Executive Summary / Key Takeaways

• Strategic Transformation Underway: Tenon Medical is rapidly evolving from a single-product company to a diversified sacropelvic fusion solutions provider through the recent strategic acquisitions of SiVantage and SIMPL Medical, alongside the launch of its Catamaran SE platform and an expanded FDA indication for its core Catamaran System.
• Enhanced Commercial Footprint & Product Portfolio: The SiVantage acquisition, in particular, is expected to deliver immediate, meaningful revenue and active case volume, significantly enhancing Tenon's commercial organization, market access, and offering physicians multiple approaches and implant formats for SI joint disorders.
• Robust Clinical Validation & IP Protection: Ongoing clinical research, including the upcoming second interim analysis of the MAINSAIL study, provides critical data reinforcing the Catamaran System's safety, effectiveness, and fusion capabilities, which is foundational for driving payer coverage and market adoption.
• Financial Discipline Amidst Growth Investments: While recent revenue faced headwinds from strategic shifts and reimbursement delays, Tenon has demonstrated disciplined operating expense reduction and fortified its balance sheet with recent equity financings, providing capital for growth initiatives despite continued expected losses.
• Outlook Hinges on Execution & Reimbursement Clarity: The company's future trajectory is highly dependent on successful integration of acquisitions, effective commercialization of new products (Catamaran SE, Symmetry Plus), resolution of reimbursement pre-authorization "coding confusion," and continued positive clinical data.

The Sacroiliac Frontier and Tenon's Genesis

Tenon Medical, Inc. ($TNON) operates at the forefront of addressing sacroiliac (SI) joint disorders, a condition responsible for a significant portion of chronic lower back pain, estimated to affect 15% to 30% of all cases. Founded in 2012 and receiving U.S. Food and Drug Administration (FDA) clearance for its flagship Catamaran SI Joint Fusion System in 2018, Tenon embarked on a mission to transform care for these patients. The company's national launch in October 2022 marked its entry into the U.S. market, initially through an exclusive sales representative agreement that was later restructured to a direct sales and commission-based model.

The SI joint market, while substantial, is highly competitive, populated by both specialized players and larger orthopedic giants. Tenon's initial strategy centered on establishing its proprietary technology and building clinical evidence, a critical differentiator in a segment often lacking robust peer-reviewed data. This foundational work has now positioned the company for a pivotal expansion phase, aiming to carve out a more significant market share by diversifying its offerings and strengthening its commercial reach.

Technological Edge: The Catamaran System and Its Evolution

At the heart of Tenon Medical's value proposition is the Catamaran SI Joint Fusion System, a proprietary technology designed for a novel, less invasive inferior-posterior approach to the SI joint. This system utilizes a single, robust titanium implant that passes through both the axial and sagittal planes of the ilium and sacrum, effectively transfixing the SI Joint along its longitudinal axis. A patented osteotome bridge is integral to the implant's design, intended to disrupt the articular portion of the joint and facilitate a true fusion response. Initial clinical results indicate that the Catamaran System promotes fusion, a key benefit evidenced by computerized tomography (CT) scans, which is considered the gold standard by the clinical community. This design aims to reduce morbidity, blood loss, and operative time for patients.

Tenon's commitment to innovation extends beyond its initial offering. The company recently launched the Catamaran SE platform, a second-generation, smaller, low-profile implant. This evolution directly addresses physician feedback, providing significant flexibility, particularly for SI revision surgeries where working around existing implants is often necessary. Management views the Catamaran SE as an "inflection point" that will attract more physicians and contribute meaningfully to top-line growth.

A significant milestone was achieved in March 2025 with the FDA clearance for an expanded indication of the Catamaran System. It can now be used to augment thoracolumbar fusion, allowing it to treat the SI joint as either a standalone treatment or to support a spinal fusion. This expanded use provides complex spine surgeons with a crucial tool to immobilize and stabilize the SI joint at the base of a multilevel fusion, protecting hardware and promoting long-term fusion. This clearance alone opens a "previously untapped market" and represents a "significant increase in addressable market" for Tenon.

Further bolstering its technological moat, Tenon's intellectual property portfolio includes 12 issued U.S. and foreign patents and 31 pending applications. Recent patents cover advanced coatings designed to enhance bone in-growth and fusion, as well as innovative configurations for revising failed SI Joint stabilizations without requiring removal of the original implant. Two European patents for the Catamaran SI joint fixation device further protect its core technology. These differentiators are crucial for Tenon's competitive standing, allowing it to offer unique solutions and potentially command better pricing in a competitive landscape.

Strategic Expansion: A Multi-Product Future

The second quarter of 2025 marked a pivotal strategic shift for Tenon Medical, transforming it from a single-product company into a diversified sacropelvic solutions provider. In August 2025, Tenon completed the strategic acquisition of substantially all assets of SiVantage, Inc. and SIMPL Medical, LLC. The SiVantage acquisition brought in the SImmetry and SImmetry+ technologies, delivering active case volume, revenue-generating technologies, and a robust pipeline. This move significantly enhances Tenon's commercial organization, unlocking new pathways through hospital approval processes, distribution networks, and market access.

