# CARLSMED, INC. (CARL) Informational only - not investment advice. CIK: 0001794546 SIC: 3841 Surgical & Medical Instruments & Apparatus SIC breadcrumb: [Manufacturing](/division/D/) > [SIC Major Group 38](/major-group/38/) > [SIC 3841 Surgical & Medical Instruments & Apparatus](/industry/3841/) Latest 10-K filed: 2026-02-25 SEC page: https://www.sec.gov/edgar/browse/?CIK=1794546 Filing source: https://www.sec.gov/Archives/edgar/data/1794546/000119312526071551/carl-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 50511000 | USD | 2025 | 2026-02-25 | | Net income | -29634000 | USD | 2025 | 2026-02-25 | | Assets | 130120000 | USD | 2025 | 2026-02-25 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001794546.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | | Revenue | | 27,165,000 | 50,511,000 | | Net income | | -24,257,000 | -29,634,000 | | Operating income | | -24,122,000 | -30,574,000 | | Gross profit | | 20,048,000 | 38,040,000 | | Diluted EPS | | -6.11 | -2.12 | | Operating cash flow | | -25,466,000 | -28,977,000 | | Capital expenditures | | 180,000 | 642,000 | | Assets | | 51,824,000 | 130,120,000 | | Liabilities | | 26,228,000 | 31,251,000 | | Stockholders' equity | -46,130,000 | -70,630,000 | 98,869,000 | | Cash and cash equivalents | 7,222,000 | 40,125,000 | 85,793,000 | | Free cash flow | | -25,646,000 | -29,619,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | | Net margin | | -89.30% | -58.67% | | Operating margin | | -88.80% | -60.53% | | Return on equity | | | -29.97% | | Return on assets | | -46.81% | -22.77% | | Liabilities / equity | | | 0.32 | | Current ratio | | 5.60 | 8.87 | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001794546.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2025-Q2 | 2025-03-31 | | -5,729,000 | | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 12,083,000 | | -1.47 | reported discrete quarter | | 2025-Q3 | 2025-06-30 | | -6,766,000 | | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 13,074,000 | | -0.40 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 15,165,000 | -8,613,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 16,116,000 | -8,696,000 | -0.32 | reported discrete quarter | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance - [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States - [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States - [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States - [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States - [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States - [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized - [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized - [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks - [GDP](/indicator/GDP/): Gross Domestic Product - [GPDI](/indicator/GPDI/): Gross Private Domestic Investment - [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment - [PCEC](/indicator/PCEC/): Personal Consumption Expenditures - [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services - [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt - [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product - [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit - [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts - [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures - [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing - [USCONS](/indicator/USCONS/): All Employees, Construction - [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade - [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities - [USGOVT](/indicator/USGOVT/): All Employees, Government - [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private - [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods - [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft - [BUSINV](/indicator/BUSINV/): Total Business Inventories - [EXPGS](/indicator/EXPGS/): Exports of Goods and Services - [IMPGS](/indicator/IMPGS/): Imports of Goods and Services - [IR](/indicator/IR/): Import Price Index (End Use): All Commodities - [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1794546/000179454626000011/carl-20260331.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high Filing date: 2026-05-05 Report date: 2026-03-31 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operations and financial condition. You should read this discussion and analysis in conjunction with our unaudited financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2025 included in our Annual Report on Form 10-K. Unless the context otherwise requires, references to “Carlsmed,” the “Company,” “we,” “us,” and “our” refer to Carlsmed, Inc., a Delaware corporation. This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions, and projections. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of the Annual Report on Form 10-K. See the section titled “Special Note Regarding Forward-Looking Statements.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Overview Company Summary We are a medical technology company pioneering AI-enabled personalized spine surgery solutions with a mission to improve outcomes and decrease the cost of healthcare for spine surgery and beyond. Our technology is powered by AI-enabled, outcome-based algorithms that provide personalized surgical plans for spine fusion. The surgical kit delivered to customers includes aprevo interbody implants for a custom vertebral fit for each patient’s unique pathology and vertebral bone topography, and single-use surgical instruments. The aprevo Technology Platform supports surgeons in achieving proper spinal alignment as they seek to improve surgical outcomes for patients with degenerative disc disease (“DDD”), including spinal deformity conditions. We market the aprevo Technology Platform to surgeons, hospitals and ambulatory surgical centers in the United States through a combination of our direct sales team and independent sales agents. Our direct sales team consists of Area Vice Presidents, Sales Directors, Account Managers, and Strategic and National Account leadership, who are primarily responsible for promoting our platform to surgeons, supporting digital file exchange and other connectivity between our Company and hospitals, and working with customers to secure required approvals for our products. Our direct sales team is also responsible for recruiting independent sales agents who cover each aprevo surgery in the operating room. Since we began commercializing the aprevo Technology Platform in 2021, we have experienced sequential quarterly and annual revenue growth from its rapid commercial adoption. For the three months ended March 31, 2026 and 2025, we recognized revenue of $16.1 million and $10.2 million, respectively, representing period-over-period growth of 58.2%. Our business model depends on our ability to timely deliver the aprevo Technology Platform to allow surgeons to maintain surgical schedules for their patients. In November 2024, we launched our enhanced digital production system (“DPS”) that enabled a reduction in our manufacturing time of 10 business days from surgeons' approvals of the digital surgical plans. Beginning in February 2026, this lead time was further reduced to six business days. Our medical devices are manufactured to our specifications by contract manufacturing organizations (“CMOs”) who meet our manufacturer qualification standards. Initial Public Offering On July 24, 2025, we completed our initial public offering of 6,700,000 shares of our common stock, at a price to the public of $15.00 per share (the “IPO”). We received net proceeds of $93.5 million from the IPO, after deducting underwriting discounts and commissions and before additional offering expenses of $5.4 million paid by us. 21 Regulatory Overview aprevo Lumbar In July 2020, the U.S. Food and Drug Administration (“FDA”) awarded us a Breakthrough Device Designation, indicating that aprevo lumbar interbody implants are likely to provide a more effective treatment than the use of stock implants. In December 2020, the FDA, through its 510(k) regulatory clearance pathway, cleared our aprevo interbody implants for lumbar fusions to correct adult spinal deformity (“ASD”). After FDA clearance, we commenced the limited clinical release of the aprevo Technology Platform, with the first U.S. aprevo patient procedure completed in February 2021. In August 2022, the FDA, through its 510(k) regulatory clearance pathway, cleared the aprevo Technology Platform for the treatment of patients with several degenerative conditions of the lumbar spine. aprevo Cervical In September 2023, the FDA granted us a Breakthrough Device Designation for aprevo in cervical spine fusion. In November 2024, we received FDA 510(k) clearance for our aprevo Technology Platform for cervical spine fusion surgery. In July 2025, the first aprevo cervical procedure was successfully completed at UC San Diego Health and we commercially launched aprevo Cervical in December 2025. Key Factors Affecting Our Results of Operations and Performance Our financial performance has been driven by the following key factors that we believe will persist for the foreseeable future. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth. Our ability to successfully address the factors below is subject to various risks and uncertainties. Market Adoption and Clinical Evidence Since its full commercial launch in October 2021, the aprevo Technology Platform for spine fusion surgery has been used to treat more than 3,700 patients through March 31, 2026. We estimate there are approximately 4,000 spine surgeons across the United States whose patients could benefit from using our platform. As of March 31, 2026, we had an increase of over 60% of trained surgeon users on the aprevo Technology Platform that have completed one or more aprevo procedures as compared to March 31, 2025. Over time, we expect to meaningfully grow the base of surgeons using the aprevo Technology Platform and its penetration with existing surgeon users. To achieve this, we plan to grow our commercial infrastructure and expand various sales and marketing initiatives, including supporting medical education programs, surgeon fellowships, and surgeon training at top academic institutions. We are also committed to building upon our strong foundation of clinical evidence demonstrating the efficacy of our aprevo Technology Platform. Clinical data publications are important tools for surgeon education and patient awareness of the potential significant benefits of our personalized solution as compared to stock implants. Our COMPASS Registry is generating ongoing real-world evidence of patient outcomes from lumbar spine surgery with the aprevo Technology Platform. For example, a study on 90 COMPASS patients with DDD published at the 2025 Congress of Neurological Surgeons meeting demonstrated that aprevo significantly improved restoration of distal lumbar lordosis with zero revision surgeries for adjacent segment disease at 20-month median follow-up. In December 2025, the Global Spine Journal published peer-reviewed two-year follow-up data on a retrospective cohort of ASD patients treated with aprevo, demonstrating a 74% reduced rate of mechanical complication–related reoperations compared to patients who had been treated using stock implants. 22 Expansion of Our Product Portfolio and Investments in Research and Development Our research and development initiatives are focused on introducing new products, enhancements and capabilities aimed at increasing the value provided by our aprevo Technology Platform to patients, surgeons, and payors. We are developing new iterations of our algorithm and software platform to drive further improvements in surgical planning and in turn help surgeons to make more informed decisions to best treat their patients. In November 2024, we received FDA 510(k) clearance for our aprevo interbody implants for cervical spine fusion surgery as part of the FDA-cleared aprevo Technology Platform and commenced commercialization in December 2025. Also in December 2025, we received FDA 510(k) clearance for our accompanying personalized cervical plating solutions as part of the aprevo cervical platform. In February 2026, we completed the first personalized plating procedure using the corra Cervical Plating System at the University of California San Francisco and are planning for its full commercial launch by December 2026. We expect to drive adoption of the aprevo cervical indication with our existing base of surgeons who are actively using the aprevo Technology Platform for lumbar spine fusion surgeries. In February 2026, as part of a limited market evaluation, we announced the successful completion of the first aprevo bi-lateral posterior lumbar spine surgery procedure at the University of Colorado Hospital in Denver, Colorado. The addition of aprevo bi-lateral expands our lumbar offering across multiple spinal fusion techniques and integrates seamlessly with our broader aprevo platform technology. The full commercial launch of aprevo bi-lateral is planned for the fourth quarter of 2026. We also believe that our platform technology has the potential to be utilized across various spinal indications and disease states such as cervical corpectomy and cervical disc arthroplasty. Additional FDA clearances/approvals would be required for these or any other new indications. Hospital Inpatient and Outpatient Reimbursement Future changes in the level of reimbursement that hospitals and outpatient facilities receive from payors for lumbar and cervical fusion surgical procedures could have a significant impact on our results of operations. The level of payors' reimbursement for procedures using our aprevo Technology Platform depends substantially on our continued ability to generate clinical evidence, garner support from key opinion leaders, and gain advocacy for patient access to our technology with Centers for Medicare & Medicaid Services ("CMS") and commercial payors. aprevo® Lumbar Procedures using our aprevo Technology Platform are covered by Medicare, Medicare Advantage, and commercial payors. For the three months ended March 31, 2026, we estimate that our hospital customers’ payor mix consisted of approximately 44% for commercial insurance and 56% for both Medicare and Medicare Advantage insurance. Effective October 2024, CMS adopted a new MS-DRG coding system which reassigns MS-DRG codes for certain lumbar spine fusion procedures when “custom-made anatomically designed interbody fusion devices” (such as our aprevo Technology Platform) are utilized. This provides additional reimbursement for our hospital customers, compared to the reimbursement for fusion procedures that use stock implants. We believe this, among other factors, will support our customers' continued demand for use of our technology in lumbar spine fusion surgeries. The Fiscal Year 2027 Inpatient Prospective Payment System (IPPS) proposal was released by CMS on April 10, 2026. The proposal includes updated assignment of lumbar spine fusion procedures utilizing aprevo to three new MS-DRG codes: 523, 524, or 525, rather than current coding in the 400 DRG series. If finalized as proposed, we [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operations and financial condition. You should read this discussion and analysis in conjunction with our audited financial statements and related notes included in this Annual Report. Unless the context otherwise requires, references to “Carlsmed,” the “Company,” “we,” “us,” and “our” refer to Carlsmed, Inc., a Delaware corporation. This discussion contains forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions, and projections. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this Annual Report. See the section titled “Special Note Regarding Forward-Looking Statements.