SHOULDER INNOVATIONS, INC. (SI) Business

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Item 1. Business

Overview

We are a commercial-stage medical technology company exclusively focused on transforming the shoulder surgical care market. We currently offer advanced implant systems for shoulder arthroplasty. These systems are a core element of our ecosystem, which we designed to improve core components of shoulder surgical care – preoperative planning, implant design and procedural efficiency – to benefit each stakeholder in the care chain. Our ecosystem is also comprised of enabling technologies, efficient instrument systems, specialized support and surgeon-to-surgeon collaboration. Together, these elements seek to address the long-standing clinical and operational challenges in the shoulder surgical care market by delivering predictable outcomes, procedural simplicity, and efficiency across all sites of care. We believe our exclusive focus on shoulder surgical care, combined with a highly specialized commercial organization and strong clinical data, positions us well to capture significant share in this large, growing market.

Shoulder pain is highly prevalent, often chronic, and can significantly reduce quality of life. The primary conditions that can result in shoulder pain and reduced functionality include osteoarthritis, rheumatoid arthritis, rotator cuff tears and shoulder fractures. These shoulder conditions are widespread, often debilitating, and are commonly experienced concurrently as interrelated musculoskeletal disorders. According to data from the National Institutes of Health, we estimate that these conditions result in more than eight million physician visits annually in the United States. Despite this prevalence, we believe there has been a historical underutilization of surgical treatments for shoulder care due to several factors including patient hesitation to pursue surgical intervention, insufficient technology to appropriately treat shoulder conditions, complex shoulder anatomy, perceived difficulty of surgical intervention and barriers to patient access of care.

We believe the shoulder surgical care market today presents a significant market opportunity. Our initial focus within this broader market is on shoulder arthroplasty. Shoulder arthroplasty is an established surgical procedure involving the reconstruction of the shoulder joint with prosthetic implants through one of two main approaches: anatomic total shoulder arthroplasty (“aTSA”) and reverse total shoulder arthroplasty (“rTSA”). Both approaches can be performed in inpatient hospital settings and in outpatient settings, including ASCs. A key competitive advantage of ours has been the emergence of ASCs as a cost-efficient site of care with positive outcomes relative to hospital-based care. We expect that future growth in the shoulder surgical care market will be significantly driven by ASCs as hospitals face capacity constraints and are more limited in their ability to meet increasing demand.

We estimate that approximately 250,000 shoulder arthroplasty procedures were performed in the United States in 2025, which we believe represents an approximately $1.7 billion market opportunity. Based on our internal estimates, knowledge of our industry and third-party data regarding the number of shoulder arthroplasty procedures performed, we expect this market to grow by approximately 11% annually through 2029. We also believe a significant opportunity exists outside of the United States and, based on third-party industry research reports and our internal estimates, we estimate that the total annual international shoulder arthroplasty market is approximately $1.0 billion in 2025. Together, this represents a global annual shoulder arthroplasty market of approximately $2.7 billion. We believe we have an opportunity to expand to address adjacent areas in the shoulder surgical care market over time.

We believe traditional implants used in shoulder arthroplasty procedures are hindered by several limitations, including poor biomechanical fit, suboptimal kinematics, difficult replacement and conversion procedures (aTSA to rTSA or stemless to stem), imprecise implant positioning due to limited surgical planning, inefficient and burdensome workflow designs and non-specialized case support. These limitations can result in continued pain, lack of mobility, postoperative complications, low rates of implant survivorship, necessity of revision surgeries and costly and inefficient procedures for healthcare providers.

We developed our ecosystem with an approach to innovation that prioritizes ease of use, flexibility, predictability of outcomes and site of care efficiency, attributes we believe are critical to win in this market. Our ecosystem is comprised of the following elements:

•Advanced Implant Systems: Our advanced implants include a diverse range of interchangeable InSet anatomic and reverse total shoulder arthroplasty systems that leverage our novel, InSet Glenoid and InSet humeral stem technologies.

•ProVoyance Preoperative Planning Technology: This preoperative planning technology integrates artificial intelligence (“AI”) and machine learning (“ML”) to transform planar CT imaging into 3D renderings, allowing surgeons to create bespoke surgical plans considering patient-specific anatomy ahead of surgery.

•Efficient Instrument System: Our efficient instrument system supports both aTSA and rTSA procedures from start to finish with just two convenient trays, considerably less than the six to nine trays typically required by other offerings.

•Specialized Support: Our team of dedicated shoulder specialists enables us to deliver a highly tailored experience to surgeons operating in a complex and technically demanding procedure category.

•Surgeon-to-Surgeon Collaboration: Our Customer Experience and Medical Education (“CEME”) team fosters a collaborative network of expert surgeon educators and promotes surgeon-to-surgeon training and peer education.

Our ecosystem offers notable benefits that differentiate it within the shoulder surgical care market. These benefits include:

•Restores Full Functionality: We engineered a range of humeral stem options to provide consistent, optimized biomechanics in both aTSA and rTSA.

•Exceptional Longevity: Our advanced implant systems are designed for longevity. In one published study, our InSet Glenoid demonstrated no surgical complications, cases of glenoid loosening or revision surgeries at a mean follow-up time of 8.7 years in a particularly challenging patient population.

•Optimized Procedural Workflow and Efficiency: Our efficient instrument system supports our implant portfolio across both aTSA and rTSA. This can provide significant workflow advantages for our customers by minimizing the operating room footprint, reducing procedural setup time, lowering sterilization requirements and costs and reducing the risk of errors – key advantages for the ASC setting.

•Access to Expert Advice: Our commercial organization creates deep relationships with surgeons and allows us to support their practice with specialized customer service and case support before, during and after surgery. In addition to direct support, our commercial team connects surgeons to the broader shoulder surgical community in various settings with a goal to improve connectivity across the shoulder surgical community and contribute to better patient outcomes.

We developed our comprehensive implant portfolio to address the unique needs of patients and surgeons. Our advanced implants are comprised of our aTSA and rTSA systems, which include various, specifically designed components capable of a wide array of system configurations to facilitate different modes of operation (anatomic or reverse) that are optimized for patient-specific needs. Our InSet Glenoid technology serves as the foundation for our advanced implant systems and includes a novel “InSet” design that aims to reduce mechanical stress at the bone implant interface, improve fixation mechanics, enhance stability and reduce micromotion. Our implant systems leverage consistent surgical techniques and the same efficient, two tray instrumentation system.

In addition to our advanced implant systems, we offer a leading preoperative surgical planning technology: ProVoyance. We believe that surgeon-level engagement in preoperative planning provides for better care for patients, and that bespoke surgical plans can help facilitate consistent positioning of implants. ProVoyance integrates AI and ML to transform planar CT imaging into 3D renderings of patient-specific anatomy ahead of surgery, and is cleared by the United States Food and Drug Administration (“FDA”) for preoperative shoulder planning. ProVoyance received 510(k) clearance in 2021 and is classified by the FDA as a Class II device. ProVoyance is listed on the FDA’s AI/ML-enabled medical devices list, which is a resource maintained, published, and periodically updated by the FDA to identify AI/ML-enabled devices that have been authorized for marketing in the United States through any of the standard paths to market for medical devices, although it is not intended to be a comprehensive list of all such devices that incorporate AI/ML. We believe the differentiation and value proposition of ProVoyance is validated by high utilization rates across procedures using our advanced implant systems. For the year ended December 31, 2025, to the extent we are able to measure, virtually all surgeries using our implants use ProVoyance, making it a routine part of surgeon workflow.

A key component of shoulder arthroplasty procedures are instrument trays, equipped with the specific instruments, supplies, and equipment needed for the surgery. We have developed a proprietary two tray instrument system designed to

enable interoperability between our aTSA and rTSA systems and a range of humeral stem options. We believe our efficient, two tray instrument system can enable surgeons and staff to reduce operating room footprint, procedural setup time, sterilization time and expense, and procedural complexity.

To best support our surgeon customers, we have built our product ecosystem around their unique needs. Our commercial organization is comprised of a dedicated commercial leadership team that drives our internal commercial efforts with an exclusive focus on shoulder care, a CEME team that enhances surgeon engagement and training, and a network of independent distributors. These three key components of our commercial organization work in tandem to form a commercial flywheel that is designed to build and provide key product support to surgeons and other stakeholders in the shoulder surgical care market, accelerate adoption, and enhance long-term retention.

We leverage our team’s decades of experience developing and launching novel shoulder surgical care technologies to identify the unmet needs of patients and surgeons and develop solutions to address those unmet needs. With respect to our advanced implant systems, we commenced development efforts with our InSet Glenoid in 2009 and received 510(k) clearance in 2011. We commercially launched an initial aTSA system with our InSet Glenoid in 2016. Since this initial launch in 2016, we have successfully launched a wide range of new technologies to enhance our ecosystem and provide surgeons with the tools and support needed to deliver quality outcomes for patients requiring shoulder surgical care. For example, we commenced development efforts for our InSet PLUS Augmented Glenoid in 2019 and received 510(k) clearance in 2020. We commenced development efforts for our rTSA system in 2019 and received 510(k) clearance in 2021. We commenced development efforts for our short stem, stemless and I-Series humeral stem system options for our aTSA and rTSA systems in 2017, 2019 and 2021, respectively, and received our primary 510(k) clearances in 2018 and 2022, with an additional 510(k) clearance in 2024 for use of our primary I-Series humeral stem for use with anatomic fractures. Each of these devices is classified by the FDA as a Class II device. We have a robust pipeline of new technologies in various stages of development and evaluation, including the anticipated expansion of our humeral stem line, indication expansions into fracture and revision, and implants tailored for metal-sensitive patients. For example, we commenced development of InSet 70, InSet 135 and InSet 185 stems to expand our I-Series humeral stem line in 2024. We have received FDA 510(k) clearance expanding I-Series humeral stem product line to include certain fracture indications and commercially launched the InSet 70 in September of 2025. In January 2026, we received FDA 510(k) clearance for products designed for patients with metal sensitivity. In December 2025, the Company announced the development of a robotics platform to design a transformative shoulder-specific micro-robotic solution designed to further enhance shoulder surgical precision, workflow efficiency, and enable exciting, new clinical approaches in the aTSA and rTSA markets. The robotic solution is designed to be integrated with the Company’s ProVoyance platform to deliver a comprehensive technology solution. We are also evaluating expansion into adjacent areas in shoulder surgical care, which may include sports medicine and shoulder trauma markets.

We have contributed to numerous publications that we believe evidence and strengthen our position as a leader in shoulder surgical care. There is a significant body of clinical evidence that supports the safety, efficacy, and durability of our implants in shoulder arthroplasty, including our InSet Glenoid technology. For example, a retrospective long-term follow-up analysis of patients who received our InSet Glenoid was published in the Journal of Shoulder and Elbow Surgery in 2019, which demonstrated a 72-point improvement in the mean American Shoulder and Elbow Surgeons (“ASES”) outcome score, statistically significant improvements in pain scores and range of motion, with no surgical complications, no cases of glenoid loosening and no revision surgeries performed at a mean follow-up time of 8.7 years. We are committed to continued investment in obtaining further clinical evidence with the support of surgeons who are recognized as thought leaders in shoulder surgical care. We believe these efforts will continue to generate a substantial body of clinical evidence that will drive increased awareness and adoption of our products.

Our Success Factors

We attribute our success to a combination of the following factors. We believe these attributes are central to our business outcomes and will be significant factors in our continued success and growth.

Disruptive Ecosystem to Address Existing Limitations Within Shoulder Surgical Care

Our purpose-built ecosystem is designed to directly address several of the limitations associated with shoulder surgical care, starting with shoulder arthroplasty. This ecosystem is comprised of our advanced implant systems for aTSA and rTSA, ProVoyance, efficient instrument system, specialized support and surgeon-to-surgeon collaboration. Our advanced implant systems are designed to address existing challenges, such as glenoid loosening, subscapularis tendon failure, limited range of motion, stability and eventual implant failure. Glenoid loosening is a leading cause of revision shoulder arthroplasty procedures, with studies showing that approximately 30% of implants exhibit moderate to severe loosening

within 6.6 years and up to 40% require revision within ten years. Unlike traditional glenoid designs, our InSet Glenoid sits within a rim of the native bone, which we believe enhances stability and reduces micromotion that contributes to loosening and potential failure. Complementing our InSet Glenoid technology, our humeral stem technology is fully compatible across both aTSA and rTSA procedures using consistent surgical techniques and instrumentation. This design facilitates interoperability and is intended to enable simplified revision and conversion procedures, which we believe provides surgeons flexibility, preserves bone mass and reduces the procedural burden associated with switching implant systems during a procedure. Surgeons leverage ProVoyance to create bespoke surgical plans that can help ensure consistent, effective positioning of our implants. Additionally, our design has allowed us to consolidate all of the instruments necessary to complete either an aTSA or a rTSA into two convenient trays, which can reduce operational complexity. We complement our offerings with specialist support and by facilitating surgeon-to-surgeon collaboration. We believe the elements of our ecosystem work together to help surgeons reduce operational complexity and surgical time, while supporting improved patient outcomes, lower revision risk and improved long-term satisfaction. We believe our differentiated design and approach positions us as a leader in addressing the critical clinical issues facing shoulder arthroplasty, as evidenced by our commercial traction to date. Since the initial launch of our InSet Glenoid in 2016, our implants have been utilized in more than 17,500 procedures.

