Hi, everyone. Thanks for joining. Just wanted to come on to say welcome. Thanks for joining one of the sessions of day two of our Small and Mid-Cap virtual event. Great opportunity to hear from corporates across the small and mid-cap space where our analysts have really great breadth of coverage, about 1,000 small and mid-caps that they cover in the U.S. Feel free to reach out if you need the schedule for the rest of the day, any additional sessions you want to join. But wanted to pass it over to Travis. Thank you. Hi, everybody. Travis Steed, the MedTech analyst here at Bank of America. We welcome Carlsmed up next. We've got the full team, Mike, Leo, and Stephanie recently joined as investor relations. Maybe I'll turn it over to you, Mike, and maybe start with an introduction, the business, for those unfamiliar with the story here. Thanks, Travis, and thanks Jill for having us today. Really thrilled to be here. Just a little bit about Carlsmed. We are an AI-enabled MedTech company and really founded on a mission to improve outcomes, decrease the cost of healthcare for spine surgery and beyond. We developed this Breakthrough Technology designation that allows us to take imaging from patients, data from surgeons, create a 3D virtual model of the patient's spinal pathology, the optimal 3D surgical plan for that patient, and then the perfect fit three-dimensional devices that are 3D printed that go into the disc space of the patient and create three-dimensional alignment. We received this Breakthrough Technology designation for lumbar spine fusion as well as cervical spine fusion. With our platform technology, we've been able to meaningfully improve outcomes in this patient population. What's really unique about our business in the MedTech space is that we are digital first. We actually have no inventory, and so we're able to model the surgery digitally, build-on-demand the devices specifically for the surgery, and collect post-op data for every surgeon, every patient that continues to improve the platform. Maybe to lay the groundwork, what are some of the biggest challenges with traditional spine surgery today, and whether for patients, surgeons, hospitals, payers, all the different customers, if you will, and how you're uniquely positioned to solve those problems? Yeah. When we started the company, we were narrowly focused on this really big problem with spine surgery in that, particularly for complex spinal deformity surgery, it's really difficult to create a three-dimensional surgical plan that the surgeon can implement in surgery and the patient can maintain that correction post-operatively. Traditionally, for that patient population, there's a really high revision rate. This is a challenge for patients, it's a challenge for surgeons, and ultimately, it's a challenge for payers because these are really expensive procedures. What we've been able to do is to build a different kind of business where we're deeply focused on delivering the right surgical plan for the patient and the surgeon, and build those devices specifically for that patient, for that surgeon. What we've been able to prove is that we've improved outcomes and ultimately, lowered the cost of treating that patient population. One of the things that helped validate the approach here is the clinical data you've published and generated. Maybe for especially those newer to the story, walk through some of the clinical findings and how surgeons have responded to the evidence that you've built. When we talked about our deep focus on patient population, we've done most of the clinical data studies on the most complex patients. We look at adult spinal deformity. These are patients that have a complex curvature of the spine, very degenerative disc spaces. With our technology, we're able to restore alignment and actually deliver the alignment in the disc space. Most recent data that was published in The Global Spine Journal showed for patients that received our technology with the 3D surgical plan, the 3D fusion devices versus traditional spine fusion, that there was a 74% reduction in reoperations in that patient population. That's really significant tool that's now available for surgeons to deliver to their patients. How should we think about the market opportunity that you're addressing today and whether procedure volumes and growth, et cetera? When we look at the market, we play today in two distinct but similar markets, lumbar spine fusion, cervical spine fusion. We look at both of these markets right around 400,000 addressable procedures, which takes us north of a $10 billion market opportunity in the U.S. With our early stage, we're growing very rapidly and continuing to train surgeons, accelerate hospital access so that we can make this available to all patients. When you think about the difference between lumbar and cervical, anything different to call it from a commercial perspective or clinical perspective? Absolutely. The great thing about the market itself is there's a really large overlap, hospitals, surgeons that perform both lumbar and cervical fusion procedures. For the markets themselves and the clinical benefit, there's a lot of overlap in our technology. We