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Overview Company Summary We are a commercial-stage medical technology company pioneering AI-enabled personalized spine surgery solutions with a focus on becoming the standard of care for spine fusion surgery. Our mission is to improve outcomes and decrease the cost of healthcare for spine surgery and beyond. The aprevo Technology Platform was designed to address the limitations of traditional lumbar and cervical spine fusion surgery and aims to optimize patient outcomes and reduce the need for revision surgeries. Our technology is powered by AI-enabled, outcome-based algorithms that provide personalized surgical plans for spine fusion. The aprevo surgical kit delivered to customers includes interbody implants for a custom vertebral fit for each patient’s unique pathology and vertebral bone topography, and single-use surgical instruments. The aprevo Technology Platform supports surgeons in achieving proper spinal alignment for patients with degenerative disc disease, which can improve clinical outcomes and reduce the likelihood of revision surgeries. We currently market the aprevo Technology Platform for lumbar and cervical spine fusion surgeries. We market the aprevo Technology Platform to hospitals and ambulatory surgical centers in the United States through a combination of our direct sales team and independent sales agents. Our direct sales team consists of Area Vice Presidents, Sales Directors, Account Managers, and Strategic and National Account leadership, who are primarily responsible for promoting the aprevo Technology Platform to surgeons and working with customers to secure required approvals for our products. Our direct sales team is also responsible for recruiting independent sales agents who cover each aprevo surgery. Since we began commercializing the aprevo Technology Platform in 2021, we have experienced sequential quarterly and annual revenue growth from its rapid commercial adoption. For the year ended December 31, 2025 and 2024, we recognized revenue of $50.5 million and $27.2 million, respectively, representing period-over-period growth of 85.9%. Our business model depends on our ability to timely deliver aprevo interbody implants in order to allow surgeons to maintain surgical schedules for their patients. In November 2024, we launched our enhanced digital production system (“DPS”), which enabled us to deliver our aprevo interbody implants to customers within 10 business days or less of surgical plan approval. Starting in February 2026, this lead time has been reduced to six business days. Our implants are manufactured to our specifications by CMOs who meet our manufacturer qualification standards. Our streamlined DPS manages both the upstream and downstream processes involved in producing our implants. Initial Public Offering On July 24, 2025, we completed our initial public offering of 6,700,000 shares of our common stock, at a price to the public of $15.00 per share. We received net proceeds of $93.5 million from the IPO, after deducting underwriting discounts and commissions and before additional offering expenses of $5.4 million paid by us. 103 Regulatory Overview aprevo Lumbar In July 2020, the FDA awarded us a Breakthrough Device Designation, indicating that aprevo lumbar interbody implants are likely to provide a more effective treatment than the use of stock implants. In December 2020, the FDA, through its 510(k) regulatory clearance pathway, cleared our aprevo interbody implants for lumbar fusions to correct adult spinal deformity. After FDA clearance, we commenced the limited clinical release of the aprevo Technology Platform, with the first U.S. aprevo patient procedure completed in February 2021. In August 2022, the FDA, through its 510(k) regulatory clearance pathway, cleared the aprevo Technology Platform for the treatment of patients with several degenerative conditions of the lumbar spine. aprevo Cervical In September 2023, the FDA granted us a Breakthrough Device Designation for aprevo in cervical spine fusion. In November 2024, we received FDA 510(k) clearance for our aprevo Technology Platform for cervical spine fusion surgery. In July 2025, the first aprevo cervical procedure was successfully completed at UC San Diego Health. Through December 31, 2025, 92 aprevo cervical procedures have been successfully completed by 28 spine surgeons as part of our clinical evaluation program and our recent commercial launch of this indication in December 2025. Key Factors Affecting Our Results of Operations and Performance Our financial performance has been driven by the following key factors that we believe will persist for the foreseeable future. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations. Our ability to successfully address the factors below is subject to various risks and uncertainties. Market Adoption and Clinical Evidence Since its full commercial launch in October 2021, the aprevo Technology Platform for spine fusion surgery has been used to treat more than 3,200 patients through December 31, 2025. We estimate there are approximately 4,000 spine surgeons across the United States whose patients could benefit from using our platform. Through December 31, 2025, 253 surgeons have been trained on the aprevo Technology Platform and have completed at least one aprevo procedure, an increase of 101 surgeons as compared to December 31, 2024. Over time, we expect to meaningfully grow the base of surgeons using the aprevo Technology Platform and its penetration with existing surgeon users. To achieve this, we plan to grow our commercial infrastructure and expand various initiatives, including supporting medical education programs, fellowships, and surgeon training at top academic institutions. We are also committed to building upon our strong foundation of clinical evidence demonstrating the efficacy of our aprevo Technology Platform. Clinical data publications are important tools for surgeon education and patient awareness of the potential benefits of our personalized solution as compared to stock implants. Our COMPASS Registry is generating ongoing real-world evidence of patient outcomes from lumbar spine surgery with the aprevo Technology Platform. For example, a study on 90 COMPASS patients with DDD published at the 2025 Congress of Neurological Surgeons meeting demonstrated that aprevo significantly improved restoration of DLL with zero revision surgeries for adjacent segment degeneration at 20-month median follow-up. In December 2025, the Global Spine Journal published peer-reviewed two-year follow-up data on a retrospective cohort of ASD patients treated with aprevo, demonstrating a 74% reduced rate of mechanical complication–related reoperations compared to patients who had been treated using stock implants. 104 Expansion of Our Product Portfolio and Investments in Research and Development Our research and development initiatives are focused on introducing new products, enhancements and capabilities aimed at increasing the value provided by our aprevo Technology Platform to patients, surgeons, and payors. We are developing new iterations of our algorithm and software platform to drive further improvements in surgical planning and in turn help surgeons to make more informed decisions to best treat their patients. In November 2024, we received FDA 510(k) clearance for our aprevo interbody implants for cervical spine fusion surgery as part of the FDA-cleared aprevo Technology Platform and commenced commercialization in December 2025. Also in December 2025, we received FDA 510(k) clearance for our accompanying personalized cervical plating solutions as part of the aprevo cervical platform. In February 2026, we completed the first personalized plating procedure using the corra Cervical Plating System at the University of California San Francisco and are planning for its commercial launch later this year. We expect to drive adoption with our existing base of surgeons who are actively using the aprevo Technology Platform for lumbar spine fusion surgeries. In February 2026, we announced the successful completion of the first bi-lateral posterior lumbar spine surgery using our newly developed aprevo PLIF at the University of Colorado Hospital in Denver, Colorado. The addition of aprevo PLIF expands our lumbar offering across multiple spinal fusion techniques and integrates seamlessly with our broader aprevo platform technology. The commercial launch of aprevo PLIF is expected in the first half of 2026. We also believe that our platform technology has the potential to be utilized across various spinal indications and disease states such as cervical corpectomy and cervical disc arthroplasty. Additional FDA clearances would be required for these or any other new indications. Hospital and Outpatient Reimbursement Future changes in the level of reimbursement that hospitals and outpatient facilities receive from payors for lumbar and cervical fusion surgical procedures could have a significant impact on our results of operations. The level of payors' reimbursement for procedures using our aprevo Technology Platform depends substantially on our continued ability to generate clinical evidence, garner support from key opinion leaders, and gain advocacy for patient access to our technology with CMS and commercial payors. aprevo Lumbar Procedures using our aprevo Technology Platform are covered by Medicare, Medicare Advantage, and commercial payors. Effective October 2024, CMS adopted a new MS-DRG coding system which reassigns MS-DRG codes for certain lumbar spine fusion procedures when “custom-made anatomically designed interbody fusion devices” (such as our aprevo Technology Platform) are utilized. This provides additional reimbursement for our hospital customers compared to the reimbursement for fusion procedures that use stock implants. We believe this, among other factors, will support our customers' continued demand for use of our technology in lumbar spine fusion surgeries. 