The SiVantage transaction involved a consideration of $750,000 in cash, 710,300 shares of common stock (with 473,533 held in escrow), a royalty equal to 15% of SI Products sales for one year and 10% for the following four years (capped at $5 million), and a deferred cash payment of up to approximately $1.3 million contingent on warrant exercises. Additionally, 867,356 shares of common stock are contingent on achieving aggregate sales milestones of $1 million, $10 million, and $20 million for SI Products. The SIMPL acquisition, focusing on posterior SI implant technology, involves a royalty equal to 30% of net revenue for five years (reducing to 20% if aggregate payments exceed $20 million), with an option to pay up to 33.3% of quarterly royalties in stock.

This multi-product strategy is a direct response to the diverse needs of physicians, offering "multiple approaches to the anatomy, multiple formats of implant to address the issue, whether they're dealing with a primary situation, a revision situation or an adjunctive situation and a bigger procedure." The integration of SiVantage is expected to take 60 to 90 days, with audited financials anticipated by mid-October. Furthermore, the company has onboarded key former SiVantage executives, Wyatt Geist as Chief Innovation Officer and Nate Grawey as Chief Commercial Officer, bringing "real horsepower to the team" to accelerate growth initiatives.

Beyond acquisitions, Tenon is actively preparing for initial alpha surgeries for the newly developed Symmetry Plus system in Q4 2025, with a full commercial launch projected for early 2026. This next-generation fusion platform, utilizing a lateral approach, is designed to further enhance the SI joint portfolio with differentiated features for long-term fusion outcomes. The company's commercial expansion also includes ongoing physician education through workshops (16 in Q2 2025, 34 in Q1 2025) and a growing sales force comprising 6 direct regional managers and 42 independent distributor contracts. Cross-selling of the combined portfolio has already commenced post-acquisition.

Clinical Validation: The Bedrock of Adoption

Clinical evidence is paramount in the medical device industry, particularly for securing physician adoption and payer coverage. Tenon Medical is deeply committed to this, funding and executing its prospective, multicenter, single-arm MAINSAIL post-market study. This study evaluates the clinical outcomes of patients treated with the Catamaran System, reviewing patient-reported outcomes, radiographic assessments, and adverse events over 24 months.

The first peer-reviewed interim analysis, published in Q3 2024, demonstrated statistically significant reductions in SI joint pain and disability scores at six months, a robust safety profile, high patient satisfaction, and definitive evidence of fusion response at 12 months, as confirmed by independent radiologists via CT scans. With over 1,000 surgeries performed to date, the Catamaran System has shown an exceptional safety profile. The second interim analysis, on track for publication in Q2 2025, will further strengthen this evidence with a larger cohort of 12-month CT scan fusion data, alongside ODI and VAS scores, providing "powerful evidence" to support the Catamaran approach. The SiVantage acquisition also brings "meaningful fusion data" that will support the newly acquired technologies. This robust clinical data is not only compelling for treating physicians but also forms the "foundation to achieve positive coverage throughout the payer network."

Financial Performance and Liquidity: A Turnaround in Progress

Tenon Medical's recent financial performance reflects a company in transition, balancing growth investments with disciplined cost management. For the second quarter of 2025, revenue was $564,000, a 37% decrease from $901,000 in Q2 2024. For the six months ended June 30, 2025, revenue stood at $1.29 million, down 20% from $1.62 million in the prior year period. This decline was primarily attributed to lower procedure volumes and account mix headwinds, exacerbated by the "strategic shift in our commercial initiatives with the impending SiVantage acquisition," which temporarily put commercial efforts "on hold."

Gross profit for Q2 2025 was $245,000, resulting in a gross margin of 43%, down from 52% in Q2 2024. For the first half of 2025, gross profit was $568,000, with a 44% margin, compared to 58% in H1 2024. This margin compression stemmed from reduced procedure volumes and lower revenue against consistent variable direct product costs and fixed production overhead. However, operating expenses saw a significant improvement, totaling $3.1 million in Q2 2025, a 29% reduction year-over-year from $4.3 million. This was driven by "disciplined spending and project timing," as well as reduced stock-based compensation across general & administrative (G&A), research & development (R&D), and sales & marketing. Consequently, the net loss for Q2 2025 improved to $2.8 million, compared to $3.8 million in Q2 2024. For the full year 2024, revenue grew 12% to $3.3 million, and gross margin improved by 10 percentage points to 52%, reflecting initial successes in market share building.

As of June 30, 2025, Tenon Medical held $7.8 million in cash and cash equivalents and notably, no outstanding debt. The company has actively sought to fortify its balance sheet, raising $7.1 million in gross proceeds from equity financings in Q1 2025 and approximately $9.6 million in net proceeds from equity in Q3 2024. Despite these efforts, the company acknowledges "substantial doubt about its ability to continue as a going concern for one year" from the 10-Q filing date, as existing cash is not deemed sufficient for 12 months. Management plans to raise additional capital through equity or debt, which could lead to stockholder dilution or restrictive covenants.