started with lumbar. We just launched cervical in December of last year. With lumbar, our lumbar platform using the AI-enabled medical device to automate the surgical plan, the patient-specific model, we're able to actually precisely deliver 3-dimensional alignment, which is really important for giving a stable construct that maintains durability post-operatively. For the platform for cervical, we really engineered it focused on patients with poor bone quality, which is a really big challenge with the ACDF procedure, that a large percentage of patients have poor bone quality. We're able to not only personalize the alignment, but engineer each individual device in a way that supports the fusion with a very high surface area that puts it in a great position for fusion, even if the patient has compromised bone quality. Early clinical experience with that's been really phenomenal because surgeons now have a tool for this more challenging patient population in cervical. Okay. When you think about just accounts and percent of accounts you're in and cover and sell into, how do we think about it from the bottoms-up account basis, your business today? We still say that we're in early stages. As we started our deep focus on teaching institutions, where we're able to get on contract in teaching institutions, train faculty where they are training the next generation of surgeons. We've seen really great adoption with early and mid-career surgeons for this technology, where they can implement this in their practice and really embed digital workflow. We reported our last quarter, we grew our surgeon base 60% year-over-year, and we're rapidly adding new surgeons and new accounts to the aprevo platform. Okay. That is helpful. Maybe just before we get into a little bit more of the details, it has been a little more than a year since the IPO, just thinking about what you have accomplished and what you are excited about and where you think you need to improve from here. Maybe just think about what the next year has in store from here. It has really been a phenomenal year since our IPO, and we have hit a number of significant company milestones. Talk about operationally, when we started the company, we were about eight weeks order to delivery, and that really allowed us to treat the most complex patients that are scheduled months out. We have invested a lot into the platform, into the technology, really to get to where we can treat every patient in a practice. Since the IPO, we have been able to advance our underlying technology that allows us to do this in about a week. From when a patient has consult to go to surgery in about a week for these scheduled procedures allows us to not only see the most complex procedures, but also where the majority of our procedure growth has been in the one and two-level procedures for degenerative disc disease for both lumbar and cervical. That was a huge enabler of us accelerating account access, accelerating our new surgeon training, accelerating our utilization since IPO. We have also launched the corra cervical platform, which as we talked about, really engineered for that patient population with soft bone, to deliver personalized alignment and the best bed of fusion. We have also most recently received our permanent MS-DRG reimbursement for the lumbar procedure, which really allows us to broaden access for the aprevo procedure and simplifies coding from where it was about 11 different MS-DRGs for hospital reimbursement to three that cover every patient that could get an aprevo procedure. These are all material tailwinds over the first year that give us a lot of confidence, not only in our guide that we put out, but also 2027 and beyond as continued accelerators of our business. The launch for cervical, and honestly, I think it's gone a lot better than I was expecting. I think a lot of people were expecting 30%-10% of revenues despite just being in the second quarter and launching in December. I do not know if it's exceeded your expectations or not, but how should we think about cervical opportunity versus lumbar? Is cervical just going to move a lot faster, or is there just something that there's been an unlock here? Yeah. We are definitely very happy with the launch of cervical. Surgeon response to it has been phenomenal. Where we've had, just like with the lumbar procedure, one of the gating items for growth is getting on contract new hospital approvals, and those have outpaced our own expectation in getting access to this technology, which I think really underpins the strong clinical need for this procedure. As we think about cervical going forward, we are really excited about the corra cervical launch. That will be in Q4 of this year, and that allows us really to complete the personalized cervical fusion procedure. Because with the aprevo platform, we can do the 3D patient model, the 3D surgical plan, the soft bone-friendly 3D implants for interbody fusion, and with corra, we can now make a personalized fixation plate to ensure that the fusion that takes place in the operating room is maintained and that alignment's maintained. We see that as an accelerator to cervical in 2027 and beyond as we launch. I think as we mentioned on our most recent earnings call, we expect full year low double-digit revenue contribution from cervical as this continues to ramp very quickly, not just with existing aprevo lumbar users, but also pulling those surgeon users that specialize in cervical procedures. You said that comes in Q4 of this year? The accelerator for cervical? Yeah. We'll launch the corra platform in the fourth quarter for cervical. Okay. Exiting the year, we'll have full commercial launch with the aprevo cervical, which is the 3D planning, 3D interbodies, as well as the corra cervical, which will have the personalized segmental plates and personalized multi-level plates. We announced we did the first in man for corra in the first quarter. We've had really great surgeon feedback in the limited market evaluation, and so we're accelerating the launch into Q4 of this year, and we see this as another great growth factor in 2027 and beyond. Do you think the accelerator for the growth is getting higher utilization out of the existing? Is it deepening utilization, or is it bringing in new surgeons? How is it going to change on the ground when you have this broader portfolio? How we think about this is we anticipate about half of the procedures will be interfixated without plates, half with plates. With the plates, we see this as deepening utilization inside the current user base, as well as allowing us to accelerate new surgeon adoption with the cervical platform. Okay. Sounds like 2027 sets up as a pretty good year for you guys versus- Yeah. We're really excited about the opportunity to capitalize on a lot of the tailwinds that we've developed in 2026. So you're already sharing some of this stuff with investors, I assume. Surgeons probably know some of this stuff's coming as well. Is that helping drive some adoption earlier on, that they see the Carlsmed invested in this platform and new- Absolutely. As we've talked about, we've invested very heavily in medical education. Our world-class medical education team continues to bring top faculty to early and mid-career surgeons. We had our largest medical event, really our marquee medical event this past weekend, which is the aprevo Power Forum, and the enthusiasm for the clinical data and really the advancements in the technology platform is really strong in the emerging surgeon user base. Once they start using aprevo, what's the typical adoption and utilization ramp look like? We typically get a trial approval, where surgeons will collect anywhere from five to 10 cases, and that typically takes a few quarters to get through the cases. Again, it depends on their practice, predominantly deformity, predominantly degen, a mix of lumbar and cervical. Collect the clinical data. The hospital typically does an economic analysis, and then we move on to contract. Beyond that, it continues to ramp. How we see a lot of surgeons adopt the technology, again, it depends on their practice, where they may adopt a specific approach first for lumbar, be it anterior, lateral, posterior, bilateral. Really perfect the technique, the planning, and start to expand through their practice to go to long constructs, short constructs, lumbar, and then cervical. As we see the surgeons move through the process, we see them continue to increase utilization. We've been adding new surgeons at such a rapid pace, the majority of our surgeon cohort is still in the early adoption phase of the technology, which again gives us a lot of confidence in our ability to continue to accelerate growth. Where do you see the early adopters, where are they at on utilization for some of these more recent adopters? How much gap is there between, and is the early adopters still moving higher, or they've found the sustainable rate, I guess? What we typically see, again, it depends on the institution and their particular practice, that it takes several quarters for them to get to steady state utilization. And depending on the practice, that will be a significant portion of their overall spine fusions. Okay. I guess, is there still a lot of room between where those adopters are today and the early adopters can move up? I know how much capacity and the utilization with your existing surgeons, if they all move to the high end, how much upside could there be, I guess, is one way to phrase it. And maybe you don't want to give me numbers, but. Just as we talked about it in growing our surgeon user base 60% year-over-year, many of those in the first year of adoption are somewhere in the trial phase. They'll have the opportunity to expand utilization. It's really the snowball effect that we're getting in adding new surgeon users really now across two platforms with the lumbar and cervical platform. Yep. How long does it usually take to get to steady state? Depends on the institution. It's multiple quarters that can be somewhere between four and eight quarters, depending on the particular institution and their practice. Okay. Now that you've got a more of a full offering, can you cover and get more procedures, higher utilization or more revenue per procedure here? Yeah. Talking about revenue per procedure first, one of the things that's been really unique about our business is we do look at this as a procedural offering. We look at an aprevo procedure, as a procedure where we have average number of levels per procedure, that includes the plan. Our average revenue per procedure for lumbar has been fairly stable and has actually increased a little bit as we move to a little higher mix of multilevel procedures. For cervical, we do see some opportunities for increase in average revenue per procedure as we add the corra platform, with the aprevo platform for cervical. Okay. Maybe we'll spend a little more time on the reimbursement. The new lumbar MS-DRGs took place October 1st, pretty meaningful improvement, in facility economics. How impactful is this going to be on growth maybe in 2027 once that goes into effect here? Yeah. I'll just give a little bit more background. Yeah. On the reimbursement, how we got there. We developed the aprevo lumbar platform. We received Breakthrough Technology designation for that. When we launched, we had a New Technology Add-on Payment, which gave incremental reimbursement to the platform. As that sunset, Medicare issued new codes, which that got to the 11 different reimbursement codes that we have today, that ultimately net have an incremental reimbursement to the aprevo procedure over the traditional. Now, what goes into place two years later, from when the NTAP expired October 1, is three new codes for aprevo lumbar procedure that independent of access, anterior, lateral, posterior, independent of the number of levels treated or the patient condition, all aprevo procedures will go into one of these three new codes. This actually makes it much simpler for the hospitals, from a hospital economic perspective. We look at the national average for reimbursement, we anticipate that this, on average, is around $30,000 incremental reimbursement for the aprevo procedure versus a non-aprevo procedure. We see this as an opportunity to expand access, accelerate hospital contracting with this procedure so that hospitals can provide this to the surgeons that want to provide this to their patients. Is it changing your ASP in any way? Have you thought about pricing differently because of it? We anticipate keeping a similar average revenue per procedure and ultimately expanding access and even the opportunity to expand utilization inside of accounts. Okay. We see this as an opportunity to accelerate volume and continue to be good partners with our hospitals on the economics of providing this to their surgeons, ultimately to provide to their patients. Yep. Have you seen it already impact the conversation with hospitals, like when you are going through VAC approvals or hospitals adopting or thinking about adoption? Yeah. The great thing is we have really invested ahead of this with our strategic national accounts team so that we can have those conversations. Hospitals really get it because this makes it very straightforward for how to assess the economics of providing this procedure to their surgeons and patients. We anticipate this will continue to drive momentum with our hospital partnerships. Yep. Maybe help people understand how different these codes are for you versus others. I think you have one other peer, maybe, that can use these codes. Is this a competitive differentiator for you, and do you expect more competition in these codes? When Medicare issued these codes, and we have been working with them for the past two years since the NTAP expired, they specifically wrote these codes for complex fusion or extensive fusions. Extensive fusions are for fusions that are eight or more levels, and complex fusions they defined as procedures that use the aprevo technology or procedures that use the SI-BONE Bedrock technology. We anticipate hospitals to use this appropriately as it has been intended. Okay. Maybe going back, you said you spent time preparing for the reimbursement change. Maybe just expand a little bit more, what the team's been doing and what you're seeing on the ground. We have a really great reimbursement team as well as strategic national accounts team that's working with hospitals to train on coding and reimbursement, build awareness, prepping them for all the changes for how coding and reimbursement works today for lumbar aprevo procedures, and how it will work starting October 1. With that, hospitals will be prepared to appropriately code for the procedures. Okay. Anything else? Well, I was going to get into some margins and profitability stuff, but if you think there's anything else that we should cover on the build or reimbursement or revenue per procedure or utilization. Yeah, I think ultimately we feel really good about where we're at. We continue to drive incremental margin expansion, where our investments in medical education, commercial, patient-specific technology continues to drive the engine that allows us to build scale. Some of the key investments that we've made in commercial and our technology are really designed for us to build 10x capacity to really accelerate the business. We feel really good about the investments we've made there, prepping for our continued long-term growth in this area. So you basically are building