105 aprevo Cervical Inpatient Procedures We believe Medicare-aged patients receiving multi-level ACDF surgeries are uniquely addressed by aprevo cervical. Based on our internal data, a majority of these procedures are performed in an inpatient setting. Effective October 1, 2025, cervical fusion procedures utilizing aprevo personalized interbody implants for traditional Medicare beneficiaries are eligible for NTAPs from CMS. The NTAP program provides additional reimbursement to hospitals that use designated new medical technologies in the first few years of market introduction. These new technologies must demonstrate significant clinical improvement in the diagnosis or treatment of Medicare beneficiaries compared to existing alternatives or be designated by the FDA as Breakthrough technology. CMS created unique ICD-10-PCS codes to identify cervical fusion procedures using "custom made anatomically designed interbody fusion devices" such as our aprevo Technology Platform. Reimbursement claims submitted with these unique ICD-10-PCS procedure codes may qualify hospitals for up to an additional $21,125 in NTAP reimbursement for eligible inpatient procedures. Outpatient Procedures aprevo cervical currently has the same payor reimbursement methodology as stock interbody implants for hospital outpatient departments and ambulatory surgery centers. Our requested Transitional Pass-Through ("TPT") payment for aprevo cervical in outpatient settings was not approved by CMS in its November 2025 OPPS Final Rule, despite our analysis and documentation for its qualification. We will continue to explore opportunities with CMS for various pathways including TPT and New Technology APC to appropriately reimburse our customers' costs of providing aprevo interbody implants in cervical fusion procedures. Key Components of Our Results of Operations Revenue We sell our aprevo interbody implants and accompanying inserter instruments to customers under standard pricing schedules. We typically recognize revenue in the period of its use within a spine fusion surgical procedure. Cost of Sales Cost of sales includes the costs of creating patient-specific digital surgical plans and the manufacturing costs of our aprevo interbody implants and the accompanying inserter instruments. These costs of sales include allocations for personnel, software, contract manufacturing and other third-party services, packaging, shipping, provision for excess and obsolete inventory, and overhead cost allocations. We expect that our cost of sales will continue to increase in proportion to recognized revenue. Gross Profit and Gross Margin Gross profit (i.e., revenue less cost of sales) and gross margin (i.e., gross profit as a percentage of revenue) have been, and will continue to be, affected by various factors. These include potential changes to our average revenue per procedure, sales volumes, third-party manufacturing costs, direct labor costs, software costs, and provisions for excess and obsolete inventory. We expect our gross margin to remain relatively constant over the short term to our 2025 full year results and to modestly increase over the medium and long term with economies of production scale, increased leverage of our AI technologies, and other planned manufacturing efficiencies. 106 Operating Expenses Research and Development Expenses Research and development expenses include personnel costs (i.e., salaries, bonuses, stock-based compensation expense, and benefits), allocated facility costs, product prototype materials and testing, clinical studies aimed at potential new products, allocated software license amortization expenses, and consulting and other service fees. We recognize research and development expenses in the periods in which they are incurred. We expect our research and development expenses to increase as we continue to accelerate product and software innovation, develop additional clinical data, and expand manufacturing capabilities. Sales and Marketing Expenses Sales and marketing expenses consist primarily of personnel costs (i.e., salaries, commissions, bonuses, stock-based compensation expense, benefits, and travel), independent sales agent commissions, costs associated with generic surgical instruments we may provide to our independent sales agents, various digital and print initiatives to increase market awareness of our product and technology, conference and trade show fees, consulting fees, and medical education expenses. We expect our sales and marketing expenses to increase in the foreseeable future as we continue to increase the size of our sales organization and scope of our marketing efforts in the United States and into other geographies, expand the indications for our aprevo Technology Platform, and establish international sales channels. While we expect sales and marketing expenses to continue to increase in absolute value, we expect that these costs will decrease as a percentage of revenue over time. General and Administrative Expenses General and administrative expenses consist primarily of personnel costs (i.e., salaries, bonuses, stock-based compensation expense, and benefits) for executive, legal, finance, and human resources roles. Other significant costs include legal fees relating to intellectual property and corporate matters, consultant and professional fees, insurance, and facility-related costs. We recognize general and administrative expenses in the periods in which they are incurred. We anticipate that our general and administrative expenses will increase in the future to support our anticipated business growth as a publicly traded company. These increased costs include accounting, audit, legal, regulatory, tax, insurance, investor relations, and compliance with exchange listing and SEC requirements. While we expect general and administrative expenses to continue to increase in absolute value, we expect that these costs will decrease as a percentage of revenue over time. Interest Expense Interest expense consists of interest coupon payments and non-cash amortization of debt issuance costs as part of the Customers Loan Agreement. Interest Income Interest income is attributable to bank interest on our cash and cash equivalents and interest earned on our short-term investments in certificates of deposit. 107 Change in Fair Value of Warrant Liabilities Prior to the closing of the IPO on July 24, 2025, we had issued warrants for the purchase of our convertible preferred stock in conjunction with the loan and security agreement with Customers Bank (the "Customers Loan Agreement"). On the closing of the IPO, all warrants issued to Customers Bank under the Customers Loan Agreement became exercisable into common stock, with certain warrants continuing to be classified as liabilities. Upon the execution of the Fifth Amendment to the Customers Loan Agreement on October 29, 2025, there were no warrants that remained classified as liabilities as a result of the cancellation of 15,831 shares of common stock that were exercisable contingent on loan draw milestones. We accounted for these liability-classified warrants, initially measured at fair value, in accordance with ASC Topic 480. Changes in fair value of warrant liabilities have been recognized in the Statements of Operations and Comprehensive Loss. See Note 2—Summary of Significant Accounting Policies in the notes to our Financial Statements for information regarding the Series B Warrant and the Series C Warrant in connection with the Customers Loan Agreement. Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following tables set forth our results of operations, variances versus the prior period, and percentage of revenue for each presented caption. The period-to-period comparison is not necessarily indicative of financial results to be achieved in future periods. Year Ended December 31, $ % Percentage of Revenue 2025 2024 Change Change 2025 2024 (in thousands, except percentages) Revenue $ 50,511 $ 27,165 $ 23,346 85.9 % 100.0 % 100.0 % Cost of sales 12,471 7,117 5,354 75.2 % 24.7 26.2 Gross profit 38,040 20,048 17,992 89.7 % 75.3 73.8 Operating expenses: Research and development 17,019 14,304 2,715 19.0 % 33.7 52.7 Sales and marketing 35,027 21,472 13,555 63.1 % 69.3 79.0 General and administrative 16,568 8,394 8,174 97.4 % 32.8 30.9 Total operating expenses 68,614 44,170 24,444 55.3 % 135.8 162.6 Loss from operations (30,574 ) (24,122 ) (6,452 ) 26.7 % (60.5 ) (88.8 ) Other income (expense): Interest expense (1,430 ) (1,321 ) (109 ) 8.3 % (2.8 ) (4.9 ) Interest income 2,698 1,330 1,368 102.9 % 5.3 4.9 Change in fair value of warrant liabilities (328 ) (144 ) (184 ) 127.8 % (0.7 ) (0.5 ) Total other income (expense), net 940 (135 ) 1,075 (796.3 ) % 1.8 (0.5 ) Net loss and comprehensive loss $ (29,634 ) $ (24,257 ) $ (5,377 ) 22.2 % (58.7 ) % (89.3 ) % Revenue Revenue was $50.5 million and $27.2 million for the years ended December 31, 2025 and 2024, respectively. The increase of $23.3 million, or 85.9%, was primarily driven by increased sales of aprevo interbody implants during the year ended December 31, 2025 as compared to the year ended December 31, 2024, with our average revenue per procedure substantially constant. 108 Cost of Sales and Gross Margin Cost of sales was $12.5 million and $7.1 million for the years ended December 31, 2025 and 2024, respectively. The increase of $5.4 million, or 75.2%, was primarily driven by increased sales of aprevo interbody implants and the associated increase in contract manufacturing costs for the year ended December 31, 2025 with this sales volume, as compared to the year ended December 31, 2024. Gross margin was 75.3% for the year ended December 31, 2025, as compared to 73.8% for the year ended December 31, 2024. This increase was primarily driven by enhanced manufacturing efficiencies and additional process improvements. Research and Development Expenses Research and development expenses were $17.0 million and $14.3 million for the years ended December 31, 2025 and 2024, respectively. The increase of $2.7 million, or 19.0%, was primarily due to an increase in personnel costs of $3.0 million to support product development and AI initiatives. This increase was partially offset by decreased costs for external services, prototype parts and materials, and reduced COMPASS registry costs following enrollment completion in the second half of 2024. Sales and Marketing Expenses Sales and marketing expenses were $35.0 million and $21.5 million for the years ended December 31, 2025 and 2024, respectively. The increase of $13.6 million, or 63.1%, was primarily driven by investments to support revenue growth. This included an increase in personnel-related costs for new headcount and employee commissions of $5.9 million and sales agent commissions increase of $4.7 million, both tied to our sales growth. The increase also reflects expanded marketing activities and other commercial support costs of $2.9 million associated with scaling our commercial organization. These increases were partially offset by lower professional service fees during the year ended December 31, 2025. General and Administrative Expenses General and administrative expenses were $16.6 million and $8.4 million for the years ended December 31, 2025 and 2024, respectively. The increase of $8.2 million, or 97.4%, was primarily driven by professional service and legal costs of $4.3 million for our IPO and intellectual property matters, as well as increased personnel-related costs of $3.1 million as part of administrative support and compliance requirements as a public company. Interest Expense Interest expense was $1.4 million and $1.3 million for the years ended December 31, 2025 and 2024, respectively. The increase of $0.1 million, or 8.3%, was primarily attributable to a higher average balance of borrowings outstanding under the Customers Loan Agreement during the year ended December 31, 2025 compared to the year ended December 31, 2024. Interest Income Interest income was $2.7 million and $1.3 million for the years ended December 31, 2025 and 2024, respectively. The increase of $1.4 million, or 102.9%, was due to an increase in bank interest on our higher daily average cash and cash equivalent balances resulting from the proceeds from our IPO in July 2025 and purchases of short-term investments during the year ended December 31, 2025. Change in Fair Value of Warrant Liabilities The change in fair value of warrant liabilities increased by $0.2 million during the year ended December 31, 2025 compared to the year ended December 31, 2024. 109 Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we utilize and present financial measures that are not calculated and presented in accordance with GAAP. Our non-GAAP financial measures include EBITDA and Adjusted EBITDA, each of which is described below. We use our non-GAAP financial measures in evaluating our operating performance and for internal planning purposes. We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. We believe that the presentation of our GAAP and non-GAAP financial measures, in combination, is helpful to investors in assessing our trending business performance in the currently reported period and versus prior periods. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business. EBITDA and Adjusted EBITDA EBITDA and Adjusted EBITDA are non-GAAP financial measures used by management as a supplemental measure in evaluating our operating performance. EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net loss or any other measure as determined in accordance with GAAP. Our computation of EBITDA and Adjusted EBITDA may not be comparable to EBITDA and Adjusted EBITDA of other companies. We define “EBITDA” as net income (loss), adjusted to exclude: (i) net interest (income) expense, (ii) income tax expense (benefit), (iii) depreciation expense from property and equipment, and (iv) amortization expense from long-lived assets. We define “Adjusted EBITDA” as EBITDA adjusted to exclude stock-based compensation expense and change in fair value of warrant liabilities. The following tables present a reconciliation of EBITDA and Adjusted EBITDA to the GAAP financial measure of net loss for each of the periods indicated: Year Ended December 31, $ % 2025 2024 Change Change (in thousands, except percentages) Net loss $ (29,634 ) $ (24,257 ) $ (5,377 ) 22.2 % Interest income, net (1,268 ) (9 ) (1,259 ) ** Income taxes — — — — Depreciation and amortization 281 145 136 93.8 % EBITDA (30,621 ) (24,121 ) (6,500 ) 26.9 % Stock-based compensation 1,927 253 1,674 661.7 % Change in fair value of warrant liabilities 328 144 184 127.8 % Adjusted EBITDA $ (28,366 ) $ (23,724 ) $ (4,642 ) 19.6 % **Change not meaningful 110 Unaudited Quarterly Results of Operations Data The following tables set forth selected quarterly results of operations data for the three months ended for each quarter of the fiscal years ended December 31, 2025 and 2024, as well as the percentage of revenue that each line item represents for each quarter. The unaudited quarterly financial information has been prepared in accordance with GAAP on the same basis as our financial statements included elsewhere in this Annual Report. In the opinion of management, these tables fairly present our quarterly financial results that include normal recurring adjustments, necessary for the proper presentation of the results of operations for these periods. This data should be read in conjunction with our financial statements and related notes included elsewhere in this Annual Report. These historical quarterly operating results are not necessarily indicative of any future period. Three Months Ended (unaudited, in thousands) March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 Revenue $ 5,086 $ 6,081 $ 6,590 $ 9,408 $ 10,189 $ 12,083 $ 13,074 $ 15,165 Gross profit $ 3,664 $ 4,562 $ 4,798 $ 7,024 $ 7,636 $ 8,869 $ 9,927 $ 11,608 Total operating expenses $ 8,993 $ 10,881 $ 12,575 $ 11,721 $ 13,355 $ 15,371 $ 18,962 $ 20,926 Loss from operations $ (5,329 ) $ (6,319 ) $ (7,777 ) $ (4,697 ) $ (5,719 ) $ (6,502 ) $ (9,035 ) $ (9,318 ) Net loss $ (5,447 ) $ (6,277 ) $ (7,813 ) $ (4,720 ) $ (5,729 ) $ (6,766 ) $ (8,526 ) $ (8,613 ) All values from the results of operations data, expressed as a