Strong Clinical Results and Positive Outcomes for Patients and Surgeons

Our InSet Glenoid technology is supported by a compelling body of clinical evidence, with approximately nine years of published data and four clinical studies and articles published in the Journal of Shoulder and Elbow Surgery demonstrating its significant impact on patient outcomes. These studies demonstrate that, following surgery using our InSet Glenoid, patients have experienced greater functionality, lower pain and higher overall satisfaction than before surgery. Clinical data has also demonstrated strong performance in key indicators, such as forward flexion, rotational movement, range of motion, pain reduction and implant durability. Notably, a retrospective long-term follow-up analysis of patients who received our InSet Glenoid was published in the Journal of Shoulder and Elbow Surgery in 2019, which demonstrated a 72-point improvement in the mean ASES outcome score as compared to before surgery, reflecting a meaningful improvement in function (range and strength) and patient well-being following surgery. In addition, no surgical complications, cases of glenoid loosening or revision surgeries were reported at a mean follow-up time of 8.7 years. In a finite element analysis published in the Journal of Shoulder and Elbow Surgery in 2012, our InSet Glenoid demonstrated an 87% reduction in “rocking horse” motion, which is a widely known key contributor to implant loosening and failure. We have also focused on optimizing rTSA biomechanics by aiming for a more anatomic feel and aesthetic, preserving native bone and replicating the anatomic humeral positioning, which can contribute to improved postoperative range of motion and function. We believe the biomechanics of our reverse offerings are an important differentiator of our technology. Our improved biomechanics are driven by our proprietary InSet design, which was engineered to create a more anatomic relationship between the glenoid and humeral stem to enhance range of motion. We believe the existing published data and patient outcomes, coupled with growing clinical validation and positive physician feedback, support the long-term adoption and utilization of our products within the shoulder surgical care market.

Well Positioned as Shoulder Surgical Care Market Grows in Outpatient Settings

Shoulder procedures can be performed in multiple care settings, including at hospitals, outpatient care centers and ASCs. Over the past three decades, there has been significant growth in outpatient care, driven by lower overall costs and increased procedural efficiency. We believe we are well positioned to succeed in these outpatient settings, particularly ASCs, because our purpose-built ecosystem can facilitate reproducible procedures with low complication rates, intraoperative flexibility, simplified workflows and efficient use of operating room space. We believe these attributes are particularly relevant in the ASC setting, where surgeons commonly face more limited resources (cost constraints and limited space for instrumentation) and financial risk if a surgery requires escalation. In addition to procedural and clinical reliability, ASCs generally prioritize or require cost-efficient, streamlined solutions. Our efficient instrument system supports both aTSA and rTSA procedures from start to finish with just two convenient trays, considerably less than the six to nine trays typically required by other offerings. This two tray instrument system can reduce operational complexity and lower costs by, for example, increasing room turnover and surgical throughput and minimizing storage and handling, ultimately helping ASCs to treat more patients with fewer resources.

Proven and Experienced Management Team

Our proven and experienced management team collectively has decades of experience in orthopedic product development and commercialization. Members of our leadership team have held senior and executive roles at some of the most recognized companies in the medical technology industry, including publicly traded companies, and have track records of delivering strong growth and results. We are an innovation-centric team, having played instrumental roles in the

development and commercialization of foundational technologies in the shoulder space, including rTSA, stemless implants and advanced preoperative planning technologies. Our commitment to innovation is further evidenced by our combined 250+ orthopedic patents developed over the course of our management team’s careers, reflecting deep clinical insight, technical expertise and a nuanced understanding of the orthopedic market. As a result, we are able to leverage deep clinical insight, technical expertise and an informed understanding as to the limitations of existing technologies in the development of next-generation solutions. In addition, through decades of thought leadership in the space, our team has established strong relationships with key opinion leaders and surgeons. We believe the history and experience of our management team position us to effectively execute on our strategic objectives.

Unique Commercial Organization Dedicated to the Shoulder Surgical Care Market

Shoulder surgeries are some of the most complex procedures in the orthopedic space due to the joint’s complex range of motion, surrounding soft tissue structures and difficult surgical exposure. This complexity requires a high degree of surgical precision, clinical support, depth of expertise and specialization. We view ourselves as specialists serving specialists and are exclusively focused on shoulder care, which we believe represents a level of expertise that is essential for addressing the unique challenges of these procedures. Our commercial organization is comprised of a dedicated commercial leadership team that drives our internal commercial efforts, our CEME team, and our network of independent distributors. As of December 31, 2025, we had 45 shoulder specialists across our dedicated commercial leadership team and CEME team, representing more than 750 years of combined direct selling, physician engagement and clinical education experience. These specialists collaborate closely with our distributors to direct our sales activities and specialized support services, including hands-on support for surgeons—from procedure planning to execution—and help to facilitate surgeon training and performance management. In addition, our network of independent distributors allows for prospecting, relationship management and case coverage. These three key components of our commercial organization work in tandem to form a commercial flywheel that is designed to build and provide key product support to surgeons and other stakeholders in the shoulder surgical care market. We estimate that there are approximately 15,000 surgeons in the United States who perform at least one shoulder arthroplasty procedure per year, of which we target the approximately 1,800 high-volume surgeons who perform the vast majority of procedures. We believe these high-volume surgeons require dedicated shoulder expertise and support. Our entrenched relationships with many high-volume surgeons, together with engagement through highly tailored support, ongoing medical education and third-party symposiums, lab events, and surgeon-to-surgeon activities, all contribute to fuel our strategy and reinforce our position as a leader in the shoulder surgical care market.

AI-Enabled Business and Clinical Intelligence Technologies

We leverage AI-enabled technology solutions to support our business and surgeons. At the center of our commercial strategy is our internal business intelligence platform, which draws insights from our proprietary database to help us target the right stakeholders in the shoulder surgical care market. We also offer similar tools to physician practices to help them identify and acquire new patients through proprietary search engine and funnel optimization strategies. By engaging with surgeons early in the care process and supporting patient acquisition, we become deeply integrated across the surgical workflow. In addition, our proprietary AI powered preoperative planning technology, ProVoyance, is designed to enable consistent, effective positioning of our advanced implant systems. ProVoyance is cleared by the FDA for preoperative shoulder planning, and is listed on the FDA’s AI/ML-enabled medical devices list. We believe the benefits of our preoperative planning technology are evidenced by the fact that, for the year ended December 31, 2025, to the extent we are able to measure, virtually all surgeries using our implants use ProVoyance, making it a routine part of surgeon workflow. We also maintain a patient registry that allows practices to monitor outcomes and engage with patients postoperatively. Together, these tools are designed to provide information to enable surgeons to improve care delivery, optimize practice performance and achieve better outcomes. We believe these technologies play an important role in solidifying us as a differentiated, data-enabled leader in shoulder surgical care.

Our Growth Strategies

Our goal is to leverage our purpose-built ecosystem to become the leader for shoulder surgical care. The key elements of our growth strategy include:

Increase Awareness of our Purpose-Built, Innovative Shoulder Surgical Care Ecosystem to Continue Taking Share Across Care Settings

We plan to center our marketing efforts around educating surgeons about our ecosystem’s advantages across all care settings, including hospitals, outpatient care centers and ASCs. Our ecosystem has been thoughtfully developed from the ground up to address the limitations associated with current offerings and help surgeons and patients access consistent

quality care regardless of where it is delivered. We believe that by focusing on increasing awareness of our holistic, innovation-driven approach, we can drive broader adoption of our ecosystem. We believe our ecosystem provides key advantages that surgeons seek in shoulder arthroplasty solutions, including improved fixation and stability, restoration of full functionality, exceptional longevity, improved implant selection and positioning, optimized procedural workflow and efficiency and access to expert advice. The output of our innovation-first and patient-centric approach has resonated with surgeons, as demonstrated by our 50% increase in procedure volume from 2024 to 2025. As the shoulder surgical care market continues to grow, we believe increased awareness of our ecosystem’s advantages will position us to continue capturing market share from less specialized offerings.

Expand our Commercial Flywheel of Shoulder Specialists, Surgeon-to-Surgeon Collaboration, and Network of Independent Distributors

Our commercial flywheel includes our dedicated commercial leadership team, CEME team and network of independent distributors. We believe our dedication to shoulder surgical care is a strategic differentiator that enables us to deliver a highly tailored experience to surgeons operating in what is a complex and technically demanding procedure category. We intend to continue scaling our commercial organization with a continued specialized focus on shoulder care. By increasing the size of our dedicated commercial leadership team, we believe we can enhance targeting and prospecting efficiency, in an effort to ensure we engage the highest-value surgeon customers. Likewise, we believe growing our CEME team will allow us to increase the frequency and reach of our educational initiatives, such as symposiums, lab events, and surgeon-to-surgeon training programs. This increased presence will aim to continue to foster and grow our collaborative network of expert surgeon educators who can serve as powerful voices regarding the safe and effective use of our products and appropriate disease states and surgical techniques, which in turn allows broader adoption of our products through surgeon-to-surgeon training and peer education. Finally, by expanding our network of independent distributors, we will strive to ensure the quality of our customer service and execution remains up to our current standard as we scale. We believe our commercial flywheel and exclusive focus on shoulder care allow us to convert high-potential accounts and nurture new surgeons into loyal users of our ecosystem. Through expansion of this integrated and specialized commercial approach, we aim to accelerate growth, drive surgeon engagement, and expand adoption of our differentiated shoulder surgical care solutions in a cost-efficient manner.

Capitalize on Our Unique Advantages to Capture Outsized ASC Growth

We intend to expand our presence in the ASC setting through a multi-pronged approach that aims to capitalize on the outsized growth of ASCs as key sites for shoulder surgical care. We will drive targeted sales initiatives to increase awareness of our unique advantages in the ASC setting, including the potential efficiency and economic benefits of our ecosystem. We will also leverage surgeon-to-surgeon collaboration to reinforce these advantages with real-world experiences and will continue to generate clinical and economic validation of our ecosystem’s benefits in the ASC. In addition, we intend to continue innovating our systems with the ASC setting in mind. As ASC procedure volume grows, we believe we will be able to drive meaningful growth and establish ourselves as the leader for shoulder arthroplasty in the ASC setting.

Increase our Addressable Market Through our Commitment to Continuous Innovation and Advancing Shoulder Surgical Care

We have a strong track record of innovation and product commercialization, having successfully launched a wide range of new technologies to address unmet needs in the shoulder surgical care market. We believe this track record demonstrates our ability to identify clinical needs and bring differentiated solutions to market. We plan to continue investing in our robust product pipeline to expand our capabilities and service additional segments of the shoulder surgical care market. Our near-term development efforts in shoulder arthroplasty include a fracture-specific system, a revision solution, and implants tailored for metal-sensitive patients. Additionally, we intend to build on our existing aTSA and rTSA systems by introducing product line extensions that support continuous improvement. We are also evaluating expansion into adjacent areas in shoulder surgical care, which may include sports medicine and shoulder trauma markets. By leveraging our innovation capabilities and deep customer relationships, we believe we can expand our addressable market and generate incremental sources of revenue through targeted product development. We may also evaluate entering other markets through business development opportunities.

Continue Building and Driving Marketing of our Technology Solutions

We view digital enablement as an essential component of modern shoulder surgical care and believe that our technologies can drive greater clinical value and deepen physician engagement. We see four key aspects to the growth opportunity for our technologies. First, we can continue to leverage our internal business intelligence platform to help us

efficiently target high-volume surgeon prospects. Second, we can strategically deploy our enabling technologies to connect patients to those physicians. Third, ProVoyance preoperative planning technology can increase surgeon loyalty by helping to improve workflows and drive positive clinical outcomes. Fourth, we can offer surgeons a platform for outcomes measurement to assess performance. We expect our underlying algorithms and predictive capabilities to improve as we drive increased adoption of our technologies and can leverage additional data inputs, which we believe will reinforce a virtuous cycle of increased accuracy, better outcomes and greater reliance on our tools. Additionally, we intend to continue investing in and expanding our technology capabilities and we are actively developing other complementary enabling technologies to support the full continuum of care in shoulder surgery. We believe these innovations will further establish our position as a comprehensive, technology-driven solution provider within the shoulder surgical care market.

Pursue Expansion in International Markets

While our primary commercial focus to date has been within the United States, we believe the international shoulder surgical care market represents a compelling opportunity for long-term growth. Based on third-party industry reports and our internal estimates, we estimate the annual international shoulder arthroplasty market opportunity outside the United States to be approximately $1.0 billion, driven by many of the same factors we see domestically. We plan to strategically pursue entry into certain international markets over time.

Market Overview

Overview of Shoulder Anatomy

The shoulder is a distinct anatomical structure comprised of bones, muscles, tendons, and ligaments that work in tandem to allow for a complex range of motion for the arm. The key bones of the shoulder include the humerus (upper arm bone), scapula (shoulder blade), and clavicle (collarbone). The humerus articulates with the glenoid fossa of the scapula to form the glenohumeral joint, while the acromion (scapular projection) and clavicle form the acromioclavicular joint. The rotator cuff includes four muscles and their tendons (infraspinatus, subscapularis, supraspinatus, and teres minor) that serve to stabilize the head of the humerus in the glenoid.

