Greetings, and welcome to the Tenon Medical Third Quarter 2024 Financial Results and Corporate Update Conference Call. As a reminder, this call is being recorded. Your host today are Steven Foster, President and Chief Executive Officer; and Kevin Williamson, Chief Financial Officer. Mr. Foster and Mr. Williamson will present results of operations for the third quarter ended September 30, 2024, and provide a corporate update. A press release detailing these results was released today and is available on the Investor Relations section of our company's website, www.tenonmed.com. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, and other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. For a more complete discussion of these factors and other risks, you should review our Annual Report on 10-Q dated September 30, 2024, particularly under the heading 'Risk Factors', which is on file with the Securities and Exchange Commission at www.sec.gov. At this time, I'll turn the call over to Tenon Medical’s Chief Executive Officer, Steven Foster. Please go ahead, sir.

Thank you, Aubrey, and good afternoon to everyone. I'm pleased to welcome you to today's third quarter 2024 financial results and corporate update conference call for Tenon Medical. In the third quarter, we continued to focus on building market share for our proprietary Catamaran System as well as securing capital to help fund our growth initiatives going forward. Since the beginning of 2024, we delivered an 18% year-over-year increase in revenue driven by a 5% rise in surgical procedures utilizing the Catamaran System. Gross margin improved 2,200 basis points to a solid 54% for the same nine months of 2024 as compared to 32% in the same year ago period. During the third quarter, revenue declined 6% over the prior year quarter and 1.6% over the second quarter of 2024. The decrease was mainly due to unexpected reimbursement pre-authorization headwinds that we believe to be transient in nature. We expect future coding clarity, combined with our recently published clinical data, will positively impact these issues going forward. As we move toward sustainable revenue growth, we believe our stable cost structure will maintain gross margin performance at recent levels and improve with increases in revenue in the near term due to our planned growth initiatives. Across operations, we've made considerable commercialization and technical advances, including the Catamaran SE, a second generation and smaller version of our implant and access profile. As we introduce versatility, we anticipate this will result in market share gains during our second year of commercialization. To maintain our momentum during the third quarter, we took the opportunity to strengthen our balance sheet to fund our growth initiatives and position the business on a sustainable growth trajectory. In September, we received an investment from a single healthcare-focused institutional investor. This investment, combined with additional equity financings, produced net proceeds of approximately $9.6 million within the quarter. We intend to use these proceeds to expand our sales force, continue our post-market study with the publication of the next tranche of analysis for Catamaran, and advance the launch of the new Catamaran SE, SI Joint Fusion System. We've initiated the pre-launch alpha clinical work of the new Catamaran SE, which extends the line of implant offerings for physicians preferring a smaller Catamaran implant and access profile when performing SI Joint Fusion procedures. Additionally, in late October, we reported that a subset of partner physicians performed initial clinical procedures implanting Catamaran SE. Feedback from the physician advisors has been extremely positive. Full commercial launch of Catamaran SE is planned in early 2025. As referenced during our earnings call in August, we completed our restructured sales operations in Q2. With the team in place, we saw building momentum into late Q3, and expect the trend to continue as they develop and grow. With a solid balance sheet, we plan to expand our efforts in 2025 to be positioned for future growth. A significant component of our growth strategy is investment in clinical research to reinforce the safety and effectiveness of the Catamaran System. Significant progress has been made in this area. As a reminder, Tenon's prospective multi-center single-arm post-market study evaluates clinical outcomes of patients with sacroiliac joint disruptions or degenerative sacroiliitis treated with the Catamaran SI Joint Fusion System. Patients will be evaluated for a period of up to 24 months, reviewing various patient-reported outcomes, radiographic assessments, and adverse events. In short, this study, which we call MAINSAIL, aims to show the Catamaran System delivers on its promises. As we near completion of enrollment in this study, during the quarter we announced the first peer-reviewed publication of our interim analysis. This interim analysis presents early experiences in the first 33 consecutive patients treated with the Catamaran SI Joint Fusion System across six U.S. clinical sites with primary and secondary clinical endpoints analysis at six months and radiographic CT fusion assessment performed by an independent radiologist at 12 months. Notable outcomes from this interim analysis include a statistically significant reduction in SI Joint pain and disability scoring at six months, a robust safety profile, and high patient satisfaction throughout all follow-up time points. Results provided definitive evidence of fusion response at 12 months and efficient surgical technique and procedural workflow. This peer-reviewed analysis reinforces that the Catamaran System's minimally invasive Inferior Posterior approach is safe and effective in the objective of relieving pain and reducing disability in adult patients diagnosed with SIJ disruption or degenerative sacroiliitis that failed non-surgical treatment. Early results and evaluations solidify our thesis that the Catamaran's unique design and less invasive Inferior Posterior approach is functioning as intended to optimize patient outcomes. Of note, the interim data from our study, combined with the nearly 800 surgeries performed with the Catamaran System to date, is demonstrating an exceptional safety profile and benefiting patients and physicians in delivering on its clinical promises. The importance of this clinical research for the company cannot be overstated. It will be compelling for treating physicians and payers alike within a market segment that is lacking peer-reviewed data. Our ongoing workshop activities, led by a network of valued physician faculty combined with the robust commercial infrastructure rebuild, have prepared us for rapid expansion. Our sales targeting efforts focus on medical professionals with experience in SI surgical procedures and technologies and provide them with world-class workshop opportunities. Importantly, this proven approach contains costs and provides higher return value to faculty, cohort physicians, and Tenon's business overall. We experienced an increase in our interactive training corresponding with our restructured marketing and sales approach, hosting 21 physicians in Catamaran workshops during the third quarter of 2024. Subsequent to the quarter end, the U.S. Patent Office issued to us three patents related to our enhanced Catamaran prosthesis that include unique drug delivery compositions, which enhance sealing of the prosthesis in SI Joint bone structures and bone growth around and within the prosthesis when the prosthesis is implanted into the joint. Another patent is directed to SI Joint prostheses with unique structures and configurations to correct failed SI Joint stabilization with alternative commercial SI Joint implants without requiring removal of the failed implant. These are meaningful protection mechanisms for our technology platform and serve to strengthen our competitive position in the industry. Finally, during the quarter, we welcomed Kevin Williamson as our Chief Financial Officer following the retirement of Mr. Steve Van Dick, who remains involved in a CFO advisory role to ensure a smooth transition. Kevin has an extensive track record of financial leadership in the spine-related medical technology industry. Most recently, he served as CFO of Accelus Incorporated, also a medical device company with a focus on developing expandable spinal implant technologies. Kevin's experience has proven valuable early on, and he will be instrumental as we strategically advance Tenon into our next phase of growth. With that, I'll turn it over to Kevin to discuss our financials.