percentage of revenue, were as follows: Three Months Ended (unaudited, in thousands) March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 Revenue 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Gross profit 72.0 % 75.0 % 72.8 % 74.7 % 74.9 % 73.4 % 75.9 % 76.5 % Total operating expenses 176.8 % 178.9 % 190.8 % 124.6 % 131.1 % 127.2 % 145.0 % 138.0 % Loss from operations (104.8 ) % (103.9 ) % (118.0 ) % (49.9 ) % (56.1 ) % (53.8 ) % (69.1 ) % (61.4 ) % Net loss (107.1 ) % (103.2 ) % (118.6 ) % (50.2 ) % (56.2 ) % (56.0 ) % (65.2 ) % (56.8 ) % Selected Quarterly Trends Revenue Our quarterly revenue increased sequentially in each of the periods presented due to increased unit sales of aprevo interbody implants with an average selling price that remained relatively constant in each period. We believe that this sales ramp is due to our ongoing sales and marketing efforts for new surgeon adoption of the aprevo Technology Platform and deepened penetration with our existing surgeons. Gross Profit Gross profit generally trended upward over the periods presented, primarily driven by increased sales of our aprevo interbody implants and associated per unit production costs. Total Operating Expenses Total operating expenses generally increased sequentially in each of the quarters presented, primarily driven by variable sales expenses that correspond with increased sales of aprevo interbody implants, product development activities, clinical data collection costs, marketing investments, personnel additions across various departments to support our ongoing revenue and business growth, and expenses associated with operating as a publicly traded company. 111 Liquidity and Capital Resources We have incurred net losses and negative cash flows from operations since our inception. We have historically financed operations primarily through the net proceeds that we have received from the sale of shares of our convertible preferred stock, borrowings under our debt facilities, and cash generated from the sales of aprevo interbody implants. On July 24, 2025, we completed our IPO and received $93.5 million in net proceeds, after deducting underwriting discounts and commissions and before additional offering expenses of $5.4 million paid by us. As of December 31, 2025, we had $109.9 million of cash, cash equivalents, restricted cash and short-term investments, $15.6 million of principal outstanding under the Term Loan of the Customers Loan Agreement, and an accumulated deficit of $100.8 million. Our losses primarily resulted from the costs incurred in the development and sales and marketing of our products and providing general and administrative support for our operations. We may continue to incur losses and expend significant amounts of cash in the foreseeable future as we continue to scale our business, invest in research and development activities, increase sales and marketing expenses to support commercial expansion, and increase general and administrative expenses associated with operating as a publicly traded company. Customers Loan Agreement In December 2022, we entered into a loan and security agreement with Signature Bank, which was later succeeded by Customers Bank (the “Customers Loan Agreement”). The Customers Loan Agreement had an initial maturity date of December 2026 and provided for $12.5 million in principal funding. On March 7, 2024, we executed a Third Amendment to the Customers Loan Agreement (the “Third Amendment”), increasing the credit facility size from $12.5 million to $18.8 million and extending the maturity up to December 2027, subject to achievement of certain revenue and other milestones. On December 30, 2024, we entered into a Fourth Amendment to the Customers Loan Agreement (the “Fourth Amendment”), expanding the facility to $27.5 million through the addition of two new tranches, one of which was a revenue milestone-based tranche. The Fourth Amendment also extended the maturity date to October 31, 2029. On October 29, 2025, we amended the Customers Loan Agreement (the “Fifth Amendment”) to expand this credit facility to include (i) a term loan in the principal amount of up to $50.0 million (the “Term Loan”), $17.5 million of which is contingent upon the achievement of requisite revenue milestones, and (ii) a $10.0 million non-formula revolving line of credit (the “Non-Formula Revolving Line”), subject to an aggregate borrowing limit for both the Term Loan and the Non-Formula Revolving Line of $50.0 million. The maturity date of the Term Loan was extended to October 15, 2030, with an interest-only period through October 15, 2027, followed by principal repayment over 36 months thereafter. Upon achievement of certain revenue milestones, the interest-only period and repayment terms of the Term Loan may be extended through April 15, 2028 followed by principal repayment over 30 months, and upon achievement of an additional milestone, may be further extended through October 15, 2028, followed by principal repayment over 24 months thereafter. The Non-Formula Revolving Line will mature on October 15, 2028. The applicable per annum interest rate did not change as a result of the Fifth Amendment and remains as the greater of (a) WSJ Prime Rate + 0.25% or (b) 5.25%. On December 23, 2025, we amended the Customers Loan Agreement (the “Sixth Amendment”) to permit us to maintain certain limited deposit accounts outside of Customers Bank. No other terms of the Customers Loan Agreement were affected by the Sixth Amendment. As of December 31, 2025, $15.6 million of principal was outstanding under the Term Loan that matures on October 31, 2030 and there were no borrowings outstanding under the Non-Formula Revolving Line. As of December 31, 2025, an aggregate $26.9 million remained available for borrowing under the Term Loan and Non-Formula Revolving Line, net of amounts outstanding. See Note 4—Debt in the accompanying notes to our Financial Statements for additional information regarding the Customers Loan Agreement. 112 Future Funding Requirements Based on our current operating plan, we believe our existing cash, cash equivalents and short-term investments, the expected cash generated from sales of our aprevo interbody implants, and amounts currently available for future borrowings under our Customers Loan Agreement will be sufficient to fund our planned operating expenses and capital expenditure requirements for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Our quarterly and annual financial results may fluctuate as a result of a variety of factors, many of which are outside of our control and, as a result, may not fully reflect the underlying performance of our business. Fluctuation in quarterly and annual results may decrease the value of our common stock. Our future capital requirements will depend on many factors, including, but not limited to: ▪ market acceptance of the aprevo Technology Platform and other products and solutions we may develop in the future; ▪ our ability to obtain marketing approval for the aprevo Technology Platform in relevant markets or for other products and solutions we may develop in the future, and the timing and scope of any such approvals we may receive; ▪ the availability of reimbursement for aprevo interbody implants at acceptable reimbursement rates; ▪ the cost of manufacturing of aprevo interbody implants, which may vary depending on the quantity of production and the terms of our agreements with manufacturers and other vendors; ▪ our ability to attract, hire, train, and retain qualified personnel; ▪ the amount and timing of costs and expenses related to the maintenance and expansion of our business and operations; ▪ changes in our product pricing policies or those of our competitors; ▪ the level of demand for aprevo Technology Platform; ▪ general economic, industry, and market conditions or extraordinary external events, such as a recession; ▪ changes in our regulatory environment; ▪ expenses associated with unforeseen product quality issues; ▪ the timing and success or failure of studies or trials for the aprevo Technology Platform or competing product candidates; ▪ any other change in the competitive landscape of our industry, including consolidation amongst our competitors or partners; ▪ litigation or other claims against us for intellectual property infringement or otherwise; ▪ expenses associated with indemnification obligations to third parties that are subject to litigation or claims, including in relation to intellectual property infringement, or that incur other losses as a result of their use of our products; ▪ our ability to obtain additional financing as necessary; and ▪ advances and trends in new technologies and industry standards. If these sources of cash are insufficient to satisfy our liquidity requirements, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity or convertible debt securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. In addition, the incurrence of indebtedness would increase our fixed obligations and include covenants or other restrictions that would impede our ability to manage our operations. 