The illustration below depicts the key anatomy of the shoulder (anterior view):

Overview of Conditions Impacting the Shoulder

Shoulder pain is highly prevalent and can significantly impact and reduce quality of life as well as result in chronic pain. According to a study published in the Journal of Shoulder and Elbow Surgery, an estimated 38% of patients with shoulder pain reported an inability to perform activities of daily life. Furthermore, a study published in the American Journal of Sports Medicine estimated 89% of patients with rotator cuff tears had difficulty sleeping. Today, approximately one in five adults in the United States over the age of 65 experience shoulder pain.

The primary conditions that can result in shoulder pain and reduced functionality include:

•Osteoarthritis (“OA”): OA is a degenerative joint disease characterized by the breakdown of cartilage and underlying bone, leading to pain, stiffness, and reduced mobility in the shoulder’s glenohumeral joint. This condition results from wear-and-tear, aging, or prior injury, progressively worsening over time. OA is highly prevalent, affecting approximately one in three adults in the United States over the age of 60.

•Rheumatoid Arthritis (“RA”): RA is a chronic autoimmune disease characterized by synovial inflammation as well as bone and cartilage destruction and deformity. RA typically impacts the large joints more than peripheral joints in later stages of the disease leading to progressive damage in the shoulder. According to the Centers for Disease Control and Prevention, RA impacts over 1.5 million adults in the United States, with various studies estimating incidence in the shoulder as high as 90%.

•Shoulder Fractures: Acute and traumatic injuries may result in severe fractures of the humerus or other adjacent bones in the shoulder. Such incidents are most prevalent among elderly patients and those with chronic conditions such as OA.

•Rotator Cuff Tears: Rotator cuff tears refer to partial or full-thickness disruptions of the tendons stabilizing the shoulder joint. Rotator cuff tears can be caused by acute trauma, repetitive stress, or degeneration. Rotator cuff tears are highly prevalent and impact nearly 25% of adults over the age of 40 in the United States.

These shoulder conditions are widespread, often debilitating, and are commonly experienced concurrently as interrelated musculoskeletal disorders. Based on publicly available industry data, including from the National Institutes of Health, we estimate that these conditions result in more than eight million physician visits annually in the United States. Despite this prevalence, we believe there has been a historical underutilization of surgical treatments for shoulder care due to several factors including patient hesitation to pursue surgical intervention, insufficient technology to appropriately treat shoulder conditions, perceived difficulty of surgical intervention, and barriers to patient access of care.

Our Addressable Market Opportunity in Shoulder Surgical Care

We believe the shoulder surgical care market today presents a significant market opportunity. Our initial focus within this broader market is on shoulder arthroplasty, and we believe we have an opportunity to expand to address adjacent areas in the shoulder surgical care market over time.

We currently serve the large, immediately addressable and rapidly growing market for shoulder arthroplasty procedures. We estimate that approximately 250,000 shoulder arthroplasty procedures were performed in the United States in 2025, which we believe represents an approximately $1.7 billion market opportunity based on our average sales price. Based on our internal estimates, knowledge of our industry and third-party data regarding the number of shoulder arthroplasty procedures performed, we expect this market to grow by approximately 11% annually through 2029. While our current commercial focus is on the United States, we plan to pursue market access initiatives in other attractive, high-growth international markets. We believe a significant opportunity exists outside of the United States and, based on third-party industry reports and our internal estimates, we estimate that the total international shoulder arthroplasty market is approximately $1.0 billion in 2025. Together, we believe these markets represent a global annual addressable market of approximately $2.7 billion.

The number of shoulder arthroplasty procedures in the United States grew at approximately 10% per year from 2019 to 2024, reflecting one of the fastest-growing segments within orthopedic reconstruction since other sectors are growing in low single digits. This growth was primarily driven by multiple, ongoing demographic factors and industry tailwinds. For example, the population in the United States is both aging and remaining more active later in life, which has contributed to a higher incidence of degenerative shoulder conditions. Additionally, greater awareness of treatment options, earlier diagnosis and broader acceptance of shoulder arthroplasty as an interventional solution have expanded the pool of potential

patients. In parallel, there has been continued growth of outpatient and ASC settings, which has further increased patient access to care and care settings where surgeons can perform these procedures.

We believe the growth in shoulder arthroplasty procedures will continue to be driven by existing tailwinds. Further, we believe the number of patients who may potentially benefit from shoulder arthroplasty is significantly higher than the number of patients who currently seek treatment today. Over time, as access to care increases and clinical outcomes improve as a result of better technology, we believe the proportion of patients seeking shoulder arthroplasty will eventually approach that of the knee arthroplasty market.

Overview of Shoulder Arthroplasty

Shoulder arthroplasty is an established surgical procedure involving a reconstruction of the shoulder joint with prosthetic implants. Arthroplasty involves the resection of surfaces around the glenoid fossa and humeral head followed by the implantation of prostheses that articulate with each other. Typically, an arthroplasty procedure includes the implantation of two devices, one “glenoid component” which attaches to the scapula and one “humeral component” which attaches to the humerus. Overall success of these procedures is measured by reduced pain, improved function, fewer post-operative complications, and increased survivorship of the implant.

In all shoulder arthroplasty procedures, appropriate biomechanical fit of the protheses is critical to ensure precise alignment with the patient’s natural shoulder anatomy to optimize stability, range of motion, and long-term functionality. Appropriate device type, size, positioning and fixation are all essential to ensuring biomechanical fit and procedure success. ASES scores, which are derived from a postoperative questionnaire used by surgeons to assess shoulder function and patient well-being following surgeries, are commonly used to measure operative success. Today, there are two approaches to shoulder arthroplasty, aTSA and rTSA:

Anatomic Total Shoulder Arthroplasty (“aTSA”) — aTSA imitates the natural joint anatomy by using prosthetic implant components to replace the humeral head with a prosthetic ball and stem and the glenoid with a prosthetic cup. aTSA is most often used in OA and RA patients with arthritic shoulder joints and intact rotator cuffs, using the rotator cuff to stabilize the joint and dictate motion. While aTSA procedures may reduce pain and restore function, complications such as subscapularis tendon failure and glenoid loosening have been relatively common with aTSA procedures.

Reverse Total Shoulder Arthroplasty (“rTSA”) — rTSA inverts the shoulder anatomy and joint configuration, reversing the ball and socket positions. rTSA transforms the humeral head into a socket and the scapula into a ball, shifting the reliance from the rotator cuff to the deltoid muscle for stability and motion. rTSA addresses a broader range of conditions, including rotator cuff arthropathy, irreparable rotator cuff tears, glenoid bone loss, acute fractures, and post-traumatic reconstruction. The development of the rTSA procedure has allowed shoulder arthroplasty to be used to address additional shoulder issues, including rotator cuff damage. While rTSA procedures have corrected some of the limitations of aTSA, historically there has been a tradeoff with patients often sacrificing shoulder motion and movement patterns in rTSA.

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AnatomicalReplicates the normal mechanics and anatomy of the shoulder, replacing the ball and socket as they are normally found in the body with prosthetic implants.	Reverse“Reverses” the ball and socket placement, transforming the humeral head into a socket and the scapula into a ball.

Market Dynamics in Shoulder Arthroplasty

Shoulder arthroplasty can be performed both as an inpatient hospital procedure and in outpatient settings, including ASCs. In recent years, as the volume of shoulder arthroplasty procedures has grown, the majority of the incremental procedures have been performed at ASCs. This trend is similar to what has occurred in the hip and knee joint replacement markets and tracks the broader long-term growth of surgical procedures shifting to outpatient settings. ASCs have emerged as a low-cost site of care and positive post-care outcomes. We expect that future growth in the market will be significantly driven by ASCs as hospitals face capacity constraints and are more limited in their ability to meet increasing demand. In 2024, CMS added total shoulder arthroplasty to the list of covered procedures that can be performed in ASCs, which facilitated reimbursement and further supported the growth of ASCs as a key site of care in the shoulder surgical care market. This growth within ASCs also presents other benefits for key stakeholders, including streamlined workflows, scheduling flexibility and operational autonomy. Further, surgeons often have economic ownership of the ASCs where they operate, with as many as 80% of ASCs owned at least in part by operating surgeons according to a study published in Global Spine Journal, which we believe further incentivizes surgeons to utilize ASCs for shoulder arthroplasty procedures.

Shoulder arthroplasty volumes in the United States experienced a significant increase driven by clear and meaningful growth of the rTSA procedure. First approved in the United States in 2004, rTSA has expanded the market and now accounts for a significant majority of shoulder arthroplasty procedures due to their broad treatment applications, surgeon preference relative to aTSA, and advantages in clinical outcomes, such as reduced likelihood of revision surgeries. In 2020, approximately 70% of all shoulder arthroplasty procedures were rTSA procedures.

Limitations of Existing Product Offerings in Shoulder Arthroplasty

Despite their frequent use and wide adoption, we believe traditional implants used in shoulder arthroplasty procedures are hindered by several limitations, including poor biomechanical fit, suboptimal kinematics, difficult replacement and conversion procedures (aTSA to rTSA or stemless to stem), imprecise implant positioning due to limited surgical planning, inefficient and burdensome workflow designs and non-specialized case support. These shortcomings can impact both patients and surgeons and result in continued pain or discomfort, lack of mobility, postoperative complications, low rates of implant survivorship, necessity of revision surgeries and costly and inefficient procedures for healthcare providers.

We believe traditional shoulder arthroplasty products present several limitations, including:

•Fixation of the Glenoid Component in aTSA: Due to poor fixation of the glenoid component in aTSA, normal movement from the humerus can also rock the glenoid loose, commonly referred to as the “rocking horse” effect, creating instability within the implant. The illustration below depicts the “rocking horse” effect resulting from an implant with poor fixation:

•Poor Product Design Resulting in Suboptimal Kinematics in rTSA: Traditional implants in rTSA utilize an onlay design, placed above the anatomic neck of the humerus on top of a bony surface, without directly penetrating the bone. This design often results in overstuffing whereby the implant excessively fills the joint space and alters the shoulder’s natural anatomy. This can increase pressure on surrounding tissues, restrict motion, and result in pain and discomfort. Furthermore, competitor implants that utilize an inlay design inserted directly into the bone often result in poor kinematics, restricting shoulder rotation and movement. These traditional implants may also modify the shoulder anatomy and move the humerus further away from the scapula than where it would naturally sit, resulting in poor aesthetic results where the shoulder does not regain its natural form post-procedure.

•Difficult to Replace and Convert: Traditional implant designs place the implant stem deep into the humerus, requiring the removal of the stem from the humerus for replacement and revision surgeries and for conversions to rTSAs. This design results in a high degree of bone removal and potential damage to the surrounding soft tissue region during such procedures, and significantly limits and complicates intraoperative flexibility and the ability of surgeons to switch from aTSA to rTSA. aTSA procedures are increasingly using a stemless humeral implant as a

bone-preserving alternative. These implants, however, are often not easily convertible to stemmed implants or in rTSA procedures, which restricts their utility.

•Imprecise Implant Positioning Due to Limited Surgical Planning: Shoulder arthroplasty procedures require precision and accuracy and clinical evidence demonstrates that positioning as little as five degrees off angle can lead to inferior patient outcomes. Surgeons have historically relied on basic imagery to inform their surgical approach, using tools that often lack 3D bone rendering or biomechanical simulation that do not fully capture patient-specific anatomy and properly simulate postoperative range of motion and joint stability. These existing market offerings have resulted in limited surgeon engagement as well as the outsourcing of imaging interpretation components and planning that surgeons might otherwise seek to perform themselves.

•Inefficient and Burdensome Surgical Workflow Design: Traditional implant systems have typically been developed and expanded product by product, indication by indication, over long periods of time. The complexity of these systems and the related equipment, including multiple trays of instruments, generally requires a wide range of surgical techniques and can considerably complicate surgical workflows across care settings. This legacy approach has led to an outsized amount of equipment in the operating room, leading to logistical challenges including an increased capital footprint, and extended procedure and operating room turnover time, thereby creating unnecessary costs to healthcare providers.

•Non-Specialized Case Support: Shoulder arthroplasty is a highly complex and technical procedure. Operating room staff and surgeons routinely rely on the product knowledge and know-how of orthopedic salespeople. Legacy shoulder implants are predominantly sold by non-specialized salespeople who also sell devices in other segments of orthopedics, such as hip and knee implants. The lack of specific product and technical knowledge in shoulder arthroplasty can result in suboptimal case support and patient outcomes.

These limitations of legacy shoulder arthroplasty products can result in the following shortcomings:

•Failure to Reduce Pain and Improve Shoulder Function: The key objectives of undertaking shoulder arthroplasty surgery – reduction in pain and increased shoulder functionality – are often not achieved post-surgery. For example, studies have shown that approximately 20% of shoulder arthroplasty patients remain in pain or discomfort beyond one to two years following surgery.

•Frequent Post-Operative Complications: As a result of poor fixation and suboptimal kinematics, traditional implants can lead to several complications including overstuffing, glenoid loosening, shoulder subluxation (dislocation), humeral fractures, and subscapularis tendon failure (a condition where the tendon connecting the subscapularis muscle to the humeral bone is damaged, which in one study published in the Journal of Shoulder and Elbow Surgery was demonstrated to occur in approximately 15% of aTSA procedures). These complications may result in further pain, reduced function for patients, and require additional intervention.

