winded questions.

  A: Okay. Thanks, Rick. I'll take the first one, and then Mark can handle part two on future consensus. You know, the way the year lines up is, like Mark said before, you know, we've got some headwinds due to these ASP - related mix shift dynamics related to the three new bunion systems that we launched in Q3 last year. As we get to Q3, that headwind starts to abate. And additionally, in Q3 and increasingly Q4, you know, we're going to benefit from the introduction of our 2026 launches, some of which carry, you know, favorable ASPs relative to the three products we launched last year. You know, Speed TMT as well as cases that will combine are SuperBite screws, Speed XM plates, and Biologics. Those get us into some higher dollar ASP midfoot and rearfoot cases. And then, you know, we also have some new sales reps that are going to be ramping up in the back half of this year. So that's kind of the way we see the year. And we're going to keep our heads down. We're pleased with our Q1. We're not satisfied. We got a lot of work to do, but we got a lot of good things going on with this business as we build out a more robust and diversified portfolio with some new, you know, growth channels in it with these different product lines. Hey, Rick. This is Mark. I'll just say John is right on there. We're going to look at this one quarter at a time. We're pleased with the results in Q1. They came in as expected, which is good for our progress during this year. And so I'll start there that, you know, it's one quarter at a time and we're going to focus on, you know, getting this right this year. With respect to next year, You know, we have not given any formal guidance with respect to 2027, but I can tell you that we are expecting to return to revenue growth in the fourth quarter this year. So I think it's going to be a little bit early to talk about 2027. It's going to be next year will be impacted on what is our momentum as we're exiting this year. But I think the positive story is that although we did have a decline this quarter, and we may have some revenue declines in the short term here, we believe that we'll have increased momentum with case volumes as well as the top line revenue growth as we're exiting the year. So before we give formal guidance to next year, we want to better understand that momentum, but we do believe that we're going to be set up very well for next year as we exit the as we fully anticipate or plan to exit this year with increased revenue growth.

• Q: And just one more from me. Maybe, John, you could talk about just the general environment. We didn't hear from Stryker this quarter because of their cyber issues as clearly as we normally would. What's your sense of the market environment? Are consumers behaving as usual? Are doctors? It's just... Is the environment an OK one, or as usual, stable? What are you seeing? How are you thinking about that aspect of the rest of the year?

  A: Yeah, I appreciate it, Rick. When we entered this year, we said that we expected the macro headwind type of dynamics, consumer sentiment. related impacts on elective procedures to to to continue into this year we didn't really see a reason things were going to be you know dramatically shifting um you know q1 kind of played out within our expectations really didn't see any surprises in in you know patient flow and surgeon activity beyond what we anticipated you know we don't have independent data yet to tell us what the overall market trends were for bunions or foot and ankle elective in q1 but Again, it played out as we expected pretty much. So我们're going to continue to focus on our strategies, getting these new products out and in full supply, training more doctors, and getting new customers and accounts, and work our way through quarter to quarter.

• Q: Hi, thanks so much for taking the question. The new MIS - ASCODME products understandably get a lot of the attention, but I'm hoping you could share some color on how lapoplasty has trended over the last few quarters. How meaningful of a contributor has the pull through from perkyplasty, nanoplasty been to reinvigorating growth in lapoplasty? And do you see lapoplasty lightening as more of an incremental update or is it something that could have a material impact on ASP and volume?

  A: Lily. Thank you for the question. It's John. You know, as we said in our last call, there's been, you know, patient - surgeon preference changes to more MIS options and even to more MTP fusions on some bunion patients over time, MTPs where they might have some arthritis in the great toe joint. We've seen a great uptick in response to our MTP fusion offering. It's doing very well out there, and that product does carry a higher average selling price than the average price on our MIS product, so we like to see that. With respect to lapidus, there continues to be strong demand for lapoplasty, where lapoplasty is indicated in the surgeon's algorithm at this point in time, and We have seen, you know, as alluded to, what we believe to be some pull - through from surgeons that came in new to trees through one of our three new bunion products, adopting lapoplasty. Now, it's early on, and these numbers aren't large yet, but we'll be watching that through the year, and we do believe, you know, in the advancements of lightning and speed TMT, more availability of Intelliguide. These are tools that can help us appeal to more surgeons as we bring those into more force into the market late this year.

• Q: And then just as a follow - up, could you talk a bit more about some of the competitive dynamics and your competitive positioning now that you're sort of going more head - to - head with the other ortho players and MIS osteotomy? So are you seeing adoption of these new products primarily from existing lapoplasty accounts? Are you seeing a good amount of competitive switches? Any color you could share on how that competitive positioning has evolved over the last few quarters would be helpful.

  A: Sure, Lily. I think it's been, you know, initially we probably had more uptake in our existing customer base, but as these products have gotten out in greater supply, the sales reps have become more familiar with them. We train more surgeons on them. More surgeons are using them. They're talking to their peer surgeons about these new MIS systems. Our instrumentation is fantastic. It really is. You know, it's extremely helpful in allowing these surgeons to do a more reproducible, predictable MIS osteotomy procedure. So as we've gotten more into the market over more time, we've definitely been seeing more competitive conversions and our sales team's expertise, our training, And the efficacy of these products is what's making it happen. So we're seeing a good uptake. We're seeing displacement of competitors, not only the MIS systems, but with our speed MTP, too. And that's a big, important segment of the market. So we like what we're seeing across all fronts, both how they're being implemented within our existing lapoplasty user base and the adoption we're getting from new surgeons and competitive conversions.