Thank you, Steve. I'm excited to join today's earnings call and be part of the Tenon Medical journey. First and foremost, I extend my appreciation to Steve Van Dick for his previous leadership in the role and guidance during the CFO transition period. Now, I'll give a succinct review of our financial results; a full breakdown is available on our press release that crossed the wire this afternoon. Our revenue was $887,000 in the third quarter of 2024, a decrease of 6% compared to $944,000 in the third quarter of 2023. Revenue for the nine months ended September 30, 2024, was $2.5 million, an increase of 18% compared to $2.1 million in the prior year period. The fluctuations in revenue growth for the three months and nine months ended September 30, 2024, as compared to the same periods in 2023, were primarily due to a decrease of 15% and an increase of 5% respectively in the number of surgical procedures in which the Catamaran System was used. We believe the reimbursement impacts and timing of our sales force operation restructure that we experienced in Q3 will become tailwinds for us moving forward in combination with our new SE platform and clinical data initiatives. Gross profit in the third quarter of 2024 was $418,000, or 47% of revenue, compared to $535,000 or 57% of revenue in the third quarter of 2023. For the three months ended September 30, 2024, gross profit was $1.4 million, or 54% of revenue, compared to a gross profit of $682,000 or 32% of revenue in the prior year period. Gross margin percentage improved due to the absorption of more production overhead costs into our standard costs, operating leverage created due to lower fixed costs and higher revenue associated with the increase in the number of surgical procedures. Operating expenses totaled $3.6 million for the third quarter of 2024 as compared to expenses of $3.9 million in the third quarter of 2023. For the nine months ended September 30, 2024, operating expenses totaled $12 million, compared to $13.3 million in the prior year period. Operating expenses decreased due to the restructuring of our sales operations that reduced sales and marketing expenses and a decline in research and development. With a continued investment in growth, expanding the sales force is a priority and increases in sales and marketing expenses are expected in future quarters. Net loss was $3.2 million for the third quarter of 2024, an improvement from a net loss of $3.3 million in the same period in 2023. For the nine months ended September 30, 2024, net loss was $10.6 million, improving from $12.6 million in the previous year period. The company does expect to incur additional losses in the future. Now turning to the balance sheet. As of September 30, 2024, cash and cash equivalents totaled $9.2 million as compared to $2.4 million as of December 31, 2023. On September 17, 2024, as previously discussed by Steve, the company received an investment with gross proceeds of approximately $4.5 million. This supportive capital from a recognized healthcare space investor, combined with additional equity financings in September, has provided aggregate net proceeds to Tenon of $9.6 million during the third quarter. Tenon's balance sheet is fortified with ample cash runway to accelerate investment in our growth initiatives, including further expansion in our sales force and market access efforts, continued focus on data in our main sales study, and the commercial launch of Catamaran SE. Lastly, as of September 30, 2024, the company has no outstanding debt. I will now turn the call back to Steve for closing thoughts.

