Shoulder Innovations (SI) Morgan Stanley 23rd Annual Global Healthcare Conference summary

Business overview and product portfolio

• Focused exclusively on the shoulder surgical care market, particularly arthroplasty, covering about 85% of a $2–3 billion global market growing at 10% annually.

• Operations are U.S.-centric, selling through an independent sales organization, with a robust product line developed over 10 years.

• Product ecosystem includes AI-enabled preoperative planning software with 98% engagement and a capital-efficient two-tray instrumentation platform.

• The InSet product line addresses key challenges in shoulder arthroplasty, notably reducing glenoid loosening and improving outcomes.

• Recent product launches maintain the two-tray footprint, supporting efficiency in ambulatory surgery centers (ASCs).

Market trends and growth drivers

• The shoulder arthroplasty market is experiencing double-digit growth, driven by improved technology, increased specialization, and ASC adoption.

• CMS reimbursement changes in 2024 have accelerated the shift of procedures to ASCs, favoring solutions with minimal instrumentation.

• Surgeons and staff prefer the simplified workflow and lower capital requirements of the two-tray system, aiding adoption.

• Word of mouth among surgeons and positive patient outcomes, especially regarding range of motion, are fueling customer growth.

• Patient expectations for post-surgical activity and range of motion are rising, further expanding the addressable market.

Financial performance and outlook

• Q2 revenue reached $11 million, reflecting 33% year-over-year growth, with customer count up 50% from the prior year.

• Guidance for the second half of the year anticipates continued strong growth rates, consistent with the first half and prior year.

• ASPs remain strong, supported by targeted center selection and favorable surgeon and product mix.

• The recent IPO raised $75 million, with capital prioritized for scaling the commercial organization and continued innovation.

• Commercial expansion is planned to match the linear relationship between sales force size and customer growth.