113 Our ability to raise additional funds may be adversely impacted by deteriorating global economic conditions and the disruptions to and volatility in the credit and financial markets in the United States and fluctuations in interest rates. If additional financing is needed, we may not be able to obtain additional financing on terms favorable to us, or at all. Our inability to obtain adequate financing or financing on terms satisfactory to us, when we require it, could significantly limit our ability to continue supporting our business growth and responding to business challenges and opportunities. Cash Flows The following table summarizes our cash flows for each of the periods presented: Year Ended December 31, 2025 2024 (in thousands) Net cash provided by (used in): Net cash flows used in operating activities $ (28,977 ) $ (25,466 ) Net cash used in investing activities $ (25,483 ) $ (180 ) Net cash flows provided by financing activities $ 100,128 $ 58,499 Operating activities For the year ended December 31, 2025, net cash used in operating activities was $29.0 million, consisting primarily of a net loss of $29.6 million. Cash payments to vendors during the year ended December 31, 2025, for our operating expenses totaled $46.9 million, and payroll-related cash payments totaled $27.6 million. This net cash used in operating activities for the year ended December 31, 2025, was partially offset by $45.5 million of cash received from our customers for sales of aprevo interbody implants. We recognized $50.5 million of revenue in 2025, based on the timing of the use of aprevo interbody implants in surgical procedures. For the year ended December 31, 2024, net cash used in operating activities was $25.5 million, consisting primarily of a net loss of $24.3 million. Cash payments to vendors during the year ended December 31, 2024, for our operating expenses totaled $31.9 million, and payroll-related cash payments totaled $16.7 million. This net cash used in operating activities for the year ended December 31, 2024, was partially offset by $23.1 million of cash received from our customers for sales of aprevo interbody implants. We recognized $27.2 million of revenue in 2024, based on the timing of the use of aprevo interbody implants in surgical procedures. Investing activities For the year ended December 31, 2025, net cash used in investing activities was $25.5 million and consisted primarily of purchases of short-term investments of $24.0 million, capitalized software costs of $0.7 million, purchases of property and equipment of $0.6 million, and payment of initial direct costs of $0.1 million for an office lease that was executed in May 2025. For the year ended December 31, 2024, net cash used in investing activities was $0.2 million and consisted primarily of purchases of property and equipment. Financing activities For the year ended December 31, 2025, net cash provided by financing activities was $100.1 million, consisting primarily of proceeds from our IPO of $93.5 million, net of underwriting discounts and commissions, net proceeds from the issuance of Series C convertible preferred stock of $11.9 million and proceeds from the exercise of stock options of $0.2 million. This was partially offset by payments for deferred offering costs of $5.4 million in connection with our IPO and $0.1 million of term loan issuance costs. 114 For the year ended December 31, 2024, net cash provided by financing activities was $58.5 million, consisting primarily of net proceeds from the issuance of Series C convertible preferred stock of $52.3 million and borrowings under the Customers Loan Agreement of $6.2 million. Contractual Obligations and Other Material Cash Commitments Our contractual obligations as of December 31, 2025, include: Debt Total principal outstanding under the Customers Loan Agreement as of December 31, 2025, was $15.6 million under the Term Loan. The Term Loan matures on October 15, 2030, with an interest-only period through October 15, 2027, followed by principal repayment over 36 months thereafter. Upon achievement of certain revenue milestones, the interest-only period and repayment terms may be further extended to an interest-only period through October 15, 2028, followed by principal repayment over 24 months thereafter. The applicable per annum interest rate is the greater of (a) WSJ Prime Rate + 0.25% or (b) 5.25%. Operating leases As of December 31, 2025, contractual obligations for operating lease payments (substantially related to our Carlsbad, California office leases with lease terms to June 30, 2028) totaled $2.3 million and are due over 30 months after December 31, 2025. Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses, stock-based compensation, and other fair value measurements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in Note 2 to our audited financial statements appearing elsewhere in this Annual Report, we believe the following accounting policies and estimates to be most critical to the preparation of our financial statements. Revenue Recognition We recognize revenue from our aprevo interbody implant sales in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Conditions (“ASC”) Topic 606, Revenue from Contracts with Customers, which requires the amount and timing of revenue recognition to align with the completed transfer of promised goods or services to customers and our entitled contractual consideration in return. Revenue is typically recognized in the period that an aprevo interbody implant is used in a surgical procedure and is based on standard pricing arrangements with our customers. The consideration we are entitled to for sales of aprevo is fixed based on the stated contractual amount with our customers. Our sales process includes contracted independent sales agents that cover each surgery and we have determined that we are the principal in these transactions for purposes of gross versus net revenue presentation. We recognize revenue at “gross” (i.e., our reported revenue is not reduced for sales agent fees that are reported in “sales and marketing” expenses) since we are responsible for product fulfillment and customer acceptability, carry the inventory risk, and have sole discretion in setting the price for our products. 115 Excess and Obsolete Inventory We maintain minimal inventories because aprevo interbody implants are made specific to each patient’s anatomy and pathology and are not otherwise made-to-stock. Inventories are stated at actual cost. Work-in-process inventory consists of titanium alloy implants for spine fusion surgical procedures, pending sterilization and packaging. Finished goods inventory is ready for shipment and use in spine fusion surgical procedures. Inventories are valued at the lower of cost or net realizable value. At each balance sheet date, we evaluate our inventories for obsolescence, based on notification of permanently canceled surgeries, and our estimates of additional permanent cancellations. We record the corresponding charge for this obsolete inventory through “cost of sales”. The estimation of obsolete inventory requires management’s judgment for future cancellations that correspond to on-hand patient-specific aprevo interbody implants. These estimates can be influenced by a variety of factors and could materially affect our financial results if actual results differ. Stock-Based Compensation We recognize stock-based compensation expense for equity awards granted to employees, consultants, and members of our Board of Directors. Stock option awards are granted at an exercise price of not less than 100% of the fair market value of common stock on the respective date of grant. The grant date is the date that the terms of the award are formally approved