What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-05 compared with 2025-10-30 · 37 added, 63 removed, 168 unchanged (37% of the section changed)

11 unchanged sentences

To deliver consistent, predictable growth, we have added, and intend to continue to add, clinically astute and exclusive sales team members to reach untapped surgeons, hospitals, and national accounts and better penetrate existing accounts and territories.

Recent Developments

0.75% Senior Convertible Notes due 2030

In March 2025, we issued $405.0 million principal amount of unsecured senior convertible notes with a stated interest rate of 0.75% (the "2030 Notes").

The 2030 Notes began accruing interest immediately and interest is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2025.

The 2030 Notes are convertible into shares of our common stock based upon an initial conversion rate of 64.3407 shares of our common stock per $1,000 principal amount of 2030 Notes (equivalent to an initial conversion price of approximately $15.54 per share).

The net proceeds from the sale of the 2030 Notes were approximately $392.9 million after deducting the offering expenses.

The 2030 Notes will mature on March 15, 2030, unless earlier converted, redeemed, or repurchased.

We used $42.5 million of the net proceeds from the 2030 Notes offering to enter into separate capped call instruments with certain financial institutions.

The capped call transactions effectively limit the premium for conversion of the 2030 Notes to 100% and are generally expected to reduce potential dilution to our common stock upon any conversion of the 2030 Notes and/or offset any payments we make upon conversion.

In addition, we repurchased 80% of our 2026 convertible notes (the "2026 Notes") for approximately $268.4 million.

We intend to use the remainder of the net proceeds from the 2030 Notes for general corporate purposes.

Revenue and Expense Components

34 unchanged sentences

Critical accounting policies are those that, in management’s view, are most important in the portrayal of our financial condition and results of operations.

Management believes there have been no material changes during the three months ended September 30, 2025, to the critical accounting policies discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC.

Management believes there have been no material changes during the three months ended March 31, 2026, to the critical accounting policies discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC.

Results of Operations

1 unchanged sentence

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except %)

Revenue from products and services

Revenue from products and services increased $45.8 million, or 30%, and $116.5 million, or 27%, during the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

Revenue from products and services increased $22.9 million, or 14%, during the three months ended March 31, 2026, compared to the same period in 2025.

The increase was primarily due to an increase in product volume that was due to the increase in our surgeon user base, continued expansion of our new product portfolio, and increasing adoption of our technology.

1 unchanged sentence

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except %)

Cost of sales

Cost of sales increased $11.2 million, or 23%, and $36.7 million, or 28%, for the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The increase was primarily due to an increase in product volume.

Cost of sales increased $2.4 million, or 5%, for the three months ended March 31, 2026, compared to the same period in 2025.

The increase was primarily due to an increase in product volume offset by a decrease in stock-based compensation.

Operating expenses

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except %)

7 unchanged sentences

Research and development expenses .

Research and development expenses decreased $1.7 million, or 8%, and $3.5 million, or 6%, for the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The decrease during the three months and nine months ended September 30, 2025 was primarily due to a decrease in stock-based compensation.

Research and development expenses increased $1.0 million, or 6%, for the three months ended March 31, 2026, compared to the same period in 2025.

The increase was primarily due to an increase in compensation expense.

Sales, general and administrative expenses.

Sales, general and administrative expenses increased $15.1 million, or 14%, and $34.3 million, or 10%, during the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

Sales, general and administrative expenses increased $10.0 million, or 8%, during the three months ended March 31, 2026, compared to the same period in 2025.

The increase was primarily due to higher compensation-related costs and variable selling expenses associated with the increase in revenue, and our continued investment in building our strategic distribution channel.

Litigation-related expenses.

Litigation-related expenses increased $4.4 million, or 212%, and $11.7 million, or 136%, for the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The increase for the three month period ended September 30, 2025 was primarily related to ongoing litigation.

The increase for the nine month period ended September 30, 2025 was primarily related to a litigation settlement during the three months ended March 31, 2025, and ongoing litigation matters.

Litigation-related expenses decreased $11.7 million, or 96%, for the three months ended March 31, 2026, compared to the same period in 2025.

The decrease was primarily related to a litigation settlement during the three months ended March 31, 2025.

Amortization of acquired intangible assets.

