CARLSMED, INC. (CARL) Business

Item 1. Business.

Overview

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, aiming to optimize patient outcomes and reduce the need for revision surgeries.

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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 bone topography, and single-use surgical instruments. The aprevo Technology Platform supports surgeons in achieving proper spinal alignment for patients with degenerative disc disease (“DDD”), 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.

DDD is the progressive breakdown of spinal discs that are interposed between vertebrae to provide mobility and shock absorption. The disease occurs naturally with age and can be accelerated by factors such as injury, repetitive loading, obesity, or genetic predisposition. Adult spinal deformity (“ASD”) is a more severe form of DDD and is a condition where the spine has systematic structural abnormalities and/or abnormal curvature often affecting multiple levels of the spine. These conditions often cause a loss of disc height and spine function, and lead to chronic pain, disability, and other chronic spinal pathologies, significantly impacting patients’ lives. As the conditions progress and patients experience debilitating pain or disabilities, surgical intervention may become necessary. One study estimated that the overall prevalence of diagnosed DDD was 27.3% for individuals over the age of 65, and increased with age.

Non-surgical interventions are typically the first line of treatment for DDD and are aimed at managing symptoms and slowing disease progression without invasive procedures. When non-surgical treatments fail to alleviate debilitating symptoms or disabilities, surgical interventions may become necessary. The most common surgical intervention and current standard of care is traditional spine fusion, which we define as a spine fusion procedure with stock implants that are fixed in size and shape. Based on projections contained in the 2024 Spinal Fusion - US Market Report (the "SmartTRAK Report") by BioMedGPS we estimate that approximately 445,200 lumbar fusion surgeries and approximately 372,600 cervical fusion surgeries were performed in the United States in 2025, which assumes a compound annual growth rate ("CAGR") of approximately 1.5% in the spinal fusion market.

Despite its wide adoption, we believe traditional spine fusion surgery has several limitations and can lead to poor clinical outcomes. First, traditional spine fusion often lacks robust pre-operative planning, relying on two dimensional ("2D") imaging without advanced tools, such as three-dimensional ("3D") modeling. This limits the surgeon’s ability to plan for optimal correction. Second, the stock implants that are used during surgery are largely symmetric in shape and only come in pre-defined dimensions, which often fail to match the unique anatomy of each patient and can lead to unpredictable alignment. Third, during the surgery, the surgeon must visually choose the correct stock implant from dozens of options, which involves a prolonged trialing process, which we believe elevates the risk of secondary complications. Finally, post-operatively, there is no integrated means for reconciling achieved outcomes against surgical objectives and utilizing these insights systematically to improve future surgical plans. As a result of these limitations, traditional spine fusion surgery can fail to achieve proper alignment, leading to post-operative complications and increasing the likelihood of revision surgery.

Recent publications on traditional spine fusion report rates of revision surgery for mechanical complications between 14% and 32% over a mean postoperative period of one to two years in ASD patients. We believe that these limitations and poor clinical outcomes not only impair patients’ health and quality of life but also impose a significant economic burden on the healthcare system, with the direct and indirect costs of a single revision surgery frequently exceeding $100,000.

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The aprevo Technology Platform represents an end-to-end, integrated digital technology platform designed to deliver better surgical results, reduce the need for revision surgery, and improve long-term outcomes. The aprevo Technology Platform is the first available solution to provide personalized digital surgical plans and the accompanying aprevo interbody implants that are tailored to each patient’s unique pathology and vertebral bone topography.

Our pre-operative planning software utilizes standard-of-care diagnostic imaging in combination with our AI-enabled algorithms to develop personalized digital surgical plans, allowing us to design aprevo interbody implants for each patient’s unique pathology and anatomy. Additionally, the aprevo Technology Platform supports the collection of post-operative data to inform our digital surgical planning process. The U.S. Food and Drug Administration ("FDA") cleared the aprevo lumbar interbody implants through its 510(k) regulatory pathway for the correction of adult spinal deformity in December 2020 and several degenerative conditions of the lumbar spine in August 2022. In October 2021, we commenced our U.S. commercial launch of aprevo for lumbar interbody fusion surgeries. Lumbar procedures using our aprevo interbody implants are covered by Medicare, Medicare Advantage, and commercial payors; these are generally mapped to Medicare Severity-Diagnosis Related Groups (“MS-DRGs”) codes that provide for premium reimbursement relative to those that use stock implants. We believe this also helps drive surgeon adoption while also supporting patient access to our patient-centric technology.

We have also developed our aprevo Technology Platform for use in cervical spine fusion surgeries. In November 2024, we received FDA 510(k) clearance for our aprevo interbody implants for cervical interbody fusion surgeries after previously receiving FDA Breakthrough Device Designation for this technology, and in July 2025, we successfully completed the first in-human personalized cervical procedure in the United States using our aprevo Technology Platform. In August 2025, in the CMS Final Rule, the Centers for Medicare and Medicaid Services ("CMS") finalized X-codes for the use of custom-made anatomically designed interbody fusion devices for cervical spine fusion surgeries and established a New Technology Add-on Payment ("NTAP") of up to $21,125 additional reimbursement to hospitals for qualifying inpatient cervical spine fusion procedures. The new X-codes and NTAP went into effect on October 1, 2025. In December 2025, we received FDA 510(k) clearance for our cervical plating system. We have generated limited early sales of aprevo interbody implants for use in cervical spine fusion surgery following a commercial launch in December 2025 and expect to more broadly commercialize the aprevo cervical platform, including the anticipated commercial launch of our corra Cervical Plating System, in 2026.

Our current commercial focus is on the U.S. market. We estimate that there is a total addressable market of approximately $13.4 billion for aprevo lumbar devices in the United States. This figure is based on our current average revenue per lumbar fusion procedure and our estimate (informed by projections contained in the SmarkTRAK Report) that approximately 445,200 lumbar fusion surgeries were performed in the United States in 2025. We estimate that the total addressable market for aprevo cervical devices in the United States. is approximately $6 billion, based on our current average revenue per cervical fusion procedure and our estimate (informed by projections contained in the SmartTRAK Report) that approximately 372,600 cervical fusion surgeries were performed in the United States in 2025. This total addressable market is calculated based on the overall revenue opportunity that we believe is possible if we achieve 100% U.S. market share for aprevo in lumbar and cervical fusion surgeries.

We estimate there are approximately 4,000 surgeons across the United States whose patients could benefit from using the aprevo Technology Platform. As of December 31, 2025, 253 surgeon users had completed one or more procedures using the aprevo Technology Platform, compared to 152 surgeon users as of December 31, 2024. We believe this suggests ample opportunity to grow our surgeon user base and further penetrate the market by engaging more surgeons across the United States.

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*As of December 31, 2025.

We market the aprevo Technology Platform to support our personalized solutions and sell personalized implant devices to hospitals and ambulatory surgical centers 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 product approval. They are also responsible for recruiting independent sales agents who cover each surgery, generate leads, and train clinics. We plan to grow our commercial infrastructure, including both our direct sales team and our number of independent sales agents, and expand various market access initiatives, including utilizing medical education programs and surgeon training at top academic institutions.

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A large body of evidence supports the clinical benefits of the aprevo Technology Platform for spine fusion, including eight peer-reviewed clinical data publications and 20 peer-reviewed clinical data abstracts. Across the various studies and publications, the aprevo Technology Platform has shown favorable results in two of the most critical success measures in spine fusion surgery: (1) achieving proper post-operative alignment and (2) significantly reducing the need for revision surgery due to implant related complications. We continue to develop our growing base of clinical and patient reported outcomes to serve as evidence of the aprevo Technology Platform’s value to all key stakeholders, including patients, clinicians, customers, and payors. For example, we are currently conducting a 338-patient study, our COMPASS Registry, to track clinical outcomes from lumbar procedures using the aprevo Technology Platform in both DDD and ASD patients. Based on interim data from the first 67 ASD patients in our COMPASS Registry, these patients demonstrated improved alignment and reduced mechanical complications post-operatively, with a revision rate of 1.5% at one-year follow-up that were mechanical complication–related reoperations unrelated to the aprevo interbody implant. In addition, 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 ("DLL") with zero revision surgeries for adjacent segment degeneration at 20-month median follow-up. Other studies have shown patients with unrestored DLL have experienced a 25.9% revision rate for adjacent segment degeneration at minimum two-years follow-up. Separate studies have shown that approximately 40%-80% of short fusion patients present with a low DLL preoperatively.

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We have established a significant competitive advantage through multiple strategic initiatives, including creating a robust intellectual property portfolio and a comprehensive data set. As of December 31, 2025, our patent portfolio contains 45 total issued patents and approximately 120 pending patent applications along with various trademarks and trade secrets. The portfolio covers our aprevo interbody implants, associated manufacturing processes, design process, software user interface for surgeons, and AI-enabled algorithms and software for anatomical spine segmentation and for generating and delivering personalized digital surgical plans.

Our competitive position is further strengthened by our significant base of patient and imaging data. As of December 31, 2025, we estimate that we have used approximately four million de-identified radiographic images to train our AI models, analyzed more than one million radiographic images of patients who have undertaken a procedure using our aprevo Technology Platform, and created more than 40,000 3D patient specific models ("PSMs") of patients’ anatomies. We use clinical and post-operative data to refine personalized surgical planning, implant design, and physician workflow, and our expanding data assets support our research and development efforts, intellectual property portfolio, and product pipeline.

We have experienced sequential quarterly and annual revenue growth, driven primarily by growth in our surgeon user base and increased utilization by our existing surgeon users. For the years ended December 31, 2025 and 2024, we recognized revenue of $50.5 million and $27.2 million, respectively, representing year-over-year growth of 85.9%. For the three months ended December 31, 2025 and 2024, we recognized revenue of $15.2 million and $9.4 million, respectively, representing period-over-period growth of 61.2%. For the year ended December 31, 2025, we recognized a gross margin of 75.3% and a net loss of $29.6 million, compared to a gross margin of 73.8% and a net loss of $24.3 million for the year ended December 31, 2024. For the three months ended December 31, 2025, we recognized a gross margin of 76.5% and a net loss of $8.6 million, compared to a gross margin of 74.7% and a net loss of $4.7 million for the three months ended December 31, 2024. As of December 31, 2025, we had an accumulated deficit of $100.8 million.

Our Success Factors

We believe that the continued growth of our company will be driven by the following success factors:

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Paradigm-shifting, patient-centric platform aiming to set the new standard of care for spine surgery. The aprevo Technology Platform represents an end-to-end, integrated digital technology platform designed to deliver better surgical results, reduce the need for revision surgery, and improve long-term outcomes. The aprevo Technology Platform is the first available solution in the United States to provide personalized digital surgical plans and the accompanying aprevo interbody implants that are tailored to each patient’s pathology and vertebral bone topography. Our platform begins by analyzing each patient’s pathology and spinal anatomy, relying on standard diagnostic imaging to create a 3D model that is then used to identify, in collaboration with the health care provider, the corrections necessary to bring the spine within alignment. Our surgical planning software then designs a personalized interbody implant and surgical plan to achieve that goal. Additionally, the aprevo Technology Platform uses post-operative data to continuously improve the personalized digital surgical planning process and drive improved patient outcomes. We believe that the unique and differentiated benefits of the aprevo Technology Platform have helped drive strong adoption since our commercial launch.