by our Board of Directors. We use the Black-Scholes option pricing model to estimate the fair value of stock option awards as of the date of grant. The measurement of the fair value of stock option awards, and recognition of stock-based compensation expense requires the use of certain assumptions within the Black-Scholes option pricing model by management. While the model includes several inputs, the estimates that involve inherent uncertainties and the application of management’s judgment consist primarily of: • Fair Value of Common Stock. Prior to the completion of our IPO, we estimated the fair value of the shares of our common stock underlying our stock-based awards. Our Board of Directors considered numerous objective and subjective factors to determine the fair value of our common stock as discussed in “—Common Stock Valuation” below. Subsequent to the completion of our IPO, the fair value of each share of underlying common stock is based on the closing price of our common stock as reported on the date of grant on the Nasdaq stock exchange. • Volatility. Since we had been privately held prior to our IPO, we did not have any trading history for our common stock. Therefore, the expected volatility is estimated based on the average volatility for comparable publicly traded companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on the similar size, stage in life cycle, or area of specialty. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available. The judgments and estimates related to stock-based compensation are subject to uncertainty due to the reliance on subjective assumptions and a complex valuation model. The estimation of the fair value of common stock and volatility involves significant judgment and is sensitive to changes in market conditions and company-specific factors. These assumptions are inherently uncertain and can vary based on future market conditions, making the estimation process complex and introducing variability into the reported stock-based compensation expense. Changes to these assumptions and estimates could have a material impact on the amount of stock-based compensation. See Note 6 to our audited financial statements included elsewhere in this Annual Report for more information concerning specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options. 116 Common Stock Valuation Prior to the completion of our IPO, the fair value of our common stock was determined by our Board of Directors in accordance with the methodologies outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the “Practice Aid”). In doing so, our Board of Directors determined the best estimate of fair value of our common stock, exercising reasonable judgment and considering numerous objective and subjective factors, including: • valuations of our common stock performed by independent third-party valuation specialists; • our stage of development and business strategy, including the status of research and development efforts of our products, and the material risks related to our business and industry; • our results of operations and financial position, including our levels of available capital resources; • the valuation of publicly traded companies in the life sciences and medical device sectors, as well as recently completed mergers and acquisitions of peer companies; • the lack of marketability of our common stock as a private company; • the prices of our convertible preferred stock sold to investors in arm’s-length transactions and the rights, preferences, and privileges of our convertible preferred stock relative to those of our common stock; • the likelihood of achieving a liquidity event for the holders of our common stock, such as an initial public offering or a sale of our company, given prevailing market conditions; • the hiring of key personnel and the experience of management; • trends and developments in our industry; and • external market conditions affecting the life sciences and medical device industry sectors. Our Board of Directors determined the fair value of our common stock by first determining the enterprise value of our business and then allocating the value among the various classes of our equity securities to derive a per share value of our common stock. The Practice Aid identifies various available methods for allocating enterprise value across classes and series of capital stock to determine the estimated fair value of common stock at each valuation date. In allocating enterprise value among the various classes of stock, we utilized a hybrid method, which is a combination of the Option Pricing Method (“OPM”) and the Probability-Weighted Expected Return Method (“PWERM”). Under the OPM, shares are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The values of the preferred and common stock are inferred by analyzing these options. The PWERM is a scenario-based analysis that estimates the value per share based on the probability-weighted present value of expected future investment returns, considering a number of discrete possible outcomes of the business, as well as the economic and control rights of each share class. Under the hybrid method, we considered expected initial public offering liquidity scenarios as well as other market-based non-initial public offering scenarios in the event a near-term initial public offering does not occur. Additionally, in determining the estimated fair value of our common stock prior to the completion of our IPO, our Board of Directors also considered the fact that our stockholders could not freely trade our common stock in the public markets. Accordingly, we applied discounts to reflect the lack of marketability of our common stock based on the weighted-average expected time to liquidity. Significant judgments and estimates were inherent in the determination of the fair value of our common stock prior to the completion of our IPO. These judgments and estimates included assumptions regarding our future operating performance, the time to complete an initial public offering or other liquidity event, and the determination of the appropriate valuation methods. For valuations after the completion of our IPO, the fair value of each share of underlying common stock is based on the closing price of our common stock as reported on the date of grant on the Nasdaq stock exchange. 117 Recently Issued and Adopted Accounting Pronouncements See “Note 2 – Summary of Significant Accounting Policies” in the accompanying notes to our Financial Statements included elsewhere in this Annual Report for information about recent accounting pronouncements, the timing of their adoption, and our assessment, if any, of their potential impact on our financial condition and results of operations. Emerging Growth Company and Smaller Reporting Company Status We qualify as an “emerging growth company” as defined in the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include: ▪ being permitted to present only two years of audited financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; ▪ reduced disclosure about our executive compensation arrangements; ▪ not being required to hold advisory votes on executive compensation or to obtain stockholder approval of any golden parachute arrangements not previously approved; ▪ an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”); and ▪ an exemption from compliance with the requirements of the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on the financial statements. We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our IPO; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. We may choose to take advantage of some but not all of these exemptions. Accordingly, the information contained herein may be different from the information you receive from other public companies in which you hold stock. In addition, the JOBS Act permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have chosen to “opt out” of this provision, and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period is irrevocable. We are also a “smaller reporting company,” because the market value of our shares held by non-affiliates is less than $700.0 million, and our annual revenue was less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250.0 million or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time that we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K, and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.