•Low Rates of Implant Survivorship: Glenoid implant loosening is frequent and common. According to a study published in the Journal of Shoulder and Elbow Surgery, approximately 30% of aTSA procedures demonstrated moderate to severe loosening at mean follow-up time of 6.6 years. The resulting pain and inflammation from excessive and continued loosening over time may require additional intervention. In a separate study of aTSA revision surgeries published in the same journal, approximately 70% of glenoid failures that resulted in revision surgery demonstrated glenoid loosening. In this study, approximately 20% demonstrated glenoid loosening within 5 years post procedure and approximately 25% demonstrated precursors to loosening within 5 years post procedure.

•Necessity of Revision Surgeries: Poor clinical outcomes and complications significantly increase the likelihood for a second surgery, often requiring a revision surgery to correct or replace a failed implant. Revision surgeries are common with studies showing up to 40% of glenoid implants were subject to revision surgery at 10-year follow-up. These repeat surgeries compromise patients’ health and quality of life and are an unnecessary burden and avoidable cost to the healthcare system, with clinical evidence demonstrating that complication rates in revision surgeries are significantly higher. According to a study published in the Journal of Shoulder and Elbow Surgery, overall complication rates were 69% in revision rTSA, significantly higher than the 25% complication rate for initial rTSA procedures.

•Costly and Inefficient for Healthcare Providers: Current instrumentation processes require up to nine trays for a single shoulder arthroplasty procedure. Each tray requires significant storage space and must be sterilized before and after every use resulting in higher costs and burdening staff. This inefficient workflow has an outsized impact

on outpatient care centers and ASCs given the inherent resource and space constraints in these settings. We believe that requiring more time and space in the operating room for maintaining surgery trays and using large quantities of unfamiliar equipment increase the risk of infection and impact patient safety.

Additional Opportunities

We plan to continue investing in our robust product pipeline to expand our capabilities in shoulder arthroplasty and serve additional, adjacent segments of the shoulder surgical care market that we do not currently address. Our near-term development efforts include a revision solution to address the $85 million annual shoulder revision market in the United States (which, based on our estimates, represents approximately 5% of the estimated $1.7 billion annual shoulder arthroplasty market in the United States). In December 2025, the Company announced the development of a robotics platform to design a transformative shoulder-specific micro-robotic solution designed to further enhance shoulder surgical precision, workflow efficiency, and enable exciting, new clinical approaches in the aTSA and rTSA markets. The robotic solution is designed to be integrated with the Company’s ProVoyance platform to deliver a comprehensive technology solution. In addition to these near-term development efforts, we are also evaluating expansion into adjacent areas in shoulder surgical care, which may include sports medicine and shoulder trauma markets.

Our Solutions

Our Approach to Innovation

We are building Shoulder Innovations with the goal of addressing some of the most pressing challenges to patient outcomes in shoulder surgical care: poor biomechanical fit, suboptimal kinematics, difficult replacement and conversion procedures (aTSA to rTSA or stemless to stem), imprecise implant positioning, inefficient and burdensome workflow designs, and limitations of a generalist approach. Our innovation-first mentality centers on the patient, realizing that each stakeholder in the care chain is motivated by and benefits from focused and improved patient care. We seek to improve core components of shoulder surgical care — preoperative planning, implant design and procedural efficiency — in an effort to benefit each stakeholder in the care chain. We believe our approach has positioned us to drive long-term success in the shoulder surgical care market.

We believe that the following attributes are critical to win in this market:

•Ease of Use: We are simplifying the shoulder arthroplasty procedure to help surgeons achieve reproducible results with confidence and ease.

•Flexibility: We are developing implant systems to enable surgeons to perform both aTSA and rTSA procedures with consistent surgical techniques and instrumentation, with interchangeable systems.

•Predictable Outcomes: We are leveraging a leading AI-enabled technology to analyze patient anatomy and preoperatively plan surgeries that, together with thoughtful implant design, can lead to improved implant positioning and outcomes.

•Site of Care Efficiency: We are engineering our offerings to optimize workflow efficiency across care settings.

The image below depicts our approach to innovation and key attributes for success in the shoulder surgical care market:

Key Elements of Our Ecosystem

Our ecosystem is comprised of the following key elements:

•Advanced Implant Systems: Our advanced implants include a diverse range of interchangeable InSet aTSA and rTSA systems that leverage our novel, InSet Glenoid and InSet humeral stem technologies.

•ProVoyance Preoperative Planning Technology: This preoperative planning technology integrates AI and ML to transform planar CT imaging into 3D renderings, allowing surgeons to create bespoke surgical plans considering patient-specific anatomy ahead of surgery.

•Efficient Instrument System: Our efficient instrument system supports both aTSA and rTSA procedures from start to finish with just two convenient trays.

•Specialized Support: Our team of dedicated shoulder specialists enable us to deliver a highly tailored experience to surgeons operating in a complex and technically demanding procedure category.

•Surgeon-to-Surgeon Collaboration: Our CEME team fosters a collaborative network of expert surgeon educators and promotes surgeon-to-surgeon training and peer education.

The image below depicts the key elements of our ecosystem:

Key Benefits of Our Ecosystem

Our ecosystem offers notable benefits that differentiate it within the shoulder surgical care market. These key benefits include:

•Improved Fixation and Stability: Our foundational InSet Glenoid technology is biomechanically designed to specifically address what we believe is the primary problem in legacy aTSA implants: glenoid loosening. Our design aims to reduce mechanical stress at the bone-implant interface, improve fixation mechanics, enhance stability and reduce micromotion. These biomechanical advantages are evidenced by a published finite element analysis in which our InSet Glenoid technology demonstrated an 87% reduction in “rocking horse” motion, which is a widely known key contributor to implant loosening and failure. Notably, a separate published retrospective long-term follow-up analysis of patients who received our InSet Glenoid demonstrated a 72-point improvement in the mean ASES outcome score as compared to before surgery, reflecting a meaningful improvement in function (range and strength) and patient well-being following surgery.

•Restores Full Functionality: We engineered a range of humeral stem options to provide consistent, optimized biomechanics in both aTSA and rTSA. Using our InSet approach for rTSA, our system is designed with the goal of enabling patients to regain full range of motion, including the ability to raise their arm and reach behind (i.e., forward elevation and internal rotation), and avoid lengthening and overstuffing. We believe our design supports improved postoperative functionality and results in a postoperative feel and aesthetic that more closely tracks the shoulder’s natural form.

•Exceptional Longevity: Our advanced implant systems are designed for longevity, with minimal need for replacement. A published retrospective long-term follow-up analysis of patients who received our InSet Glenoid demonstrated no surgical complications, cases of glenoid loosening or revision surgeries at a mean follow-up time of 8.7 years in a particularly challenging patient population. We believe this durability provides surgeons and patients with confidence in our long-term implant performance and clinical outcomes.

•Improved Implant Selection and Positioning: ProVoyance preoperative planning technology empowers surgeons to create bespoke surgical plans that facilitate consistent, effective positioning of our implants. The highly intuitive interface enables surgeon planning without the need for third-party intervention and we believe that surgeon-level engagement in preoperative planning provides for better care for patients.

humeral stem technologies across our aTSA and rTSA systems, minimizing the number of sets and instruments required. Our advanced implant systems leverage consistent surgical techniques, which we believe can improve procedural outcomes while allowing for intraoperative flexibility and seamless interchangeability between aTSA and rTSA procedures.

Our Implants Systems

We developed a comprehensive implant portfolio to address the unique needs of patients and surgeons. Our advanced implants are comprised of our aTSA and rTSA systems, which include various, specifically designed components capable of a wide array of system configurations to facilitate different modes of operation (anatomic or reverse) that are optimized for patient-specific needs. These systems leverage consistent surgical techniques and the same efficient, two tray instrumentation system. The design of our advanced implant systems helps to facilitate shoulder surgical care with significant operational flexibility and reduced equipment and operating room footprint requirements.

InSet aTSA System

Our aTSA configuration consists of two main components, a glenoid scapular implant and a humeral fixation device, or stem. Each of these components was developed with a view to the overall implant system in an effort to provide maximum benefits to patients and flexibility for surgeons. A retrospective long-term follow-up analysis of patients who underwent aTSA procedures with our InSet Glenoid was published in the Journal of Shoulder and Elbow Surgery in 2019, which demonstrated a 72-point improvement in the mean ASES outcome score, statistically significant improvements in pain scores and range of motion, with no surgical complications, no cases of glenoid loosening and no revision surgeries performed at a mean follow-up time of 8.7 years.

InSet Glenoid

Unlike traditional glenoid implants that utilize an onlay design, our InSet Glenoid technology features a design that positions the implant within a pocket of sclerotic or cortical bone and aims to reduce mechanical stress at the bone-implant interface, improve fixation mechanics, enhance stability and reduce micromotion, all of which are key contributors to glenoid loosening. This design also enables a less invasive surgical approach that reduces surgical steps and difficulty of tissue exposure. Our InSet Glenoid implants were developed with a patented complex articular surface that contributes to reduction of the rocking horse motion. The InSet Glenoid design also enables a significantly reduced central fixation peg to provide further surgical flexibility.

The InSet PLUS Augmented Glenoid was designed to treat advanced shoulder conditions in patients with severe bone loss. The design of the InSet PLUS Augmented Glenoid corrects defects on the articular surface (in contrast to the fixation side of the implant) with five or ten-degree options. This method allows surgeons to easily adjust the implant’s position for optimal patient fit and stability through this dialable and articular side augmentation. The image below depicts the implant characteristics of our InSet Glenoid:

Supported by a growing body of peer-reviewed studies and approximately nine years of published data, our InSet Glenoid technology has demonstrated effectiveness across a variety of clinical indications, including cases involving advanced arthritis and severe bone loss. In addition to preserving bone in patients, our InSet Glenoid technology has been shown to facilitate quick recovery times, decreased pain, and improved range of motion for patients after surgery.

We commenced development efforts with our InSet Glenoid in 2009 and received 510(k) clearance in 2011. We commercially launched an initial aTSA system with our InSet Glenoid in 2016. We commenced development efforts for our InSet PLUS Augmented Glenoid in 2019 and received 510(k) clearance in 2020. Each of these devices is classified by the FDA as a Class II device.

InSet Humeral Stems

We offer three unique InSet humeral stem system options for our aTSA and rTSA systems—Humeral Stemless, Humeral Short Stem, and I-Series Humeral Stem—each purpose-built to address the specific needs of patients and physicians. Our humeral stems feature a proprietary porous coating designed to promote bone ingrowth by allowing bone tissue to grow into the porous structure (osseointegration), which creates a strong natural biological fixation and improves implant stability. Our stems also feature what we believe is an industry-only 132.5 degree neck shaft angle, a feature that enables our simplified surgical technique focused on proximal geometry—the shape, size, and position of the proximal humerus (upper arm bone) and its relationship to the glenoid (shoulder blade). The image below depicts our primary current humeral stems:

We commenced development efforts for our short stem, stemless and I-Series humeral stem system options for our aTSA and rTSA systems in 2017, 2019 and 2021, respectively, and received our primary 510(k) clearances in 2018 and 2022, with an additional 510(k) clearance in 2024 for use of the InSet 95 stem for use with anatomic fractures. Each of these devices is classified by the FDA as a Class II device.

Our novel humeral stem solutions are differentiated and designed to be compatible across the full range of our implant systems. Surgery with each humeral stem involves a consistent surgical technique and instruments, which enables seamless interchangeability between our aTSA and rTSA systems. This interchangeability is important in cases where the surgeon makes an intraoperative decision to switch from a stemless to a stemmed implant, or in revision or conversion surgeries where the determination is made to switch to a different implant modality (anatomic or reverse) or alternative humeral stem design. The image below depicts the designed compatibility of our systems:

InSet rTSA System

Our rTSA configuration leverages the same humeral fixation platform as our aTSA configuration but utilizes alternative humeral and glenoid articular components designed for the reverse modality. The humeral component is configured to allow attachment of a tray and bearing assembly, designed to articulate with the glenoid sphere (“glenosphere”). The glenosphere is attached to a baseplate configured to provide reliable fixation to the glenoid on the scapular bone.

Our rTSA system was designed to optimize biomechanics and provide patients and physicians with a novel reverse implant solution that functions more like an anatomic implant in terms of improved range of motion. The InSet design of our rTSA system allows for retention of the patient’s native anatomy and aesthetic and helps to achieve desirable, impingement free range of motion by avoiding arm lengthening, overstuffing, and other common challenges.

Humeral Tray and Bearing Assembly

Our humeral tray and bearing assembly are comprised of two components—a titanium humeral tray, and a polyethylene bearing—designed for low-profile assembly using our proprietary “Twistlock” locking mechanism. The Twistlock mechanism improves bearing-to-tray pullout strength, reducing the potential for bearing disassociation, a serious complication in rTSA where the polyethylene liner (“socket”) separates from the humeral tray (“ball”).

Our humeral tray and bearing assembly feature a unique bowl-shaped design that, together with the low profile nature of the Twistlock design, allows for inlay biomechanics with a rTSA modality, in which the apex of the glenosphere is positioned on the articular surface. This tray and bearing assembly, a key component of our rTSA system, connects to our humeral stems in the same manner as our InSet humeral head solutions, a key component of our aTSA system. The identical connection mechanism between these key components of our aTSA and rTSA systems is a critical design feature that enables the interchangeability of our systems and the potential for the humeral stem to remain in place during a revision or conversion surgery.