Amortization of acquired intangible assets remained consistent for the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

Amortization of acquired intangible assets remained consistent for the three months ended March 31, 2026, compared to the same period in 2025.

Restructuring expenses.

Restructuring expenses decreased $0.9 million, or 100%, and $1.5 million, or 80%, during the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The decrease in restructuring expenses is primarily due to costs associated with the relocation of office facilities in Paris, France and personnel related expenses in the prior period that did not recur.

Restructuring expenses decreased $0.4 million, or 100%, during the three months ended March 31, 2026, compared to the same period in 2025.

The decrease in restructuring expenses is primarily due to personnel related expenses in the prior period that did not recur.

Total interest expense and other expense, net

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except %)

5 unchanged sentences

Total other expense, net

Interest expense, net, increased $6.3 million, or 96%, and $15.3 million, or 86%, during the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The increase in interest expense, net, was primarily due to drawing an additional $50.0 million on the Braidwell Term Loan in October 2024, and the amortization of debt discount associated with the 2030 Notes.

Net cash interest was $5.3 million and $16.0 million for the three and nine months ended September 30, 2025, respectively.

Net non-cash interest was $7.6 million and $17.1 million for the three and nine months ended September 30, 2025, respectively.

Loss on debt extinguishment increased $17.6 million, or 100%, during the nine months ended September 30, 2025, compared to the same period in 2024.

The increase in loss on debt extinguishment relates to the redemption of 80% of the 2026 Notes.

Gain on derivative liability increased $0.6 million, or 100%, during the nine months ended September 30, 2025, compared to the same period in 2024.

The increase in gain on derivative liability relates to the change in the valuation of the derivative liability associated with 2030 Notes from inception to June 12, 2025, the date the conditions necessary for separate accounting of the conversion option as a derivative liability were no longer met.

Other income, net, decreased $0.3 million, or 51%, and increased $0.7 million, or 82%, during the three and nine months ended September 30, 2025, respectively, compared to the same period in 2024.

The increase in other income, net, during the nine months ended September 30, 2025, was primarily due to receiving the employee retention credit and fluctuations in foreign currency rates.

Interest expense, net, increased $3.9 million, or 49%, during the three months ended March 31, 2026, compared to the same period in 2025.

The increase in interest expense, net, was primarily due the amortization of debt discount associated with the 2030 Notes.

Net cash interest was $4.9 million for the three months ended March 31, 2026.

Net non-cash interest was $6.8 million for the three months ended March 31, 2026.

Loss on debt extinguishment decreased $17.6 million, or 100%, during the three months ended March 31, 2026, compared to the same period in 2025.

The decrease in loss on debt extinguishment relates to the redemption of 80% of the 2026 Notes in March 2025.

Gain on derivative liability decreased $17.4 million, or 100%, during the three months ended March 31, 2026, compared to the same period in 2025.

The decrease in gain on derivative liability relates to the change in the valuation of the derivative liability associated with 2030 Notes from inception to March 31, 2025.

As of June 12, 2025 the conditions necessary for separate accounting of the conversion option as a derivative liability were no longer met.

Other income, net, increased $0.1 million, or 32%, during the three months ended March 31, 2026, compared to the same period in 2025.

The increase in other income, net, during the three months ended March 31, 2026, was primarily due to fluctuations in foreign currency rates.

Income tax provision

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except %)

Income tax provision (benefit)

The change in the income tax provision (benefit) for the three and nine months ended September 30, 2025, compared to the same period in 2024, was primarily related to the recognition of income taxes in several jurisdictions.

The change in the income tax provision (benefit) for the three months ended March 31, 2026, compared to the same period in 2025, was primarily related to the recognition of income taxes in several jurisdictions.

Liquidity and Capital Resources

19 unchanged sentences

We have disclosed all material accruals for pending litigation or investigations in Note 8, Commitments and Contingencies, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Cash and cash equivalents were $155.7 million and $138.8 million at September 30, 2025, and December 31, 2024, respectively.

Cash and cash equivalents were $139.9 million and $160.8 million at March 31, 2026, and December 31, 2025, respectively.

We believe that our existing funds, cash generated from our operations and our existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure and debt service requirements, and other business initiatives we plan to strategically pursue.

Summary of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

6 unchanged sentences

Operating Activities

Cash provided of $24.5 million from operating activities for the nine months ended September 30, 2025, primarily driven by favorable working capital changes, partially offset by inventory purchases and the timing of cash payments and receipts.