Competitive Landscape and Strategic Positioning

Tenon Medical operates in a highly competitive medical devices industry, facing established players such as SI-Bone, Inc. , Globus Medical, Inc. , and Zimmer Biomet Holdings, Inc. . These competitors offer a range of SIJ fusion systems and broader spinal implants, vying for the same surgeon and hospital networks.

TNON's competitive positioning is evolving. Historically, as a smaller, single-product company, it has lagged larger rivals in terms of operational scale, market presence, and financial metrics. For instance, SI-Bone, Inc. has demonstrated more consistent revenue growth and improving profitability, while Globus Medical, Inc. boasts significant scale, higher operating margins, and a broader product portfolio. Zimmer Biomet Holdings, Inc. , a global giant, benefits from extensive reach and brand recognition. Tenon's TTM Gross Profit Margin of 45.44% lags SI-Bone, Inc. (SIBN)'s 79% and Globus Medical, Inc. 's 59%, indicating a need for improved operational efficiency and scale. Similarly, TNON's deeply negative operating and net profit margins reflect its earlier-stage, investment-heavy profile compared to the more established profitability of Globus Medical, Inc. (GMED) and Zimmer Biomet Holdings, Inc. (ZBH).

However, Tenon's recent strategic moves are designed to address these competitive disadvantages. The acquisition of SiVantage and SIMPL Medical allows Tenon to offer a "multiproduct dynamic approach fusion solution that differentiates Tenon in an increasingly competitive sacropelvic marketplace." This diversification provides physicians with "multiple approaches to the anatomy, multiple formats of implant," moving beyond a "one-size-fits-all" approach. This strategy, combined with its proprietary Catamaran technology, the specialized Catamaran SE, and the expanded FDA indication for thoracolumbar fusion, positions Tenon with niche technological advantages that can appeal to specific surgical preferences and patient needs. The company's robust intellectual property portfolio further strengthens its competitive moat.

Tenon acknowledges that it has "catching up to do" against competitors with longer histories in the SI joint space. Its strategy involves leveraging its clinical data, expanding its sales force, and integrating the newly acquired portfolios to drive cross-selling synergies and market access. The "coding confusion" in reimbursement, while a challenge, is being actively addressed through advocacy and data, which could level the playing field as clarity emerges.

Outlook and Risks: A Path to Scale

Tenon Medical anticipates entering a "period of sustained momentum" driven by the SiVantage integration, the full commercial launch of Catamaran SE, and the upcoming MAINSAIL interim data publication. Management expects a "good bounce back in Q3" for Catamaran revenue, complemented by an "immediate revenue pickup meaningful for Tenon with the Symmetry product line." The Symmetry Plus system, with alpha surgeries in Q4 2025 and a full launch in early 2026, is also expected to be a significant catalyst. These initiatives are poised to expand the addressable market, strengthen the clinical foundation, and drive top-line growth.

The company's outlook hinges on several critical assumptions. The resolution of reimbursement pre-authorization "coding confusion," with clarity expected to emerge over time (e.g., with the 2026 coding book), is crucial for alleviating delays and facilitating adoption. Successful integration of the SiVantage and SIMPL acquisitions, effective expansion of the sales force, and continued positive clinical data from the MAINSAIL study are also key.

However, significant risks persist. The "going concern" uncertainty highlights the company's need for additional capital within the next 12 months. The pace at which available capital is consumed could accelerate due to unforeseen changes in business operations, regulatory developments, or R&D spending. The ability to raise future financing on acceptable terms, or at all, remains a challenge, with potential for significant stockholder dilution or restrictive debt covenants. Furthermore, the company has identified a material weakness in internal controls due to its size, impacting segregation of duties and disclosure controls, though mitigation measures are underway. Continued reimbursement challenges, despite anticipated clarity, could also impede revenue growth.

Conclusion

Tenon Medical is at a pivotal juncture, transforming from a focused SI joint device developer into a more comprehensive sacropelvic fusion solutions provider. Its core Catamaran System, enhanced by the Catamaran SE and an expanded FDA indication for thoracolumbar fusion, forms a strong technological foundation. The strategic acquisitions of SiVantage and SIMPL Medical represent a bold move to diversify its product portfolio, expand market access, and build the necessary scale to compete more effectively in a competitive industry.

The investment thesis for Tenon Medical rests on its ability to successfully integrate these new assets, leverage its robust clinical data to drive payer coverage, and execute its commercial expansion strategy. While the company faces significant financial hurdles, including ongoing losses and the need for additional capital, its disciplined cost management and strategic product roadmap offer a compelling narrative of a company striving for long-term growth and market relevance. Investors should closely monitor the integration progress, the impact of new product launches, and the resolution of reimbursement challenges as key indicators of Tenon Medical's trajectory towards sustainable profitability.