Scapular Reverse Assembly

The scapular assembly for rTSA is comprised of two main components—a baseplate and a glenosphere—assembled by attaching the baseplate to the scapula using peripheral and central screws, then connecting the glenosphere to the baseplate using our proprietary locking cap technology. We have developed a wide range of baseplate and glenosphere options, which allows for multiple configurations to support a broad range of patient anatomy. With the use of

ProVoyance, the assembly is configured to a patient’s unique needs. This assembly enables a lateralized center of rotation that, together with our humeral assembly, results in a reverse implant that we believe feels and functions more like an anatomic shoulder replacement, with optimized range of motion and joint stability.

A key advantage of our rTSA system is the ability to treat complex glenoid deformities with minimal bone removal, enabled by our augmented baseplates developed with a concave backside design. The augmented baseplate is positioned within the subchondral bone which allows for correction of complex glenoid defects, which we believe improves implant stability and can preserve bone. Unlike typical augmentation options, our InSet reverse scapular components enable complete, flush contact between the implant and the native bone, without the need for a bone graft and eliminating multiple bone preparation steps.

We commenced development efforts for our rTSA system in 2019 and received 510(k) clearance in 2021. Our rTSA system is classified by the FDA as a Class II device.

ProVoyance Preoperative Planning Technology

We believe that surgeon-level engagement in preoperative planning—that is, detail-by-detail procedural planning performed by surgeons themselves—is a key element in providing effective surgical care for the patient. Hands-on preoperative planning by the surgeon provides for intimate familiarization with the patient’s unique anatomy and surgical needs and reveals key learnings which guide preoperative and intraoperative decision making. For these reasons, we offer a highly approachable, easy to use preoperative planning technology with an intuitive interface designed to engage surgeons at levels we believe are industry leading.

ProVoyance integrates AI and ML to transform planar CT imaging into 3D renderings of patient-specific anatomy ahead of surgery. Its AI and ML algorithms empower surgeons to independently create bespoke surgical plans that can help ensure consistent, effective positioning of our implants.

ProVoyance received 510(k) clearance from the FDA in 2021 and is classified by the FDA as a Class II device. ProVoyance is listed on the FDA’s AI/ML-enabled medical devices list, which is a resource maintained, published, and periodically updated by the FDA to identify AI/ML-enabled devices that have been authorized for marketing in the United States through any of the standard paths to market for medical devices, although it is not intended to be a comprehensive list of all such devices that incorporate AI/ML. This is highly differentiated from other preoperative planning solutions, where the implant manufacturer or another third-party creates a surgical plan that is sent to the surgeon for their consideration.

We believe the differentiation and value proposition of ProVoyance is validated by high utilization rates of ProVoyance across procedures using our advanced implant systems. For the year ended December 31, 2025, to the extent we are able to measure, virtually all surgeries using our implants use ProVoyance, making it a routine part of surgeon workflow. We believe this high surgeon utilization rate of ProVoyance is due to its ease of use and technical feature set. Ease of use is facilitated by the platform’s highly intuitive, Unity-based interface with full user control and high-quality graphics capabilities. Technically, ProVoyance delivers true full-depth 3D rendering, 2D/3D bone density analysis, and biplanar glenoid deformity correction. ProVoyance provides an enhanced preoperative planning experience for surgeons and allows them to approach procedures with high confidence in their surgical plan.

The image below depicts the ProVoyance interface:

Efficient Instrument System

We re-engineered the components and technique for shoulder arthroplasty in order to create our proprietary InSet instrument system. This system was designed to enable interoperability between our novel aTSA and rTSA systems and a range of humeral stem options, while minimizing complexity and streamlining workflows.

Our instrument system is comprised of many components that fit within two trays, which we have specifically designed to facilitate the surgical technique used in connection with our implant systems. The components of each tray were designed for our implant characteristics and function. For example, the shape of the fixation fins on the humeral components were specifically designed to facilitate a surgical technique that can be used across procedure types and systems, and each instrument was designed with a view to maximize utility and reduce the overall quantity of instruments used in procedures involving our systems.

We believe our efficient, two tray instrument system can enable surgeons and staff to reduce operating room footprint, procedural setup time, sterilization time and expense and procedural complexity. We believe these benefits make it an optimal solution for aTSA and rTSA procedures performed across care settings and meaningfully reduce the per procedure capital outlay in shoulder surgical care. This advantage is particularly evident in ASCs, which generally have fewer resources and smaller footprints to handle or coordinate significant operative tools and complex instrument systems. The image below depicts our efficient instrumentation system for aTSA and rTSA:

Our Commercial Approach

We view ourselves as specialists serving specialists, having purposefully built our commercial organization around the unique needs of shoulder surgeons. Our commercial organization is comprised of three key components: (a) a dedicated commercial leadership team, (b) a CEME team and (c) a network of independent distributors. These key components work in tandem to form a commercial flywheel that is designed to build and provide key product support to surgeons and other stakeholders in the shoulder surgical care market, accelerate adoption, and enhance long-term retention.

The image below depicts the three key components of our commercial organization:

We estimate that approximately 15,000 surgeons in the United States perform at least one shoulder arthroplasty procedure per year, with approximately 1,800 high-volume surgeons performing the vast majority of procedures. We believe these high-volume surgeons require dedicated expertise and support. To optimize our commercial strategy, we have developed proprietary business intelligence tools that enable us to identify and engage with the high-volume surgeons most likely to adopt our solutions. These tools analyze key data points such as surgeon location, procedure mix and care settings, enabling us to prioritize outreach and allocate commercial resources efficiently. By understanding where and how these high-volume surgeons practice, we can tailor our engagement strategies to align with their clinical and operational needs.

Once a surgeon is integrated into our ecosystem, we focus on expanding utilization by increasing the percentage of procedures performed with our solutions. To support our targeting and commercial efforts, we have classified surgeon customers into three categories: prospect surgeons, who perform between one and two shoulder arthroplasty procedures using our implant systems per quarter (“Prospect Surgeons”); contender surgeons, who perform between three and eight shoulder arthroplasty procedures using our implant systems per quarter (“Contender Surgeons”); and core surgeons, who

perform at least nine shoulder arthroplasty procedures using our implant systems per quarter (“Core Surgeons”). A key driver of increasing adoption within our existing surgeon base over time (helping Prospect Surgeons become Contender Surgeons, and Contender Surgeons to become Core Surgeons) is our surgeon-to-surgeon education program facilitated by our CEME team. We are committed to fostering a collaborative community among shoulder surgeons where expertise is shared, new ideas are exchanged and best practices are disseminated to enhance clinical outcomes. By facilitating these peer connections, we strengthen engagement within our ecosystem and reinforce its real-world success. As surgeons share their positive experiences with our ecosystem and the impact on patient outcomes, we believe this organic advocacy further accelerates adoption, positioning us to benefit from the natural network effects within the shoulder surgical care community.

Using this commercial approach, we aim to drive adoption and momentum with both existing and new surgeons and are continuing to increase our number of high-volume surgeons over time. For example, our number of Core Surgeons and Contender Surgeons has increased over time. For the year ended December 31, 2023, 2024 and 2025, we had 60, 83 and 134 Core Surgeons and Contender Surgeons, respectively.

Dedicated Commercial Leadership Team

As of December 31, 2025, our dedicated commercial leadership team was comprised of 33 specialized representatives, organized into two commercial territories in the United States. Our team is focused on identifying high-volume surgeons specializing in shoulder surgical care. Their main responsibilities include: (a) target prospecting, by leveraging our business intelligence tools to identify and engage high-volume surgeons; (b) manage our distributor relationships, which helps to ensure alignment across our commercial organization and network of third-party distributors; and (c) facilitate case coverage for each shoulder surgery performed with our systems, either directly or through our network of distributors.

Dedicated Customer Experience and Medical Education Team

As of December 31, 2025, our CEME team was comprised of seven expert surgeon educators who facilitate rewarding and meaningful experiences for surgeons focused on clinical value. A key responsibility of our CEME team is facilitating quality surgeon-to-surgeon educational opportunities, which naturally results in expanding surgeon utilization of our solutions. This team hosts medical education events and activities such as symposiums and lab events where like-minded surgeons can exchange ideas and nurture a culture of innovation in shoulder care. These in-person engagements are designed to build long-term relationships that extend well beyond the events themselves. For that purpose, we have developed online forums where high-volume users of our products can collaborate, share case experiences, and consult one another in real time. This community of surgeons often becomes the most passionate advocates for our solutions, often educating, training, and engaging other surgeons in the benefits of joining our ecosystem.

Independent Distributor Network

Unlike typical stocking distributors, this network plays a critical role in expanding our market reach and driving adoption of our solutions in a cost-effective and scalable manner. In most cases, these distributors are focused on the orthopedic marketplace and sign exclusive agreements to carry our systems as their dedicated shoulder solution. They provide valuable feedback from the marketplace and are responsible for prospecting new surgeon customers, managing relationships, servicing existing accounts, and providing case coverage to support surgical execution. By maintaining strong, localized relationships with surgeons and healthcare facilities, our distributors help facilitate initial engagement, ongoing support, and long-term retention. Our dedicated commercial leadership team actively manages these relationships, ensuring distributors are meeting performance expectations and driving sales growth. We continuously evaluate distributor performance, maintaining relationships with those who generate the most sales while upgrading distribution partners where commercial execution can be improved.

Product Development and Pipeline

We leverage our team’s decades of collective experience developing and launching novel shoulder surgical care technologies to identify solutions addressing the unmet needs of patients and surgeons. Since the initial launch of our InSet Glenoid in 2016, we have successfully commercialized a wide range of new technologies to enhance our ecosystem and provide surgeons with the tools and support needed to deliver quality outcomes for patients requiring shoulder surgical care. We believe our commitment to continuous innovation has been demonstrated by our track record of developing leading new technologies.

We continue to see clinical outcomes in the shoulder surgical care space that are inferior to those seen in more mature orthopedic markets and intend to continue working with our surgeon advisors to further improve clinical outcomes in

shoulder surgical care. We believe this continued commitment to innovation will further expand our addressable market opportunity and improve our competitive position in shoulder surgical care.

We have a robust pipeline of new technologies in various stages of development and evaluation, including the following select projects.

I-Series Expansion and New Indications

We engineered the I-Series humeral stem line to provide a novel stem option for patients suffering from arthritis and a wide spectrum of proximal humeral bone loss or density. Our I-Series humeral stems feature a 2-fin design, specifically engineered for superior rotational control and stability. We launched our initial I-Series system in 2023, the InSet 95 Humeral Stem, which has been well received by the marketplace. The InSet 70 was launched in September 2025, and certain InSet 135 indications have received approval. We are also developing InSet 185 stems to further expand our I-Series humeral stem line. We anticipate pursuing FDA clearance of the InSet 185 stems, as needed, over the next twelve months. These additional clearances, if received from the FDA, will extend the range of available stem sizes and include expanded indications into fracture and revision surgeries.

Technologies for Metal Hypersensitive Patients

Market awareness of the risks and prevalence of metal hypersensitivity has risen in recent years. We have developed a line of humeral head and glenoid technologies for the approximately 10% to 15% of the general population who test positively for a metal hypersensitivity and may experience persistent pain, or other symptoms associated with allergic reactions from metal implants. These development technologies include our Humeral Head and Glenosphere, each constructed from alternative materials which do not incorporate elements that typically represent higher allergic risk for patients who test positively for a metal hypersensitivity. We have received FDA clearance for these solutions in January of 2026.

Adjacent Market Expansion

We are also evaluating expansion into adjacent areas in shoulder surgical care, which may include sports medicine and shoulder trauma markets.

Robotics Platform

In December 2025, the Company announced the development of a robotics platform to design a transformative shoulder-specific micro-robotic solution designed to further enhance shoulder surgical precision, workflow efficiency, and enable exciting, new clinical approaches in the aTSA and rTSA markets. The robotic solution is designed to be integrated with the Company’s ProVoyance platform to deliver a comprehensive technology solution.

Clinical Overview

There is a significant body of clinical evidence that supports the safety, efficacy, and durability of our implants in shoulder arthroplasty, including our InSet Glenoid technology. We are committed to continued investment in obtaining further clinical evidence with the support of surgeons who are recognized as thought leaders in shoulder surgical care. We believe these efforts will continue to generate a substantial body of additional clinical evidence that will drive increased awareness and adoption of our products.

Since our founding, we have contributed to numerous publications that we believe evidence and strengthen our position as a leader in our industry. These studies focus on various patient outcome measures related to pain relief, range of motion, and complication rates, such as ASES outcome scores, Visual Analog Scale (“VAS”) scores and Single-Assessment Numeric Evaluation (“SANE”) scores. An ASES score is a metric derived from a postoperative questionnaire used by surgeons to assess shoulder function and patient well-being. ASES scores are based on a 100-point scale with higher scores indicating better function and less pain. A VAS score is a metric used to measure patient-perceived pain intensity with 10 indicating highest level of pain and 0 indicating no pain. A SANE score is a metric used to measure patient improvement where patients rate their shoulder on a scale from 0 to 100, with 100 being the patient’s normal function. In addition, these studies focus on the most frequent complication associated with shoulder arthroplasty, failure of the glenoid component and published research demonstrates superior implant survivorship (i.e., lack of revision).

As described in greater detail in the table below, the following is a summary of certain of these supportive, peer-reviewed publications:

•A study published in The Journal of Shoulder and Elbow Surgery in 2011 evaluated clinical outcomes of our InSet Glenoid implants at a mean follow-up time of 4.3 years. The results demonstrated statistically significant improvements in the mean ASES outcome score (68-point improvement), VAS scores (6.8-point improvement) and range of motion, with no surgical complications.

