Business Overview and Company History
SI-BONE, Inc. (NASDAQ:SIBN) is a medical device company dedicated to solving musculoskeletal disorders of the sacropelvic anatomy. The company has established itself as a leader in the field, pioneering proprietary minimally invasive surgical implant systems to address sacroiliac joint dysfunction, pelvic fixation, and pelvic trauma management.
SI-BONE was founded in 2008 by the principal inventor of the iFuse triangle, orthopedist Mark A. Reiley, M.D., the company's current Chairman of the Board, Jeffrey W. Dunn, and orthopedic surgeon Leonard Rudolf, M.D. The company's flagship product, the iFuse Implant System, was first launched in 2009 and has since become a widely adopted solution for sacroiliac joint fusion procedures.
Since its inception, SI-BONE has faced various challenges in establishing its presence in the medical device industry. In the early years, the company had to convince physicians that its products were attractive alternatives to competitors' products and that its procedures were superior to existing surgical and non-surgical treatments. Additionally, SI-BONE had to work diligently to obtain adequate coverage and reimbursement from third-party payors for its procedures.
Despite these challenges, SI-BONE has achieved significant milestones. As of December 31, 2024, over 115,000 procedures have been performed using SI-BONE's products by over 4,300 physicians in the United States and 38 other countries since the introduction of iFuse in 2009. This widespread adoption demonstrates the company's success in overcoming initial hurdles and gaining acceptance in the medical community.
SI-BONE's product portfolio has expanded significantly since its founding. In addition to the original iFuse implant, the company has launched multiple product lines to address various aspects of sacropelvic disorders. These include the iFuse-3D Implant System in 2017, which combines the triangular cross-section of the original iFuse with a proprietary 3D-printed porous surface and fenestrated design for better bone in-growth and fusion.
The company's innovation continued with the introduction of the iFuse TORQ in 2021, a line of 3D-printed threaded implants designed for pelvic trauma and sacroiliac joint fusion applications. In 2022, SI-BONE launched the iFuse Bedrock Granite Implant System, providing sacroiliac fusion and sacropelvic fixation as a foundational element for segmental spinal fusion. Most recently, in 2024, the company introduced the iFuse INTRA and iFuse TORQ TNT products, further expanding its comprehensive portfolio of sacropelvic solutions.
In the United States, SI-BONE has obtained clearances for its iFuse, iFuse-3D, iFuse TORQ, and iFuse Bedrock Granite products for applications in sacroiliac joint dysfunction, adult spinal deformity, and pelvic trauma. The iFuse TORQ TNT implant has clearances for applications in pelvic trauma and sacroiliac joint dysfunction. These regulatory approvals have been crucial in allowing the company to address a wide range of musculoskeletal disorders and expand its market presence.
Financial Performance and Metrics
SI-BONE has demonstrated impressive financial performance in recent years. For the full year 2024, the company reported total revenue of $167.2 million, reflecting over 20% growth compared to the previous year. This strong revenue growth was driven by a 21% increase in U.S. revenue to $158.4 million, as well as a modest improvement in average selling prices due to procedure mix. International revenue accounted for $8.8 million or 5% of total revenue.
The company's gross profit for the full year 2024 increased 21% to $132.1 million, with a gross margin of 79%. This healthy gross margin profile can be attributed to the company's initiatives to streamline its supply chain and improve lead times and manufacturing costs. The gross margin for 2024 was consistent with the prior year and exceeded the company's original guidance by 100 basis points.
Despite the company's focus on growth, SI-BONE has also made strides in achieving profitability. In the fourth quarter of 2024, the company reported positive adjusted EBITDA of $1.9 million, a significant improvement from the $4.8 million adjusted EBITDA loss in the prior-year period. For the full year 2024, the adjusted EBITDA loss narrowed to $5.1 million, representing a more than 70% improvement compared to 2023.
The company's net income for the full year 2024 was -$30.9 million, while operating cash flow was -$12.4 million and free cash flow was -$22.9 million. In the fourth quarter of 2024, SI-BONE reported revenue of $49.0 million, representing a 26% year-over-year growth, with a net income of -$4.5 million.
Liquidity and Capital Structure
As of December 31, 2024, SI-BONE had $150 million in cash and marketable securities, providing a strong liquidity position to support its growth initiatives and strategic priorities. The company's debt-to-equity ratio stood at 0.22, indicating a relatively low level of leverage. SI-BONE also has access to a $15 million revolving credit facility, further enhancing its financial flexibility.
The company's current ratio of 7.66 and quick ratio of 6.66 demonstrate a strong ability to meet short-term obligations and maintain operational liquidity. These robust liquidity metrics position SI-BONE well to continue investing in research and development, expand its commercial infrastructure, and pursue strategic opportunities.
