Shoulder Innovations Q4 2025 Earnings Call - Accelerating surgeon adoption and robotics push, but operating losses widen as company scales

Operator: Please stand by. Welcome, ladies and gentlemen, to the fourth quarter and full year 2025 earnings conference call for Shoulder Innovations. At this time, all participants are in a listen-only mode. At the end of the company’s prepared remarks, we will conduct a question-and-answer session. Please note that this conference is being recorded and will be available on the company’s website for replay shortly. I would now like to turn the call over to Sam Bentzinger, Investor Relations at Gilmartin Group, for a few introductory comments. Please go ahead.

Sam Bentzinger, Investor Relations, Gilmartin Group: Good afternoon, and thank you for participating in today’s call. Joining me from Shoulder Innovations are Rob Ball, Chief Executive Officer, and Jeff Points, Chief Financial Officer. Earlier today, Shoulder Innovations issued a press release announcing financial results for the quarter and year ended December 31, 2025. A copy of the press release is available on the investor relations section of the company’s website. Before we begin, I’d like to remind you that management will make remarks during this call that constitute forward-looking statements within the meaning of federal securities laws and that these are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our most recent annual report on Form 10-K and in our other filings with the Securities and Exchange Commission. Additionally, during this conference call, the company will discuss certain financial measures that have not been prepared in accordance with GAAP. This non-GAAP information should not be considered in isolation or as a substitute for or superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release for reconciliation of these measures to the most directly comparable GAAP financial measure.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March tenth, twenty twenty-six. Shoulder Innovations disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. With that, I’ll now turn the call over to Rob.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Thanks, Sam. Good afternoon, everyone, and thank you for joining us today on our fourth quarter and full year 2025 earnings call. We’re very excited to share the details of our exceptional fourth quarter performance and review recent progress against our key priorities, which are driving continued momentum. 2025 was a transformational year for Shoulder Innovations, and I’m proud of our team’s many accomplishments. We continue to add new surgeon customers at an accelerated pace, drove rapid commercial adoption of our advanced implant systems, and solidified our position as an innovation leader in the shoulder space, all while beginning our journey as a public company. Most importantly, we continued to positively impact thousands of patients and the shoulder specialists who care for them.

Revenue for the fourth quarter of 2025 was $14.4 million, reflecting an increase of 65% year-over-year and 23% sequentially. For the full year, revenue totaled $47.3 million, reflecting an increase of 50% over 2024. We are very pleased with this performance, which was driven by continued market adoption of our implant systems across a growing base of surgeon customers. Q4 gross margin of 76.7% and full year 2025 gross margin of 76.5% were also strong and reflected our commitment to enhancing profitability. We continue to take deliberate actions to drive further improvement in gross margin and believe there is additional opportunity for expansion going forward.

Our performance and accelerating business momentum exiting the fourth quarter leave us highly confident in our ability to sustain our commercial progress into 2026 and beyond. As a result, we are initiating full year 2026 revenue guidance of $62 million-$65 million, representing growth of 31%-37% year-over-year. Our ability to achieve this growth in 2026 is grounded in the same strategic priorities that we discussed on our last call. These priorities are designed to fuel continued above-market growth and commercial momentum and, as a reminder, include driving adoption among new surgeons, increasing penetration in our existing surgeon customer base to increase procedural volume, and adding products to our portfolio to address the remaining unmet needs of patients and surgeons. This includes both expanding indications and continued enabling technology.

We made meaningful progress across each of these priorities in the fourth quarter and throughout 2025. I’ll begin with our efforts to drive adoption among new surgeons. As a reminder, our commercial model combines a nationwide network of independent distributors with a dedicated W-2 commercial leadership team focused on identifying and converting high-volume shoulder specialists using our proprietary business intelligence platform. Of the approximately 15,000 U.S. surgeons performing shoulder arthroplasty procedures annually, roughly 1,800 are high-volume specialists who account for the majority of procedures. We segment these surgeons, these high-volume surgeons, into prospects, contender, and core, with core and contender surgeons generating approximately 95% of our revenue, supporting both visibility and durability in our growth models.

We’re pleased to announce that we ended 2025 with 134 core and contender surgeons, representing a year-over-year increase of 61%. As a reminder, we will provide our core and contender surgeon count on an annual basis moving forward. We consistently expanded this base of core and contender surgeons each quarter through 2025 and did so at an accelerating pace, driven by both enhanced awareness of the Shoulder Innovations brand and the focused execution of our commercial leadership team, leveraging our proprietary business intelligence platform in identifying and converting high volume shoulder specialists. Specific to our commercial leadership organization, we have more than doubled the size of this team since the beginning of 2025 to support increased scale of our business.