•A study published in The Journal of Shoulder and Elbow Surgery in 2012 evaluated the fixation strength and stress distribution of our InSet Glenoid fixation technique. In this study, our InSet Glenoid implants demonstrated no signs of loosening and up to an 87% reduction in displacement.

•A study published in The Journal of Shoulder and Elbow Surgery in 2019 evaluated clinical outcomes of aTSA procedures with our InSet Glenoid at a mean follow-up time of 8.7 years. The results indicated statistically significant improvements in the mean ASES outcome score (72-point improvement), VAS scores (7.6-point improvement) and range of motion, with no surgical complications, no cases of glenoid loosening and no revision surgeries performed at follow-up.

•A study published in The Journal of Shoulder and Elbow Surgery in 2023 evaluated clinical outcomes of aTSA procedures with our InSet Glenoid at a mean follow-up time of 28.7 months. There results indicated significant improvements in ASES scores (43-point improvement), VAS scores (4.2-point improvement) and SANE scores (51.6-point improvement, and statistically significant improvement in range of motion). Additionally, there were low rates of central peg radiographic lucency, asymptomatic loosening of the InSet Glenoid implant, and no patients were revised for implant-related complications.

The table below sets forth additional information regarding these peer-reviewed publications. Some of these studies were conducted with small sample sizes, did not control for clinical variables or have other design limitations (e.g., the studies may be retrospective and are not randomized controlled trials). Except as otherwise noted in the table below, we did not fund or sponsor any of these peer-reviewed publications nor were our employees involved in the studies or publications.

	Reference		Source		Study Summary
	Gunther et al. (2011)		The Journal of Shoulder and Elbow Surgery		Title: Total shoulder replacement surgery with custom glenoidimplants for severe bone deficiencyAuthors: Stephen B. Gunther, MD; Tennyson L. Lynch, BSDescription: A retrospective review of seven consecutive patients (three men, four women) treated with shoulder arthroplasty surgery with custom inset glenoid implants for severe bone deficiency at a minimum of three years.Conclusions: This study documented for the first time the use of custom-made inset glenoid implants in the treatment of severely deficient bone defects for which standard implants are contraindicated. The surgical technique has allowed glenoid implantation to be performed safely in this small group of patients, and the inset technique has been an effective short-term solution for these patients.At a mean follow-up of 4.3 years, there were statistically significant improvements (P 0.02) in VAS scores (6.9 to 0.1), ASES outcome scores (26 to 94), and range of motion. No surgical complications occurred. Independent radiographic analysis determined all implants were classified as “low risk” for glenoid loosening.
	Gunther et al. (2012)		The Journal of Shoulder and Elbow Surgery		Title: Finite element analysis and physiologic testing of a novel, inset glenoid fixation techniqueAuthors: Stephen B. Gunther, MD; Tennyson L. Lynch, BS; Desmond O’Farrell, B.Eng (Hons) MM; Christian Calyore; Andrew Rodenhouse, BSDescription: A comparative scientific analysis of glenoid loosening using an inset glenoid fixation technique vs. the standard onlay technique used with a keel or pegged implant. The analysis consists of two separate methods: First, physiologic in vivo cyclic loading of glenoid implants was simulated using the dynamic model described by Anglin et al. and American Society for Testing and Materials (ASTM) F2028-08 Standard Test Methods for Dynamic Evaluation of Glenoid Loosening or Disassociation. Second, finite element analysis was performed to estimate the glenohumeral joint stress and displacement for both standard onlay implants and an inset glenoid implant.Conclusions: The mechanical testing in this study of the inset glenoid design and fixation technique showed a significant reduction in post-testing distraction after physiologic loading compared with standard onlay design and fixation. The results of the finite element analysis support the concept of inset glenoid fixation based on the significant reduction in stresses on the backside surface on the inset implant compared with the standard onlay implant. Also, the nodal displacement at the edges of the implants under rim loading conditions was significantly reduced for the inset implants, and there was more uniformity of stress distribution along the inset polyethylene surface. This testing shows increased glenoid fixation strength using an inset technique, which may be beneficial in minimizing clinical glenoid loosening.

	Gunther et al. (2019)*		The Journal of Shoulder and Elbow Surgery		Title: Long-term follow-up of total shoulder replacement surgery with inset glenoid implants for arthritis with deficient boneAuthors: Stephen B. Gunther, MD; Sterling K. Tran, BSDescription: A retrospective analysis was performed on 21 of 24 consecutive patients treated with inset glenoid implants for severe glenohumeral joint arthritis with bone deficiency with prospectively collected data. Inclusion criteria were patients with shoulder arthritis and severe glenoid bone deficiency, defined by perpendicular glenoid vault depth less than 15 mm. No bone grafts were used. All patients were evaluated preoperatively and after surgery with physical examination, radiographic studies and outcome measures. There were 10 males and 11 females, 17 cases with osteoarthritis and 4 with inflammatory arthritis, and 5 patients with rotator cuff tears (3 full thickness and 2 partial tears). Mean age was 68 years.Conclusions: This inset glenoid fixation technique offers an innovative approach to a difficult clinical conundrum of shoulder arthritis with deficient glenoid bone. In this series, there were no complications, no cases of glenoid implant loosening and no revision surgeries performed at a mean 8.7-year follow-up. This technique is also safe, because there is only minimal penetration of the glenoid surface bone. Finally, the technique is simple and easily reproducible. It is a reasonable alternative to other current techniques available for patients with shoulder joint arthritis, severe bone deficiency, and an intact rotator cuff.At a mean follow-up of 8.7 years, there were statistically significant improvements (P 0.001) in VAS scores (7.7 to 0.1), ASES outcome scores (23 to 95) and range of motion.
	Johnston et al. (2023)		The Journal of Shoulder and Elbow Surgery		Title: Clinical and radiographic outcomes following anatomic total shoulder arthroplasty utilizing an inset glenoid component at 2-year minimum follow-up: a dual center studyAuthors: Peter S. Johnston, MD; John T. Strony, MD; Jessica L. Churchill, MD; Roma Kankaria, BS; Benjamin W. Sears, MD; Grant E. Garrigues, MD; Robert J. Gillespie, MDDescription: A retrospective review of 75 patients undergoing aTSA using an inset glenoid component by two fellowship-trained shoulder surgeons at two separate institutions from August 2016 to August 2019 with minimum follow-up of two years. Range of motion and ASES, VAS and SANE scores were obtained. Radiographic outcomes, including central peg lucency and glenoid loosening, were assessed by three independent reviewers on the postoperative Grashey and axillary radiographs obtained at the final follow-up.Conclusions: At 2-year minimum follow-up, there were significant improvements in range of motion, VAS, SANE and ASES scores with low rates of central peg radiographic lucency and glenoid loosening. Additional long-term follow-up is needed to further clarify the advantages of InSet glenoid components when used in anatomic shoulder arthroplasty.

*As part of this publication, Mr. Gunther received 6,551 warrants to purchase our Series B convertible preferred stock in January 2020.

In addition, we are investing in a registry to collect observational non-randomized standard-of-care data to document survival of our implant and evaluate the short- and long-term clinical and radiographic outcomes associated with real world use of our implant systems. The primary purpose of the registry will be to assess survival of our implant with or without

revision at 2 years, 5 years and 10 years post-operatively. We believe this registry will provide further clinical support and additional clinical evidence that will drive increased awareness and adoption of our products.

Coverage and Reimbursement

We sell our systems directly to hospitals, outpatient care centers and ASCs. These customers in turn bill various third-party payors, such as Medicare, Medicaid and private health insurance plans, for the total healthcare services required to treat the patient. Government agencies, private insurers and other payors determine whether to provide coverage for a particular procedure and to reimburse hospitals, outpatient care centers and ASCs at rates based on a prospective payment system. For procedures performed during a hospital inpatient stay, Medicare generally reimburse hospitals a single bundled payment that is based on the patient’s principal diagnosis, up to 24 additional diagnoses and up to 25 procedures performed during the stay. Cases are classified into Medicare Severity-Diagnosis Related Groups, for payment under the Medicare Inpatient Prospective Payment System, for all items and services provided to the patient during a single hospitalization, regardless of whether procedures utilizing our products are performed during such hospitalization. Medicare rates for the same or similar procedures vary due to geographic location, nature of facility in which the procedure is performed and other factors. With respect to procedures performed in a hospital outpatient setting, all items and services paid under the Medicare outpatient prospective payment system, are assigned to payment groups called Ambulatory Payment Classifications, which group together items and services that are similar clinically and in terms of resource use. With respect to ASCs, covered procedures are assigned to ASC payment groups, which then determines the amount that Medicare pays for facility services furnished in connection with a covered procedure. Effective January 1, 2024, CMS added total shoulder arthroplasty to the list of covered procedures that can be performed in ASCs, which facilitated reimbursement and further supported the growth of ASCs as a key site of care in the shoulder surgical care market. While private payors vary in their coverage and payment policies, most use coverage and payment by Medicare as a benchmark by which to make their own decisions.

Reimbursement for professional services performed by physicians are also reported using CPT codes and based on a different payment methodology. Procedures using our systems are reported under CPT code 23470 for partial shoulder arthroplasty and CPT Code 23472 for total shoulder arthroplasty:

•CPT 23470 (Arthroplasty, glenohumeral joint; hemiarthroplasty) – Customers may categorize a procedure using our system as a partial shoulder arthroplasty when the reconstruction procedure is limited to the humeral articulation, and no replacement of the scapular articular surface (glenoid) is made.

•CPT 23472 (Arthroplasty, glenohumeral joint; total shoulder (glenoid and proximal humeral replacement (e.g., total shoulder))) – Customers may categorize a procedure using our system as a total shoulder arthroplasty when either aTSA or rTSA reconstruction is performed and the articular surfaces of both the humerus and the scapula are replaced by artificial components.

Intellectual Property

Intellectual property, including patents, trade secrets, trademarks and copyrights, is important to our business. Our commercial success depends in part on our ability to obtain and maintain proprietary intellectual property protection for our current products as well as for future product candidates and novel discoveries, product development technologies, and know-how. Our commercial success also depends in part on our ability to operate without infringing the proprietary rights of others and to prevent others from infringing our proprietary rights. We seek to maintain our proprietary position by, among other means, filing United States and foreign patent applications to obtain issued patents with claims directed to our products, product candidates, technology, inventions, and improvements that are important to the development and implementation of our business. We may also license from third parties certain patent rights and proprietary know-how that we believe to be necessary or useful to our business. Additionally, we protect our proprietary know-how that may not be patentable, and other confidential information, by maintaining and implementing appropriate policies and procedures with respect to secrecy and confidentiality.

We are currently seeking and maintaining patent protection in the United States and key foreign jurisdictions where we intend to market our products, and plan to do so with respect to any of our future product candidates. Our patent portfolio includes a combination of patents and pending patent applications solely held by us.

As of December 31, 2025, our owned patent estate contains 11 patent families comprising 13 issued U.S. patents, nine issued foreign patents, 13 pending U.S. non-provisional patent applications and 20 pending foreign patent applications. The patent families cover different aspects of glenoid implants, humeral implants, instrumentation, and reverse shoulder replacement systems, devices and methods.The 13 issued U.S. patents are expected to expire between August 2027 and

October 2041, after accounting for potentially available patent term adjustments, and assuming payment of appropriate maintenance, renewal, annuity and other governmental fees. Any patents that may issue from the 13 pending U.S. patent applications are expected to expire between September 2035 and August 2043, without accounting for potentially available patent term adjustments, term-limiting effects of terminal disclaimers and assuming payment of appropriate maintenance, renewal, annuity and other governmental fees. The nine issued foreign patents include one or more issued patents in jurisdictions such as Australia, Canada, Europe (validated in one or more of Germany, France, Switzerland and the U.K. and/or registered as having unitary effect) and Japan, and are expected to expire between February 2026 and March 2040, without accounting for potentially available patent term extensions and assuming payment of appropriate maintenance, renewal, annuity and other governmental fees. The 20 pending foreign patent applications include one or more pending applications in jurisdictions such as Australia, China, Europe and Japan, and are expected to expire between April 2038 and January 2045, without accounting for potentially available patent term extensions and assuming payment of appropriate maintenance, renewal, annuity and other governmental fees. Calculation of the expiration of issued patents is complex, varies by country and is based upon many factors. Accordingly, the expiration dates are estimates.

Our owned U.S. and foreign patents and patent applications generally relate to aTSA, rTSA, and instrumentation systems for aTSA and rTSA. Our owned issued U.S. and foreign patents are set forth in the table below, which are directed to our relevant technologies, including glenoid implants, humeral implants, reverse shoulder replacement systems and instrumentation for shoulder replacement.

The term of individual patents in our portfolio depends upon the legal term of patents in the countries in which they are obtained. In most countries in which we file, including the United States, the patent term is 20 years from the earliest date of filing a non-provisional patent application. In the United States, the term of a patent may be reduced due to terminal disclaimer made to overcome a double patenting rejection, or may be lengthened by patent term adjustment, which permits patent term restoration as compensation for delays incurred at the USPTO during the patent prosecution process.

