SI-BONE, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report; the filing does not provide a clear set of Q4 revenue, profit, or cash-flow figures.
Business context
SI-BONE develops and sells minimally invasive implants and instruments for sacroiliac joint fusion, pelvic fixation, and pelvic fracture treatment. Its product portfolio includes iFuse, iFuse-3D, iFuse-TORQ, and iFuse Bedrock Granite. The company reported more than 95,000 procedures performed by over 3,600 physicians across the U.S. and 38 other countries since 2009. The U.S. accounted for 94% of FY2023 revenue.
Financial performance and position
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $138.9 million | $106.4 million |
| Gross profit / margin | $109.4 million / 79% | $90.7 million / 85% |
| Operating expenses | $156.4 million | $150.3 million |
| Operating loss | $46.9 million | $59.6 million |
| Net loss | $43.3 million | $61.3 million |
| Net loss per share, basic and diluted | $1.13 | $1.79 |
| Cash used in operating activities | $18.7 million | $41.7 million |
Revenue grew 31%, primarily on higher procedure volumes. Gross margin fell six percentage points, reflecting product and procedure mix, higher costs and royalties for iFuse-TORQ and Bedrock Granite, increased inventory reserves, and higher depreciation. The company remained loss-making and reported an accumulated deficit of $400.4 million.
At year-end, cash and cash equivalents were $33.3 million and short-term investments were $132.7 million, totaling $166.0 million. Current assets were $211.4 million versus current liabilities of $23.5 million. Long-term borrowings were $36.1 million; no amounts were drawn on the $15.0 million revolving line. Management expects existing cash and marketable securities to fund operating expenses and capital requirements for the next 12 months and beyond, but notes that this depends on business and market conditions.
Investing activities used $59.8 million, including $52.0 million net purchases of marketable securities and $7.8 million of property and equipment. Financing activities provided $90.9 million, including $83.7 million net proceeds from the May 2023 stock offering. The share count increased from 34.7 million at year-end 2022 to 40.7 million at year-end 2023.
Material changes and notable items
- U.S. revenue increased $31.9 million; international revenue increased $0.6 million.
- Operating cash use improved by $22.9 million year over year, although operations continued to consume cash.
- The company recorded $1.7 million of inventory reserves in Q4 2023, primarily for the lower-than-expected demand for the “lag” configuration of iFuse-TORQ.
- Effective January 1, 2024, a new Category I CPT code, 27278, covers certain intra-articular, non-transfixing sacroiliac fusion procedures. The company warns that reimbursement and competitive effects remain uncertain.
- In January 2024, the company received FDA clearance for a smaller-diameter Bedrock Granite implant with expanded pediatric and S1-trajectory applications. In February 2024, it amended its loan agreement and entered a three-year initial manufacturing and supply agreement with RMS, with prices fixed through 2026.
Outlook, risks, and contingencies
Management expects continued operating losses and rising research and development spending as it invests in commercial capacity, product development, and clinical evidence. It provided no specific revenue, earnings, or margin guidance in the supplied filing text. Planned clinical milestones include initial SAFFRON and STACI results expected in late 2024 and SILVIA long-term results expected in 2025.
- Adoption and reimbursement: Sales depend on physician adoption, clinical evidence, payer coverage, and adequate reimbursement. The new CPT code and changes to payer policies could affect procedure volumes, pricing, and product mix.
- Competition and concentration: Substantially all revenue comes from one related product family and procedures focused on the sacroiliac joint. Larger device companies, new entrants, and allograft alternatives may intensify pricing pressure.
- Supply and margins: The company relies on third parties, including RMS as the current sole supplier of iFuse-3D and iFuse-TORQ implants. Supply interruptions, inflation, and product mix could affect availability and margins.
- Product and clinical risks: Clinical experience with Bedrock Granite and iFuse-TORQ remains limited, and ongoing trials may not demonstrate expected patient benefits. Product safety issues, recalls, or liability claims could harm the business.
- Debt and liquidity: The term loan carries a floating rate and is secured by substantially all assets other than intellectual property. The revolving line was unavailable for advances at year-end until specified cash and customer-payment arrangements are redirected to First-Citizens accounts. The company reported compliance with debt covenants at December 31, 2023.
- Other exposures: Risks include regulatory requirements and EU MDR certification, patent expirations, privacy and cybersecurity obligations, and potential loss of tax attributes. The company said it was not party to material legal proceedings and reported effective internal control over financial reporting, as audited by PwC.
Important facts for investors to verify
- Whether procedure growth continues to offset the six-point gross-margin decline, and how product mix and inventory reserves evolve.
- Whether the $166.0 million of cash and short-term investments supports the company’s stated funding horizon as operating losses and investment needs continue.
- How CPT codes 27278 and 27279, payer coverage decisions, and site-of-service shifts affect procedure volume, reimbursement, and average selling prices.
- Whether RMS supply, the new supply agreement, and manufacturing capacity are sufficient to meet demand without further margin or inventory pressure.
- Results and timing of SAFFRON, STACI, and SILVIA, and whether clinical evidence supports adoption of newer products and indications.
- The impact of the 2023 equity issuance and ongoing stock compensation on dilution; the filing reported 40.7 million shares outstanding at year-end 2023.