Product Portfolio and Market Opportunity
SI-BONE's diverse product portfolio addresses a wide range of musculoskeletal disorders in the sacropelvic anatomy. The company's flagship iFuse and iFuse-3D Implant Systems are primarily used for sacroiliac joint fusion procedures, which the company estimates has a total addressable market opportunity of approximately $2.4 billion per year in the United States alone.
The more recently launched iFuse TORQ and iFuse Bedrock Granite products have expanded the company's reach into pelvic fixation and management of pelvic fractures, which the company estimates represents a combined addressable market opportunity of approximately $350 million and $130 million, respectively.
Furthermore, the company's introduction of the iFuse INTRA allograft bone implants has allowed it to cater to physicians who prefer to use this type of implant material for sacroiliac joint stabilization and fusion.
Growth Drivers and Strategic Initiatives
SI-BONE's growth strategy is centered around expanding its physician base, increasing procedure density with existing customers, and driving innovation through new product launches. The company has made significant investments in its commercial infrastructure, growing its U.S. sales force to 158 territory managers and 71 clinical specialists as of December 31, 2024.
The company's focus on physician engagement and training has also been a key driver of growth, with the number of U.S. physicians performing at least one procedure increasing to nearly 2,000 in 2024. Additionally, the company has seen a 40% increase in the number of physicians performing multiple procedure types, highlighting the success of its cross-selling efforts.
Looking ahead, SI-BONE's robust pipeline of innovative products, including its recently announced third breakthrough device designation from the FDA, positions the company for continued growth and market expansion. The company's clinical evidence-driven approach and strong focus on reimbursement have also been instrumental in driving adoption of its solutions.
Guidance and Future Outlook
SI-BONE has provided guidance for fiscal year 2025, projecting worldwide revenue of $193.5 million to $195.5 million, implying year-over-year growth of approximately 16% to 17%. The company expects its 2025 annual gross margin to be between 77% and 78%, with annual operating expenses growing approximately 9% at the midpoint of the revenue range.
Importantly, SI-BONE anticipates delivering positive adjusted EBITDA in the second half of 2025 and for the full year 2025, marking a significant milestone in the company's path to profitability. This guidance reflects management's confidence in the continued adoption of SI-BONE's products and the company's ability to execute on its strategic initiatives.
Risks and Challenges
While SI-BONE has demonstrated impressive growth and financial performance, the company faces several risks and challenges that investors should be aware of. These include, but are not limited to:
1. Competitive landscape: The company operates in a highly competitive medical device industry, with larger players such as Globus Medical and Medtronic also offering solutions in the sacropelvic and spinal fusion markets.
2. Regulatory and reimbursement risks: Changes in regulatory requirements or reimbursement policies could impact the company's ability to maintain or expand market access for its products.
3. Supply chain disruptions: Disruptions in the supply of materials and components used in the manufacturing of SI-BONE's products could adversely affect the company's operations and financial performance.
4. Ongoing Department of Justice investigation: In October 2024, SI-BONE received a civil investigative demand from the U.S. Department of Justice related to an investigation under the federal Anti-Kickback Statute and False Claims Act. The company is cooperating with the investigation but is unable to provide an update on the status or potential outcome. This ongoing investigation could result in potential legal and financial implications for the company.
Despite these risks, SI-BONE's strong financial position, innovative product portfolio, and focus on clinical evidence and reimbursement support have positioned the company as a leader in the sacropelvic solutions market.
Conclusion
SI-BONE, Inc. has established itself as a pioneering force in the medical device industry, leveraging its expertise in sacropelvic anatomy and biomechanics to develop a comprehensive portfolio of innovative solutions. The company's robust financial performance, with over 20% revenue growth and a path to profitability, combined with its strategic initiatives and strong product pipeline, suggest a bright future for SI-BONE.
The company's ability to exceed its own internal estimates for physician demand for new products like Granite 9.5 and TNT in Q4 2024 demonstrates the strong market reception of its innovations. Furthermore, SI-BONE's achievement of positive adjusted EBITDA in Q4 2024 and the significant narrowing of its full-year adjusted EBITDA loss showcase the company's progress towards sustainable profitability.
While SI-BONE faces some industry-specific risks and challenges, including the ongoing Department of Justice investigation, its strong market position, commitment to innovation, and focus on clinical evidence and reimbursement make it a compelling investment opportunity for those seeking exposure to the growing musculoskeletal device market. The company's solid liquidity position, with $150 million in cash and marketable securities and access to additional credit, provides a strong foundation for future growth and strategic initiatives.
As SI-BONE continues to execute on its growth strategy and expand its product portfolio, it is well-positioned to capitalize on the large addressable market opportunities in sacroiliac joint fusion, pelvic fixation, and pelvic trauma management. With its guidance for continued revenue growth and the expectation of achieving positive adjusted EBITDA in 2025, SI-BONE appears poised for continued success in the evolving landscape of sacropelvic solutions.