enough capacity now to 10X your revenue base? Is that what I heard? We are building enough capacity to 10X our production capability and invest in our ability, obviously, to 10X scale our business. Okay. When does that investment or capacity come online? We continue to add to it. The great thing is that we have a very predictable business in that we get every patient, every surgeon pre-planned so that we can continue to build that capacity. So much of what we are doing is the underlying technology platform is to continue to advance and re-engineer that for scale. We will continue to update on our advancements in the underlying technology platform that allow us to continue to add more automation in our surgeon-in-the-loop process that really makes it very surgeon-specific, patient-specific, and can take the capacity of demand that we are seeing. Is there ways to speed up the turnaround from here? What we really look at is a week is really a great time point for us from an order to delivery standpoint that allows us to really see essentially every scheduled patient. Technology that we're working on now continues to drive that automation around the surgeon so that we can continue to use more of the surgeon-specific data and patient-specific data to provide more value in that preoperative planning aspect so that it becomes easier and easier for surgeons to adopt this across their entire patient platform. Sounds like there's maybe more investment in the digital side or can you get What are the benefits longer term and can you get even better outcomes or more specific patient products? Yeah, absolutely. Continuing to add more procedures to the platform and also provide more intelligence to the surgeon about their patients, about their procedures, and ultimately provide useful data preoperatively. As we really think about our platform advancing, it's continuing to move decisions that were typically made in the OR preoperatively with the data that we collect about the surgeon and about the patients. What kind of procedures could you add? Is it adding different levels or is it more complexity or deformity or I don't know where you would naturally go next. Yeah, we can talk about what we've already talked about as we continue to expand the platform. We've got the bilateral procedure posteriorly for lumbar. We're advancing our technology so that we have corra personalized plating and I think the other area that we talked about that we're really excited about with our development in cervical is to look at taking this technology into cervical arthroplasty. All the data that we collect, the technology about the personalization of the fusion continues to add to our data that's going to allow us to develop our next generation platform that we see as application for cervical arthroplasty as well. Yeah. Is there anything that doesn't make sense that would be a typical adjacency for you guys, but it doesn't make sense to go there with the technology? Where we're super focused is in deploying this technology at scale where we can meaningfully improve clinical outcomes and as we think about areas we're probably not going to go into large joints, hard to improve over the standard of care for knee replacement, hip replacement that generate great outcomes. We'll continue to look at those procedures where deep patient and surgeon personalization can improve workflow as well as improved outcomes for patients. Would you consider getting out of spine over time or are you still focused on spine? We're still focused on spine in the near term, but as you pointed out, Travis, as you know, our mission statement is to improve outcomes, decrease the cost of healthcare for spine and beyond. We're continuing to look at areas where this platform can have applications beyond spine fusion, spine arthroplasty. As we look at the next three to five years, we have a huge market opportunity inside of spine. We have still a lot of opportunity to expand momentum and truly change the standard of care for spine and so that is our deep near-term focus. Yeah. It sounds like the and beyond piece is more of a five-plus year idea. Yeah, that is what we think about is. Yeah. And beyond five-plus years out and continuing to evolve the underlying technology platform where we can look at this perhaps as additional market expansion. But where we are focused now, lumbar fusion, cervical fusion, cervical arthroplasty and then continue to look at as the platform expands where we can meaningfully improve outcomes by deployment of this platform. Yeah. In the last few minutes here, we will talk a little bit about path to profitability and how you are thinking about what level of revenue do you need to get to break even and go beyond on the margin side. Yeah. So Travis, really everything starts with the aprevo platform helping surgeons achieve superior outcomes for their patients versus legacy standard of care. As Mike well covered, we are very pleased with the surgeon receptivity to the extension of that platform with the cervical indication and that continues to pave the way for helping surgeons again achieve that superior result. We also have a superior way in which we operate our