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    SI
    Earnings call· Jun 2026(Q2 FY26)

    SHOULDER INNOVATIONS Q2 FY26 earnings call SI

    Aug 6, 2026 Source

    Executive summary

    Shoulder Innovations Q2 FY26 — Strong Revenue Growth and Accelerated Product Pipeline

    Shoulder Innovations delivered strong Q2 FY26 results, marked by significant revenue growth and gross margin expansion, driven by accelerated new surgeon adoption and increased utilization within its customer base. The company raised its full-year revenue guidance, reflecting high conviction in its commercial strategy and a robust product pipeline, including advancements in robotic surgery and next-generation implant systems. Management emphasized the strategic importance of its ProVoyance platform and new partnerships in expanding market reach.

    Highlights

    5

    • Net revenue reached $17.2 million, marking a 56% increase year-over-year.

    • Gross margin improved to 78.3%, up both year-over-year and sequentially.

    • Full-year 2026 net revenue guidance was raised to $67 million-$69 million, representing 42%-46% growth.

    • Total implant volume across core, contender, and prospect customers increased approximately 50% year-over-year to 2,238 units.

    • Cash and cash equivalents stood at $99 million as of June 30, 2026, with improved cash burn compared to Q1.

    Concerns

    5

    • The company reported a net loss of $10.2 million for the quarter.

    • Adjusted EBITDA loss was $8 million.

    • SG&A expenses increased to $20.1 million from $12.8 million in the prior year, driven by commercial expansion and public company costs.

    • R&D expenses rose to $3.4 million from $1.4 million year-over-year, primarily due to investments in new product development and robotics.

    • SG&A expenses as a percentage of revenue are expected to increase in Q3 before declining in Q4.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 Net Revenue
    $67 million to $69 million
    high materiality
    High
    Full-year 2026 Net Revenue Growth
    42% to 46%
    high materiality
    High
    Gross Margins
    similar margins
    medium materiality
    Medium
    SG&A Expenses as % of Revenue
    increase from Q2 in Q3, then decline in Q4
    medium materiality
    Medium
    R&D Expenses as % of Revenue
    moderate
    medium materiality
    Medium
    InSet Neo Robotic Technology FDA Submission
    1H 2027
    high materiality
    High
    Robotic Training Program Kick-off
    early Q1 of next year
    medium materiality
    High
    InSet One FDA Submission
    2027
    medium materiality
    High
    Additive Manufacturing Cost Reductions
    up to 30% on certain products
    medium materiality
    Medium

    Operational metrics

    16
    Net Revenue
    $17.2 millionup 56% YoY
    Q2 FY26

    Strong growth driven by new surgeon onboarding and increased utilization.

    Gross Margin
    78.3%up YoY and sequentially
    Q2 FY26

    Improvements reflect ongoing operational efficiency.

    Selling, General, and Administrative Expenses (SG&A)
    $20.1 millionvs $12.8 million prior year
    Q2 FY26

    Operating leverage achieved across SG&A excluding public company costs.

    Research and Development Expenses (R&D)
    $3.4 millionvs $1.4 million prior year
    Q2 FY26

    Increased investment in innovation pipeline.

    Net Loss
    $10.2 millionvs $19.2 million prior year loss
    Q2 FY26

    Improved compared to prior year due to specific charges in Q2 FY25.

    Adjusted EBITDA Loss
    $8 millionvs $18.1 million prior year loss
    Q2 FY26

    Improved compared to prior year due to specific charges in Q2 FY25.

    Cash and Cash Equivalents and Marketable Securities
    $99 millionimproved cash burn vs Q1
    as of June 30, 2026

    Company remains confident in its balance sheet to fund growth plans.

    Total Implant Volume
    2,238 unitsup approximately 50% YoY
    Q2 FY26

    Growth primarily derived from core surgeon category, with core surgeons performing more procedures.

    New Customer Additions Pace
    acceleratedeven more than Q1
    Q2 FY26

    Reflects effective targeting of high-volume surgeon specialists.

    Surgeon Engagement Events
    >90
    YTD

    CEME team activities fostering peer advocacy and driving procedural volumes.

    Territory Growth
    >80%YoY
    Q2 FY26

    Indicates broad-based utilization increases and market penetration.

    OR Time Saving (InSet Go)
    up to 10 minutes
    future

    Expected impact of the next-generation InSet anatomic glenoid implant on surgical steps.

    Debt Facilities
    up to $50 million
    Q2 FY26

    Strengthens financial foundation, provides future cost savings and flexibility.

    Additive Manufacturing Cost Reduction Potential
    up to 30%
    beginning sometime in 2027

    Expected incremental cost reductions from new supply chain capabilities.

    OR Time Cost (Analyst Estimate)
    $40-$50 per minute
    current

    Analyst Matthew O'Brien suggested OR time costs $40-$50 per minute when discussing the impact of InSet Go's 10-minute time saving. Management refocused on ability to fit additional surgeries.

    Absorbed Overhead Per Case (Analyst Estimate)
    minimum $500
    current

    Analyst Matthew O'Brien suggested minimum $500 of absorbed overhead per case when discussing the impact of InSet Go. Management refocused on ability to fit additional surgeries.