As these leaders continue to ramp, they are becoming more productive in building deeper relationships within their territories, and we expect these trends to persist through the year. Speaking of territories, in the fourth quarter, we secured quality representation and hospital approvals in several new key territories that represent largely untapped greenfield opportunities, and we expect to begin activating these markets over the course of 2026. Looking ahead, we see meaningful opportunity to further enhance the efficiency and reach of our commercial organization. As we build upon our early market share gains, we plan to continue investing in our commercial infrastructure to support sustainable growth and driving greater predictability in our business. Leveraging our independent distributor network will continue to create a clear opportunity for operating leverage as we scale, a factor we consider critical to our long-term success.

Importantly, our investment in headcount also reinforces our second strategic priority by driving higher utilization and increased procedural volumes among our existing surgeon base. In the fourth quarter, total implant volume increased 62% year over year to 1,976 units, bringing full year 2025 implant volume to 6,506 units, an increase of 50% over 2024. Consistent with prior quarters, this performance was driven by continued utilization gains among existing surgeons, particularly those onboarded in late 2024 and early 2025, as well as newly added surgeons ramping more quickly and becoming productive sooner. To further drive procedural volume growth, we also remain focused on transitioning surgeons over time from prospect to contender to core by increasing penetration and utilization. Throughout 2025, we made meaningful progress in shortening the time surgeons spend in each of those stages.

For example, from Q1 to Q3, we reduced the time to convert a new surgeon from prospect to contender by 41% and from contender to core by 43%. The cumulative effect of this is significant. New surgeons who entered the pipeline in Q3 reached core status roughly 40% faster than those who entered in Q1, a strong signal that our commercial engine is maturing and becoming more efficient with scale. A key driver of this success is our surgeon-to-surgeon education program, facilitated by our customer experience and medical education team, an integral part of our broader commercial organization. That program continued to gain momentum in the second half of 2025 as our team conducted 48 commercial company-sponsored education events during Q3 and Q4, including categoric and skills labs, regional events, and our second national shoulder arthroplasty symposium of the year.

Many of these events, including the cadaveric and skills labs, were mostly with surgeons who are newer to SI, and we believe that organic advocacy derived from these peer connections helps drive real-world success, positioning us to benefit from the natural network effects within the shoulder surgical care community. The National Symposium in particular is a noteworthy success story. In November, we hosted our second national shoulder arthroplasty symposium of the year focused on learning and education around our ecosystem. The event, which was the largest in our history, also included wet lab surgical training as well as didactic sessions, which were all designed, written and proctored by surgeons. During our Q3 call, we highlighted this event and discussed the feedback we received from surgeons around the value SI provides in creating this community, as well as the positive impact it’s having on their practices.

In the months since that symposium, we are seeing more clearly how meaningful that impact has been as the particular cohort of surgeons who attended the meeting have since increased their monthly utilization with SI products by approximately 40% over the average monthly volume measured in the 12 months prior to the event. We are thrilled with this response and believe it validates the incredible work of our CE&ME team in creating a true differentiator in the marketplace that’s driving tangible results. We’re hosting our next national symposium in May, and as of this moment, enrollment is already at capacity and by far represents record attendance over the 4 years we’ve hosted these events. We look forward to sharing new insights with you after this event and other educational meetings that our commercial team has planned for 2026.

To ensure we continue to equip our growing surgeon base with a comprehensive, best-in-class suite of shoulder surgical care solutions, our third strategic priority is focused on developing and launching new technologies to address the remaining unmet needs of patients and surgeons. We made significant progress on this front in the fourth quarter and into early 2026. As part of these efforts, and consistent with our broader strategy of introducing complementary enabling technologies to support the full continuum of care and shoulder surgery, in December, we announced a strategic partnership with Interventional Systems, a developer of robotic solutions for minimally invasive surgery, to introduce a shoulder specific microrobotic solution designed to enhance surgical precision, workflow efficiency and enable exciting new clinical approaches.

This solution is designed to integrate directly with our ProVoyance platform to deliver a seamless enabling technology experience from preoperative planning through intraoperative execution, allowing surgeons to plan in ProVoyance and deploy that plan in the operating room as a single connected workflow. Importantly, ProVoyance itself is already used in virtually all of our implant procedures, making it a routine part of surgeon workflow even before the added benefit of robotic surgery. Beyond its integration with ProVoyance, there are two other key benefits of this robotic system that we believe will be meaningful differentiators in the marketplace. The first is its form factor, which drives an entirely new economic model.