Operating activities provided net cash of $1.3 million for the three months ended March 31, 2026, which is primarily related to cash collections offset by costs associated with the continued expansion of our business and inventory purchases.

Investing Activities

We used cash of $37.7 million in investing activities for the nine months ended September 30, 2025, which is primarily related to the purchase of surgical instruments to support the growth of our business and commercial launch of new products and an equity investment.

We used cash of $19.9 million in investing activities for the three months ended March 31, 2026, which is primarily related to the purchase of surgical instruments to support the growth of our business and commercial launch of new products and a $5.0 million note receivable.

Financing Activities

Financing activities provided cash of $29.8 million for the nine months ended September 30, 2025, which is primarily related to proceeds from our 2030 Notes, offset by the repurchase of 80% of our 2026 Notes, the purchase of capped calls of the 2030 Notes, and payments on our revolving line of credit.

Financing activities used cash of $1.8 million for the three months ended March 31, 2026, which is primarily related to cash paid for net settlement of shares, offset by proceeds from financed insurance.

Debt and Commitments

As of September 30, 2025, we had $200.0 million outstanding under the Braidwell Term Loan.

As of March 31, 2026, we had $200.0 million outstanding under the Braidwell Term Loan.

The outstanding loans under the Braidwell Term Loan bear interest at the sum of Term SOFR plus 5.75% per annum.

The Braidwell Term Loan matures on January 6, 2028.

As of September 30, 2025, we had $15.0 million outstanding under the Revolving Credit Facility.

As of March 31, 2026, we had $15.1 million outstanding under the Revolving Credit Facility.

The outstanding loans under the Revolving Credit Facility bear interest at the sum of Term SOFR plus 3.5% per annum.

The Revolving Credit Facility matures on September 29, 2027.

As of September 30, 2025, we had $63.3 million outstanding under the 2026 Notes.

As of March 31, 2026, we had $63.3 million outstanding under the 2026 Notes.

The 2026 Notes accrue interest at a rate of 0.75%, payable semi-annually in arrears on February 1 and August 1 of each year.

1 unchanged sentence

Based on the terms we have the option to pay or deliver cash, shares of our common stock, or a combination thereof, when a conversion notice is received.

As of September 30, 2025, we had $405.0 million outstanding under the 2030 Notes.

As of March 31, 2026, we had $405.0 million outstanding under the 2030 Notes.

The 2030 Notes accrue interest at a rate of 0.75%, payable semi-annually in arrears on March 15 and September 15 of each year.

1 unchanged sentence

Based on the terms we have the option to pay or deliver cash, shares of our common stock, or a combination thereof, when a conversion notice is received.

As of September 30, 2025, we had $2.3 million in other debts that are due in monthly and quarterly installments through maturity in 2027.

As of March 31, 2026, we had $1.6 million in other debts that are due in monthly and quarterly installments through maturity in 2027.

We have an inventory purchase commitment agreement with a third-party supplier, where we are obligated to meet certain minimum purchase commitment requirements through December 2026.

As of September 30, 2025, the remaining minimum purchase commitment under the agreement was $6.2 million.

As of March 31, 2026, the remaining minimum purchase commitment under the agreement was $3.7 million.

Contractual obligations and commercial commitments

As of September 30, 2025, there have been no material changes, outside the normal course of business, in our outstanding contractual obligations from those disclosed within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

As of March 31, 2026, there have been no material changes, outside the normal course of business, in our outstanding contractual obligations from those disclosed within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Off-Balance Sheet Arrangements

1 unchanged sentence

Recent Accounting Pronouncements

Aside from the changes disclosed in Note 1 to the Notes to Condensed Consolidated Financial Statements (Unaudited) under the heading “Recently Issued Accounting Pronouncements,” if any, there have been no new accounting pronouncements or changes to accounting pronouncements during the nine months ended September 30, 2025, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2024, that was filed with the SEC.

Aside from the changes disclosed in Note 1 to the Notes to Condensed Consolidated Financial Statements (Unaudited) under the heading “Recently Issued Accounting Pronouncements,” if any, there have been no new accounting pronouncements or changes to accounting pronouncements during the three months ended March 31, 2026, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2025, that was filed with the SEC.

Forward Looking Statements

31 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis