All right. Good afternoon, everyone. Thanks for joining us today. I'm Eduardo Herdan. I'm part of the Morgan Stanley team. Today, I have the pleasure of being joined by Rob Ball and Jeff Points, CEO and CFO of Shoulder Innovations. Before we begin, just a very quick plug for disclaimers. Please visit morganstanley.com/researchdisclosures. With that, we can start with the fun part. Thank you guys for being with us today. Thanks for having us. Thank you. Yeah, of course. The opportunity. We are about a year out from the IPO, so I want to start with just some of the exciting updates that you have announced since then. Maybe we can start with your new partnership with ALM Ortho. Maybe give us a little bit of a flavor of what sort of things that brings to your portfolio and how meaningful is it going to be for you? Yeah, sure. As you can imagine, orthopedic surgeons face a spectrum of difficulty as they replace a joint. Of course, these are patients that have disease, and so they are treating disease. As you get further and further into the complexity spectrum, our current products become less and less the optimal products. As we lean into that portion of the market, we find in some patients that the best solution is a solution perhaps provided by other parties. The ALM relationship allows us the opportunity to lean further into those more complicated opportunities sooner, quite frankly, and offer, I think a great word is bespoke solutions for those very complicated, kind of dysplastic or revision circumstances. Great, and when would you say you are going to start benefiting commercially from the partnership? It is a process that is ongoing right now. ALM Ortho has already deployed their process in a number of patients over the past 24 months or so. We are essentially taking over the exclusive relationship there. We believe we will treat some patients even yet here in 2026, but be more meaningful for us in 2027. Okay, great. I think you also announced the clearance and launch of the N-22 Humeral Head for anatomic. Yep. I think you had the glenosphere for reverse procedures that you launched earlier this year. Can you give us a sense of what that market opens up and what the opportunity is there? Yeah, sure. It is a very similar dynamic to the alternative bearing material, the N-22, for the glenospheres. Effectively, there is 10-15% of the population that may suffer from some sort of hypersensitivity to an alloy or an allergy, if you will. We essentially propose this alternative material for those patients. The N-22 heads that were available earlier this year for the reverse indeed accommodate that circumstance. We have seen a nice uptake of that device in certain patient populations, so we know that those are incremental patients that our surgeons would not have treated without that device. We have the same dynamic in the anatomic shoulder arthroplasty side now with the clearance of the N-22 Humeral Head. Great. I guess beyond the N-22 products, you also highlighted several additional new product launches in Q2. Can you maybe give us a flavor of what each one of those products is and whether you think about them more in terms of increasing utilization within your existing user base, or is it really broadening out the new surgeons that you might be bringing into the funnel? Yeah, sure. You will make me go by memory here, but one that is a little more eminent is what we call InSet Go. Most people are aware of our InSet Glenoid, which has been commercially available for about 10 years now. InSet Go will be our second generation version of that InSet anatomic glenoid, and it does a couple things. One is it preserves some of the key elements relative to our intellectual property around the complexity of the articular surface and the availability of what we call InSet Plus or augmentation devices in that very simple procedure. But it eliminates or reduces a step in the operating room that perhaps saves as much as 8- 10 minutes in the operating room. We do this by incorporating additional features. That product is kind of in the very final stages of manufacturing and will be available here relatively soon, over the next weeks, and we are excited to see that come to fruition. We see this mostly as expansive relative to surgeons that may have had some inhibition about that step in the operating room that we cause them to take, so this we think can be expansive relative to our existing share in the marketplace. Another device that is relatively near term is the InSet Clutch. That is the device that allows a surgeon to take preoperative planning information and use that information in a reusable guide that allows them to seek to duplicate that information in the operating room relative to the placement of the glenoid device. We have had the opportunity clinically to experience this a few times and that will be imminent in a limited user release here in the fourth quarter as well. Those are two that are quite near. Got it. Very cool. I guess maybe on the InSet Go, is there also an argument from a hospital economics perspective or an ASC economics perspective of you reduce that amount of time, is there a benefit there for them? I think there is a benefit there for them, but only if they're stacking up enough of those procedures that they could incrementally add an additional procedure in a day, which would realize additional revenue. So of course, the overhead still exists if the operating room is idle, I'll put it that way. So if they can add an additional procedure, then yeah, it's certainly an economic benefit. Fair enough. Maybe shifting a bit to robotics. I think you've mentioned that the development of InSet Neo is running substantially ahead of schedule. What can you tell us about it? How do you expect it to strengthen your competitive advantage? How does it fit into the ecosystem? Yeah. As you know, Eduardo, we wrote that relationship in December of 2025. We've been strong at the development process here for 8, 9 months. The idea here is to present a very portable solution that allows a robotic translation of the preoperative planning step in ProVoyance into the operating room with indeed a portable robotic solution. The robot's about the size of your hand, so it's very small and compact and allows us to package that in a single container that can be transported into and out of the operating room exactly like our existing instrumentation. That's powerful because it sets up the opportunity for a new type of economic relationship with operating centers. For example, robotics as a service instead of robotics as a capital asset. That can fundamentally change the conversation we have with surgeons about how they think about robotics and where it's applicable. It's been a very powerful and fruitful discussion that we've had with surgeons throughout the US so far. It's been very exciting to watch the development process. I play an active role on some level in that process, and it's a large number of technical people working together. It's been a delight to watch these multiple streams of development working in concert very effectively together, and it's, I think, a testament to the culture we have in the company that's caused us to be able to leverage that complex organizational issue and make things go faster, I'll put it that way. It's my applaud to the team as well. As I mentioned, we do intend to seek clearance for the device in the H1 of 2027. At this point, that's a fair amount ahead of where we intended in the first place. Yep. I think you sort of alluded to this, but there's obviously, because of the way that robots are today, there's a lot of facilities that just are never going to adopt a robot as they stand today. If we think about sort of this Neo way more portable, how much does that expand the number of facilities? Is there sort of a rough number or sort of give us a sense of how many more facilities are able to adopt robotics after Neo? Yeah, I think it increases it by a ratio of infinity. It really makes every facility a candidate for robotics. We obviously have been very successful in a transition from our operative procedures from a hospital inpatient or outpatient into a standalone operating center, ambulatory surgery center. That's been a function of the design of our instrumentation, et cetera. That's been a very powerful component of our commercial model. We felt it necessary that our robotic solution or enabling technology suite is consistent with that trajectory. Just because it works in an ambulatory surgery center doesn't mean that it doesn't work in a hospital inpatient setting, for example, right? So it's as portable in hospital inpatient as it is in an ambulatory surgery center. Really, we see it providing an additional advantage. Since it is available in both types of centers, you can have exactly the same technology everywhere you operate, because indeed, most surgeons operate in multiple types of centers. Right. Fair enough. Maybe shifting to another part of your ecosystem, ProVoyance. Sure. I think we're hearing that more and more clinical decision-making is moving into software. How do you envision ProVoyance changing the way that surgeons think and changing the way from going from a pre-op planning tool, a more foundational component of the moat and the surgeon toolkit? Yeah. I think I equate it to what we see in many other marketplaces, which is you can do more and more of the analysis and planning at the software level so that what happens in the operating room can in function be a foregone conclusion, I'll put it that way, right? You've managed your risk at the software level so that what you deploy in the operating room is not a decision-making process, but an execution process. Today that's just frankly not the case. It is a decision-making process that happens in the operating room. I think as we provide more and more tools, information, and analysis of that information at the ProVoyance level, we will continue to improve the way that we can manage that risk and cause that execution to just be simple and anxiety-free. I'll put it that way. I think that's at a high level how that will happen. Neo or the robotic solution is a perfect example of that. We can provide a preoperative plan and just frankly, the ability to perfectly translate that preoperative plan into a