The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions. The relevant patent laws and their interpretation outside of the United States is also uncertain. Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our technology or product candidates and could affect the value of such intellectual property. In particular, our ability to stop third parties from making, using, selling, offering to sell or importing products that infringe our intellectual property will depend in part on our success in obtaining and enforcing patent claims that cover our technology, inventions and improvements. We cannot guarantee that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may file in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our products, the methods of use or manufacture of those products. Moreover, issued patents do not guarantee the right to practice our technology in relation to the commercialization of our products. Issued patents only allow us to block potential competitors from practicing the claimed inventions of the issued patents in the countries in which such patents are issued.

Further, patents and other intellectual property rights in the medical device space are evolving and involve many risks and uncertainties. For example, third parties may have blocking patents that could be used to prevent us from commercializing our product candidates and practicing our proprietary technology. Our issued patents may be challenged, invalidated or circumvented, which could limit our ability to stop competitors from marketing related products or could limit the term of patent protection that otherwise may exist for our product candidates. In addition, the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies that are outside the scope of the rights granted under any issued patents. For these reasons, we may face competition with respect to our product candidates. Moreover, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any particular product candidate can be commercialized, any patent protection for such product may expire or remain in force for only a short period following commercialization, thereby reducing the commercial advantage the patent provides.

We also rely on trade secrets relating to our discovery programs and product candidates, and seek to protect and maintain the confidentiality of proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. It is our policy and practice to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us, and for employees and consultants to enter into invention assignment agreements with us. These agreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. Where applicable, the agreements provide that all inventions to

which the individual contributed as an inventor shall be assigned to us, and as such, will become our property. There can be no assurance, however, that these agreements will provide meaningful protection or adequate remedies for our trade secrets in the event of unauthorized use or disclosure of such information.

Software License Agreement with Genesis Software

On October 22, 2020, we entered into a software license agreement with Genesis Software, which was amended and restated on January 1, 2023 (as amended and restated, the “License Agreement”). Pursuant to the License Agreement, Genesis Software granted us an exclusive, worldwide, transferable, sublicensable and royalty-bearing license under Genesis Software’s SaaS surgery planning platform software, including all intellectual property rights therein, updates, upgrades and other modifications thereto, and object code, source code and other surgery planning software developed or controlled by Genesis Software during the term of the License Agreement (collectively, the “Licensed Software”), to store, use copy, make derivative works from, modify, extend, enhance and improve the Licensed Software in the field of shoulder surgical procedures primarily related to replacement of the shoulder joint articulation (i.e., anatomic shoulder arthroplasty, reverse shoulder arthroplasty, revision shoulder arthroplasty, and hemi-shoulder arthroplasty) (the “Field of Use”). The Licensed Software is utilized in connection with ProVoyance. We granted Genesis Software a limited, non-exclusive, non-transferable license to use data generated by us through our use of the Licensed Software solely in connection with customization of an implant other software products outside the Field of Use. Genesis Software granted us a limited, non-exclusive, non-transferable license under identified data collected by Genesis Software through its use of the Licensed Software outside of the Field of Use for our use within the Field of Use. We also agreed to compensate Genesis Software for certain development, consulting, and support services related to the Licensed Software that we may request from time to time.

Pursuant to the License Agreement, we paid Genesis Software an upfront license fee of $1.0 million and a milestone payment of $0.5 million upon receipt of FDA clearance of the Licensed Software. We are also required to pay Genesis Software royalties of a mid-single-digit percentage on net sales of shoulder replacement products that incorporate or use the Licensed Software until the earlier of (i) the tenth anniversary of the effective date of the License Agreement and (ii) such time as the aggregate amount of royalties, upfront license fee and milestone due upon receipt of FDA clearance paid to Genesis Software reaches $7.0 million. At any time prior to the tenth anniversary of the effective date of the License Agreement, we have the right to buy out our royalty obligations by paying Genesis Software the difference between the aggregate amounts already paid to Genesis Software and $7.0 million, upon which our rights under the License Agreement shall become irrevocable and perpetual and shall be royalty-free and fully-paid.

The term of the License Agreement shall continue until earlier terminated in accordance with the terms therein. The License Agreement may be terminated for cause by either party: (i) if the other party breaches a material provision of the License Agreement and fails to cure such breach within a specified notice and cure period or (ii) upon the bankruptcy, insolvency or certain dissolution or liquidation events of other party.

Manufacturing and Supply

We utilize third-party manufacturing and supply providers to manufacture our implants. We believe this outsourcing strategy provides the expertise and capacity required to effectively and efficiently scale production based on demand, and helps to ensure low-cost production and a capital efficient business model. The majority of our products are provided by single-source suppliers. For example, Avalign Technologies manufactures and supplies our humeral stems, Micropulse is our sole source for Inset Glenoid, Trifecta Medical Group manufactures and supplies our trays and RMD supplies surgical instruments used during procedures involving our systems. We also utilize a single supplier for significant majority of our sterilization needs.

We generally do not have long-term contracts with these third parties and our supply arrangements generally do not include minimum manufacturing or purchase obligations. We primarily order products through the use of purchase orders. As such, we generally do not have any obligation to purchase any given quantity of products, and our suppliers generally have no obligation to sell to us or to manufacture for us any given quantity of our products or components of our systems. We maintain strong working relationships with our suppliers and we believe our current network of third-party manufacturing and supply providers provides for sufficient capacity to meet projected market demand for our products for the foreseeable future.

While there are other suppliers that could make or provide any one of our products, we seek to manage single-source supplier risk by regularly assessing the quality and capacity of our suppliers, implementing supply and quality control protocols where appropriate and actively managing lead times and inventory levels. In addition, we are currently in the process of identifying and approving alternative suppliers to dual- or multi-source certain of our products and we are

working with key strategic partners on internal redundancy of certain products. We generally seek to maintain sufficient supply levels to help mitigate any supply interruptions and enable us to find and qualify another source of supply. For certain products, we estimate that it could take between six and twelve months to find and qualify a second source. Order quantities and lead times are based on internal forecasts, which are derived from historical demand and anticipated future demand. Lead times vary depending on the size of the order, time required to manufacture, specific supplier requirements and current market demand and dynamics for the raw materials, sub-assemblies and parts related to our products.

Our third-party manufacturing and supply providers are evaluated, qualified and approved through our supplier quality program, which includes verification and monitoring procedures to help ensure that our suppliers comply with FDA and ISO standards, as well as our own specifications and requirements. We inspect and verify products under strict processes supported by internal policies and procedures. We maintain a rigorous change control policy to assure that no product or process changes are implemented without our prior review and approval.

Competition

Our industry is competitive, subject to technological change and significantly affected by new product introductions and market activities of other industry participants. Our competition includes medical device manufacturers in the shoulder surgical care market and in the shoulder arthroplasty market in particular. For example, companies operating in our market include Arthrex, Enovis, Exectech, Johnson & Johnson, Smith & Nephew, Stryker, and Zimmer Biomet as well as a number of smaller companies. There are a significant number of approved devices for shoulder surgical care and shoulder arthroplasty, and we expect competition will intensify over time.

Many of our competitors have longer, more established operating histories, and in some cases significantly greater name recognition and financial, technical, marketing, sales, distribution and other resources. In addition, certain competitors have several competitive advantages, including international operations with significant scale and established relationships with hospitals, outpatient care centers and ASCs and surgeons who use their devices and are familiar with existing devices on the market. In addition to competing for market share, we also compete against these companies for personnel, including qualified personnel that are necessary to grow our business.

We believe the principal competitive factors in our market include:

•product features and design;

•patient experience, including recovery time, level of discomfort and post-operative results;

•acceptance by surgeons and other key stakeholders in the shoulder surgical care market;

•surgeon learning curves and willingness to adopt new techniques;

•ease of use and reliability, including preoperative planning tools;

•economic benefits and efficiencies for hospitals, outpatient care centers, ASCs and surgeons;

•effective distribution and marketing to surgeons and potential patients, including physician education and information sharing programs;

•product quality and standards, including our reputation with customers and surgeons;

•intellectual property; and

•customer service and support capabilities.

We believe we have established a compelling value proposition to compete favorably in this market. However, conditions in our market could change rapidly and significantly as a result of technological advancements, partnerships, or acquisitions by competitors or continuing market consolidation and we expect the competitive environment to remain intense. For example, we have seen and continue to see consolidation amongst our competitors and have seen and continue to see our competitors innovate and improve upon traditional implants and technologies. If our competitors have greater resources and access to funding than us, they may be able to finance the development of new technologies and products before we are able to do so, which may allow them to gain market share or enter new markets before us or provide lower-priced or better-quality offerings.

Government Regulation

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

United States 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, including software such as AI/ML, to ensure that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements of the FDCA. In addition, the FDA collects user fees for certain medical device submissions (including all submissions for marketing authorization) and annual fees for medical device establishments.

FDA Marketing Authorization Requirements

Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a premarket notification submitted under Section 510(k) of the FDCA, approval of a PMA, or classification under the de novo classification process. 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 and are those 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 (the “QMSR”), which amended the QSR, facility registration and product listing, Medical Device Reporting, and truthful and non-misleading labeling, advertising, and promotional materials. Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to provide reasonable assurance of device safety and effectiveness. These special controls can include 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 (or a “510(k) notice”) requesting permission to commercially distribute the device. The FDA’s permission to commercially distribute a device subject to a 510(k) notice is generally known as 510(k) clearance. Devices deemed by the FDA to pose the greatest risks, such as life sustaining, life supporting or some implantable devices, or devices that have a new intended use or use advanced technology that is not substantially equivalent to that of a legally marketed device, are placed in Class III, requiring approval of a PMA. Some pre-amendment devices are unclassified, but are subject to FDA’s premarket notification and clearance process in order to be commercially distributed. Where software, including AI/ML-based software, qualifies as a device, this same classification scheme and regulatory path to market applies.

510(k) Clearance Marketing Pathway

To obtain 510(k) clearance, a company must submit to the FDA a premarket notification demonstrating that the proposed device is “substantially equivalent” to a legally marketed predicate device. 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 device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, a device that was found substantially equivalent through the 510(k) process, or a 501(k)-exempt device. To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence. In addition, FDA collects user fees for certain medical device submissions and annual fees and for medical device establishments.

If the FDA agrees that the device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device. 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 classification process.

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. The FDA requires each manufacturer to determine whether the proposed change requires a new marketing submission 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 such marketing authorization has been granted. Also, in these circumstances, the manufacturer may be subject to significant regulatory fines or penalties.

PMA Approval Pathway

The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices. Most Class III devices require PMA approval before they can be marketed, although some pre-amendment Class III devices for which FDA has not yet required a PMA are cleared through the 510(k) process. The PMA process is more demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials. The PMA must also contain a full description of the device and its components, a full description of the methods, facilities, and controls used for manufacturing, and proposed labeling. Following receipt of a PMA, the FDA determines whether the application is sufficiently complete to permit a substantive review. If FDA accepts the application for review, it has 180 days under the FDCA to complete its review of a PMA, although in practice, the FDA’s review often takes significantly longer, and can take up to several years. An advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. The FDA may or may not accept the panel’s recommendation. In addition, the FDA will generally conduct a pre-approval inspection of the applicant and/or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QMSR.

The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s). The FDA may approve a PMA with post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported PMA approval or requirements to conduct additional clinical studies post-approval. The FDA may condition PMA approval on some form of post-market surveillance when deemed necessary to protect the public health or to provide additional safety and efficacy data for the device in a larger population or for a longer period of use. In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients. Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval.

Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement. PMA supplements often require submission of the same types of information as a PMA, but are limited to information needed to support any changes from the device covered by the original PMA and may not require as extensive clinical data or the convening of an advisory panel. Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable to demonstrate a reasonable assurance of safety and effectiveness for the modified device.

De Novo Classification

Medical device types that the FDA has not previously classified as Class I, II, or III are automatically classified into Class III regardless of the level of risk they pose. The Food and Drug Administration Modernization Act of 1997 established a route to market for low-to-moderate risk medical devices that are automatically placed into Class III due to the absence of a suitable predicate device, called the “Request for Evaluation of Automatic Class III Designation,” or the de novo classification procedure. 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 to moderate risk, rather than requiring the submission and approval of a PMA application. Pursuant to the Food and Drug Administration Safety and Innovation Act (“FDASIA”), manufacturers may request de novo classification directly without first submitting a 510(k) notice and receiving a not-substantially-equivalent determination.

Under FDASIA, FDA is required to classify the device within 120 days following receipt of the de novo request, although the process may take significantly longer. A de novo request seeking reclassification into Class II must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. If FDA grants the de novo request, the device may be legally marketed in the United States, and the FDA will issue a new classification regulation defining the new device type. This device type may be used subsequently as a predicate device for future 510(k) submissions. However, the FDA may reject the request if the FDA identifies a legally marketed predicate device that would be appropriate for a 510(k) notice, determines that the device is not low-to-moderate risk, or determines that General Controls would be inadequate to mitigate the risks and/or adequate special controls cannot be developed. After a device receives de novo classification, 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, another de novo request or even PMA approval.

Clinical Trials

Clinical trials are almost always required to support a PMA and de novo classification, and are sometimes required to support a 510(k) submission. All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption (“IDE”) regulations, which 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 in 21 C.F.R. § 812.3(m), the device sponsor must 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 as defined by the FDA, then the IDE application is not required before initiating human clinical trials, but the sponsor must still comply with abbreviated IDE requirements when conducting such trials. An IDE application must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. 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, clinical studies must be approved by, and conducted under the oversight of, an Institutional Review Board (“IRB”) for each clinical site. The IRB is responsible for the initial and continuing review of any IDE, 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, 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 complying with labeling and record-keeping requirements. In some cases, an IDE supplement must be submitted to, and approved by, the FDA before a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness or the rights, safety or welfare of human subjects.

