SI-BONE, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparisons are with Q1 2023 unless stated otherwise. SI-BONE develops and sells minimally invasive implants and related instruments for sacroiliac joint and other sacropelvic conditions. Its iFuse INTRA product launched in January 2024. The company operates as one reportable segment and derives most revenue in the United States.
Financial performance
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $37.9 million | $32.7 million |
| Gross profit / gross margin | $29.9 million / 79% | $26.8 million / 82% |
| Operating expenses | $41.9 million | $38.1 million |
| Operating loss | $(12.0) million | $(11.3) million |
| Net loss | $(10.9) million | $(11.1) million |
| Net loss per share, basic and diluted | $(0.27) | $(0.32) |
| Cash used in operating activities | $7.6 million | $10.8 million |
| Capital expenditures | $2.1 million | $2.6 million |
Revenue increased 16%, primarily from higher U.S. case volumes; U.S. revenue was $35.4 million, up from $30.5 million. International revenue was $2.4 million, compared with $2.3 million. Gross margin declined three percentage points, which management attributed to procedure and product mix. Operating expenses rose 10%, including a 32% increase in research and development. Higher interest income helped reduce the net loss despite a larger operating loss.
Liquidity, debt and cash flow
- At March 31, 2024, cash and cash equivalents were $32.0 million and short-term investments were $125.8 million, totaling $157.8 million. The total was $166.0 million at December 31, 2023.
- Net cash used in operations was $7.6 million. Cash and cash equivalents decreased by $1.2 million during the quarter; investing activities provided $6.3 million, mainly reflecting net maturities of marketable securities.
- Long-term borrowings, net of issuance costs and final-fee accretion, were $36.1 million. The term loan’s principal and final fee totaled $36.7 million; it matures December 2027, with monthly principal amortization scheduled to begin July 2025. The effective interest rate was 9.3% for the quarter.
- No amounts were outstanding on the $15 million revolving line. The company reported covenant compliance, but said it cannot access future revolver advances until specified customer payments and cash balances are redirected to First-Citizens accounts.
- Current operating lease liabilities were $1.4 million; total operating lease liabilities were $2.6 million. Total contractual obligations disclosed were $47.8 million, including debt, estimated interest, leases and purchase obligations.
Changes, outlook and risks
- Management believes existing cash and marketable securities can fund operating expenses and capital expenditures for at least 12 months from the filing date. The company has not achieved positive operating cash flow, expects further losses, and did not provide specific revenue or earnings guidance.
- Management expects continued investment in research and development and anticipates some operating expenses will increase to support growth. It cited physician adoption, sales-force capacity, reimbursement, product launches, inventory and instrument-set investment, and supplier lead times as relevant business drivers.
- Management changed the estimated useful life of instrument trays from three to five years effective January 1, 2024. This reduced Q1 depreciation expense and net loss by $0.5 million and improved basic and diluted loss per share by $0.01.
- Key exposures include reliance on U.S. revenue, reimbursement and physician adoption, competition, supply-chain and supplier availability, and foreign-exchange and interest-rate changes. The company noted that a prior loan covenant issue related to bank accounts was waived; future covenant breaches could restrict credit access, accelerate repayment or lead to collateral enforcement.
- The SAFFRON fracture study results are anticipated in late 2024; primary endpoint results from the SILVIA study are anticipated in 2025. These are expected research milestones, not financial guidance.
- The company reported no material pending legal proceedings and no material changes to the risk factors in its 2023 Form 10-K. Disclosure controls were assessed as effective at the reasonable assurance level.
Important facts for investors to verify
- Whether revenue growth and procedure volumes continue, and whether new products contribute meaningfully.
- Whether gross margin recovers from the product- and procedure-mix pressure reported this quarter.
- Cash burn and investment levels relative to the company’s stated 12-month liquidity outlook.
- Access conditions, covenant requirements and interest costs under the First-Citizens loan and revolving line.
- Timing and results of the SAFFRON and SILVIA studies, and any resulting reimbursement or adoption implications.
- The impact of the instrument-tray useful-life estimate change and ongoing stock-based compensation; Q1 stock-based compensation was $7.0 million.