The robot is designed to be transported directly into the operating room as a portable unit on a case-by-case basis, enabling any OR to be immediately robotic enabled without the capital burden, logistical constraints or steep learning curve associated with traditional systems. This robotics as a service model enables maximum flexibility and fundamentally disrupts the financial relationships that have historically existed between healthcare providers and traditional surgical robotic companies. This economic model is particularly relevant as shoulder procedures continue to shift towards the ambulatory surgery centers where cost efficiency and ease of implementation are critical. We believe this focused approach strengthens our position relative to larger competitors whose legacy robotic platforms were not designed for this setting.

As an example, by the end of 2025, over 30% of our procedures were performed in an ambulatory surgery center setting, outpacing the broader market where we believe penetration sits in the mid- to high teens%. We expect this trend to be durable as surgeons continue to direct more volume to ASCs where they have greater ownership and influence. With the added benefit of microrobotic technology specialized for shoulder arthroplasty, we believe we are best positioned to capitalize on this ASC shift. The second key benefit of this robotic solution is that it requires very minimal change to the current surgical workflow, unlike other systems which require fundamental changes in both workflow and bone preparation. A procedure plan with this robotic solution will look identical to the one planned without it, but robotic integration will ensure a faster and more accurate execution.

Surgeons will cut and operate as they do today, just simply with greater confidence and accuracy. We have already completed several initial cadaveric sessions which have validated these benefits in a clinical setting. In addition, feedback from our surgeon partners has been very strong, validating our understanding of the market landscape and confirming our approach will hit the mark. These recent actions increase our conviction around the economic and competitive opportunities associated with this technology. Beyond the near-term benefits, we are excited about the longer-term innovation cycle that robotics-enabled surgery can unlock, including new surgical approaches and implant technologies that we believe have the potential to be truly transformational for the shoulder arthroplasty market.

To understand why, it’s important to understand that many of today’s implant systems are fundamentally designed to compensate for the inherent uncertainties of the surgical process, variability that surgeons and engineers have historically managed through hardware rather than precision. Our technology platform changes that equation. By using robotics to address these uncertainties directly, we can now think about shoulder arthroplasty in an entirely new way, one where implant design is no longer constrained by the limitation of manual surgery. We’ve made significant progress in defining what the future looks like, and we believe the opportunity is substantial. We also remain focused on expanding our product portfolio and capabilities with the goal of providing a comprehensive suite of solutions that cover 100% of shoulder procedures performed.

To that end, we recently began a limited market release of our new InSet I-135RFX Humeral Stem product, the third addition to our InSet Series humeral stem product line in as many years. The InSet 135 is currently indicated for primary, revision, and certain fracture total shoulder arthroplasty procedures, meaningfully expanding the range of cases our surgeons can treat with our ecosystem. As the product progresses through limited release, our focus will be on ensuring reproducibility before transitioning to full launch. So far, early surgeon feedback has been very positive and customers highlighting its ease of use, straightforward surgical technique, and seamless integration with our TrueTrace instrumentation system. Separately, we also commenced a limited market release of our N-22 Humeral Head, the first introduction in our new line of glenoid technologies designed for patients with metal hypersensitivity who may experience adversity associated with allergic reactions from metal implants.

Both patient and surgeon benefits, both the InSet 135 and new head products are also associated with higher ASPs, making them constructive to gross margin as volumes continue to build through full commercial launch. Before turning the call over to Jeff, I want to briefly highlight an update on the clinical evidence front. We recently reached enrollment of over 300 patients in our clinical data registry, which we initiated in late 2024 to evaluate short- and long-term real-world clinical and radiographic outcomes, as well as implant survival of our implant systems for both anatomic reverse shoulder arthroplasty. With a target enrollment of 2,500 patients and follow-up extending to 10 years post-operatively, we believe this registry will generate a robust body of real-world evidence that will further validate the clinical performance of our ecosystem and strengthen our position with surgeons, health systems, and payers.

We will provide updates over time as patients progress through the follow-up windows and data is available to share, but we are pleased with enrollment to date is progressing in line with our expectations. With that, I’ll now turn the call over to Jeff to review our fourth quarter results in more detail and discuss our outlook for 2026.