robotic solution in the operating room takes away a component of physician anxiety as a result, right? Outcomes is directly a function we know from clinical literature of proper positioning of the implant. That's one example. Another example is as we analyze the way we can manage certain risks that the patient may present based on bone morphology, for example, we can assess the various clinical options a surgeon has to treat, and that can be down a risk curve, if you will, right? You can take more simple products for less risk, and as you identify greater and greater risk, you can move down that risk curve into more complex products. Another example of how ProVoyance will be used in the future is to deploy our patient match platform, which we call InSet One. It's not yet regulatory cleared. We disclosed in the Q2 call that we'll see clearance in 2027 for that product. But effectively, what we want to be able to do is deploy a solution in ProVoyance so the surgeon can assess risk. They find themselves wanting a patient-matched implant and can indeed conceive on some level that patient-matched implant together with the company so that we can then deliver them a patient-matched device, which we're hopeful will be at both higher margins and lower capital costs to us. Right. Very cool. Maybe let's shift a bit towards commercial. Obviously, you focus on the roughly 1,800 shoulder specialists or high-volume shoulder specialists out there. Can you give us a sense of how far you feel you've penetrated that community and how much greenfield runway there remains? So of course, we disclosed at the end of last year 134 core contender surgeons. For a reminder for everybody, we define the way that 1,800 group of high-volume surgeons interacts with us as either core contender or prospect surgeons. Core and contender surgeons represent the lion's share of our revenue base. When you think about that core and contender group of 134 versus 1,800, that gives you a pretty good feeling. Of course, some portion of that is core, and so that's yet a lower percentage of that 1,800. Long story short, we think we have a long way to go to continue to develop share in the market. Yep. I think, at least back when we were talking around the time of the IPO, I think a lot of those surgeons that you had brought in had started with your anatomic and then moved towards your reverse. At least from some of the comments in the Q2 call, it sounds like a lot of people are going direct to your reverse, meaning that your reverse has now gotten a lot more market acceptance from the get-go, versus starting from the anatomic. How does that change the calculus in terms of the speed of adoption or the ultimate depth of adoption that you can get in that 1,800 surgeons? Yeah, sure. As our product line has kind of developed over the years, of course, we have a greater and greater portion of the practice, shoulder arthroplasty practice, I'll put it that way. Effectively today, we have a product for every indication they may treat. They may not always choose that ours is the optimal for every single patient, and so there will always be a reason why we continue to develop further and further into the product suite. There's no question when you look at our revenues breakdown of anatomic versus reverse sits perfectly on top of where the broader market is, so that we know we're getting great penetration of the reverse product into our customer base. We also, obviously as you kind of alluded to, early days in the company, this start was always with an anatomic device and always in an ambulatory surgery center setting. We don't always see that anymore with commonly surgeons, their first case with us is a reverse procedure. We have at least as much innovation around our reverse platform as we do the anatomic platform. We've gained a reputation of innovation on both sides of the market there. Great. I think one of the ways in which you've stood out in the shoulder community is a lot of your education events and a lot of the engagements that you've done that are sort of surgeon-led. I think as you grow, one of the questions a lot of people have is, how scalable is that education sort of platform, the education model, sort of the Napa symposium that you've done? How should we think about that as you grow? Yeah. I think obviously we can do more symposiums. I'm not concerned at this point about our ability to scale that. Just broadly, I'll put it this way. We have found that when a surgeon talks to another surgeon about our products and our solutions, that interaction is much more effective than one of our salespeople or one of our W2 employees talking to a surgeon about that. We intend to continue to lean into those interactions. It shouldn't be a surprise that surgeons just delight in that process. They enjoy the education process. They enjoy telling each other about the solutions that they found or created. I don't have any anxiety at all about that being able to continue at that pace. We've quite meaningfully increased the pace this year that we're adding new customers into that core contender prospect funnel, if you will, relative to last year. That pace