Shoulder Innovations (SI) investor relations material

Market overview and growth drivers

• Shoulder arthroplasty is a $2.8 billion global market, growing at over 10% annually, with a significant shift from inpatient to outpatient care, especially in ambulatory surgery centers following CMS reimbursement approval in January 2024.

• The company targets 1,800 high-volume surgeons, representing 80% of procedures, enabling a focused and efficient commercial model.

• Reverse shoulder replacements now account for 70% of procedures, reflecting evolving clinical practice and biomechanics.

• The transition to ambulatory surgery centers is expected to drive substantial growth, with outpatient procedures rising from 10% to 30% by the end of 2025.

• The company has achieved 60% revenue growth year-to-date, with gross margins in the upper 70% range and a strong cash position.

Product innovation and differentiation

• The InSet Glenoid technology addresses glenoid component loosening, achieving 100% survivorship at 8.7 years and an 87% reduction in rocking horse motion.

• Modular implant design allows intraoperative transition between anatomic and reverse procedures, enhancing surgical flexibility.

• Instrument footprint is reduced to two trays, lowering costs and simplifying workflow in ambulatory settings.

• Automated, AI-enabled, CT-based preoperative planning improves surgical accuracy and is being integrated with a portable robotic solution, with 510(k) filing planned for the first half of 2027.

• New product launches include InSet 135 for fractures, N22 Glenosphere for metal sensitivity, TPS reverse baseplate, and a reusable guide system.

Commercial strategy and operational efficiency

• The commercial model combines a 1099 independent sales force with over 40 W2 leaders and a Customer Experience in Medical Education (CEME) team, enabling targeted surgeon engagement and rapid growth.

• Over 90 CEME events in the first half of the year engaged 160 practitioners, driving first-use adoption.

• Cost-down initiatives and a low-inventory model support improved free cash flow and working capital efficiency, with cash burn reduced from $15M to $9M quarter-over-quarter.

• The company is focused on expanding its core customer base, increasing average selling prices, and exploring adjacent markets and international expansion.