Tenon Medical Reports Third Quarter 2023 Financial Results

~ Revenue Increased 354% Year-Over-Year to $944,000 ~

~ Gross Profit Margin of 57% an Increase of 31 Basis Points Sequentially ~

~ Surgical Procedures Increased 329% in the Third Quarter ~

~ Concluded the Quarter with the Surgical Launch of the JIB Instrument Kit for the Catamaran® SI Joint Fusion System ~

LOS GATOS, CA / ACCESSWIRE / November 14, 2023 / Tenon Medical, Inc. (NASDAQ:TNON) ("Tenon Medical" or the "Company"), a company transforming care for patients suffering with certain sacroiliac disorders, today reported financial results for the third quarter ended September 30, 2023.

Third Quarter 2023 and Subsequent Highlights

• Revenue of $944,000, a 354% increase over the prior year quarter, and up 27% on a sequential basis compared to Q2 2023.
• Gross profit increased to $535,000 as compared to a gross loss of ($94,000) in the prior year period and $194,000 sequentially.
• Gross profit margin of 57%, a significant improvement sequentially compared to 26% in Q2 2023.
• 329% increase in the number of surgical procedures in which the Catamaran System was used compared to the prior year.
• Secured a $10 million equity line of credit facility with Lincoln Park Capital Fund to strengthen balance sheet position and support strategic growth investments.
• Successfully completed initial patients' treatment and expanded physician use with the JIB Instrument Kit for the Catamaran® SI Joint Fusion System.
• In early November, Tenon announced the Company has passed the FDA's Level 2 Quality System Inspection of its facilities with no observations, no objectionable conditions and no Form 483 issued.

"November marks a full year from our national commercial launch of The Catamaran System, and we remain encouraged by the increased adoption and utilization achieved during the third quarter as we experienced a significant 329% increase in surgical procedures from the prior year," said Steve Foster, CEO and President of Tenon Medical. "The triple digit revenue growth of 354% was due to an increase in procedures and further adoption of the Catamaran System. Importantly, following the achievement of positive gross profit and gross profit margin in the second quarter of 2023, we sustained this trend in the third quarter. Specifically, we produced strong third quarter gross profit of $0.5 million, a sequential increase of 176% that generated an impressive sequential improvement in gross profit margin of 57% from 26%."

"We continued our carefully targeted physician workshop activities, hosting 28 physicians in Catamaran focused sessions during the quarter. Early use of our alpha JIB Instrument Kit for the Catamaran® SI Joint Fusion System by two expert physicians in the ortho and neuro spine fields has shown the kit delivers on its promise of reduced incision length, improved stability, and efficient graft handling. Year to date, we have generated revenue of $2.1 million and produced gross profit of $0.7 million. Additionally, we secured an equity line of credit provided by Lincoln Park during the third quarter. This facility has the potential of strengthening our cash position allowing us to remain focused on our post market clinical research and continuing to build visibility via our commercial programs.

"Looking ahead, we expect strong revenue growth into 2024 as the number of surgical procedures builds from the efforts of our sales and marketing team, which have yielded positive returns with a firm focus on outreach through education and workshop events. We reinforce our commitment to ongoing post market clinical studies and validating patient outcomes and radiographic assessment. Over the long-term, our goal is to further expand our product portfolio to address SI Revision, adjunct to fusion and navigation procedures. We look forward to providing additional updates as we build our sales infrastructure and execute on our growth objectives to improve the quality of life of patients suffering from SI joint pain, and bring long-term value for our shareholders," concluded Foster.

Third Quarter 2023 Financial Results

Revenue was $944,000 in the third quarter of 2023, an increase of 354%, compared to $208,000 in the comparable year ago period. Revenue for the nine months ended September 30, 2023, was $2.1 million, an increase of 412%, compared to $414,000 in nine months ended September 30, 2022. The increase in revenue for the three and nine months ended September 30, 2023, as compared to the same periods in 2022 was primarily due to increases of 329% and 404%, respectively, in the number of surgical procedures in which The Catamaran System was used.