has persisted, I'll put it that way. That's not a concern. As it relates to the pace at which surgeons adopt, we do see that accelerating. We do see surgeons accelerating through the prospect contender core model more quickly, and I think it's a number of things that drive that. One is just kind of brand equity and our recognition in the marketplace. That has increased meaningfully and has been powerful. I think it's also a function of our ability to better target surgeons through our business intelligence platform and getting better at that sales process, identifying what are the obstacles that must be overcome and what are the solutions that overcome those obstacles. That just execution process has improved for us. Maybe let's talk about that for a second because I think you mentioned that in your second quarter earnings call that a lot of your growth today is coming from share capture. It's not market growth. Some of it happens to be market growth, but a lot of it is share capture. Is there any particular phenotype of doctor or any type of site of care where you're seeing the biggest share gains? What's your ideal candidate for a target? Indeed, we have a technology-forward and sophisticated shoulder arthroplasty device. The perfect surgeon candidate for our devices, a surgeon that actually can lean into and fully understand the advantages that can be realized by using our device. That's certainly that high-volume specialist trained shoulder arthroplasty surgeon. I've commented before that we believe there's about 15,000 surgeons that could perform an arthroplasty each year, and so we very much lean into that specialist profile. That's where we focus. No question. Okay. As you think about it, because obviously you must be taking share from the big guys, how is it that you compete against the bundled proposition? The "I will sell you the hip, the knee, and the shoulder. Yeah. That is not a common obstacle that we face. I can't say that it's never been a subject, but it's just not been something that we've come up against that we've not been able to sell through or sell around. I'll put it that way. I think that operating centers identify shoulder arthroplasty as a highly profitable part of their business and so they're more in the mode of recruiting surgeons to operate in their centers now, vice versa. Those surgeons commonly come with preferences and decisions about what types of products they want to use, and so they have a lot of influence over the products that they do use. So we've been able to push through that. Okay. Fair enough. Maybe let's shift a bit to some of the clinical evidence that you've been generating. I think you've highlighted that there's encouraging signals from your ongoing registry. Could you maybe talk about a few of the things that you're seeing, what's most interesting? What endpoints do you think investors should pick up as signals that your device is working? Yeah. Clearly the literature that's already published is powerful and has been very effective for us. We know there's a couple publications on the way that are not out of our registry, but in association with surgeons we affiliate with. We've been mostly focused on recruitment into the registry over the past 12 months or so. So we're a little over 700 patients consented into the registry at this point. I think on the order of 80- 90% of it actually have clinical data in the registry. So it's been a powerful tool in building the dataset. I think a few signals that we are, I'd say the analysis is still ongoing, but is yet to be proven out, but we're encouraged by, one is the acromial fracture, a common postoperative complication, seems to be quite low. I'll put it that way. The rate of subluxation or mild dislocation of the joint seems to be quite low. We believe we will be able to demonstrate quite meaningful range of motion, both in forward elevation, internal rotation, as well as strength scores. So far signs are very good, but of course, we need to finish the statistics and work through the paper publication process. Fair enough. Is there any sort of timeframe, anything that we should be looking out for? Is it matter of quarters, years? Yeah. As I mentioned, I would count a submission in quarters, not weeks, I will put it that way, or years. So sooner rather than later, but it does take time. Yep. Fair enough. How about your subscapularis-sparing initiative? Can you talk a little bit about how that is going? What should we be looking out for? Yeah. We fortunately start with a little bit of a running start there with subscapularis-sparing because of the low profile of our glenoid implant puts us in a position to have just smaller instrumentation in a, what desire to be a small wound. The subscapularis-sparing initiative is about enabling postoperative care that's perhaps more rapid or lower stress for the patient. Essentially what that means is while you're doing the anatomic procedure, instead of taking down or removing the subscapularis tendon from the humerus, you leave that attached to execute the procedure. When you do that, you lose some ability to visualize the joint and execute the procedure. What we