business. We have a personalized pure-play spine company that is fundamentally different than how a legacy ortho or spine player typically operates. We have no inventory. All of our cases are build-on-demand. We have ARP right now in lumbar for Q2 of $31K per case. We have $18K for cervical. We have reported Q2 gross margins of 77%. That was consistent with Q1. As we continue to scale, we are able to continuously improve our efficiency even with the product mix of cervical taking a greater proportion and we see that trend continuing both with the continued growth in our business and the stability of our gross margins. That gives us ultimately the foundation upon which to continue to scale and grow our business and leverage the operating expenses. We see a steady decline as a percent of revenue of sales and marketing and of G&A. We will make purposeful investments within R&D to further advance the aprevo platform and potentially for the and beyond as Mike covered, but all of the OpEx told, we will see a steady decline over 2027 as a percent of revenue relative to 2026. It is really a convergence of continued revenue growth, the stability of our gross margins, and the ongoing decline of operating expenses. We see, as we have publicly stated in the past, this profitability measure being achieved in under a $200 million annual run rate. As perspective here in terms of our current cash position and what that really means, we ended Q2 with almost $90 million in cash, where we burned in Q2 under $3 million a month. As we continue to grow the business and have that stability of gross margins and that steady decline of operating expenses, that path to profitability is well within achievement with our current cash on hand, with sufficient buffer for operating flexibility and being able to further invest in growth and innovation. That's helpful. I had several follow-ups, but you already asked them all, so it was a very thorough answer. Well, I figured there was a question behind the question there, so I wanted to make sure holistically, for those new to the story, they fully understand it's more than just a revenue measure. It's really fundamental to our business in terms of how we grow and how we continue to operate the business in a highly capital efficient manner. Yeah, of course. Mike, maybe help us understand, one question that comes up is kind of the competitive moat for the company. Is the moat around competitive advantage more of the ecosystem you build around personalized surgery, or how hard is it to replicate what you're doing if you're a larger company? Yeah, so I think, and this is, I think, one really important way to think about our business. We are highly differentiated as a business, and our business model is very different. We have no inventory, and so we do everything digitally, and our closed-loop ecosystem continues to evolve. When we talk about our closed-loop ecosystem, it's the data collection, it's a 3D modeling of a patient's pathology, three-dimensional surgical plans. It's our build-on-demand personalized devices, single-use instruments, and post-op data collection. Because we run a pure play personalized surgery company, we don't have the challenges of the logistics of a traditional MedTech company that has a very high capital deployment in instruments, implants, moving case trays. We have no trays, and that really allows us to continue to focus on this closed-loop ecosystem around the patient, around the surgeon to develop better outcomes. We are going to continue to put out more clinical data. I talked about our landmark data in adult spinal deformity. We have a lot of data collection on what is the much bigger part of the market and what is actually the majority of our procedures in one and two-level fusions, showing the ability for our platform to very predictably achieve alignment outcomes and reduce reoperation rates in this patient population. This closed-loop system continues to drive the great clinical outcomes and really becomes very sticky with our surgeon users once they get onto the platform. Makes sense. That covers the questions for me. If anybody else on the call has questions, just put them in the chat or ping me the Bloomberg or Mike or even Greenstein, if there is anything that you think we need to cover, let me know. Travis, really appreciate the time. I think just to kind of reiterate, we have created this really Breakthrough Technology platform that is scaling very rapidly, and what makes me really proud about it is ultimately what we are doing for patients. We continue to really move the needle on patient outcomes, where we publish, like I said, a lot of data on the adult spinal deformity for lumbar patient population, and we will continue to publish data on the aprevo platform's ability to generate better patient outcomes across a large patient population. We see this as the ongoing flywheel effect of surgeon adoption, hospital adoption of this technology platform. Great. Well, thanks for the conversation. It was helpful, and good to see you again. Yeah. Great to see you again, Travis. Thanks a lot. Thanks for the time. Thank you. Bye, Travis. Thanks, Jill. All righty. Bye-bye. Okay, bye.