Gross profit in the third quarter of 2023, was $535,000, or 57% of revenues, compared to a gross loss of $94,000, or (45)% of revenues, in the comparable year ago quarter. For the nine months ended September 30, 2023 gross profit was $682,000, or 32% of revenues, compared to a gross loss of $434,000, or (105)% of revenue, for the nine months ended September 30, 2022. Overall, gross margin improved due to higher revenue associated with the increase in the number of surgical procedures. Our model has proven that we will continue to experience improvement in gross profit margin to coincide with revenue growth.

Operating losses totaled $3.4 million for the third quarter of 2023, compared to a loss of $3.3 million in the third quarter 2022. For the nine months ended September 30, 2023, operating losses totaled $12.6 million compared to $10.8 million in the prior year period. Increases in operating expenses were primarily a result of increases in sales and marketing as the Company builds its sales function and infrastructure to support future growth.

Net loss was $3.3 million for the third quarter of 2023, compared to a loss of $3.2 million in the same period of 2022. For the nine months ended September 30, 2023, Net loss was $12.4 million compared to $11.0 million in the previous year period. The Company expects to incur additional losses in the future.

As of September 30, 2023, cash and cash equivalents and short-term investments totaled $3.4 million, as compared to $6.3 million as of June 30, 2023. As of September 30, 2023, the Company had no outstanding debt.

Q3 2023 Earnings Conference Call

Management will host an investor conference call at 4:30 p.m. ET (1:30 PT) today, Tuesday, November 14, 2023, to discuss Tenon's third quarter 2023 financial results, provide corporate update, and conclude with Q&A with the Company's covering analysts. To participate, please use the following information:

Please dial in at least 10 minutes before the start of the call to ensure timely participation.

An audio playback of the call will be available through November 28, 2023, on Tenon's Investor Relations website at http://ir.tenonmed.com/ or via telephone replay by dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International). The access code will be 13741950.

About Tenon Medical, Inc.

Tenon Medical, Inc., a medical device company formed in 2012, has developed The Catamaran™ SI Joint Fusion System that offers a novel, less invasive approach to the SI joint using a single, robust titanium implant. The system features the Catamaran™ Fixation Device which passes through both the axial and sagittal planes of the ilium and sacrum, stabilizing and transfixing the SI joint along its longitudinal axis. The angle and trajectory of the Catamaran surgical approach is also designed to provide a pathway away from critical neural and vascular structures and into the strongest cortical bone. Tenon is underway with a national launch of this system to address the greatly underserved market opportunity that exists in this space. For more information, please visit www.tenonmed.com.

The Tenon Medical logo and Tenon Medical, are registered trademarks of Tenon Medical, Inc. Catamaran is a trademark of Tenon Medical, Inc.

Safe Harbor

This press release contains "forward-looking statements," which are statements related to events, results, activities or developments that Tenon expects, believes or anticipates will or may occur in the future. Forward-looking often contain words such as "intends," "estimates," "anticipates," "hopes," "projects," "plans," "expects," "seek," "believes," "see," "should," "will," "would," "target," and similar expressions and the negative versions thereof. Such statements are based on Tenon's experience and perception of current conditions, trends, expected future developments and other factors it believes are appropriate under the circumstances, and speak only as of the date made. Forward-looking statements are inherently uncertain and actual results may differ materially from assumptions, estimates or expectations reflected or contained in the forward-looking statements as a result of various factors. For details on the uncertainties that may cause our actual results to be materially different than those expressed in our forward-looking statements, please review our Registration Statement on Form S-1 on file with the Securities and Exchange Commission at www.sec.gov, particularly the information contained in the section entitled "Risk Factors". We undertake no obligation to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise unless required by law.

Investor Contact

Shannon Devine
MZ North America
203-741-8811
[email protected]

Tenon Medical, Inc.
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SOURCE: Tenon Medical, Inc.