Jeff Points, Chief Financial Officer, Shoulder Innovations: Thanks, Rob, and good afternoon, everyone. As Rob mentioned, total revenue for the fourth quarter of 2025 was $14.4 million, a 65% increase from $8.7 million in the prior year. Our unique commercial model and proprietary business intelligence capabilities drove continued commercial expansion in the fourth quarter, resulting in increased adoption of our implant systems across new and existing surgeons. For the full year 2025, total revenue was $47.3 million, representing 50% growth over 2024. Gross margin for the fourth quarter of 2025 was 76.7% compared to 77.6% in the prior year. For the full year, gross margin was 76.5% compared to 77% in 2024.

Selling, general and administrative expenses in the fourth quarter of 2025 were $16.3 million compared to $9.1 million in the prior year. SG&A costs as a percentage of revenue dropped considerably in Q4 compared to Q3, demonstrating our ability to create leverage in our commercial channel, even taken in the context of rapid talent expansion. The increase in SG&A expenses were primarily driven by increased headcount in the commercial organization, higher legal costs related to litigation, higher variable selling expenses, and increased professional service fees related to our transition to a public company. For the full year, selling, general and administrative expenses were $54.8 million compared to $34.5 million in 2024. The majority of this increase was related to general and administrative expenses such as the IPO, public company, and legal costs.

Sales and marketing costs have grown at a rate consistent with revenue for the full year of 2025. Research and development expenses in the fourth quarter of 2025 were $3.2 million compared to $1.2 million in the prior year. The increase was primarily driven by investment in new product development efforts, including an initial milestone payment and development related to the robotic platform strategic partnership. For the full year, research and development expenses were $7.7 million, compared to $4.5 million in 2024. Net loss in the fourth quarter of 2025 was $7.8 million, compared to a loss of $3.8 million in the prior year.

The adjusted EBITDA loss in the fourth quarter of 2025 was $7 million, compared to a loss of $2.6 million in the prior year. The increase in net loss and the adjusted EBITDA loss was primarily related to increased operating expenses. For the full year 2025, net loss was $40.4 million, compared to a loss of $15.6 million in the prior year. Adjusted EBITDA loss was $36.1 million in the full year 2025, compared to a loss of $11.4 million in the prior year. The increase in net loss and adjusted EBITDA loss was primarily related to increased operating expenses and changes in the fair value of the company’s preferred stock warrant liability and convertible notes.

Our cash and cash equivalents as of December 31, 2025, were $124.3 million. We continue to believe these funds put us in a strong financial position to continue investing in growth while enabling us to achieve cash flow breakeven with cash on hand. Turning now to our guidance and outlook for 2026. On the top line, we expect full year 2026 total revenue to range from $62 million-$65 million, representing growth of 31%-37% year-over-year. This guidance reflects our already high degree of conviction in our ability to deliver industry-leading growth by driving adoption among new surgeons, increasing penetration in our existing surgeon customer base, and through commercial launches of new products.

In addition, guidance accounts for seasonal dynamics that are typical in our industry, specifically lower sequential industry volumes in Q3 before a step-up in Q4. Regarding gross margins, we expect to continue delivering strong gross margins throughout the year with the potential for some incremental improvements late in the year, depending on the timing of certain cost reduction initiatives and new product adoption. At our full-year revenue guidance, we expect operating expenses and SG&A expenses, in particular, as percentages of revenue to be relatively stable from Q4 of 2025. Further, we expect more substantial leverage beginning in Q4, specifically within the SG&A line. We expect to continue to investing in growth accretive R&D initiatives throughout the year. Finally, we are also proactively increasing inventory and asset purchases through the first half of the year.

In spite of this, we continue to expect quarterly cash burn in 2026 to remain relatively flat to Q4 of 2025, with more noticeable improvement in our burn rate expected later in 2026. With that, I’ll turn the call back to Rob for a few closing remarks.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Thank you, Jeff. In closing, we are very pleased with our financial and operational performance in the fourth quarter and full year. The momentum we built through 2025 has continued to accelerate in the first quarter of the year, and we are confident in our ability to achieve the guidance Jeff just outlined. We appreciate your support and continued interest in Shoulder Innovations as we advanced our mission to redefine shoulder surgical care and deliver best in class outcomes for shoulder specialists and their patients. We look forward to updating you on our progress this year. On a final note, I’d like to formally welcome our newest board member, Drew Hykes, who joined us earlier this month. As former CEO of Inari Medical, Drew is a med tech veteran and proven healthcare leader.

His strategic leadership and broad functional experience across commercial operations, product development, and business management at both Inari and Medtronic will undoubtedly benefit Shoulder Innovations as we continue to rapidly scale adoption of our novel shoulder arthroplasty portfolio. Thrilled to have him on the board and look forward to his contributions. With that, I’ll now turn the call over to the operator for Q&A. Operator?

