CARLSMED, INC. Q1 FY2026 earnings call

• Mission: To enhance outcomes and reduce the cost of healthcare for spine surgery and other areas. Pioneered patient-specific digital surgery for lumbar and cervical spine fusion. - Vision: Make personalized surgery at scale the standard for spine surgery. - 2026 started well with strong adoption of lumbar and cervical procedures, robust clinical outcome data. - Revenue growth was fueled by medical education and compelling clinical outcomes, expanding the surgeon base and procedure volumes. - Operationally, leveraged technology to boost production efficiencies, cutting lead time by over 30% to six business days and achieving margin expansion of over 200 basis points year over year. - Strategic focuses: Patient-centric innovation (advancing personalized surgery platform), surgeon education (investing in medical education team and programs), commercial execution (focusing on surgeon onboarding, utilization, and access expansion), and generating clinical data to support market adoption.

In the first quarter of 2026, Carls Med achieved revenue of $16.1 million, marking a 58% year-over-year growth. The lumbar procedure constitutes the majority of the business. The first quarter of 2026 was the first full quarter commercially for the Aprivo cervical fusion procedure, which was launched in December 2025. Lumbar procedure has been driving the revenue growth significantly, and cervical is in the initial stage of commercialization with early adoption and traction.

• Raised full-year 2026 revenue range to between $72 million and $77 million, representing a 48% growth at the midpoint compared to 2025. - Anticipates gross margins to remain in the mid to high 70s and expects operating expense leverage as revenue ramps up for lumbar and cervical procedures.

• Comments during the call include forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from forward-looking statements. - Risks as described in Carls Med's annual report on Form 10-K for the year ended December 31st, 2025 are relevant, including risks related to market conditions, reimbursement, clinical data, and competition.

Q: David Roman of Goldman Sachs inquired about surgeon utilization and average selling price (ASP).

A: Surgeon enthusiasm is high, with a year-over-year increase of over 60% in the surgeon user base and ongoing growth in utilization. Average revenue per procedure was consistent year over year, and cervical has a lower ASP than lumbar but will contribute more as it becomes a larger percentage of total revenue over time.

Q: Travis Steed from Bank of America asked about the cervical launch.

A: The cervical launch in the first quarter has good traction, with over 20% of surgeon users trained on the cervical platform, and expects high single-digit to low double-digit revenue contribution from cervical for the year.

Q: Richard Newwitter from Truist Securities questioned about the CMS proposal and gross margin impact.

A: The Aprivo Lumbar procedure currently has coverage under 11 different MS-DRGs, and the proposed IPPS rule simplifies coding and reimbursement, seen as beneficial. Gross margins are expected to remain in the mid to high 70s with the mix of lumbar and cervical, with efficiencies in digital production for lumbar offsetting any minor impact from cervical's lower ASP.

Q: Ryan Zimmerman from BTIG asked about feedback on the IPPS proposal and phasing.

A: It's early days for the IPPS proposal, and feedback will be seen once the final rule is in place, but the proposal is viewed as beneficial for all stakeholders. In terms of phasing, pre-vote lumbar will carry the majority of revenue initially, with cervical contributing as it progresses.