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Large and established addressable market opportunity with a significant unmet clinical need. According to the Mayo Clinic News Network, approximately 20% of U.S. adults experience some amount of disc degeneration by the age of 65. We estimate, based on projections contained in the SmartTRAK Report, that approximately 445,200 lumbar fusion surgeries and approximately 372,600 cervical fusion surgeries were performed in the United States in 2025. This represents an existing, annual addressable U.S. market of $13.4 billion for our lumbar fusion implants and approximately $6 billion for our cervical fusion implants, based on our average revenue per procedure. Despite its wide adoption, we believe traditional spine fusion is hindered by several shortcomings that may contribute to high rates of malalignment and resulting, frequent complications and increased likelihood of revision surgery. For example, one analysis has shown that, following surgery for ASD, 62% of patients remain sagittally malaligned and 25% of patients remain coronally malaligned. This results in serious complications and may require one or more revision surgeries. One study reported that 10% of ASD patients included in the study underwent revision surgery at one year due to implant-related complications, while another observed revision rates for implant-related complications up to 50% by year four. Malalignment is equally problematic for patients receiving surgery for DDD. For example, a study of 578 patients and a study of 335 patients observed malalignment present in 30% and 85%, respectively, of DDD patients preoperatively (typically impacting the levels being treated with fusion), and that 70% and 90% of these patients remained malaligned, respectively, following surgery. Revision surgery represents a burdensome cost to the healthcare system. Based on published data, the direct and indirect costs of a single revision surgery frequently exceeds $100,000. We designed the aprevo Technology Platform to address the limitations of traditional spine surgery by providing surgeons with personalized digital surgical plans and patient-specific aprevo interbody implants to achieve the desired surgical correction. Our total addressable market is the total overall revenue opportunity that we believe is available for the aprevo Technology Platform in the United States if we achieve 100% market share for lumbar fusion and cervical fusion surgeries, and it is not a representation that we will achieve such market share.

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Compelling benefits for patients and providers supported by a robust body of clinical studies and real-world evidence. A large body of evidence supports the clinical benefits of the aprevo Technology Platform for spine fusion, including eight peer-reviewed clinical data publications and 20 peer-reviewed clinical data abstracts. Across the various studies and publications, the aprevo Technology Platform has shown favorable results in two of the most critical success measures in spine fusion surgery: (1) achieving proper post-operative alignment and (2) significantly reducing the need for revision surgery due to implant-related complications. We continue to develop our growing base of clinical and patient reported outcomes to serve as evidence of the aprevo Technology Platform’s value to all key stakeholders, including patients, clinicians, hospitals, and payors. For example, we are currently conducting a 338-patient study, our COMPASS Registry, to track clinical outcomes from lumbar procedures using the aprevo Technology Platform in both DDD and ASD patients. Based on interim data from the first 67 ASD patients in our COMPASS Registry, these patients demonstrated improved alignment and reduced mechanical complications post-operatively, with a revision rate of 1.5% at one-year follow-up that were attributable to mechanical complication–related reoperations unrelated to the aprevo interbody implant. A December 2025 publication in the Global Spine Journal reported two-year follow-up data on a retrospective cohort of ASD patients treated with aprevo interbody implants, comparing the rate of mechanical complication-related reoperations at two years among such patients to the reoperation rate among patients who had been treated using stock implants. The study demonstrated a significantly reduced rate of mechanical complication–related reoperations in the aprevo cohort as compared to the patients who had been treated using stock implants. Patients treated with aprevo had a reoperation rate at two years of 4.3% (n=115) as compared to a two-year reoperation rate of 16.6% (n=997) for patients who had been treated using stock devices (p0.001), representing a 74% relative reduction. The study authors noted that the reoperation rate in the selected comparator was relatively low, as these patients were treated by highly experienced and renowned surgeons. When factoring in three other published studies that were noted in the paper, the average two-year revision rate due to mechanical complications was 24.9%, making the comparative reoperation rate associated with aprevo even more meaningful. In addition, 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. Other studies have shown patients with unrestored DLL have experienced a 25.9% revision rate for adjacent segment degeneration at minimum 2-years follow-up. Separate studies have shown that approximately 40%-80% of short fusion patients present with a low DLL preoperatively.

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Established and distinct reimbursement with favorable payment levels. In October 2024, CMS established new MS-DRG codes that included “custom-made anatomically designed” devices. These new MS-DRG codes provide premium reimbursement for most lumbar spine fusion surgeries that utilize aprevo interbody implants relative to those that use stock implants. Additionally, in August 2025, CMS finalized X-codes for the use of custom-made anatomically designed interbody fusion devices for cervical spine fusion surgeries and established an NTAP of up to $21,125 additional reimbursement to hospitals for qualifying inpatient cervical spine fusion procedures. The new X-codes and NTAP went into effect on October 1, 2025. We believe that this reimbursement helps drive surgeon adoption while also supporting patient access to our patient-centric technology. Procedures using our aprevo interbody implants are covered by Medicare, Medicare Advantage, and commercial payors.

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Scalable, inventory-light business model with attractive gross margins. We have purposefully designed the aprevo Technology Platform, our supply chain, and our commercial strategy to enable rapid adoption and efficiently scale our operations. We leverage our AI-enabled algorithms and software to convert standard-of-care diagnostic patient imaging into a personalized digital surgical plan with limited human interaction and labor costs. Our made-on-demand aprevo interbody implants and our single-use surgical instruments allow us to operate an asset-light business model. Unlike traditional orthopedic device manufacturers who must build significant inventory in order to provide surgeons a range of devices for potential use in each procedure, our aprevo interbody implants are manufactured on demand by our CMOs and personalized for each patient. As a result, at any given time, our inventory consists primarily of devices used in personalized patient procedures, including patient-specific and standard components manufactured for a specific patient’s procedure. Importantly, as of February 2026, our streamlined Digital Production System ("DPS") allows us to typically deliver our patient-specific aprevo interbody implants to our customers within six business days of surgical plan approval. We utilize independent sales agents for case coverage, allowing our team of direct sales professionals to focus on widening and deepening the adoption of the aprevo Technology Platform. We expect these highly attractive business model attributes to drive revenue and enable our path to profitability.

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Strong competitive position supported by robust intellectual property and comprehensive data moat. As of December 31, 2025, our patent portfolio contained 48 total issued patents and approximately 120 pending patent applications along with various trademarks and trade secrets. The portfolio covers our (i) implants, (ii) associated manufacturing processes, (iii) design processes, (iv) software user interface for surgeons, and (v) AI-enabled algorithms and software that is used for generating personalized digital surgical plans. Our competitive position is further strengthened by our significant base of patient and imaging data. As of December 31, 2025, we estimate that we have used approximately four million de-identified radiographic images to train our AI models, analyzed more than one million radiographic images of aprevo patients, and created more than 40,000 3D PSMs of patients’ anatomies. We use clinical and post-operative data to refine personalized surgical planning, implant design, and physician workflow, supporting our research and development efforts, intellectual property portfolio, and product pipeline.

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Experienced leadership team. Our team of industry professionals is dedicated to our mission and embodies our “patient-obsessed” culture. Our senior management team has deep expertise across various disciplines, including technology, spine and orthopedic surgery, research and development, sales and marketing, operations, engineering, data science, manufacturing, and intellectual property.

Our Growth Strategies

We believe that the following strategies will advance our mission and contribute to our future success and growth:

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Continue to drive adoption and market share capture for aprevo in lumbar fusion surgeries. Our focus is to establish the aprevo Technology Platform as the standard of care for lumbar fusion. Since its full commercial launch of the aprevo Technology Platform for spine fusion surgery in October 2021, the aprevo Technology Platform has been used to treat more than 3,200 patients. We estimate that there are approximately 4,000 spine surgeons in the United States. As of December 31, 2025, we had 253 trained surgeons that performed at least one aprevo procedure and believe this represents a large opportunity to further penetrate the market with a wider surgeon base. Over time, we expect to not only expand the number of surgeons actively using the aprevo Technology Platform, but to also increase the annual average number of aprevo procedures performed by surgeons in their practice. To achieve this, we plan to grow our commercial infrastructure and expand various market access initiatives, including utilizing medical education programs, fellowship programs, and surgeon training at top academic institutions. Our medical education and surgeon training initiatives support our commercial operations by increasing awareness of the benefits of the aprevo Technology Platform. Additionally, we are investing in key initiatives to grow patient awareness, including our physician locator web page, which we believe will drive increased patient volume to surgeons who currently utilize the aprevo Technology Platform.

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Broadly commercialize our aprevo Technology Platform for cervical spine fusion surgeries. We believe that cervical spine fusion surgery using stock implants has significant challenges, and this creates an opportunity for the aprevo Technology Platform to significantly improve upon the standard of care in cervical fusion. 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. In July 2025, we successfully completed the first in-human personalized cervical procedure in the United States and commenced commercialization in December 2025. Also in December 2025, we received FDA 510(k) clearance for our 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.

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Invest in further growing our base of clinical evidence. We are committed to building upon our strong foundation of clinical evidence demonstrating the efficacy of the aprevo Technology Platform. Clinical data publications are important tools for patients and surgeons to educate themselves on what we believe are the clear benefits of the aprevo Technology Platform when compared to traditional spine surgery using stock implants. For example, our COMPASS Registry is generating real-world evidence on the performance and outcomes of the aprevo Technology Platform for use in lumbar spine fusions, and we anticipate that our COMPASS Registry will support a robust cadence of clinical publications. In addition, although the outcomes of our studies cannot be guaranteed, we plan to continue to engage in studies and a registry to further validate the clinical benefits of the aprevo Technology Platform in cervical spine fusion. We believe that our ongoing clinical initiatives will further validate the benefits of the aprevo Technology Platform, drive surgeon adoption, and strengthen our reimbursement profile.

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Continue to develop our research and development initiatives. Our research and development initiatives are focused on introducing enhancements and new capabilities aimed at increasing the value provided by the aprevo Technology Platform to patients, surgeons, and third-party payors. We will continue introducing iterations of our AI-enabled algorithms and software to drive further improvements in our planning. We believe that these improvements will strengthen our ability to leverage the post-operative data we collect to improve our planning process and thus help physicians make better decisions earlier on in treatment. We also believe we can further develop the aprevo Technology Platform to address additional indications and disease states within the spine, such as cervical corpectomy and cervical disc arthroplasty. While spine surgery remains our current focus and we do not currently have a definitive timeline to expand beyond cervical and lumbar at this time, we believe that our platform technology may also benefit other musculoskeletal applications beyond spine.

Market Overview

Spinal Anatomy

The human spine is a complex and critical structure that provides support, protects the spinal cord, and enables mobility. The spine or spinal column consists of 24 individual bones, or vertebra, and intervertebral discs that are stacked vertically and categorized into distinct regions: cervical (seven vertebrae), thoracic (12 vertebrae), and lumbar (five vertebrae). The vertebral body is the large, cylindrical, weight-bearing portion of a vertebra. The vertebral endplate, which is a thin layer of bone at the upper and lower surfaces of the vertebral body, plays an important role because it facilitates nutrient exchange between the vertebral body and disc. The spinal cord runs the length of the spine and passes through each vertebra; nerves exit the spine through spaces between the vertebra to send and receive signals from the rest of the body.

A fully functional spine is characterized by proper spinal alignment and healthy discs. Proper alignment is essential for stability and effective load distribution, while healthy discs provide mobility and shock absorption. Healthy discs are well-hydrated and have sufficient height to allow for passage of nerves and movement of the spine. Healthy endplates are generally smooth and uniform and may be slightly concave.