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions. Thank you. Our first question comes from the line of Patrick Wood with Morgan Stanley. Please go ahead.

Patrick Wood, Analyst, Morgan Stanley: Beautiful. Thanks so much. Yeah, great to see the results, guys, so nice one. Maybe just starting on the sort of surgeon side and some of the programs you’ve been running with the symposiums and things like that, you know, clearly that’s accelerating the adoption curve, with, you know, all the surgeons that are actually coming onto the stack and getting them faster between core and contender on that side. You know, what do you think it is about the programs, the clinical programs, that’s helping accelerate that adoption curve? Is it, you know, just better knowledge, the clinical support? Like, what is helping getting them up the curve of volumes much faster than before?

Rob Ball, Chief Executive Officer, Shoulder Innovations: Yeah, I think, thanks, Patrick, for your question and appreciate it. You know, I think there’s a couple factors that go into, you know, kind of that acceleration of prospect to contender to core. You know, I think the first and foremost is, you know, leveraging our business intelligence platform to effectively target and manage those surgeons through process. So, a lot of that progress was frankly just a function of focus on those metrics and the team really orienting and being focused together around that objective. In that context, those national symposiums in the labs, they become very important tools in that process, if that makes sense. What’s most powerful in those tools is the surgeon to surgeon interactions that we, you know, can enable to create.

When individuals experience the national symposium, I think a very typical commentary of feedback is how uncommercial it feels to most surgeons, even though this is a completely company-sponsored event, if that most makes sense. The agenda is drafted by surgeons, it’s conducted by surgeons with very relevant surgeon topics that is real-world and helpful information for those folks. I think, you know, all of those factors together, Patrick, are what’s driving that faster adoption.

Patrick Wood, Analyst, Morgan Stanley: Amazing. Just one quick follow-up. You know, obviously, overall great growth in core and contender surgeons in 2025. You know, how are you guys thinking about that, you know, even qualitatively, that utilization curve as we move into and through 2026? You know, given the revenue guide that you guys have put out there, how are you thinking about that cadence of utilization amongst those new surgeons as we move through the year?

Rob Ball, Chief Executive Officer, Shoulder Innovations: Yeah. I just characterize, Patrick, that obviously we believe that core and contender surgeon growth is very indicative of what we can expect from a momentum standpoint in the business. It’s indeed, you know, obviously new surgeons is driving growth. We have seen some very interesting dynamics in the business where we’ve seen some interesting evening out of contribution of growth from existing surgeons and new surgeons, meaning that our growth is being driven both by the addition of new surgeons and increased utilization of existing surgeons. You’re just seeing deeper and deeper penetration in the, you know, kind of the folks that were at it even more than 12 months ago, I’ll put it that way. Both of those together are both contributing nicely.

Patrick Wood, Analyst, Morgan Stanley: Love it. Thanks, guys.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Thanks, Patrick.

Operator: Thank you. Our next question comes to the line of David Roman with Goldman Sachs. Please proceed.

David Roman, Analyst, Goldman Sachs: Thank you. Good afternoon, everyone. I wanted to start on the new product front, and I think if you go back to the time of the IPO, you had talked about a product portfolio that could cover about 70% of the cases out there with respect to shoulder arthroplasty. Now, I think your latest disclosure on this was around 85%, including products that were in LMR. Maybe you could just update us on progress there and how you’re thinking about new product contribution in the 2026 outlook.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Yeah, appreciate that, David. Nice to hear from you. I think, as we went, you know, kind of through mid-2025, as we went public, I think we were kind of seeking to characterize that we thought the products that we had in the bag and that were commercially launched represented about 85% of arthroplasty volume, and that we had some new products in the way to kind of get to that 100%. Those three new products were the fracture product, the InSet 135, the hypersensitivity heads, the N-22, and then the revision stem InSet 135. Obviously both the 135 and the N-22 heads are now in our limited commercial release phase. That gets us a long way towards that 100%, given that the InSet 135 particularly is also indicated for revision and will be used there.

Just a small way to go with the InSet 135. It’s coming in revenue over the next quarter or so I’m looking forward to getting that completed. I’m hoping I’m answering your question, David.

David Roman, Analyst, Goldman Sachs: Yes. Well, I guess just to clarify. As you think about exiting 2026, do you think you’ll be in full market release with the entire spectrum of products needed to cover kind of all?

Rob Ball, Chief Executive Officer, Shoulder Innovations: Yes.

