Carlsmed Earnings Call Highlights Growth, Rising Costs

Carlsmed, Inc. ((CARL)) has held its Q1 earnings call. Read on for the main highlights of the call.

Carlsmed’s latest earnings call balanced optimism with caution, as management highlighted rapid revenue growth, strong surgeon adoption, and improving unit economics against a backdrop of rising operating costs and widening losses. The tone underscored a classic growth‑investment phase, with investors asked to tolerate higher cash burn today for the promise of a larger, more profitable spine‑surgery franchise tomorrow.

Surging Revenue Underscores Market Traction

Carlsmed posted Q1 2026 revenue of $16.1 million, up 58% from $10.2 million a year earlier, showing powerful top‑line momentum. Management tied this growth to expanding procedure volumes and broader surgeon adoption, reinforcing the view that its personalized spine solutions are gaining commercial traction in a competitive market.

Surgeon Adoption Broadens Across Career Stages

The company’s surgeon user base expanded more than 60% year over year, with notable uptake among early‑career and post‑fellowship doctors who can drive long‑term volume. Around 20% of existing surgeons have already been trained on the new cervical platform, suggesting that cross‑selling within the installed base could be a key growth lever.

Gross Margin Expansion and Production Efficiencies

Gross margin climbed to 77.1% from 74.9% in Q1 2025, a 220‑basis‑point improvement that signals healthier unit economics as scale builds. Lead times fell more than 30% to six business days thanks to digital production investments, supporting management’s view that gross margins can remain in the mid‑to‑high‑70% range even as volume ramps.

Clinical Data Strengthens Competitive Position

Peer‑reviewed data in the Global Spine Journal showed a 74% reduction in two‑year revision rates for Aprivo versus stock devices, with revisions at 4.3% versus 16.6%. Such outcomes highlight fewer reoperations and complications, providing powerful clinical validation that can support surgeon adoption, reimbursement discussions, and long‑term pricing power.

Pipeline Advances in Lumbar and Cervical Platforms

Carlsmed completed its first Aprivo bilateral lumbar fusion procedure and remains on schedule for a full commercial launch in Q4 2026, expanding its addressable lumbar portfolio. The Cora patient‑specific cervical plating system also achieved its first procedure in February and is tracking toward a Q4 launch, positioning the company to broaden indications and deepen wallet share per surgeon.

Reimbursement and Policy Tailwinds Emerging

On reimbursement, Aprivo lumbar is currently covered by 11 MS‑DRG codes, giving it a solid inpatient economics profile. A proposed CMS rule for FY2027 would consolidate codes so all Aprivo lumbar procedures map to three higher‑paying MS‑DRGs, while the Aprivo cervical platform benefits from an NTAP that can meaningfully enhance hospital reimbursement.

Raised Revenue Outlook Signals Confidence

Management raised its 2026 revenue guidance to a range of $72 million to $77 million, implying roughly 48% growth at the midpoint versus 2025. Alongside this, the company reiterated expectations for mid‑to‑high‑70% gross margins and emphasized that operating‑expense leverage should improve as revenue scales, setting a path toward better profitability metrics.

Balance Sheet Supports Growth Strategy

Carlsmed ended Q1 with $97.1 million in cash and investments, plus $15.6 million drawn on a $50 million debt facility, leaving optional undrawn capacity. Management indicated no near‑term plans to tap the remaining debt, suggesting the current liquidity runway is sufficient to fund growth initiatives and ongoing operating losses for the foreseeable future.

Operating Costs Climb as Company Invests to Scale

Total operating expenses rose 61.2% year over year to $21.7 million, reflecting heavy investment across the business. R&D climbed to $5.2 million, sales and marketing to $10.3 million, and G&A to $6.2 million, underscoring the spending required to expand the product pipeline, build the commercial footprint, and support a larger enterprise.

Losses Widen and Cash Burn Intensifies

The GAAP net loss widened to $8.7 million from $5.7 million a year earlier, while adjusted EBITDA remained negative at $7.5 million compared with a $5.5 million loss in Q1 2025. Cash used in operating activities increased to $13.0 million from $8.2 million, signaling that the current growth push carries meaningful near‑term cash burn despite solid gross margins.

Pricing Mix Pressures from Cervical Platform

Average revenue per procedure was roughly flat year over year and is expected to sit in the mid‑to‑high $20,000 range, but mix is becoming a swing factor. Cervical procedures have a lower average selling price than lumbar and are projected to be a high‑single‑digit to low‑double‑digit share of 2026 revenue, which could modestly pressure blended ASPs and margins if growth skews too quickly to cervical.

Policy and Execution Risks Remain in Focus

While proposed CMS changes could materially enhance lumbar reimbursement, they are still preliminary and subject to modification before finalization, creating some timing and access risk. Execution around scaling production, integrating new product launches, and managing costs will also be closely watched, as missteps could slow the march toward profitability despite strong demand.

Guidance Points to High Growth and Margin Stability

Looking ahead, Carlsmed’s guidance calls for 2026 revenue of $72 million to $77 million, mid‑to‑high‑70% gross margins, and average revenue per procedure in the mid‑to‑high $20,000s as cervical volume ramps. Management expects operating‑expense leverage and improving adjusted EBITDA on a path toward cash‑flow breakeven, supported by Q1’s robust growth, operational efficiencies, and ample liquidity.

Carlsmed’s earnings call painted the picture of a spine‑technology company firmly in build‑out mode, with clinical validation and revenue growth offset by heavier losses and cash use. For investors, the key question is whether the company can convert today’s strong momentum and promising reimbursement outlook into durable scale and eventual profitability before the cash cushion thins.