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Degenerative Disc Disease

DDD refers to the progressive breakdown of the spinal discs that occurs naturally with age and can be accelerated by factors such as injury, repetitive loading, obesity, or genetic predisposition. DDD can occur in any region of the spine; however, DDD is most prevalent in the lumbar and cervical regions. DDD often causes a loss of disc height and spine function, resulting in compressed nerves and malalignment of the spine. These conditions often lead to chronic pain (nerve impingement, discogenic pain), disability (reduced mobility), and other chronic spinal pathologies, significantly impacting patients’ lives. The progression of DDD typically results in worsening symptoms. In its early phase, disc degeneration involves subtle dehydration and minor structural changes, manifesting as discomfort or reduced functionality. These issues can typically be treated with conservative treatment, including physical therapy and pain medication. As the condition progresses, the discs may lose significant height and functionality. Degeneration of the discs may include ruptures, herniation, and may contribute to spinal stenosis (narrowing of the spinal canal). Patients at this phase often experience severe, debilitating pain, and substantial limitations in daily activities. These symptoms may force the patient to consider surgical solutions such as spine fusion to improve stability, restore function, and alleviate symptoms. The image below depicts an example of a healthy disc versus a degenerated disc.

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Disc degeneration can lead to mechanical stress and damage to the endplates, making the endplate surfaces uneven and coarse. In turn, endplate defects can impair nutrient supply and accelerate disc degeneration, creating a vicious cycle that further contributes to spinal pathology and pain. One study demonstrated the correlation between disc degeneration and vertebral endplate surface irregularities or defects, with an increasing percentage of endplates, up to 48.9%, with disc degeneration exhibiting surface irregularities or defects from the upper spine to lower spine. The below 3D models depict two vertebral bodies from the same patient. The vertebral body on the left has a smooth surface, and the patient’s intervertebral disc at this level is healthy. The vertebral body on the right is from a level in which degeneration has caused endplate irregularities and defects.

If multiple sections and levels of the spine are impacted by DDD, the patient may experience systematic structural abnormalities of the spine, which is broadly referred to as ASD. ASD is often characterized by conditions such as scoliosis (curvature of the spine) or spondylolisthesis (slipping of one vertebra relative to another).

We believe that the prevalence of DDD has significantly increased in recent years due to multiple demographic factors, including an aging population and heightened obesity levels. Low back pain, which is strongly connected to the degenerative process of the intervertebral disc, is the fifth most common cause for doctor visits and affects 7.6% to 37% of patients according to a published literature review. One study estimated that the overall prevalence of patients diagnosed with DDD to be over 27% and increased with age.

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Current Treatment Landscape

The treatment landscape for DDD spans a continuum of non-surgical and surgical interventions, each addressing different phases of disease progression and patient needs.

Non-Surgical Intervention

Non-surgical interventions are typically the first line of treatment for DDD, aimed at managing symptoms and slowing disease progression without invasive procedures. These approaches typically include physical therapy, pain medications, lifestyle modifications, and alternative therapies, such as chiropractic care or acupuncture. Despite their use, non-surgical approaches have notable shortcomings. They primarily address symptoms rather than the underlying structural degeneration. As degeneration progresses, the loss of disc height and joint stability may become irreversible, requiring surgical intervention.

Surgical Intervention

When non-surgical treatments fail to alleviate debilitating symptoms or disabilities, surgical interventions may become necessary.

The most common surgical intervention and current standard of care is traditional spine fusion. The goals of spine fusion surgery are to relieve pain, improve disability, restore function, and provide a durable solution to prevent the need for subsequent surgeries to achieve positive long-term patient outcomes. During the surgery, the degenerated disc is extracted and replaced with an interbody implant made of titanium, polymer, or bone allograft. Prior to placement, the center of the interbody implant is packed with bone graft material. The role of the interbody device is to restore height (allowing the nerves to exit the canal without being impinged), establish spinal alignment (based on the needs of each patient), and stabilize the spinal segment in the desired position while the graft material promotes bone growth between the two vertebral bodies to form a solid fusion. In most instances, the interbody implants are supplemented with additional fixation devices such as rods, screws, and plates to provide added stabilization. Traditional spine fusion is performed using 2D imaging for pre-operative planning and stock implants that are largely fixed in size and shape.

Left to right: images of titanium, polymer, and bone allograft interbody devices.

In lumbar fusion, surgeons may employ various anatomical approaches to access the disc space, including from the front (anterior lumbar interbody fusion (“ALIF”)), from the side (lateral lumbar interbody fusion (“LLIF”)), and from the back (transforaminal interbody fusion), depending on the patient’s pathology and vertebral bone topography. In cervical fusion, the most common anatomical approach is through the front of the neck (anterior cervical discectomy and fusion (“ACDF”)).

The alignment of the spine following surgery is critically important. Proper alignment of the spine must be considered in three dimensions, which involves coronal correction (correcting side-to-side curvature), sagittal correction (correcting front-to-back curvature), and axial correction (height restoration). If the spine is, or becomes, malaligned, as often measured by missing a desired angle by as little as 11 degrees, the patient will likely continue to have symptoms or require additional surgeries. Studies have shown a strong association between spinal malalignment and the degeneration of adjacent spinal segments (adjacent segment disease), and there is a higher risk of undergoing revision surgery if proper sagittal alignment is not achieved during the primary surgery. The achieved alignment at each treated level can have a profound impact on overall alignment and the risk of needing additional surgery.

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Limitations of Traditional Spine Fusion

Despite wide adoption, we believe traditional spine fusion is hindered by several shortcomings, which may contribute to poor clinical outcomes post-surgery. These poor outcomes not only meaningfully impair patients’ health and quality of life but also impose a significant economic burden on the healthcare system, with the direct and indirect costs of a single revision surgery frequently exceeding $100,000.

We believe that traditional spine fusion is limited in several ways, including:

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Lack of Sufficient Pre-Operative Planning: Traditional spine fusion often lacks robust pre-operative planning, relying on 2D imaging without advanced tools such as 3D modeling. This can limit the surgeons’ ability to identify and develop a plan for achieving optimal correction and alignment goals.

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Poor Fit of Stock Interbody Implants: Stock implants are delivered to surgery in a large metal tray containing dozens of interbody implants of different shapes and sizes. Stock implants are largely symmetrical in shape and come in pre-defined dimensions, which can fail to match the unique anatomy of each patient and lead to unpredictable alignment. As a result, stock implants may not deliver proper alignment or correct coronal (side to side) imbalance of the spine. The lack of proper fit and correction often results in uneven loading and unpredictable alignment. The graphic below depicts the poor fit of a stock implant to endplates with damaged and uneven surfaces.

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Complicated and Time-Consuming Workflow: Given the limitations of 2D imaging, during the surgery, surgeons must visually choose the correct stock implant from dozens of options while the patient is anesthetized and with the spine exposed. This approach often requires the surgeon to test the fit of multiple implants in the disc space, which involves multiple passes of instruments into and out of the wound and repeated X-ray imaging. This trial process can prolong surgery time and increase radiation exposure, which elevates the risk of secondary complications.

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Lack of Post-Operative Feedback Incorporation into Future Decision Making: Without a sufficient pre-operative plan, it can be difficult for surgeons to reconcile achieved outcomes against surgical objectives. Reconciling post-operative data can provide valuable insights into whether the optimal alignment of the spine was successfully achieved. However, in traditional spine fusion, there is no integrated means for reconciling the data and communicating these insights back to surgeons. As a result, critical insights cannot be incorporated into future surgical plans that could help to improve surgical outcomes.

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Burdensome Inventory Management: Due to the uniform nature of stock implants, traditional spine fusion requires multiple trays of devices. This can result in an unnecessary, upfront investment from the manufacturers to ensure that there is adequate and properly sterilized inventory on hand for every spine fusion procedure. As a result, we believe that current medical device manufacturers struggle to reach profitability because they must produce stock implants in dozens of sizes and as a result hold large amounts of inventory to address the broad array of patient needs. In addition, stock implants are not delivered sterile to hospitals and ambulatory surgical centers, requiring additional processing and resulting in additional expenses for each.

We believe that these limitations explain why traditional spine fusion procedures can fail to achieve the desired alignment, which often leads to post-operative complications and revision surgery, as discussed below.

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High Rates of Malalignment: Malalignment following spine fusion surgery is a leading cause of poor outcomes, often resulting in complications and revision surgery. Proper spinal alignment is often not achieved following the traditional spine fusion procedure and, according to numerous published studies, post-operative alignment with stock implants is unpredictable. One analysis has shown that 62% of ASD patients remain sagittally malaligned and 25% remain coronally malaligned after traditional spine fusion surgeries. A study of 578 DDD patients that received one- to two-level fusions using stock implants showed that of the 173 patients that were malaligned pre-operatively, only 29% were corrected to normal alignment through surgery. A second study of 335 patients observed that, of 285 patients that were pre-operatively malaligned, only 10% were corrected to normal alignment through spine fusion surgery with stock implants. A third study of 149 DDD patients that received spine fusion surgery using stock implants observed that patients who were malaligned pre-operatively generally had worsened alignment after surgery.

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Frequent Complications: Spine fusion procedures using stock implants can lead to malalignment, which may cause several complications, including penetration of the interbody implant through the vertebral endplate into the vertebral body (subsidence), degeneration of adjacent spinal segments (adjacent segment disease), and mechanical complications, which include implant breakage, pseudoarthrosis (failure of the bone to fuse), and the development of malalignment/kyphosis (abnormal alignment) elsewhere in the spine. A systematic review of 40 articles reporting results on lumbar fusion procedures with stock implants in a mix of both DDD and ASD patients showed that subsidence occurred in 13% to 27% of patients. In a study of 997 ASD patients that received spine fusion surgery using stock implants, implant-related mechanical complications were the most common complications, affecting 28% of patients by two years post-operatively. Another study of 138 ASD patients that underwent spine fusion surgery using stock implants observed a similar rate of implant-related mechanical complications of 30% at two years and increasing to 56% at five years. Other published studies have also identified a strong association between spinal malalignment and the development of adjacent level pathology in DDD patients that receive spine fusion surgery using stock implants.

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Increased Likelihood of Revision Surgery: Post-operative malalignment and the resulting complications significantly increase the likelihood of undergoing revision surgery. Recent publications on traditional spine fusions report rates of revision surgery for mechanical complications between 14% and 32% over a mean postoperative period of one to two years in ASD patients. Other published studies have observed revision rates ranging from 29.5% to 50% in ASD patients receiving spine fusion surgery using stock implants by four-years follow-up. Research has shown that ASD patients requiring revision surgery due to poor alignment suffer from persistent disability and are 93% less likely to achieve meaningful benefit from surgery. One study examined the revision rate in DDD patients in whom abnormal sagittal alignment was not corrected and found that these patients had 19.4% revision rate by 1-year after surgery. Another study of 335 DDD patients showed that 285 (85%) of patients had abnormal sagittal alignment preoperatively and only 28 (10%) were corrected through their surgery. Among the 257 patients having abnormal sagittal alignment after surgery, the revision rate was 20.2% with a mean follow-up of 6.5 years. This revision rate was significantly higher than the 7.7% revision rate among patients in whom abnormal sagittal alignment was corrected, 20.2% vs. 7.7% (p=0.0103). Repeat revision surgeries, each requiring six to 12 months of recovery, can compromise patients’ health and quality of life, and represent a burdensome and avoidable cost to the healthcare system.

Our Addressable Market Opportunity

Given the limitations of traditional spine fusion surgery, we believe that DDD presents a significant unmet clinical need and economic burden to the healthcare system. We believe that the aprevo Technology Platform effectively addresses the underlying issues in this large, established market by providing personalized surgical plans, patient-specific spine implants, and holistic post-operative feedback.

Our initial focus has been on the lumbar fusion market for which the aprevo Technology Platform is FDA 510(k) cleared for all lumbar levels. We estimate our total addressable market opportunity for lumbar fusion procedures to be approximately $13.4 billion. This figure is based on our estimate (informed by projections contained in the SmartTRAK Report) that 445,200 lumbar fusion surgeries were performed in the United States in 2025, and the average revenue per lumbar procedure.