Matthew O’Brien, Analyst, Piper Sandler: Angles of the market appreciating? Okay. Very helpful.

David Roman, Analyst, Goldman Sachs: Yeah.

Maybe just as a follow-up, as you think about the robotic strategy here, I think if we look at some of the larger players who have had clearances for robotic navigation for shoulder, some of them have been in place for some time, and the market probably has been a little bit slower to develop than we might have contemplated. If you just sort of talk through how you thought about your own robotic strategy, what you’re seeing in the market, and maybe why this is important for shoulder, and is that the nature of the customer you’re bringing on being ASCs? Maybe just help us contextualize how significant that is to you.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Yeah, I think let’s start with the why of robotics, David. You know, I think as we observe shoulder arthroplasty and kind of think about it relative to knee arthroplasty or hip, knee hip arthroplasty, shoulder arthroplasty brings kind of the complexities of both knee and the hip arthroplasty without going into detail. So it tends to be kind of the more difficult of those to consider. Brings a fair amount of additional ambiguities. Also, when we look at outcomes or survivorship of hips and knees versus shoulders definitely trails those more mature, you know, kind of counterparts. Indeed, implant positioning is one of those fundamental problems that needs to be, I’ll just say, resolved in the marketplace to improve those outcomes.

Obviously, a robotic solution, one could hypothesize, could have a more meaningful impact in the shoulder arthroplasty space as opposed to some other larger, you know, kind of larger joint approaches. In that context, as we conceived or considered what we believed our strategy needed to be, there were a couple foundational elements that we wanted to make sure were a part of what we brought to market. Number one is that we needed every operating room to be a robotic operating room. We wanted to eliminate, you know, kind of the conversation around capital equipment and really present it as a robotics as a service solution. The only way to accomplish that objective, in our view, is to present, you know, the robot as a portable device.

It’s very easy to set up and take down and move from operating room to operating room. Indeed, we have accomplished that model with the relationship that we build and what we’ve conceived from a technology standpoint. The second is that we wanted the technology to be time transparent, and really duplicate the existing surgical techniques that surgeons are accustomed to, but provide, you know, kind of that additional accuracy. You know, effectively, we believe we’ve accomplished that as well. At this point, there’ll be an exchange of eliminating some ambiguity that takes some time in the operating room with the robot, but then it’s also a little bit of time of setup for the robot. Those two things kind of cancel each other out, if you will.

We’re very confident that we have solved for both of those objectives and are, quite frankly, very excited about the opportunity that exists here with the platform in the marketplace. Our interactions with customers have been highly positive so far, you know, kind of obviously increasing our conviction of the strategy here.

Matthew O’Brien, Analyst, Piper Sandler: Super helpful perspective. Thanks so much.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Thanks, David.

Operator: Thank you. Our next question comes from the line of Matthew O’Brien with Piper Sandler. Please proceed.

Matthew O’Brien, Analyst, Piper Sandler: Afternoon. Thanks for taking the questions and congrats on a fantastic quarter. You know, Rob, as I look at the results here, you know, you added so many core contender surgeons this quarter. I think you did this quarter as many as you did in all of 2024 in terms of core contender additions. If you start to kind of look at some of the older cohorts, though, if you kind of, you know, subtract out the strong results as far as new core contenders, it has to indicate that your older vintages are actually growing very quickly. You know, what I’m really trying to get at, sorry for this long-winded question, but aren’t we seeing that in some of these older vintages of your surgeons using your product more and more?

Can you give us any kind of quantitative, you know, estimates of kind of where some of the, these surgeons are at? Are they at 100% across the board or 70%? Are you seeing that kind of big bump from some of the older vintage surgeons? Because that’s what my model’s telling me.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Yeah. You know, I can’t speak to your model, Matt, but I can characterize that, you know, we are seeing growth both from older, maybe isn’t the right word, but more mature with us.

Surgeons as well as new surgeons. Both are meaningfully contributing to growth. We’re seeing kind of an increase across the board. To your question about, you know, kind of do we see them using Shoulder Innovations 100% of the time, you know, I think that as surgeons become core, we begin to see more and more that they use us for the vast majority of their procedures. Now, of course, there are some indications that we’re only now just in Q1 beginning to cover. Clearly 100% of our surgeons could not use us for 100% of their procedures because we didn’t cover all the indications. I hope that makes sense. As we mature on these new products, that will, you know, kind of continue to improve.

I mean, I think I wanna emphasize that, you know, kind of growth is a function of new customer adds as well as maturity of the existing customers into the portfolio. You know, it’s not a heavy weight towards one or the other, quite frankly, Matt.

