Carlsmed (CARL) Bank of America SMID Cap Virtual Conference summary

Key technology and clinical advancements

• AI-enabled platform creates personalized 3D surgical plans and devices for spine fusion, improving outcomes and reducing costs for complex spinal deformity cases.

• Digital-first, inventory-free model enables on-demand device production and continuous post-op data collection to refine the platform.

• Clinical data shows a 74% reduction in reoperations for patients using the technology compared to traditional fusion.

• Recent launches include cervical fusion solutions, with strong early clinical feedback and rapid surgeon adoption.

• Ongoing investments in automation and data analytics aim to further personalize procedures and expand indications, including future cervical arthroplasty.

Market opportunity and commercial progress

• Addressable U.S. market exceeds $10 billion, with 400,000 lumbar and cervical fusion procedures annually.

• Rapid growth in surgeon base (60% year-over-year), especially in teaching institutions and among early/mid-career surgeons.

• Cervical platform launched in December, with full commercial rollout and new personalized plating (corra) set for Q4, expected to accelerate growth into 2027.

• Adoption typically ramps over several quarters, with most surgeons still in early phases, supporting future utilization increases.

• Revenue per procedure stable for lumbar, with upside for cervical as new products are added.

Reimbursement, margins, and scalability

• Permanent MS-DRG reimbursement for lumbar simplifies hospital coding and adds ~$30,000 incremental reimbursement per procedure, expected to drive hospital adoption and access.

• Only one other peer shares these codes, providing a competitive edge.

• Gross margins reported at 77% in Q2, with continued margin expansion and declining operating expenses as a percent of revenue.

• Investments in technology and commercial infrastructure are designed to support a 10x scale in production and business capacity.

• Profitability targeted at under $200 million annual run rate, with current cash position supporting growth and innovation.