We have also developed and recently begun to commercialize our aprevo Technology Platform for use in cervical fusion procedures, after having received FDA 510(k) clearance for our aprevo interbody implants for cervical interbody fusion surgeries in November 2024. We have generated limited early sales of aprevo interbody implants for use in cervical spine fusion surgery in 2025 and expect to more broadly commercialize our cervical platform in 2026. We estimate our total addressable market opportunity for cervical fusion procedures to be approximately $6 billion. This figure is based on our estimate (informed by projections contained in the SmartTRAK Report) that 372,600 cervical fusion surgeries were performed in the United States in 2025, and the average selling price for our cervical fusion implants.

Total addressable market for our aprevo lumbar and cervical devices is calculated based on the total overall revenue opportunity that we believe is available if we achieve 100% market share for lumbar fusion surgeries and cervical fusion surgeries in the United States and is not a representation that we will achieve such market share. The market share we achieve is subject to a number of assumptions, risks and uncertainties, which could fluctuate from time to time. See the risk factor titled “The size and expected growth of our total addressable market has not been established with precision and may be smaller than we estimate.”

Given the global prevalence of spine fusion procedures, we believe that a significant market opportunity also exists for the aprevo Technology Platform in international markets. We also plan to develop the aprevo Technology Platform to address additional indications and spinal disease states and may target cervical corpectomy and cervical disc arthroplasty solutions. While spine surgery remains our current focus, and we do not currently have a definitive timeline to expand beyond cervical and lumbar at this time, we believe that our platform technology may also benefit other musculoskeletal applications beyond the spine, unlocking greater market potential.

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Our Solution

The aprevo Technology Platform represents an end-to-end, integrated digital technology platform designed to deliver better surgical results, reduce the need for revision surgery, and improve long-term outcomes. Our aprevo Technology Platform is the first available solution to provide personalized digital surgical plans and the accompanying aprevo interbody implants that are tailored to each patient’s pathology and vertebral bone topography.

Our pre-operative planning software utilizes standard-of-care diagnostic imaging and AI-enabled algorithms to develop personalized digital surgical plans and to design aprevo interbody implants for each patient’s pathology and vertebral bone topography. Additionally, the aprevo Technology Platform supports the collection of real-world, post-operative data to inform our digital surgical planning process. The aprevo Technology Platform is commercially available in the United States and is indicated for use in lumbar and cervical interbody fusion procedures.

Our Data Asset and Correction AI-Enabled Algorithms

Our aprevo Technology Platform supports our collection of pre- and post-operative data from each patient and utilizes this data to improve our digital surgical planning process. Through our extensive database of radiographic images, we have developed proprietary AI-enabled algorithms to create personalized digital surgical plans for spine surgery. As of December 31, 2025, we estimate that we have used approximately four million de-identified radiographic images to train our AI models, analyzed more than one million radiographic images of aprevo patients, and created more than 40,000 3D PSMs of patients’ anatomies. We use clinical and post-operative data to refine personalized surgical planning, implant design, and physician workflow, supporting our research and development efforts, intellectual property portfolio, and product pipeline.

The aprevo Technology Platform and Procedure Surgical Workflow

The aprevo Technology Platform offers solutions for the entire surgical workflow, including pre-operative AI-enabled, surgical planning and post-operative data collection and insights for each surgeon. The following describes this workflow:

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Pre-Operative. A procedure using the aprevo Technology Platform begins with designing a personalized digital surgical plan for each patient. Utilizing standard-of-care diagnostic imaging, our proprietary AI-enabled software renders a 3D PSM of the patient’s anatomy, including their pathology and vertebral bone topography. The PSM is then virtually manipulated to place the patient’s vertebral bodies into the appropriate 3D alignment; this creates a new intervertebral space that we then map to create aprevo interbody implants. This process results in a personalized digital surgical plan and aprevo interbody implants that are designed to match the irregular surfaces of each patient’s vertebral bone topography to provide the targeted alignment. We interact with the surgeon during the pre-operating planning process through our myaprevo application (available via mobile device or desktop). The myaprevo application is a digital tool used to display the personalized digital surgical plan and associated metrics that define the desired correction and alignment. The myaprevo application provides interactive 3D visualizations that the surgeon may share with the patient. Each patient’s personalized digital surgical plan and aprevo interbody implants are visualized, reviewed, and approved through the myaprevo application.

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Intra-Operative. The proposed personalized digital surgical plan and aprevo interbody implant designs are approved by the surgeon, including the exact implant dimensions, the desired position on the endplate, and their preferred surgical approach. Our patient-specific aprevo interbody implants are then 3D-printed by our CMOs. Our aprevo interbody implants are made of medical-grade titanium and designed with a lattice to promote fusion. Our streamlined DPS allows us to deliver aprevo interbody implants to our customers within six business days of surgical plan approval. The implants are delivered to the operating room in a sterile kit along with single-use surgical instruments. In the operating room, our myaprevo application provides the surgeon and the operating staff with access to the personalized digital surgical plan that aids in the ability to accurately place aprevo interbody implants and predictably achieve the surgical plan.

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Post-Operative. Following the spine fusion surgery, we collect each patient’s operative and post-operative radiographs. The patient’s imaging data is measured and analyzed, and a detailed case report, branded as “aprevo intelligence,” is generated. The aprevo intelligence report shows pre-operative, planned, and post-operative alignment parameters. Surgeons can access comprehensive analytics for each surgery, providing the ability to conduct in-depth review and analysis of the surgical outcome against the operative goals. By leveraging the aprevo intelligence reports and post-operative insights, our planning process can be improved to the benefit of future patients.

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Key Benefits of the aprevo Technology Platform

We designed the aprevo Technology Platform to address the shortcomings of traditional spine fusion surgery using stock implants. The benefits demonstrated by the aprevo Technology Platform include:

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Improved alignment and decreased risk of revision spine surgery. Post-operative spinal malalignment has been shown to have the greatest negative impact on clinical outcomes in spine fusion surgery. Achieving the necessary alignment to address a patient’s condition and improve the chances of a successful outcome requires careful planning and precise execution. The aprevo Technology Platform provides 3D anatomical correction, incorporating coronal alignment, sagittal alignment, and height restoration to help surgeons achieve their planned alignment targets. A large body of evidence supports the clinical benefits of the aprevo Technology Platform for spine fusion, including eight peer-reviewed clinical data publications and 20 peer-reviewed clinical data abstracts. Across the various studies and publications, the aprevo Technology Platform has shown favorable results in two of the most critical success measures in spine fusion surgery: (1) achieving proper post-operative alignment and (2) significantly reducing the need for revision surgery due to implant related complications. We continue to develop our growing base of clinical and patient reported outcomes to serve as evidence of the aprevo Technology Platform’s value to all key stakeholders, including patients, clinicians, customers, and payors. For example, we are currently conducting a 338-patient study, our COMPASS Registry, to track clinical outcomes from lumbar procedures using the aprevo Technology Platform in both DDD and ASD patients. Based on interim data from the first 67 ASD patients in our COMPASS Registry, these patients demonstrated improved alignment and reduced mechanical complications post-operatively, with a revision rate of 1.5% at one-year follow-up that were attributable to mechanical complication–related reoperations unrelated to the aprevo interbody implant. A December 2025 publication in the Global Spine Journal reported two-year follow-up data on a retrospective cohort of ASD patients treated with aprevo, comparing the rate of mechanical complication-related reoperations at two years among such patients to the reoperation rate among patients who had been treated using stock implants. The study demonstrated a significantly reduced rate of mechanical complication–related reoperations in the aprevo cohort as compared to the patients who had been treated using stock implants. Patients treated with aprevo had a reoperation rate at two years of 4.3% (n=115) as compared to a two-year reoperation rate of 16.6% (n=997) for patients who had been treated using stock devices (p0.001), representing a 74% relative reduction. The study authors noted that the reoperation rate in the selected comparator was relatively low, as these patients were treated by highly experienced and renowned surgeons. When factoring in three other published studies that were noted in the paper, the average two-year revision rate due to mechanical complications was 24.9%, making the comparative reoperation rate with aprevo even more meaningful. In addition, 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. Other studies have shown patients with unrestored DLL have experienced a 25.9% revision rate for adjacent segment degeneration at minimum two-years follow-up. Separate studies have shown that approximately 40%-80% of short fusion patients present with a low DLL preoperatively. We attribute these results to the improved alignment observed in patients receiving the aprevo Technology Platform.

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Outcomes-driven pre-operative planning and post-operative insights. Our pre-operative, 3D modeling, and AI-enabled algorithms informed by large amounts of data help surgeons plan the surgery that fits with a patient’s unique pathology and anatomy. Following the procedure, the patient’s post-operative images and outcome data are measured and analyzed to inform results against the surgical plan. These post-operative insights allow surgeons to reconcile their plan against the surgical results. As such, their preferences and objectives can be fine-tuned, which streamlines the planning process in future patient cases and further enhances precision and performance of future surgeries. An aprevo intelligence report containing a dashboard and details showing the surgical outcomes as measured against personalized surgical plans is provided to the surgeon. Our aprevo Technology Platform not only enables direct feedback to the surgeon, but it also collects data that is used to improve our surgical planning process.

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Seamless integration and improvement of existing surgical workflows. The use of the aprevo Technology Platform integrates with, and can improve upon, existing surgical workflow. The aprevo Technology Platform does not require any additional or supplemental pre-surgical imaging beyond what is required for traditional spine fusion surgery. The surgeon can use their preferred surgical access approach and methods as they would with a stock implant without any additional surgical training. Our aprevo interbody implants are compatible with commercially available surgical robots and other accompanying implants, such as rods, screws, and plates. We believe this allows for ease of adoption and integration into the surgeon’s workflow and preferences and enables surgeon user acquisition and account penetration. As an improvement to the surgical workflow, the surgeon does not need to test fit various interbody sizes during the surgery while the patient is under anesthesia and the spine is exposed. Instead, the surgeon can deliver the aprevo interbody implant to each planned vertebral level without any trialing required.

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On-demand, made-to-order inventory model with short lead times. Our aprevo interbody implants are manufactured on demand by our CMOs and are specific to each patient, their pathology, and vertebral bone topography. This allows us to maintain a capital-efficient inventory model. Unlike stock implants, our patient-specific aprevo interbody implants and accompanying single-use surgical instruments are delivered sterile to our customers typically within six business days of surgical plan approval. Our surgical kits do not require additional processing at the hospital or ambulatory surgical centers, which eliminates additional expenses for each. Since our aprevo interbody implants and accompanying insertion instruments are made on-demand by our CMOs for each patient, we are able to operate an asset-light business model, requiring limited investments in capital equipment and inventory.

Our 510(k) Submissions

The following table sets forth our 510(k) submissions for our material products and product candidates:

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Our Clinical Results and Studies

A large body of evidence supports the clinical benefits of the aprevo Technology Platform for spine fusion, including eight peer-reviewed clinical data publications and 20 peer-reviewed clinical data abstracts. We are committed to continuing to develop a strong base of clinical evidence and real-world patient outcomes to further support the aprevo Technology Platform's clinical benefits. We believe that these efforts will help continue to generate a robust cadence of publications, increase awareness of the aprevo Technology Platform and drive commercial adoption.

Across the various studies and publications, the aprevo Technology Platform has shown favorable results in three of the most critical success measures in spine fusion surgery: improved post-operative alignment, improved disc space biomechanics, and reduced need for revision surgery due to implant-related complications.