Matthew O’Brien, Analyst, Piper Sandler: Okay. Well, there’s clearly momentum across the business on both sides. Jeff, I just wanna make sure I understand your commentary on SG&A spend this year or OpEx spend. You’re just basically saying expect the OpEx spend as a percentage of revenues to be similar this year versus what we saw in 2025? Because we just saw a ton of leverage in Q4, especially on the SG&A line. Is that the right way to think about it? Then could you know just given those investments could 2027 be a period of meaningful you know operating margin expansion?

Jeff Points, Chief Financial Officer, Shoulder Innovations: Yeah. Thanks, Matt, for the question. Let me just clarify that. We expect to see both, you know, both SG&A and R&D as a percentage of revenue to stay pretty consistent with what we just experienced in Q4. We did just see leverage. You’re right about that, and that’s obviously at the, you know, at the guidance revenue levels that we stated. There could be some leverage, further leverage in SG&A. In my prepared remarks, I talked about potentially seeing some more leverage in Q4 of 2026. Kind of for the next few quarters, expect that you’ll see a similar percentage for both SG&A and R&D. Obviously R&D is driven, you know, much of that is driven by the robotic platform and the work around the robotic platform.

SG&A is a number of factors, you know, including continuing to add to our commercial organization, variable expenses, and so on.

Matthew O’Brien, Analyst, Piper Sandler: Okay.

Jeff Points, Chief Financial Officer, Shoulder Innovations: Yeah.

Matthew O’Brien, Analyst, Piper Sandler: Jeff, wasn’t Q4 R&D it kinda I mean it was a pretty big pop here. Are you saying that’s what we should expect for the full year 2026 or more like the full year 2025 should be the same thing as 2026?

Jeff Points, Chief Financial Officer, Shoulder Innovations: To clarify that, Matt, Q4’s R&D expense as a percentage of revenue was about 22%. I would expect that to remain similar for the next several quarters as a percentage of revenue.

Matthew O’Brien, Analyst, Piper Sandler: Okay, thank you.

Operator: Thank you. Our next question comes from the line of Matthew Taylor with Jefferies. Please proceed.

Matthew Taylor, Analyst, Jefferies: Hi. Thanks for taking the question. Jeff, I was wondering if you could be more specific around some of the assumptions and guidance from some of the KPIs, same-store growth, how many core contender surgeons are you adding and the new products.

Jeff Points, Chief Financial Officer, Shoulder Innovations: Yeah. Matt, sorry, can you repeat the question? Matt, just you came through a little patchy there. Can you repeat the question?

Matthew Taylor, Analyst, Jefferies: Yeah, sure. Could you comment on core, contender, surgeon adds, same-store growth, and new product contributions.

Jeff Points, Chief Financial Officer, Shoulder Innovations: Yeah. I think I got the question, Matt. I think you’re just asking about some of the assumptions around guidance for 2026. Obviously, we’re not gonna kind of break those down into smaller buckets. You know, we talked about the number of core contender surgeons at the end of December. We’ll talk about that number on kind of an annual basis. New product launches for both fracture and metal sensitivity will be sometime later in 2026. Revision will likely be kinda late 2026. You know, that’s gonna be kind of relegated to the second half. One thing I will comment on is I do expect ASPs, which saw a slight decline here in Q4, and that’s really due to kind of payer mix. Our reverse percentage was down a little bit.

We’ve seen that historically in prior years. I do expect ASPs to come back, and we’re already seeing that kind of in Q1. I expect durable ASPs, and then obviously therefore most of the growth is all gonna be unit-based.

Matthew Taylor, Analyst, Jefferies: Gotcha. Can you hear me better now? Sorry about that.

Jeff Points, Chief Financial Officer, Shoulder Innovations: Yeah, it’s better.

Matthew Taylor, Analyst, Jefferies: Yeah.

Jeff Points, Chief Financial Officer, Shoulder Innovations: Hey, Matt, I’ll just double-click on the new product side. I think I always wanna make sure it’s perfectly clear. We are in market on a limited market release basis. We just don’t. Obviously, as we ramp into that ramp will be more meaningful in the second half of the year. Those are. You know, that’s reflective of what our plans have been all along, and that’s going exactly to plan.

Matthew Taylor, Analyst, Jefferies: Gotcha. Just as a follow-up on gross margins, good to see it holding in there, but I guess I would’ve thought maybe with the new products, with the ASP commentary, with scale, you might be moving those higher, I guess. What are kind of the pushes and pulls on gross margins, and can we see more leverage there in 2027?