    Industry KPIs

    9
    MetricValueDetails
    System utilizationdeepening
    Pricing realized priceuplift
    New product launch rampmultiple launches
    Procedure volume growth50%%
    FCF conversion leverage guidanceimproved
    Segment franchise organic growthmajority >80%%
    Sales force commercial capacity buildaccelerated
    Indicated addressable patient population1,800surgeons
    Pivotal trial clinical evidence milestonesimprovements

    Product announcements

    7
    ProductTypeDetails
    I-135RFX humeral stemlaunch
    N-22 glenospherelaunch
    Titanium Plasma Spray (TPS) reverse baseplatelaunch
    InSet Clutch guide systemlaunch
    InSet Oneroadmap
    Subscapularis sparing technique initiativeslaunch
    InSet Go (next-generation InSet anatomic glenoid implant)launch

    Deals & partnerships

    2
    leader in additive manufacturing devices for the treatment of severe deformityexclusive collaboration

    Partnership to expand offerings into complex revision cases where current solutions may not be optimal.

    soft tissue device manufacturernew relationship

    Partnership to commercialize several soft tissue devices, expanding into adjacent indications.

    Risks & headwinds

    5
    Orthopedic seasonalitybegan in June and will continue into Q3

    normal degree

    Mitigation: consistent with past patterns, accounted for in guidance

    Shift in procedure mixduring the second half of the year

    typically lowers our percentage of reverse procedures and correspondingly impacts ASPs

    Mitigation: accounted for in guidance

    Increased SG&A expenses as % of revenueQ3

    increase from Q2

    Mitigation: expected to decline in Q4; driven by investments in greenfield opportunities and commercial team expansion

    Public company costsQ2 FY26

    increased costs

    Mitigation: operating leverage achieved across SG&A excluding these costs

    Prior year charge impacting net loss and adjusted EBITDA lossQ2 FY25

    $19.2 million net loss and $18.1 million adjusted EBITDA loss in Q2 FY25

    Mitigation: related to changes in fair value of preferred stock, warrant liability, and Series E purchase option; not a recurring operational issue

    What to watch in Q3 FY26

    5

    InSet Clutch guide system availability

    Q3 FY26
    Currentlimited availability starting Q3
    Targetfull availability/adoption

    Why it matters

    This new system is expected to improve surgical planning transferability and provide a modest uplift to average selling price.

    With limited available starting in Q3, our new InSet Clutch guide system for anatomic and reverse glenoid procedures will allow surgeons to more effectively transfer and execute the intended surgical plan in the OR.

    Q&A highlights

    6

    Why is H2 guidance flat compared to H1, unlike last year, and are there competitive dynamics from a new robotic system affecting this?

    Management expressed high conviction in the guidance, citing accelerated new customer additions and no perceived changes in market dynamics or competitive pressures influencing the outlook.

    “There is nothing that we are remarking about or considering as it relates to any changes in the market dynamics in the second half of the year. And I'd characterize that, like all quarters that we have reported on so far, we have presented numbers that we consider to be very high conviction numbers.”

    asked by Matthew O'Brien · answered by Robert Ball

    2 min read5 chapters

    Detailed Narrative

    01

    Commercial Strategy & Execution

    Shoulder Innovations' commercial strategy focuses on driving adoption among new surgeons, increasing penetration within existing customer bases, and expanding its product portfolio. The company's W2 commercial leadership targets approximately 1,800 high-volume shoulder specialists in the U.S., leading to accelerated new customer additions. Surgeon-to-surgeon education programs, including over 90 engagement events year-to-date and a national symposium in Napa, are central to its commercial model, demonstrating tangible increases in procedural volumes among attending surgeons.

    02

    Customer Base Dynamics

    The company's growth is primarily driven by its 'core surgeon' category, which is increasing procedural volumes. Surgeons typically progress through prospect, contender, and core categories, with the core category continuously expanding. This trend, combined with sequential increases in new surgeon adds, provides a highly encouraging outlook on the customer base's trajectory. The majority of territories demonstrated over 80% year-over-year growth, indicating broad-based utilization increases.

    03

    ProVoyance Platform & Robotic Integration

    Shoulder Innovations is revamping its ProVoyance enabling technology platform to better align with surgeon needs and integrate with the upcoming InSet Neo robotic solution. This advancement aims to create a comprehensive, integrated enabling technology suite that supports more accurate and effective surgery. The goal is to shift surgical planning and execution towards software-driven decisions, improving outcomes, lowering costs, and reducing capital requirements, particularly for ambulatory surgery centers.

    04

    Clinical Evidence & Data Registry

    The company is actively building a real-world evidence database through its clinical data registry, with data collection efforts ahead of expectations. Preliminary review suggests improvements in postoperative acromial fractures, reduced complications related to instability, advances in patient range of motion, and materially favored aesthetic outcomes. Shoulder Innovations is pursuing partnerships with centers holding large bodies of retrospective data to accelerate the publication of these results by several quarters.

    05

    Strategic Partnerships

    Shoulder Innovations announced two new partnerships. An exclusive collaboration with a leader in additive manufacturing devices for severe deformity cases will enable improved bespoke solutions for complex revision cases. Additionally, a new relationship with a soft tissue device manufacturer is expected to enable commercialization of several devices before year-end, marking an important strategic starting point for future growth, though not expected to materially impact 2026 revenue.

    AI-generated summary of the company’s earnings call. Not investment advice.