Improved and More Predictable Post-Operative Alignment. Proper spinal alignment is crucial in spine surgery to achieve optimal patient outcomes, minimize complications, and improve long-term function. In a cohort study of 762 ASD patients, the authors concluded that poor post-operative alignment has the greatest impact on clinical outcomes in ASD patients. Research further indicates that if the spine is, or becomes, malaligned, the patient will likely continue to have symptoms or require revision surgery. The primary measures for evaluating post-operative lumbar spinal alignment include:

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intervertebral lordosis (“IVL”), which measures the angles between the endplates of two adjacent vertebrae;

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DLL, which measures the angle between the upper endplate of the L4 vertebral body and the S1 sacral endplate, which is the upper surface of the first sacral vertebra (“S1”);

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lordosis distribution index (“LDI”), which is defined as the ratio of lower lumbar lordosis (“L4-S1”) to the total lumbar lordosis; and

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pelvic incidence minus lumbar lordosis (“PI-LL mismatch”), which assesses the relationship between pelvic incidence (“PI”), which is the orientation of the pelvis, and lumbar lordosis (“LL”), which describes the curvature of the lower spine.

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The following diagram depicts each of these measures:

Several studies have found that procedures using the aprevo Technology Platform can achieve favorable post-operative alignment in short and long construct cases. For example:

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IVL: In a study of 217 patients with ASD or DDD treated with an aprevo interbody implant at one or more levels, 82% of lumbar levels treated (n = 365 implants) achieved IVL alignment within five degrees of target, and 97% of lumbar levels treated achieved IVL alignment within 10 degrees of target. In another published clinical study using stock implants, the authors found no differences in the amount of lumbar lordosis between patients receiving stock interbody devices with an off-the-shelf angle of six degrees versus patients who received stock interbody devices with an off-the-shelf angle of 20 degrees, demonstrating the unpredictability of alignment achieved with stock devices.

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DLL: A study of 72 DDD patients showed that 45% of patients with low DLL (33 of 72 patients) were restored to a normal DLL range after receiving an aprevo interbody implant.The authors of this study compared their results to those reported in a separate study of 335 patients that received stock implants. They noted that, in the other study, correction of low DLL to normal DLL was achieved in only 10% of patients, with the uncorrected patients having 20.2% incidence of revision surgery at a mean follow-up of 6.5 years.

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LDI: In a study of 111 DDD patients, hypolordotic patients (those patients with a reduced or absent inward curve with LDI less than 50%; n=14) treated with an aprevo interbody implant achieved statistically significant improvement in LDI post-operatively. The mean post-operative LDI among these hypolordotic patients was 46%, approaching the normal LDI range (LDI 50-80%). In this study, hyperlordotic patients (those patients with excessive inward curve with LDI greater than 80%; n = 16) had a decrease in LDI trending toward the normal range; however, this decrease did not reach statistical significance. The authors of this study compared their results to those presented in a separate study of 149 DDD patients receiving stock implants and noted that the hypolordotic LDI patients (n = 36) in the other study tended to continue to have abnormally low LDI levels post-operatively and actually worsened as a group. The authors cited multiple studies showing that patients with a post-operative hypolordotic distribution present a greater risk of developing adjacent segment degeneration and are more likely to require revision surgery.

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PI-LL: In a multicenter study of 65 ASD patients receiving an aprevo interbody implant, 44.6% of patients achieved targeted PI-LL within five degrees, and only 15.3% of patients missed targeted PI-LL by greater than 15 degrees. The authors of this study compared their results to those presented in a report from the International Spine Study Group (“ISSG”) in a cohort of 266 patients with ASD that received stock implants. The authors noted that, compared with the ISSG cohort, utilization of aprevo interbody implants resulted in significant improvement in achieving PI-LL target within five degrees of the pre-operative plan (44.6% vs. 31.5%, P = 0.046). Furthermore, compared to ISSG cases, utilization of aprevo interbody implants led to a significant reduction in cases in which the PI-LL target was missed by greater than 15 degrees (15.3% vs. 30.8%, P = 0.012). In another multicenter study of 135 DDD patients, among patients who were pre-operatively malaligned, alignment was restored (PI-LL restored to less than 10 degrees) in 44% of the patients (23 of 52 patients) when an aprevo interbody implant was used. The authors of this study compared their results to a multicenter study of 578 patients that received stock implants, where only 29% of pre-operatively malaligned patients experienced PI-LL restoration using stock implants. The authors found that the results using aprevo interbody implants to represent a statistically significant improvement compared with stock implants.

Improved Disc Space Biomechanics. In addition to providing the necessary alignment, interbody fusion devices play a central role in restoring and stabilizing the biomechanics of the disc space. However, the incongruity between an irregularly shaped vertebral endplate and the uniform surfaces of a stock interbody fusion device can create point contact between the interbody device and the endplate, causing uneven load distribution which can lead to implant subsidence or pseudarthrosis. Subsidence of the implant occurs when the interbody device penetrates the vertebral endplate and intrudes into the vertebral body during the post-operative healing process. In these situations, alignment may be altered, and height restoration may be reduced or lost leading to the recurrence of pain. Pseudoarthrosis, which is a failure of the bone graft to fuse the two vertebral bodies into a single unit, can occur if the load on the bone graft is not evenly distributed across the disc space. After a period of time, the failure to achieve a fusion also alters the biomechanics of the disc space and this is most typically manifested by a mechanical failure elsewhere, such as a rod fracture. The goal of the endplate matched design of the aprevo interbody device is to increase the contact area between the irregular surface of the vertebral endplate to distribute loads more evenly across the disc space including loading of the bone graft. Unfortunately, an assessment of contact area across a three-dimensional endplate cannot be performed with conventional 2-dimensional X-rays, rather, a 3D analysis from a post-operative CT is required. Because a CT exposes the patient to harmful radiation, this type of post-operative imaging is relatively infrequent. However, in some situations, post-operative CTs are the standard of care, and these provide a rare and valuable opportunity to analyze endplate to implant contact, as well as assess the occurrence of subsidence and pseudoarthrosis. In a study using one-year post-operative CT imaging to evaluate the implant-endplate contact area, subsidence and fusion in a series of 15 patients receiving 24 aprevo interbody implants, the implant-endplate contact area ratio was determined to be 93.9%, fusion was visible in 100% of levels and 95.8% of levels were free of subsidence. The authors concluded that aprevo interbody implants can provide nearly complete contact with endplate surfaces regardless of the individual endplate morphology, noting that this may contribute to improved interbody fusion rates, less subsidence, maintenance of alignment, and potentially decreased risk of implant-related complications.

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Reduced Likelihood of Revision Surgery. Achieving optimal alignment has been shown to prevent mechanical complications and reduce the need for revision surgery, significantly improving patient quality of life. Based on interim data from the first 67 ASD patients in our COMPASS Registry, these patients demonstrated improved alignment and reduced mechanical complications post-operatively, with a revision rate of 1.5% at one-year follow-up that were attributable to mechanical complication–related reoperations unrelated to the aprevo interbody implant. A December 2025 publication in the Global Spine Journal reported two-year follow-up data on a retrospective cohort of ASD patients treated with aprevo, comparing the rate of mechanical complication-related reoperations at two years among such patients to the reoperation rate among patients who had been treated using stock implants. The study demonstrated a significantly reduced rate of mechanical complication–related reoperations in the aprevo cohort as compared to the patients who had been treated using stock implants. Patients treated with aprevo had a reoperation rate at two years of 4.3% (n=115) as compared to a two-year reoperation rate of 16.6% (n=997) for patients who had been treated using stock devices (p0.001), representing a 74% relative reduction. The study authors noted that the reoperation rate in the selected comparator was relatively low, as these patients were treated by highly experienced and renowned surgeons. When factoring in three other published studies that were noted in the paper, the average two-year revision rate due to mechanical complications was 24.9%, making the making the comparative reoperation rate with aprevo even more meaningful. In addition, 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. Other studies have shown patients with unrestored DLL have experienced a 25.9% revision rate for adjacent segment degeneration at minimum two-years follow-up. Separate studies have shown that approximately 40%-80% of short fusion patients present with a low DLL preoperatively.

COMPASS Registry

The COMPASS Registry is an observational, prospective registry designed to collect and evaluate data on patients with degenerative spinal conditions for a period of two years following lumbar surgery using the aprevo Technology Platform. We completed enrollment of 338 patients across 16 centers in the United States in the fourth quarter of 2024 and anticipate complete data to be released in the first half of 2027.

Eligible patients were required to meet inclusion criteria specified for the registry. Generally, patients must be adults who have been diagnosed with a degenerative condition of the lumbar spine that is appropriately treated with a lumbar fusion, and a clinical decision must have been made to use the aprevo Technology Platform in their spine fusion surgery prior to enrollment in the COMPASS Registry. The procedure must include placement of one or more aprevo interbody implants using an anterior, lateral, oblique, or transforaminal approach between the L1 and S1 vertebra. Patients are excluded if they have limited life expectancy for the study duration, have a known allergy to implant materials, are pregnant or intend to be, have an infection or inflammation, or have morbid obesity.

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Patients are evaluated at the post-operative time points of six weeks, six months, one year and two years. The primary outcome measures include alignment, complications, and revisions, and the secondary outcome measures are Patient-Reported Outcome Measures to assess pain, function, treatment satisfaction, and quality of life.

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Interim results from the first 67 ASD patients in our COMPASS Registry, from nine centers at 12-week to one-year follow-up with a mean follow-up time of 14.7 months, have been published. Overall, the results demonstrated that ASD patients who were treated with the aprevo Technology Platform obtained favorable post-operative alignment status, with no complications related to the aprevo interbody implant, and low revision rates. Among 44 patients with pre-operative severe overall deformity (based on a combined score of three alignment parameters) 16 improved to moderate deformity and nine to mild deformity. The percentage of patients starting in the severe PI-LL category was reduced from 55% pre-operatively to 12% post-operatively, with 38% improving from pre-operative moderate or severe PI-LL to a PI-LL of zero. Early complications requiring revision surgery consisted of two reoperations for screw malposition within 90 days (unrelated to the aprevo interbody implant). Between 90 days and one year, there was one revision surgery at nine months post-operatively due to proximal junctional kyphosis. This represents a revision rate of 1.5% attributable to a mechanical complication not related to the aprevo interbody implant and the authors of this study noted that this compares favorably to recent publications on traditional spine fusions reporting rates of revision surgery for mechanical complications between 14% and 32% over a mean postoperative period of two years in ASD patients. A December 2025 publication in the Global Spine Journal reported two-year follow up data on a retrospective cohort of ASD patients treated with aprevo, comparing the rate of mechanical complication-related reoperations at two years among such patients to the reoperation rate among patients who had been treated using stock implants. The study demonstrated a significant reduced rate of mechanical complication-related reoperations in the aprevo cohort as compared to patents who had been treated using stock implants. Patients treated with aprevo had a reoperation rate at two years of 4.3% (n=115) as compared to a two-year reoperation rate of 16.6% (n=997) for patients who had been treated using stock devices (p0.001), representing a 74% relative reduction. The study authors noted that the reoperation rate in the selected comparator was relatively low, as these patients were treated with highly experienced and renowned surgeons. When factoring in three other published studies that were noted in the paper, the average two-year revision rate due to the mechanical complications was 24.9% making the comparative reoperation rate associated with aprevo even more meaningful. In addition, 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 Other studies have shown patients with unrestored DLL have experienced a 25.9% revision rate for adjacent segment degeneration at minimum two-years follow-up. Separate studies have shown that approximately 40%-80% of short fusion patients present with a low DLL preoperatively.