Thank you, Kevin. We are strategically advancing our commercialization strategy into our next phase of growth with steady progress and year-over-year increases in our Catamaran procedures. We ended the first nine months with year-over-year revenue growth and a notable increase in gross margin. We believe we will continue this growth trajectory supported by our capital resources, expanding commercial infrastructure, and the introduction of the new SE platform. We also believe the upcoming larger cohort of patient post-market data will be a catalyst to drive payer coverage, which will accelerate sales growth and market share gains into 2025. With our strengthened balance sheet, we have the resources to maintain our momentum and are excited to have line of sight to the next phase of growth for Tenon Medical. I thank you all for attending. Now, I would like to hand the call back over to our operator to begin our question-and-answer session with covering analysts.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Our first question comes from Mr. Anthony Vendetti of Maxim Group. Please go ahead, sir.

Thank you. Hey, Steve, Kevin, how are you?

Very good. Thank you, Anthony.

So you did say in your prepared remarks that in the press release you did experience unexpected reimbursement preauthorization headwinds. What specifically do you think caused that? Has that continued into the fourth quarter? Or do you believe whatever issue that occurred has been resolved? Or was it a case-by-case basis?

No. Great. I appreciate the question, Anthony. So as you know, reimbursement is very regional, and so it's always hit and miss depending on where physicians are submitting preauthorization, trying to get procedures approved. What we've run into is there was a good bit of coding; I'll call it coding confusion, as to which codes belong with which procedure. It was a big topic of conversation at recent AMA meetings, and we anticipate a lot of good clarity coming down the pipe as they publish everything that they discussed and finalized from the meeting. So I think coding clarity is going to help tremendously. And then, the other part of that equation is our data, right, being able to go out and interface with payers, showing them peer-reviewed data that shows this technology delivers is exceptionally important to make sure that they recognize and cover our technology. It goes without saying that there are competitors in the space that have been here a lot longer than we have. And so we've got catching up to do and work to do there, but now we have the tools to do so. So we do see it as transient; we do see it as improving, and it will continue to improve, we believe, right into 2025.

Okay. In some recently published clinical data should clarify some of the coding. And not only that, but you think it will alleviate some of the preauthorization headwinds.

Yes. I don't think our data clarifies coding. I want to make sure I'm clear. What the data does is reinforce that our technology does what it says it's supposed to do in a safe and effective manner, right, without undue adverse events and things of that nature. The coding thing between AMA, CMS, et cetera, is just a different thing. There has been a lot of back and forth and frankly, controversy on the issue. We believe that's clearing pretty quickly here. And we anticipate the combination of those two things—coding clarity in the big picture and our specific data—will really help us with coverage issues going forward.

Okay. Great. And then just in terms of some feedback from physicians on the system, recent feedback, how would you describe that and have you made any changes to the system based on that feedback?

Yes. We absolutely have. So we mentioned in the prepared remarks the Catamaran SE, SE is really simply a smaller version of all aspects of the system—a smaller implant and therefore a smaller access portal to get down to the anatomy and do the work that needs to be done. Every physician looks at these things differently, right? As we've talked about before, Anthony, we have a combination of spine surgeons and interventional pain physicians using these technologies. And they were all trained differently. They all look at things differently. Some believe that bigger is better; they want more graft, more size, more robustness in the fixation, et cetera. Our initial Catamaran is going to be a better format for them. Others are more sensitive to the size of the incision; they believe in miniaturization, et cetera, that that's positive for patients. And Catamaran SE now fits that requirement and that desire for those physicians. I don't believe, frankly, that there's a big right or wrong answer. We just simply want the physician to be comfortable with the technology, be confident with the technology. And so this is our effort to respond to their needs and desires for a system that fits what they like.

Okay. Great. And regarding the expansion of the sales force, are you currently working on that, or is it planned for 2025?

Yes. That is something we're very active in currently. That'll be happening over the coming months and quarters as we expand into areas, looking at again, very geographically focused, where the key opportunities are, et cetera. Where do we need feet on the street to really be engaging target physicians, compelling them into workshop settings so they can hear the Tenon, Catamaran story, and learn about the technology, practice with the technology, et cetera? So that's really where our energy is going right now out in the field.

Okay. Great. Thanks for all that color. I'll hop back in the queue. Appreciate it.

Thanks, Anthony.

There are no further questions at this time. I would now like to turn the call back over to Mr. Foster for his closing remarks.

Well, thank you, Aubrey. I'd like to thank each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions, please reach out to our IR firm. We'll be more than happy to assist you. With that, I wish you a good day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.