have prepared is instrumentation that enables that procedure to happen effectively, even without taking down that subscap tendon. We're in the very early stages of that development, but we do have, I'd say, a quite interested cohort of surgeons that they believe that should be an important part of their practice, and we have a lot of curious surgeons about that. We do think it's a trend that can gain some traction over the coming years and would be important for us, particularly with the InSet Glenoid, which makes that procedure indeed even easier because of its low profile. Right. What do you think it'll take to change surgeon behavior for it to be widely adopted? I think we'll need some material publications that demonstrate that surgeons can accurately place the device despite their lower visualization and get good outcomes. Okay, great. If you had to give a sense of whether it's quarters or years to get to that point? I think this is a dynamic that rolls out over years. Okay. Over a period of years. All right. Fair enough. I think maybe, Jeff, we shift the conversation a little bit towards you. You've delivered 60% growth in 2026, at least in H1 Can you talk about what's driving performance? What are the biggest things we should look out for on your performance? Yeah, I think I'll just point out that we've had great growth in H1 of the year. That's really a product of not only adding a number of new customers, we've really been happy with the new customer growth. But also we're just seeing increased productivity amongst our existing customers. All of that, I think, combined has really produced just a great first half of the year. Okay. Is it more, I don't know, new surgeon adds? Is it more utilization? Is it the broader portfolio? Is it a combination of all three? How should we think about it? Yeah, it's really a combination of all three. We've also launched a few new products also that's contributed in some manner. But I think the commercial team has really fired on all cylinders, executed really well. I'll just mention ASP as well. ASP has been really supportive. Our ASP has continued to kind of go up. We've done a nice job executing on that, and that's really helped drive just really attractive revenue growth. Great. I think you've also raised Q2 guidance. Sorry, you've raised your yearly guidance in your Q2 call. I think it's now $67- 69 million. Correct. What would have to go right or wrong for you to hit the top or the bottom end of that guidance? Yeah, good question. So that guidance range contemplates a revenue growth of 42-46%, so it's already market leading revenue growth. I think that's a number we set obviously with high conviction. As we think about that going forward to the second half of the year, obviously we've incorporated seasonality. We started to see some seasonality in June. We've incorporated an assumption around seasonality. So if we think about the rest of the year, we think about how that number we could potentially have upside to that number as well, and that could be based on increasing new customers, increased productivity and acceleration with existing customers, new product revenue, all that could potentially provide some upside as well. Great. How about on the gross margin side? I think you've reached 78%. Yeah. How much additional margin opportunity do you see as you scale? Yeah, really pleased with gross margin, 78.3% in Q2. That's about a 200 basis point increase from last year. We've got a number of cost reduction programs kind of underway that we think will provide benefits over the next several years. I would just mention that our new products that we've talked about all have a similar or improved gross margin profile. So we think there's upside in gross margins from where we're at currently as we look forward over the long term. Okay. Fair enough. Maybe moving down the P&L, obviously profitability is important and, as you continue to grow and you continue to add commercial headcount, it seems like you are starting to show some SG&A leverage. Can you maybe talk to us how you balance reinvesting for growth versus trying to achieve the profitability? Yeah, we really try and take a balanced approach between investing where appropriate, especially in our sales channel. There's a number of uncovered opportunities right now, geographies that we're not in, that we don't cover, and obviously we prioritize those. So we want to invest behind the business, but obviously pay attention to leverage, creating more leverage over time. We have seen a cash burn decrease between Q1 and Q2. I think as we go over time, we're going to kind of pay attention to that and be responsible and both invest behind the business, but also be responsible in kind of reducing cash burn over time, is kind of how we think about it. Yeah. Fair enough. Maybe not exactly P&L, but more so on capital allocation. You've obviously developed a lot of stuff internally, but we've also seen you have partnership with the robot, partnership for the additive manufacturing. You have a soft tissue collaboration that you also announced in Q2. How should we think about the build versus partner versus buy