Carlsmed has had a busy few weeks. Since September 8, the Carlsbad, California, company has promoted a COO, named a new CFO, hired a chief product and AI officer from Intuitive Surgical and filed suit against DeGen Medical over eight patents. Fourteen months after its IPO, Carlsmed looks like a company getting ready for its next phase, one built as much around surgical planning software as around the implants themselves.
Who came in
Jeff Bertolini moved up to COO on September 8. He joined Carlsmed in 2024 to run advanced manufacturing, after operations and technology roles at SI-BONE, NuVasive and U.S. Surgical, so this one reads as a promotion of someone who already knows the factory floor.
On September 28, Richard Heppenstall took over as CFO from Leo Greenstein, who had held the role since 2023 and led the company’s finances through the IPO. Heppenstall was CFO of ZimVie through its sale to ARCHIMED last October and had the same title at Breg before that, so he brings plenty of orthopedic and public-company experience.
Then, on October 1, Tony Jarc arrived in a role that did not exist until now: Chief Product and AI Officer. Jarc spent over 15 years at Intuitive, where he built the AI group from scratch. Companies don’t usually poach that profile to sell more interbodies.
The numbers
The business is in good shape to absorb the changes. Revenue in the second quarter reached $18.9 million, 57% higher than a year ago, and the increase came from more procedures rather than higher pricing. Gross margin improved as well, rising 340 basis points to 76.8%, and management believes it can get into the low 80s over the next couple of years.
Full-year guidance went up to $74-78 million from $72-77 million, and the release announcing Heppenstall reaffirmed it. That works out to roughly 50% growth at the midpoint.
Spending is rising along with sales. Sales and marketing went from $7.9 million to $11.9 million as Carlsmed added reps, and the quarterly net loss widened from $6.8 million to $10.5 million. The company ended June with $89.3 million in cash and investments and used about $7.4 million in operations during the quarter, which gives it a solid cushion while it keeps investing in growth.
Beyond lumbar
Cervical is ramping faster than expected. aprevo Cervical already brought in about 10% of Q2 revenue, and it has only been on the market two full quarters. Two launches are planned before year-end: a bilateral lumbar system and the corra Cervical Plating System.
Corra is the one to watch. According to management, about 60% of ACDF cases use a plate. If the surgeon is already planning the case in Carlsmed’s software, adding a personalized plate is an easy second sale. Reimbursement should help as well. Three new MS-DRG codes for inpatient aprevo lumbar fusions kicked in on October 1, though management itself says not to expect much impact before 2027.
On the clinical side, Carlsmed leans on a retrospective Global Spine Journal paper: 115 adult deformity patients treated with aprevo had a 4.3% two-year revision rate for mechanical complications, compared with 16.6% in a historical International Spine Study Group cohort of 997 patients, a 74% relative reduction. The paper points out that the comparison group was treated by highly experienced surgeons, which makes the gap more striking, although it is still a retrospective study and not a randomized trial.
The DeGen suit
The lawsuit was filed September 15 in federal court in South Carolina. Carlsmed claims DeGen infringes eight patents on implants, methods and systems, and wants damages plus an injunction. The announcement did not name the DeGen products at issue.
“We are committed to protecting the intellectual property that supports our patient-centric innovation, which remains at the forefront of the industry,” CEO Mike Cordonnier said. Too early to handicap the case. But as more companies move into patient-specific spine, Carlsmed has made it plain that they will defend their IP.
Our take
On paper, Carlsmed has most of what investors want from a young spine company: 50%-plus growth, margins close to 77%, a surgeon base up more than 60% year over year and a product line that now goes well beyond lumbar. The next test is operating leverage, meaning expenses that grow more slowly than revenue as the company scales.
The new hires say something about ambition too. A CFO with deep orthopedic and public-company experience, an operations chief promoted from the manufacturing side and an AI leader from Intuitive add up to a team built to run Carlsmed as a broader spine platform. Q3 results, and whether corra and the bilateral system ship on time, will tell us more.
About Carlsmed
Carlsmed is a commercial-stage medical technology leader and creator of the personalized spine surgery market with pioneering technology that is transforming spine surgery. The Company has developed the cutting-edge aprevo® Technology Platform that personalizes surgical procedures through a combination of proprietary AI-driven software and patient-specific fusion devices.Website: http://www.carlsmed.com