As of January 2026, there are 324 patients from 16 centers enrolled in the Carlsmed-sponsored COMPASS Registry. The study cohort consists of 181 patients (56%) treated for DDD and 143 patients (44%) treated for ASD. All 324 patients have passed their one-year postoperative milestone, and 216 patients are more than two years postoperative. Among the 324 patients, 11 patients (3.3%) underwent revision surgeries for adjacent segment disease or mechanical complications. Eight of these revisions occurred within the 6-week to 1-year postoperative period and 3 occurred within the 1- to 2- year postoperative period. Among the 181 DDD patients there were 4 such revisions (2.2%) including one for pseudoarthrosis with infection and three for adjacent segment disease. Among the 143 ASD patients there were 7 revisions (4.9%) including one for adjacent segment disease and 6 for proximal junctional kyphosis.

Research and Development

We invest in research and development efforts to continuously improve the aprevo Technology Platform. We believe that investment is critical to achieving our goal of establishing the aprevo Technology Platform as the standard of care for spine fusion and expanding the use of the aprevo Technology Platform into additional disease states. Our research and development initiatives are focused on introducing enhancements and new capabilities aimed at increasing the value provided by the aprevo Technology Platform to patients, surgeons, and payors.

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Our research and development team includes engineers and scientists with expertise in biomedical, mechanical, and software design in support of spine surgery solutions. We employ an integrated team approach to product development and emphasize collaboration of team members across various disciplines to design, test, and obtain regulatory clearance and approvals for our products more effectively.

Our research and development efforts are further supported by automation and use of AI in the product improvement process. Our database currently includes over four million de-identified radiographic images and will continue to expand with data from new procedures. We leverage this growing database to continuously improve our digital planning process and will continue to introduce iterations of our AI-enabled algorithms and software to drive further improvements of our platform. We believe that these improvements will strengthen our ability to leverage the post-operative data we collect to improve our planning process and thus help physicians make better decisions earlier on in treatment.

We also invest in developing our technology and products for indication expansions. In November 2024, we received FDA 510(k) clearance for our aprevo interbody implants for cervical spine fusion surgery as part of the aprevo Technology Platform. In July 2025, we successfully completed the first in-human personalized cervical procedure in the United States and commenced commercialization in December 2025. Also in December 2025, we received FDA 510(k) clearance for our 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 posterior lumbar spine surgery using our newly developed aprevo lumbar bi-lateral posterior system ("aprevo Lumbar Bi-lateral Posterior System") at the University of Colorado Hospital in Denver, Colorado. The addition of aprevo Lumbar Bi-lateral Posterior System ("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 continue to explore other potential opportunities to leverage our platform technology, including additional indications and disease states within the spine, such as cervical corpectomy and cervical disc arthroplasty, and other musculoskeletal applications beyond spine.

Sales and Marketing

We market and sell the aprevo Technology Platform to hospitals and ambulatory surgical centers 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 marketing the aprevo Technology Platform to surgeons and working with our customers to secure product approval. They are also responsible for recruiting indirect sales agents who cover each surgery, generate leads, and train clinics. Our direct sales team has significant experience launching new technology solutions to accounts and selling innovative spine procedures and products, with established customer relationships in their respective territories.

Our direct sales team is supported by a team of independent sales agents, who are responsible for generating leads, training clinics, and covering cases. Our independent sales agents have deep surgeon relationships, spine expertise, and provide clinical support in aprevo surgical procedures. Each sales agent agreement typically appoints an individual as an independent sales agent on an exclusive basis with respect to specific surgeons and procedures for an initial term of one calendar year, automatically extending for one additional year thereafter unless notice of intent not to renew is provided by either party within 30 days prior to the end of the current term. As an independent sales agent, each individual will receive a standard commission based on sales of aprevo interbody implants. The Company enters into agreements with independent sales agents in the ordinary course of business.

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We expect to continue to increase our sales territories and our independent sales agents in the United States to deepen our penetration in the United States in our existing markets and expand into new geographic territories. We believe that the expansion of our U.S. sales force provides us with significant opportunities for future growth as we continue to penetrate existing geographic markets and enter new ones. In addition to our in-house sales team and independent sales agents, our commercial organization includes personnel in product and brand marketing, professional education, strategic accounts contracting support, and sales operations.

We devote significant resources to training and educating our independent sales agents and customers. Our training teams are deployed to new accounts in order to seamlessly integrate the aprevo Technology Platform into each surgeon’s clinic and operating room and to drive deeper adoption of our technology by surgeons and customers. We have also developed our aprevo Personalized Spine Provider program, supported by the Carlsmed personalizedspine.com website for patient education materials and access to our aprevo Personalized Spine Provider locator within their geographic area. This tool helps connect patients with surgeons within the aprevo network, increases our exposure, drives brand awareness, and facilitates adoption of the aprevo Technology Platform. We do not incorporate the information contained on, or accessible through, personalizedspine.com into this Annual Report and you should not consider it a part of this Annual Report.

Coverage and Reimbursement for aprevo Interbody Implants

In the United States, healthcare providers generally rely on third-party payors, including private insurers, governmental payors, such as Medicare and Medicaid, managed care organizations, and administrative contractors to cover and pay for all or part of the cost of a spine surgery in which the aprevo Technology Platform is used. Hospitals are the primary purchasers of our aprevo interbody implants under the aprevo Technology Platform, which are primarily used in a hospital inpatient setting.

When procedures using the aprevo Technology Platform are performed, both the surgeon or other healthcare provider and the hospital or healthcare facility submit claims for reimbursement to the third-party payor. Generally, the hospital or healthcare facility obtains a lump sum payment, or facility fee, that covers the episode of care, including implant costs. Surgeons are reimbursed separately for their professional time and effort to perform a spine surgery procedure. We do not bill any third-party payors for the aprevo Technology Platform. Instead, we invoice our customers. Third-party payors may deny reimbursement if they determine that a device used in a procedure was not medically necessary or in accordance with cost-effective treatment methods or was used for an unapproved indication. These third-party payors regularly update reimbursement amounts and also from time to time revise the methodologies used to determine reimbursement amounts. This includes routine updates to reimbursement amounts to surgeons, other healthcare providers, hospitals, and healthcare facilities for procedures during which our products are used. No uniform policy for reimbursement for our products exists among third-party payors in the United States. Therefore, reimbursement for devices can differ significantly from payor to payor.

Medicare coverage and reimbursement policies are developed by CMS, the federal agency responsible for administering the Medicare program, and its contractors. CMS establishes these Medicare policies for medical products and procedures, and such policies are periodically reviewed and updated. While private payors vary in their coverage and payment policies, the Medicare program is widely viewed as a benchmark. Medicare payment rates for the same or similar procedures vary due to geographic location, nature of the facility in which the procedure is performed (i.e., teaching or community hospital), and other factors. CMS policies may alter coverage and payment related to our product portfolio in the future. These changes may occur as the result of national coverage determinations issued by CMS or as the result of local coverage determinations by contractors under contract with CMS to review and make coverage and payment decisions. Medicaid programs are funded by both federal and state governments and may vary from state to state and from year to year. As a result, the coverage and reimbursement determination process varies widely, with no guarantee that coverage and adequate reimbursement will be applied consistently or obtained in the first place. We therefore cannot provide assurance that government or private third-party payors will cover and provide adequate payment for the procedures in which our products are used. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (the “ACA”) and other reform proposals contain significant changes regarding Medicare, Medicaid, and other third-party payors that may also impact the coverage and reimbursement determination process for our products.

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The MS-DRG payments for procedures using the aprevo Technology Platform are intended to cover all hospital inpatient costs associated with treating a patient during his or her hospital stay. The MS-DRGs for lumbar fusions are 402,426, 427, 428, 447, 448, 450, 451, 456, 457, and 458, depending on the number of levels being fused, existence of complicating or comorbid conditions, existence of malignancy or infection, and whether a “custom-made anatomically designed interbody fusion device” is utilized. For the fiscal year beginning October 1, 2025, CMS proposed national average payment amounts for these MS-DRGs ranging between $24,049 and $82,040. Given that most procedures using the aprevo Technology Platform are mapped to the “custom-made anatomically designed interbody fusion device” MS-DRG’s, 426, 447 and 450, the incremental CMS reimbursement to the hospital for an aprevo procedure under these MS-DRG’s ranges from approximately $12,000 to $50,000. Hospitals receive incremental reimbursement for most aprevo procedures.

In August 2025, CMS announced proposed X-codes for the use of custom-made anatomically designed fusion devices for cervical spine fusion surgeries. In October 2025, the proposed X-codes were finalized, and CMS NTAP was activated, allowing hospitals to receive NTAP of up to $21,125 per qualifying inpatient cervical spine fusion procedure that uses our aprevo cervical interbody implants.

For the year ended December 31, 2025, we estimate that our payor mix was approximately 43% commercial insurance and 57% Medicare and Medicare Advantage insurance. Medicaid and private payors often follow Medicare payment limitations in setting their own reimbursement rates, and any reduction in Medicare reimbursement may result in a similar reduction in payments from private payors, which may result in reduced demand for our products. Because there is no uniform policy of coverage and reimbursement among third-party payors in the United States, coverage and reimbursement for procedures can differ significantly from payor to payor. Based on our experience, third-party payors generally reimburse for the procedures in which our products are used only if the patient meets the established medical necessity criteria for surgery, and reimbursement decisions by particular third-party payors may depend upon a number of factors, including the payor’s determination that use of a product is (i) a covered benefit under its health plan, (ii) appropriate and medically necessary for the specific indication, (iii) cost effective, and (iv) neither experimental nor investigational. See the risk factor titled “The continued commercialization of the aprevo Technology Platform depends in part on the extent to which third-party payors provide coverage and adequate reimbursement levels. Failure to obtain and maintain coverage and adequate reimbursement for aprevo interbody implants could limit our ability to market them and decrease our ability to generate revenue.”

Manufacturing and Supply

Our aprevo interbody implants specifically address each patient’s pathology and vertebral bone topography for surgical correction, starting with our personalized digital surgical plans. The design and manufacture of our aprevo interbody implants require significant and diverse technical expertise. Accordingly, our manufacturing strategy is a critical component of our success. We rely exclusively on CMOs to manufacture our aprevo interbody implants. To manage this, we have developed two essential value streams within our operations.

Our streamlined DPS manages both the upstream and downstream processes involved in producing these patient-specific aprevo interbody implants. On the upstream side, DPS applies AI to convert the patient’s computerized tomography (“CT”) scans into a 3D PSM of their spine. It applies the surgeon’s desired correction, and designs the corresponding aprevo interbody implants that precisely address the patient’s pathology and vertebral bone topography to deliver the optimal alignment for spine fusion surgery. On the downstream side, DPS integrates with both our enterprise resource planning and our CMOs’ “shop floor” systems. This integration enables rapid, secure, and accurate information flow and streamlines our “procure-to-pay” processes, ensuring that each aprevo interbody implant design rapidly moves into manufacturing.

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We have a streamlined supply chain that, as of February 2026, allows us to timely deliver aprevo interbody implants to our customers within six business days of surgical plan approval. The supply chain integrates all processes in connection with the manufacture of our products. We leverage and rely on a limited number of CMOs to manufacture our products to our specifications and do not own or operate our own manufacturing facilities for clinical or commercial production of aprevo interbody implants. Under this manufacturing model, our CMOs electronically receive the aprevo interbody implant designs, perform all of the various processes in connection with the manufacture of our products, including 3D printing, heat treatment, post-processing, cleaning and packaging, and sterilization, and then ship the completed aprevo surgical kit directly for use in surgery. All of our CMOs are located within the United States. See the risk factor titled “We rely on a limited number of CMOs for the manufacture, treatment, sterilization, packaging, and distribution of our products. This reliance on third parties increases the risk that we will not have sufficient quantities of our products or such quantities at an acceptable cost and reduces our control over the manufacturing process, which could delay, prevent, or impair our development or commercialization efforts, as well as our ability to timely deliver our aprevo interbody implants.”