During a 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 recordkeeping requirements. Additionally, after a trial begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.

Post-Market Regulation of Medical Devices

After a medical device obtains premarket authorization and is placed on the market, numerous regulatory requirements continue to apply. These requirements include:

•device listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;

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

•labeling regulations and FDA prohibitions against the promotion of products for uncleared or unapproved uses or indications;

•obtaining a new marketing authorization prior to implementing modifications that could significantly affect the device’s safety or effectiveness or that would constitute a major change in intended use;

•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;

•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;

•regulations pertaining to voluntary recalls;

•the FDA’s recall authority, whereby it can ask, or under certain conditions order, manufacturers to recall from the market a device that is in violation of governing laws and regulations;

•post-market restrictions or conditions, including post-market study commitments; and

•post-market surveillance regulations, which apply, when necessary, to protect the public health or to provide additional safety and effectiveness data for the medical product.

Manufacturing processes for medical devices are required to comply with the applicable portions of the QMSR, which 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, design history file, and complaint files. Manufacturers are subject to periodic scheduled and unscheduled inspections by the FDA. Failure to maintain compliance with the QMSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of marketed products. The discovery of previously unknown problems with any marketed products, 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 approval, or off-label 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:

•warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties;

•recalls, withdrawals, or administrative detention or seizure of our products;

•operating restrictions or partial suspension or total shutdown of production;

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

•withdrawing 510(k) clearances, de novo classifications, or PMA approvals that have already been granted;

•refusal to grant export approvals for our products; or

•criminal prosecution.

Foreign Government Regulation

In addition to U.S. regulations, medical devices are subject to a variety of foreign government regulations.

Foreign Regulation of Medical Devices

Regulation of Medical Devices in the European Union

The EU has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.

Until May 25, 2021, medical devices were regulated by the Council Directive 93/42/EEC (“EU Medical Devices Directive”), which has been repealed and replaced by Regulation (EU) No 2017/745 (“EU Medical Devices Regulation”). Unlike directives, regulations are directly applicable in all EU member states without the need for member states to implement into national law.

In the EU, there is currently no premarket government review of medical devices. However, all medical devices placed on the EU market must meet general safety and performance requirements, including the requirement that a medical device must be designed and manufactured in such a way that, during normal conditions of use, it is suitable for its intended purpose. Medical devices must be safe and effective and must not compromise the clinical condition or safety of patients, or the safety and health of users and – where applicable – other persons, provided that any risks which may be associated with their use constitute acceptable risks when weighed against the benefits to the patient and are compatible with a high level of protection of health and safety, taking into account the generally acknowledged state of the art.

Compliance with the general safety and performance requirements is a prerequisite for European conformity marking (“CE mark”), without which medical devices cannot be marketed or sold in the EU. To demonstrate compliance with the general safety and performance requirements medical device manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk) classification. Except for low-risk medical devices (Class I), where the manufacturer can self-assess the conformity of its products with the general safety and performance requirements (except for any parts which relate to sterility, metrology or reuse aspects), a conformity assessment procedure requires the intervention of a notified body. Notified bodies are independent organizations designated by EU member states to assess the conformity of devices before being placed on the market. A notified body would typically audit and examine a product’s technical dossiers and the manufacturer’s quality system. If satisfied that the relevant product conforms to the relevant general safety and performance requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own declaration of conformity. The manufacturer may then apply the CE mark to the device, which allows the device to be placed on the market throughout the EU.

Throughout the term of the certificate of conformity, the manufacturer will be subject to periodic surveillance audits to verify continued compliance with the applicable requirements. In particular, there will be a new audit by the notified body before it will renew the relevant certificate(s).

All manufacturers placing medical devices into the market in the EU must comply with the EU medical device vigilance system. Under this system, serious incidents and Field Safety Corrective Actions (“FSCAs”), must be reported to the relevant authorities of the EU member states. Manufacturers are required to take FSCAs defined as any corrective action for technical or medical reasons to prevent or reduce a risk of a serious incident associated with the use of a medical device that is made available on the market. An FSCA may include the recall, modification, exchange, destruction or retrofitting of the device.

The aforementioned EU rules are generally applicable in the EEA, which consists of the 27 EU Member States plus Norway, Liechtenstein and Iceland.

Regulation of Medical Devices in the United Kingdom

The EU Medical Devices Regulation is not applicable in Great Britain due to Brexit. Existing EU directives governing all medical devices have been given effect in domestic law through the Medical Devices Regulations 2002 (SI 2002 No 618, as amended) (“UK Medical Devices Regulations”). This means that since January 1, 2021, the Great Britain route to market is still based on the requirements derived from the pre-existing EU legislation. As a standalone regulatory body, the Medicines and Healthcare products Regulatory Agency (“MHRA”) is responsible for regulating medical devices in Great Britain (England, Scotland and Wales) and Northern Ireland, though Northern Ireland is aligned with EU legislation and regulations regarding medical devices as a result of the Northern Ireland Protocol that took effect in January 2021. The UK government has passed the Medicines and Medical Devices Act which came into force on 11 February 2021 and which allows the secretary of state or an ‘appropriate authority’ to amend or supplement existing regulations in the area of medical devices including the UK Medical Devices Regulations. In addition, the Trade Deal between the UK and the EU generally provides for cooperation and exchange of information between the parties in the areas of product safety and

compliance, including market surveillance, enforcement activities and measures, standardization-related activities, exchanges of officials, and coordinated product recalls. As such, processes for compliance and reporting should reflect requirements from regulatory authorities.

Under the UK Medical Devices Regulations, in order to be lawfully placed on the Great Britain market, certain medical devices need to be “UKCA” certified by a UK approved body. However, certain medical devices in compliance with: (1) the EU Medical Devices Directive can continue to be placed on the Great Britain market until the sooner of certificate expiration or June 30, 2028; or (2) the EU Medical Devices Regulation can continue to be placed on the Great Britain market until the sooner of certificate expiration or June 30, 2030. The EU no longer recognizes conformity assessment activities performed by UK notified bodies for medical devices placed on the market since January 1, 2021. Notified bodies must be located in an EU member state, or territory where there is a Mutual Recognition Agreement (“MRA”), that allows the marketing of medical devices that meet EU requirements, there is (currently) no such MRA between the UK and the EU.

Furthermore, on December 16, 2024, the UK government published an amendment to UK Medical Devices Regulations to clarify and strengthen the post-market surveillance requirements for medical devices in Great Britain. This amendment will come into force on June 16, 2025 and aims to facilitate greater traceability of incidents and trends enabling the MHRA to act swiftly when needed to address safety issues and support the entire health system in better protecting patients. In addition, the MHRA launched a consultation from November 14, 2024 to January 5, 2025 on proposals to update the pre-market requirements for medical devices in Great Britain, covering four topics, namely: (1) a new international reliance scheme to enable swifter market access for certain devices that have already been approved in a comparable regulator country; (2) the new UK Conformity Assessed (“UKCA”) mark and, in particular, proposals to remove the requirement to place such UKCA marking on devices; (3) conformity assessment procedures for in vitro diagnostic devices; and (4) maintaining in UK law certain pieces of “assimilated” EU law which are due to sunset in 2025. This consultation builds on the MHRA’s previous consultation between September and November 2021, and the UK government’s response to that consultation which was published on June 26, 2022. The MHRA has stated that it will incorporate feedback to its recent consultation into new legislation on pre-market requirements for medical devices in Great Britain. The new legislation is expected to be implemented in 2026 and aims to enable greater international collaboration and practices, with more patient-centered, proportionate requirements for medical devices which are responsive to technological advances.

Coverage and Reimbursement

In the United States, our currently authorized products are commonly treated as general supplies utilized in orthopedic surgery and if covered by third-party payors, are paid for as part of the surgical procedure. 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 the procedures during which our products are used. Failure by physicians, hospitals, ASCs and other users of our products to obtain sufficient coverage and reimbursement from third-party payors for procedures in which our products are used, or adverse changes in government and private third-party payors’ coverage and reimbursement policies, could directly impact the demand for our products.

Based on our experience to date, third-party payors generally reimburse for the surgical procedures in which our products are used only if the patient meets the established medical necessity criteria for surgery. Some payors are moving toward a managed care system and control their healthcare costs by limiting authorizations for surgical procedures, including elective procedures using our devices. Although no uniform policy of coverage and reimbursement among payors in the United States exists and coverage and reimbursement for procedures can differ significantly from payor to payor, 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:

•a covered benefit under its health plan;

•appropriate and medically necessary for the specific indication;

•cost effective; and

•neither experimental nor investigational.

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 or procedures 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.

We believe 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 industry to reduce the costs of products and services. All third-party reimbursement programs are developing increasingly sophisticated methods of controlling healthcare costs through prospective reimbursement and capitation programs, group purchasing, redesign of benefits, requiring second opinions prior to major surgery, careful review of bills, encouragement of healthier lifestyles and other preventative services and exploration of more cost-effective methods of delivering healthcare.

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 physicians, hospitals and ASCs for procedures during which our products are used. These updates could directly impact the demand for our products.

Other U.S. Healthcare Laws

Device manufacturers are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business. Such laws include, without limitation, U.S. federal and state anti-kickback, fraud and abuse, false claims, consumer fraud, and transparency laws and regulations.

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

The federal civil and criminal false claims laws, including the civil False Claims Act, prohibit, among other things, any individual or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. In addition, the government may assert that 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 civil False Claims Act.

The Civil Monetary Penalty Laws impose penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent, or offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier.

HIPAA created additional federal civil and criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA 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 the CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (defined to include physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse midwives) and teaching hospitals, and further requires applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.

Similar state and local laws and regulations may also restrict business practices in the medical device industries, such as state anti-kickback and false claims laws, which may apply to business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-

government third-party payors, including private insurers, or by patients themselves; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities; state laws that prohibit fee-splitting arrangements between companies and physicians and other healthcare professionals; and state and local laws that require the registration of sales representatives.

Violation of any of such laws or any other government regulations that apply may result in penalties, including, without limitation, civil and criminal penalties, damages, fines, additional reporting obligations, the curtailment or restructuring of operations, exclusion from participation in government healthcare programs and individual imprisonment.

Healthcare Reform

The United States is considering or has 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, 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 healthcare costs 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 changed healthcare financing and delivery by both governmental and private insurers substantially, and affected medical device manufacturers significantly. 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 has 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.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted that tighten margins and intensify burdens for healthcare providers that use our products. For example, the Budget Control Act of 2011, 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 unless additional Congressional action is taken. Additionally, the American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

The Medicare Access and CHIP Reauthorization Act of 2015 repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates and a new system of incentive payments which began in 2019 that are based on various performance measures and physicians’ participation in alternative payment models, such as accountable care organizations. Each year, CMS updates Medicare payments for physician services through rulemaking, based on parameters established under law. In November 2024, CMS finalized a 2.83% decrease in the physician fee schedule conversion factor, a key aspect of physician payment rates under the Medicare program. This resulted in an average payment cut of 2.93% to physicians and other clinicians, which took effect on January 1, 2025 and remains in effect today, unless Congress takes additional action.

We expect additional state and federal healthcare reform measures to be adopted in the future, particularly given the recent change in administration, 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, 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 partners. 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. In addition, certain foreign laws 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 can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

Employees and Human Capital Resources

As of December 31, 2025, we had 75 employees, 72 of which were full-time. None of our employees are represented by a labor union or party to a collective bargaining agreement. We consider our relationship with our employees to be good.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and additional employees. The principal purposes of our equity incentive plans are to attract, retain, and motivate selected employees, consultants, and directors through the granting of stock-based compensation awards and cash-based performance bonus awards.

Corporate Information

Shoulder Innovations was originally incorporated under the laws of the State of Delaware in October 2014. Our principal executive offices are located at 1535 Steele Avenue SW, Suite B, Grand Rapids, Michigan 49507 and our telephone number is (616) 294-1026. Our website address is https://shoulderinnovations.com/. Our website also contains copies of our Corporate Governance Guidelines and Code of Ethics and Conduct, as well as the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Within the time period required by the SEC, we will post on our website any amendment to our Corporate Governance Guidelines and Code of Ethics and Conduct and any waiver applicable to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The information contained on, or that can be accessed through, our website is not incorporated by reference into, and is not a part of, this Annual Report. Investors should not rely on any such information in deciding whether to purchase our common stock.

Available Information

Our reports filed with or furnished to the Securities and Exchange Commission (the “SEC”) pursuant to Sections 13(a) and 15(d) of the Exchange Act, are available, free of charge, on our investor relations website at https://ir.shoulderinnovations.com/ as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding us and other companies that file materials with the SEC electronically. Copies of our reports on Form 10-K, Forms 10-Q, and Forms 8-K, and amendments to those reports may also be obtained, free of charge, electronically through our investor relations website located at the web address appearing above as soon as reasonably practicable after we file such material with, or furnish it to, the SEC. We use our investor relations website as a means of disclosing material information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings, and public conference calls and webcasts.

The content of our websites and information that we may post on or provide to online and social media channels and information that can be accessed through our websites or these online and social media channels are not incorporated by reference into this Annual Report or in any other report or document we file with the SEC, and any references to our websites or these online and social media channels are intended to be inactive textual references only.