Jeff Points, Chief Financial Officer, Shoulder Innovations: Yeah, definitely see some leverage in 2027. Obviously, we’re not getting into that a whole lot right now. I did mention in my prepared remarks, Matt, that we could see some improvements later in the year. Obviously, that depends on kind of where ASP lands. It depends on new product introductions and kind of the scale and timing of those new product introductions. But you’re right, there is some cost down initiatives we have in place that’ll largely occur kind of in that 2027 time period. We may start to see some of that later in 2026, but more likely in 2027.

Matthew Taylor, Analyst, Jefferies: Great. Thank you, guys.

Jeff Points, Chief Financial Officer, Shoulder Innovations: Thank you.

Operator: Thank you. Our next question comes from the line of Ryan Zimmerman with BTIG. Please proceed.

Ryan Zimmerman, Analyst, BTIG: Good afternoon and congrats on a nice end of the year. Maybe starting with the ASC utilization, it’s, you know, Rob, you made the point, you guys are tracking, you know, well ahead of the industry. I’m curious if you could kind of elaborate on what you think drives that relative to your peers, and where do you think that goes over time? You know, the benefit you see from that, if it’s higher surgeon engagement, if it’s higher utilization. You know, it has to be kind of this meaningful contributor in some way to, I think, you know, the brand loyalty that we’re seeing in the numbers. I’m trying to, you know, maybe take what is a qualitative factor and maybe think about it in a quantitative term.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Yeah. Thanks for your question, Ryan. I appreciate that. Please be a little sensitive, the question you’re asking is quite competitive in nature. You know, it’s a bit of our secret sauce on some level and an important component of the way we drive the business. Of course, having said that, of course, our instrumentation platform is, you know, kind of a step function different from the top competitors in the space, and it’s obviously perfectly adapted to the ambulatory surgery center. Our timing on that platform was perfect in the sense that at the beginning of 2024, you know, kind of CMS began paying in standalone surgery centers, giving us a position where surgeons had more decision-making ability, more rapid decision-making ability to use our product in the ambulatory surgery center.

You know, kind of we had a number of factors kind of coalesce simultaneously that put us just in a really neat position to take share there. A common dynamic is that we begin first in the ambulatory surgery center. It’s commonly easier to get into the surgery center first, and once surgeons experience the product, they find themselves, you know, kind of attracted to use it across all of their, you know, kind of operating environments. Obviously, as you understand, most surgeons would operate in more than one, you know, kind of surgical environment. Once we find our way in one place, they tend to translate to others. For sure there’s an important competitive dynamic.

I’ll just characterize or, you know, kind of further articulate, you know, kind of we saw, you know, kind of increasing penetration in the ambulatory surgery center throughout 2025. That trend line is, I’ll just put it up and to the right and has continued even into 2026.

Ryan Zimmerman, Analyst, BTIG: Okay. Very helpful. Jeff, you know, we talked about all these variables, surgeon growth, pricing, et cetera. I don’t know if you said this though explicitly, but, you know, when you think about the low end versus the high end of the guidance, is there any other factors that we need to think about in the context of your guidance, whether that’s, you know, macro related or, you know, third party payer dynamics, et cetera? Just wanna make sure we’re thinking about any, you know, and all risk factors on both sides of the guidance.

Jeff Points, Chief Financial Officer, Shoulder Innovations: Yeah, Ryan, I don’t think there’s any kind of macro factors I would mention there. I think it’ll kind of really come down to our execution and really come down to units. New customer adds, and then, you know, obviously there could be some impact from new products kinda later in the second half, so.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Yeah, I’ll just double click on that, Ryan. I mean, there is, you know, from our perspective, we are all green. It’s all green lights. Everything’s going, you know, kind of to plan for us at this point. We’re not aware of any, you know, kind of looming concerns or risks at this point. Things are kind of running right to schedule. We’re having a lot of fun as a business for sure.

Ryan Zimmerman, Analyst, BTIG: Nice job. Thank you, guys.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Thanks, Ryan.

Jeff Points, Chief Financial Officer, Shoulder Innovations: Thank you.

Operator: Thank you. There are no further questions. I’d like to pass the call back over to Rob for any closing remarks.

Rob Ball, Chief Executive Officer, Shoulder Innovations: Thank you, Elisha. Just my sincere thanks for your engagement and support of the company. Obviously, it was a great 2025 and an even better Q4 2025. We’re looking forward to continuing the momentum into 2026 and look forward to talking further with all of you. Thank you very much. Have a great afternoon.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.