We are registered with the FDA as a medical device manufacturer responsible for development of specifications and complaint handling, and are licensed by the State of California to manufacture and distribute medical devices. We are required to manufacture our products in compliance with the FDA’s Quality Management System Regulation under 21 CFR Part 820, as amended effective February 2, 2026, to align more closely with ISO 13485:2016 (the Quality Management System Regulation, or "QMSR"). We have been ISO 13485-certified since February 2025. We are audited annually under these regulations and standards and no major non-conformities have been identified in any external audit to date.

Competition

The medical device industry is highly competitive, subject to rapid technological change and significantly affected by new product introductions and market activities of other participants. Our currently marketed products, and any future products we commercialize, will compete against manufacturers of conventional spine and orthopedic devices. To our knowledge, there are no other commercially available patient-specific interbody technology platforms widely available for sale in the United States for lumbar and cervical spine fusions. Our products currently compete with stock implants manufactured or developed by other companies, including Medtronic PLC, Johnson & Johnson, and Globus Medical Inc. Some of these competitors are large, well-capitalized companies with greater market share and resources than we have. As a consequence, they may be able to spend more on product development, marketing, sales, and other product initiatives than we can. We also compete with smaller to mid-sized medical device companies, such as Orthofix Medical Inc., Alphatec Holdings, Inc., Highridge, Inc., and VB Spine, LLC. We have no knowledge of, nor can we predict, when devices or solutions in development by our competitors might be available for sale. Additionally, we may also face competition from smaller companies that have developed or are developing similar technologies for our addressable markets.

We believe that the principal competitive factors in our markets include:

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improved outcomes for medical conditions;

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acceptance by surgeons;

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acceptance by the patient community;

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ease of use and reliability;

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product price and qualification for reimbursement;

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technical leadership and superiority;

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effective marketing and distribution; and

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speed to market.

As the first commercially available solution to provide personalized digital surgical plans with patient-specific interbody implants, we believe that the aprevo Technology Platform provides a compelling value proposition to compete favorably in this market.

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Intellectual Property

Intellectual property rights are instrumental to the success of our business. We seek to protect the intellectual property and proprietary technology that we consider important to our business by pursuing patent applications that cover our technologies and product candidates and methods of using the same, as well as any other relevant inventions and improvements that are considered commercially important to the development of our business. We have developed, and are continuing to develop, a comprehensive intellectual property portfolio related to the aprevo personalized surgery platform.

Our success depends in part on our ability to: (a) obtain, maintain, protect, and enforce intellectual property and other proprietary rights for our current and future technology, inventions, improvements, and know-how that we consider important to our business; (b) preserve the confidentiality of our trade secrets; (c) defend and enforce our intellectual property rights; (d) operate without infringing, misappropriating, or violating the intellectual property and other proprietary rights of others; and (e) prevent others from infringing, misappropriating, or violating our intellectual property and other proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, pursuing and obtaining patent protection in the United States and in jurisdictions outside of the United States related to our proprietary technology, inventions, and improvements that are important to the development and implementation of our business. Our patent portfolio is intended to cover our surgical planning technology, aprevo personalized surgery platform and software run thereon, personalized spinal implants, and any other inventions that are commercially important to our business. We also rely on trademarks, trade secrets, and know-how to develop and maintain our proprietary position.

Patents have a limited lifespan, and the term of individual patents depends upon the date of filing of the patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained. In most countries, including the United States, issued patents are granted a term of 20 years from the earliest effective non-provisional filing date. In certain instances, a patent term of a U.S. patent may be adjusted to recapture a portion of delay by the USPTO in examining the patent application or extended to account for term effectively lost as a result of the FDA regulatory review period, or both. The period of extension may be up to five years but cannot extend the remaining term of a patent beyond a total of 14 years from the date of approval. Only one patent among those eligible for an extension and only those claims covering the approved product, a method for using it, or a method for manufacturing it may be extended. However, there is no guarantee that the applicable authorities, including the FDA, will agree with our assessment of whether such extensions should be granted, and even if granted, the length of such extensions may be less than the maximum extension available.

We solely own all of the patents and patent applications in our portfolio. As of December 31, 2025, our patent portfolio contained 45 total issued patents and approximately 120 pending patent applications relating to the aprevo Technology Platform, including our myaprevo application and aprevo devices. The 45 issued patents include 39 issued U.S. patents and six issued foreign patents in the European Union and Japan. These issued patents are expected to expire between 2037 and 2045, without accounting for potentially available patent term adjustments or extensions or terminal disclaimers and assuming payment of appropriate maintenance, renewal, annuity, and other governmental fees. As of December 31, 2025, we also owned approximately 120 pending patent applications, including approximately 54 pending U.S. patent applications and 66 pending foreign patent applications. We are pursuing protection in Australia, Canada, the European Union, Japan, the United Kingdom, the Republic of Korea, Singapore, and other jurisdictions. Any patents that may issue from these pending patent applications are expected to expire between 2037 and 2045, without accounting for potentially available patent term adjustments or extensions and assuming payment of appropriate maintenance, renewal, annuity, and other governmental fees.

In addition to patents, we also rely upon trademarks, trade secrets, know-how, and continuing technological innovation to develop and maintain our competitive position. We maintain and will continue to pursue trademark protection for our company name, products, and brand, including the registered trademarks CARLSMED and APREVO in the United States, the European Union, Japan, and other foreign jurisdictions.

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We rely on trade secrets to protect certain aspects of our technology related to our current and future proprietary algorithms. However, trade secrets can be difficult to protect. We seek to protect our proprietary information, including trade secrets, in part, by using confidentiality agreements and/or invention assignment agreements with our commercial partners, collaborators, employees, and consultants. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining the physical security of our premises and physical and electronic security of our information technology systems. See the section titled “Risk Factors—Risks Related to Our Intellectual Property” for a more comprehensive description of risks related to our intellectual property.

Government Regulation

Our products and operations are subject to extensive regulation by the FDA and other federal and state authorities in the United States, as well as comparable authorities in foreign jurisdictions. Our products are subject to regulation as medical devices in the United States under the Federal Food, Drug, and Cosmetic Act ("FDCA"), as implemented and enforced by the FDA.

U.S. Regulation of Medical Devices

The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising, promotion, marketing and distribution, and import and export of medical devices to ensure that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements of the FDCA.

FDA Premarket Clearance and Approval Requirements

Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a 510(k) premarket notification or approval of a Premarket Approval ("PMA") application. Under the FDCA, medical devices are classified into one of three classes—Class I, Class II, or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness. Class I includes devices with the lowest risk to the patient for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality Management System Regulation (“ QMSR”), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials. Class II devices are subject to the FDA’s General Controls, as well as any special controls deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include, among other things, performance standards, post-market surveillance, patient registries, and FDA guidance documents.

While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA, requesting permission to commercially distribute the device. The FDA’s permission to commercially distribute a device subject to a 510(k) premarket notification is generally known as 510(k) clearance. Devices deemed by the FDA to pose the greatest risks, such as life-sustaining, life-supporting, and some implantable devices, devices that have a new intended use, or devices that use advanced technology that is not substantially equivalent to that of a legally marketed device, are placed in Class III, requiring the receipt of a PMA by FDA. Some pre-amendment devices are unclassified but are subject to FDA’s premarket notification and clearance process in order to be commercially distributed. The majority of the products that we currently market are classified as Class II devices and have received FDA marketing authorization through the 510(k) clearance process.

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FDA Medical Device Marketing Authorization Pathway

To obtain 510(k) clearance, a manufacturer must submit to the FDA a premarket notification demonstrating that the proposed device is “substantially equivalent” to a predicate device already on the market. A predicate device is a legally marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments), and for which a PMA is not required; a device that has been reclassified from Class III to Class II, or I; or a device that was found substantially equivalent through the 510(k) process. The FDA’s 510(k) clearance process usually takes from three to twelve months but may take longer. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence. FDA collects fees for 510(k) applications and annual fees for medical device establishments.

If the FDA agrees that the device is substantially equivalent to a predicate device, it will grant 510(k) clearance to commercially market the device within the United States. If the FDA determines that the device is “not substantially equivalent” to a previously cleared device, the device is automatically designated as a Class III device. The device sponsor must then fulfill more rigorous PMA requirements, or can request a risk-based classification determination for the device in accordance with the “de novo” process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device. This procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA application. The PMA process requires that the manufacturer demonstrate that the device is safe and effective for its intended uses, which generally requires the submission of extensive data, including results from preclinical studies and human clinical trials. A PMA must also contain a full description of the device and its components; the methods, facilities, and controls used for manufacturing and proposed labeling. The PMA process is burdensome, and in practice, the FDA’s review of a PMA application may take up to several years following initial submission. We currently do not market any medical devices pursuant to an approved PMA application, nor have we sought or obtained de novo classification for our products.

After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) clearance or, depending on the modification, PMA approval or de novo classification. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k), de novo request, or a PMA in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination. If the FDA disagrees with a manufacturer’s determination, the FDA can require the manufacturer to cease marketing and/or request the recall of the modified device until 510(k) marketing clearance or PMA approval is obtained or a de novo request is granted. In these circumstances, the manufacturer may be subject to significant regulatory fines or penalties.

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Medical Device Clinical Trials

Clinical trials are sometimes required to support 510(k) or de novo submissions. All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption (“IDE”), regulations that govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting, and monitoring responsibilities of study sponsors and study investigators. If the device presents a “significant risk” to human health, as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials. If the device under evaluation does not present a significant risk to human health, then the device sponsor is not required to submit an IDE application to the FDA before initiating human clinical trials but must still comply with abbreviated IDE requirements when conducting such trials. A significant risk device is one that presents a potential for serious risk to the health, safety, or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating, or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a patient. An IDE application must be supported by appropriate data, such as animal and laboratory test results, demonstrating to the FDA satisfaction that the risks of testing the device in subjects would not be outweighed by the anticipated benefits, there are no subject protection concerns that could preclude initiation of the study, and the testing protocol is scientifically sound. An IDE application is approved if the FDA has determined that the sponsor has provided sufficient data to support initiation of a human clinical study, no subject protection concerns preclude initiation of the investigation, and no additional conditions must be met. The IDE will automatically become effective 30 days after receipt by the FDA unless the FDA notifies the company that the investigation may not begin. If the FDA determines that there are deficiencies or other concerns with an IDE for which it requires modification, the FDA may permit a clinical trial to proceed under a conditional approval.

Regardless of the degree of risk presented by the medical device, all clinical studies must be approved by, and conducted under the oversight of, an IRB, for each clinical site or under a centralized IRB. The IRB is responsible for the initial and continuing review of the clinical study and may impose additional requirements for the conduct of the study. If an IDE application is approved by the FDA and one or more IRBs, human clinical trials may begin at a specific number of investigational sites with a specific number of patients, as approved by the FDA. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements. Submission of an IDE application for review does not guarantee that the FDA will allow the IDE to become effective and, if it does become effective, the FDA may or may not determine that the data derived from the trials support the safety and effectiveness of the device or warrant the continuation of clinical trials.

During a clinical study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators, and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping, and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators in the clinical study are also subject to FDA’s regulations and must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and record keeping requirements. Additionally, after a trial begins, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, such as a belief or determination that the risks to study subjects outweigh the anticipated benefits. The study sponsor may also suspend or terminate a clinical trial at any time for strategic business decisions.