framework? How do you guys determine if it's going to be organic or inorganic or partnership? Yeah, from my perspective, we have built a very capital efficient business with very high gross margins, and our objective is to maintain that structure. We look at all of these opportunities. Let me take a step back. When you think about those 1,800 high volume surgeons, 1,800 high volume surgeons, for those 1,800 high volume surgeons, less than half of their practice is shoulder arthroplasty, right? We have a broad spectrum of other products that we could consider. As we think about broadening out our exposure to those other parts in adjacent markets, our view is that we should deploy it in a way such that, A, we can leverage that effective call point that we are creating for that high volume shoulder specialist, but secondarily, maintain the best in class economics around our existing products, right? Sometimes that will involve some partnerships where we can economically accomplish those. Some of those we have disclosed already. But we have the kind of superpower, if you will, to internally develop them ourselves and deploy them in that way. Really, the main factor to consider there is time, and to the extent that we can help kind of increase shareholder returns by reducing the time it takes to deploy there, we will. Yeah. Fair enough. I guess you sort of alluded to this, but you said less than half the time or around half the time of most of your customer base is spent on arthroplasty and the soft tissue repair partnership obviously opens up another avenue. How should we think about the long term strategy in soft tissue? So kind of as we went public last year, we talked about not the shoulder arthroplasty market, but the shoulder surgical care market. Our view is that has been a relatively underserved market viewed in the same way that we view it, which is there is a high volume shoulder specialist. They do a spectrum of procedures and are looking for help, talent, innovation in that full spectrum of procedures. They are literally as we are in operating rooms for shoulder arthroplasty procedures, there are literally products that are being used where they kind of reach past our individual and reach for a product from another company, if you will. That is pretty low-hanging fruit as it relates to bringing those products into that same call point. But then take that one step further, they may do an arthroplasty at 8:00 A.M. and do a rotator cuff at 10:00 A.M., right? Why aren't our representatives in that same room at the same time? We think that that relationship can be built much deeper between representation and the surgeon for a broader spectrum of their procedures, and we'll go after those aggressively for sure. Great. Maybe moving on to some of your growth plans. You broke ground on the new headquarters- Yes, we did. recently. I think it was yesterday. Yesterday. Yesterday. Yeah. Congratulations. Can you talk about what that means for the future of Shoulder Innovations? Yeah. I think there's two key components there. Obviously, we've outgrown. Transparently, we maybe are a little late with it. We've materially outgrown our existing space. We've taken a conservative approach from a capital deployment standpoint and facilities and matters like that. This just gets us that space and that type of space that's more efficient for our operation, and so it's exciting for the entire employee base. But it also characterized that this isn't a dramatically larger facility than we're currently in. It's just a more effective facility for us. What I think that really does mean is that we see that the continuing growth in the company will demand more and more facilities for us to continue to innovate and distribute from. It's unlikely that we'll find ourselves in one location as a massive headquarters, that we'll find ourselves in a little bit more modular business with facilities effectively deployed throughout the U.S. from a distribution standpoint. Fair enough. I think we have probably room for just one last question, so I'll ask it. What do you think is the most underappreciated part of your story that you'd want everyone to take away from this session today? I think the feedback that I receive and one thing that's been much more powerful in our success than I had originally considered was the culture that we've built around the business. That's both a function of the way employees interact with one another, but then also the surgeons interact with one another. I've emphasized all along that that surgeon-to-surgeon selling process is important, but that has created a culture that's attractive, that folks want to be a part of. Not only do they get to enjoy great products, innovative products, fun products that can help their patients and help them treat their patients, but they get to have fun doing it in a pleasant environment, and that means a lot. That means much more than I expected. Great. I assume that that's why they keep returning to Shoulder Innovations. Yeah. Great. Well, thank you very much. I think we're right around time. This has been great. Thank you for being at the conference. Thank you. Thank you.