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Expedited Development and Review Programs

Following passage of the 21st Century Cures Act, the FDA implemented the Breakthrough Devices Program, which is a voluntary program offered to manufacturers of certain medical devices and device-led combination products that may provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions. The goal of the program is to provide patients and health care providers with more timely access to qualifying devices by expediting their development, assessment, and review, while preserving the statutory standards for PMA approval, 510(k) clearance, and de novo classification. The program is available for medical devices that meet certain eligibility criteria, including that the device provides more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions, and that: (i) the device represents a breakthrough technology, (ii) no approved or cleared alternatives exist, (iii) the device offers significant advantages over existing approved or cleared alternatives, or (iv) the availability of the device is in the best interest of patients. Breakthrough Device Designation provides certain benefits to device developers, including more interactive and timely communications with FDA staff; use of post-market data collection, when scientifically appropriate, to facilitate expedited and efficient development and review of the device; opportunities for more efficient and flexible clinical study design; and prioritized review of premarket submissions. When reviewing Breakthrough Device Designation requests, the FDA may require a combination of literature or preliminary bench, animal, or clinical data to demonstrate a reasonable likelihood of clinical and technological success. Receiving a Breakthrough Device Designation from the FDA does not guarantee that the FDA will grant marketing authorization for the device.

Post-Market Regulation

After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply. These may include:

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establishment registration and device listing with the FDA;

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QMSR requirements, which currently require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the design and manufacturing process;

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labeling regulations and FDA prohibitions against the promotion of investigational products, or the promotion of “off-label” uses of cleared or approved products;

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requirements related to promotional activities;

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clearance or approval of product modifications to cleared devices or devices authorized through the de novo classification process that could significantly affect safety or effectiveness, or that would constitute a major change in intended use of such devices, or approval of certain modifications to PMA-approved devices;

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medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;

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correction, removal, and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

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complying with laws and regulations requiring Unique Device Identifiers on medical devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database;

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the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and

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post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.

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Manufacturing processes for medical devices are required to comply with the applicable portions of the QMSR, which currently cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use. The QMSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. Medical device manufacturers are subject to periodic scheduled or unscheduled inspections by the FDA. Failure to maintain compliance with the QMSR requirements could result in the shutdown of, or restrictions on, manufacturing operations and the recall or seizure of marketed products. The discovery of previously unknown problems with marketed medical devices, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.

The FDA has broad regulatory compliance and enforcement powers. If the FDA determines that a manufacturer has failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions, among others:

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warning letters, untitled letters, “it has come to our attention” letters, fines, injunctions, consent decrees, and civil penalties;

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recalls, withdrawals, or administrative detention or product seizures;

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operating restrictions or partial suspension or total shutdown of production;

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refusing or delaying requests for 510(k) clearance, de novo classification, or PMA approvals of new products or modified products;

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withdrawing 510(k) clearances or PMA approvals that have already been granted;

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refusal to grant export approvals for devices being shipped to foreign markets; or

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criminal prosecution.

We are also subject to regulation by the California Department of Public Health Food and Drug Branch (the “FDB”) through the Medical Device Safety Program. We must maintain a California Medical Device Manufacturing license. Our facilities may be subjected to scheduled or unscheduled inspections by the FDB.

Healthcare Fraud and Abuse Laws

In the United States, we are subject to a number of federal and state healthcare regulatory laws that restrict business practices in the healthcare industry. These laws include, but are not limited to, federal and state anti-kickback, false claims, and other healthcare fraud and abuse laws.

The federal Anti-Kickback Statute prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, receiving, or providing any remuneration, directly or indirectly, overtly or covertly, to induce, reward, or in return for, purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any good, facility, item, or service reimbursable, in whole or in part, under Medicare, Medicaid, or other federal healthcare programs. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

The federal false claims laws, including the civil False Claims Act, prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false, fictitious, or fraudulent claim for payment to, or approval by, the federal government, knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government, or knowingly making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government. A claim includes “any request or demand” for money or property presented to the government. Actions under the civil False Claims Act may be brought by the Attorney General or as a qui tam action by a private individual in the name of the government. Moreover, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

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In addition, the civil monetary penalties law, subject to certain exceptions, prohibits, among other things, the offer or transfer of remuneration, including waivers of copayments and deductible amounts (or any part thereof), to a Medicare or state healthcare program beneficiary if the person knows or should know that it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program.

HIPAA created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious, or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items, or services. Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), certain other healthcare professionals such as physician assistants and nurse practitioners, and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members.

Several states in which we operate have also adopted fraud and abuse laws similar to those described above. The scope of these laws and the interpretations of them vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion. Some state fraud and abuse laws apply to items or services reimbursed by any third-party payor, including patients and commercial insurers, not just those reimbursed by a federally funded healthcare program.

Violations of fraud and abuse laws, including federal and state anti-kickback and false claims laws, may be punishable by criminal and civil sanctions, including fines and civil monetary penalties, the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid), disgorgement, and corporate integrity agreements, which impose, among other things, rigorous operational and monitoring requirements on companies. Similar sanctions and penalties, as well as imprisonment, also can be imposed upon executive officers and employees of such companies.

Coverage and Reimbursement Regulation

In the United States, our commercial success depends in part on the extent to which governmental authorities, private health insurers, and other third-party payors provide coverage for and establish adequate reimbursement levels for aprevo interbody implants. Use of aprevo interbody implants is typically covered and reimbursed under existing physician and hospital codes. These procedures are typically performed in a hospital inpatient setting, where governmental payors such as Medicare reimburse hospitals a single bundled payment based on the MS-DRG system. Failure by surgeons, healthcare systems, and hospitals to obtain adequate reimbursement from third-party payors for services performed with our products, or adverse changes in government and private third-party payors’ coverage and reimbursement policies, could adversely impact demand for our products.

Coverage and reimbursement for use of aprevo interbody implants can differ significantly from payor to payor. Third-party payors are increasingly auditing and challenging the prices charged for medical products and services with concern for upcoding, miscoding, using inappropriate modifiers, or billing for inappropriate care settings. Some third-party payors must approve coverage for new or innovative devices before they will reimburse healthcare providers who use the products or therapies. Even though a new product may have been cleared for commercial distribution by the FDA, we may find limited demand for the product unless and until reimbursement approval has been obtained from governmental and private third-party payors.

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In addition to uncertainties surrounding coverage policies, there are periodic changes to reimbursement levels. Third-party payors regularly update reimbursement amounts and also from time to time revise the methodologies used to determine reimbursement amounts. This includes routine updates to payments to hospitals under the IPPS. These updates could directly impact the demand for our products.

We believe that the overall escalating cost of medical products and services being paid for by the government and private health insurance has led to, and will continue to lead to, increased pressures on the healthcare and medical device industries to reduce the costs of products and services. Third-party payors are developing increasingly sophisticated methods of controlling patient access to new technology through prospective reimbursement and capitation programs, group purchasing, redesign of benefits, and exploration of more cost-effective methods of delivering healthcare. In the United States, some insured individuals enroll in managed care programs, which monitor and often require pre-approval of the services that a member will receive. Some managed care programs pay their providers on a per-capita (patient) basis, which puts the providers at financial risk for the services provided to their patients by paying these providers a predetermined payment per member per month and, consequently, may limit the willingness of these providers to use our products.

Reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific product lines and procedures. There can be no assurance that our products will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be available, or that the third-party payors’ reimbursement policies will not adversely affect our ability to sell our products profitably. More and more, local, product-specific reimbursement law is applied as an overlay to medical device regulation, which has provided an additional layer of clearance requirements.

Healthcare Reform

The United States and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality, or expanding access. Current and future legislative proposals to further reform healthcare or reduce patient access to new technology may limit coverage of or lower reimbursement for the procedures associated with the use of our products. The cost-containment measures that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our products.

The implementation of the ACA in the United States, for example, has substantially changed healthcare financing and delivery by both governmental and private insurers and significantly affected medical device manufacturers. The ACA, among other things, provided incentives to programs that increase the federal government’s comparative effectiveness research, and implemented payment system reforms, including a national pilot program on payment bundling to encourage hospitals, physicians, and other providers to improve the coordination, quality, and efficiency of certain healthcare services through bundled payment models. Additionally, the ACA expanded eligibility criteria for Medicaid programs and created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. Since its enactment, there have been judicial, executive, and political challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed a judicial challenge to the ACA brought by several states without specifically ruling on its constitutionality.

Other legislative changes have been proposed and adopted since the ACA was enacted. For example, the Budget Control Act, among other things, reduced Medicare payments to providers, effective on April 1, 2013, and, due to subsequent legislative amendments to the statute, will remain in effect through 2032, with the exception of a temporary suspension from May 1, 2020, through March 31, 2022, unless additional congressional action is taken. Additionally, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover Medicare overpayments to providers from three to five years.

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We expect additional state and federal healthcare reform measures to be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressure.

Data Privacy and Security Laws

Numerous state, federal, and foreign laws, regulations, and standards govern the collection, use, disclosure, access to, confidentiality, and security of health-related and other personal information, and could apply now or in the future to our operations or the operations of our collaborators, third-party providers, and others upon whom we commercially rely.

In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, and consumer protection laws and regulations, govern the collection, use, disclosure, and protection of health-related and other personal information that could apply to our operations.

In addition, we may in the future become subject to certain foreign laws that govern the privacy and security of personal data, including health-related data.

Privacy and security laws, regulations, and other obligations are constantly evolving; may conflict with each other to complicate compliance efforts and increase both legal risk and compliance costs for us and the third parties upon whom we rely; and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing that could adversely affect our business, financial condition, reputation, and results of our operations.

Finally, the loss of, unauthorized access to, or disclosure of personal information due to a cybersecurity event or otherwise may trigger breach notification statutes and notification obligations under laws in both the United States and other jurisdictions. A cybersecurity event may result in investigations, legal actions, including class action litigation, regulatory inquiries, and regulatory enforcement actions, as well as fines, consent orders, or mandated corrective actions.

Employees and Human Capital Resources

As of December 31, 2025, we had 127 full-time and part-time employees, of which 94 were located at our headquarters in Carlsbad, California and 33 were remote and field-based employees throughout the United States. None of our employees are located outside of the United States. Of these employees, 44 were in sales, marketing or commercial operations; 26 were in manufacturing, operations or quality; 39 were in research and development, clinical or regulatory; and 18 were in general and administration. None of our employees are represented by a labor union or party to a collective bargaining agreement with respect to their employment with us.

We rely on both our internal sales team and independent sales agents to promote and market the aprevo Technology Platform and to solicit sales of our personalized spinal implants. We expect to dedicate meaningful resources to significantly expand our in-house sales force as we continue to expand. We believe that we have a good relationship with our workforce. Our human capital is a key factor in our current and future success, which largely depends upon our continued ability to attract and retain highly skilled employees.

Seasonality

Our business has not historically exhibited material seasonality. However, sales of our products may be influenced by summer vacation and winter holiday periods during which we have experienced fewer surgeries taking place, as well as more surgeries taking place later in the year when patients have met their deductibles under insurance plans.

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Corporate Information

We were incorporated under the laws of the State of Delaware in June 2018 under the name Carlsmed, Inc. Our corporate headquarters is located at 1800 Aston Ave., Suite 100, Carlsbad, CA 92008. Our telephone number is (760) 766-1923. We use our website at www.carlsmed.com to communicate important information about our company, including news releases and financial information. We also make available on our investor relations webpage, free of charge, copies of our Securities and Exchange Commission (“SEC”) filings and submissions, which can be found at the SEC’s website, www.sec.gov, as soon as reasonably practicable after electronically filing or furnishing such documents with the SEC. Stockholders may also request copies of these documents by writing to our Corporate Secretary at the address above. Website references are provided throughout this document for convenience only. The contents of these websites do not constitute a part of this Annual Report and shall not be deemed incorporated by reference into this Annual Report unless expressly noted.