Treace Medical (TMCI) Q2 Revenue Up 7%

Key Points

• Net loss per share (GAAP) was $(0.28). Net loss per share was $(0.28), compared to $(0.34) in Q2 2024 and slightly better than expectations.

• Operating expenses (GAAP) dropped 4.1% year-over-year, with Adjusted EBITDA loss narrowed by 58% year-over-year.

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Treace Medical Concepts (NASDAQ:TMCI), a medical device company focused on innovative solutions for surgical bunion correction and other foot deformities, reported its latest earnings results on August 7, 2025, for Q2 FY2025. The most notable news was that revenue (GAAP) came in at $47.4 million, slightly ahead of analyst expectations, and Net losses (GAAP) narrowed year-over-year. The net loss per share (GAAP) of $(0.28) for Q2 2025 improved on the analyst forecast of $(0.29), and revenue (GAAP) also surpassed the $47.05 million consensus. While profitability remains elusive, the company showed stronger cost control and made meaningful progress in expanding its product portfolio. Overall, the period demonstrated modest revenue growth of 7%, better operating efficiency, and continued execution of its long-term strategy.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Recent Strategic Focus

Treace Medical Concepts specializes in surgical systems and medical devices for the treatment of bunion and midfoot deformities. Its core product portfolio includes the Lapiplasty 3D Bunion Correction System, which offers correction of bunions in three dimensions, and a growing range of minimally invasive devices such as Nanoplasty, Percuplasty, and SpeedPlate implants. The company’s approach leverages technology and clinical evidence with an emphasis on precision and reproducibility for foot and ankle surgeons.

Recently, Treace has focused on broadening its product suite to cover the full range of bunion procedures, aiming to provide solutions for nearly all patients and surgeon preferences. The company also invests in surgeon training programs and direct patient outreach, supporting clinical adoption. Key success factors include continual expansion of its device portfolio, investment in clinical evidence, and maintaining regulatory compliance for its suite of products.

Quarterly Performance and Key Developments

During the second quarter, Treace reported a 7% revenue increase (GAAP) year-over-year, Revenue surpassed both its previous result and the consensus forecast. This outcome reflects expanding sales in its bunion technology portfolio and the tailwind from product launches. Gross margin (GAAP) stayed above 79%, though it declined by 0.5 percentage points from a year ago.

The company continued to demonstrate improvement in operating efficiency, as reflected by a 53% improvement in adjusted EBITDA to $(3.8) million year-over-year. Total operating expenses (GAAP) decreased by 4.1%, driven mainly by a reduction in sales and marketing spending, which dropped 12% year-over-year to $33.1 million. This cost control helped narrow the net loss year-over-year. and led to a 58% improvement in Adjusted EBITDA, a measure of earnings before interest, taxes, depreciation, and non-cash items. General and administrative expenses (GAAP) ticked up to $16.1 million, reflecting ongoing support for business scale and IP protection, while research and development spending rose to $5.5 million, compared to $5.2 million in Q2 2024.

Treace expanded its portfolio during the quarter by moving new systems into full market release: the Nanoplasty and Percuplasty 3D minimally invasive osteotomy systems, and the SpeedMTP fusion system for the metatarsophalangeal (MTP) joint. Feedback from limited market releases has been positive, with strong surgeon engagement. The company now offers a complete set of bunion correction options designed to match all four clinical classes of bunion deformity, joining its flagship Lapiplasty and Adductoplasty midfoot correction systems. This expansion aims to move beyond its existing surgeon customer base, as historically, Lapiplasty has captured about 25% of bunion procedures per surgeon; management now expects to target up to 100% of these cases as the new systems achieve adoption starting in Q3 2025.

The company also reported significant progress in building out its patent portfolio, growing to 117 granted patents and 163 pending applications. Litigating and defending these patents is costly, with $1.06 million spent, but management views strong intellectual property as essential to its market position. Revenue cadence remains back half–weighted, as management cited both seasonal demand (“bunion season”) and the timing of new product launches as drivers for accelerated growth in the latter part of 2025.

Looking Ahead and Management Outlook

Management reaffirmed its guidance for FY2025, expecting revenue between $224 million and $230 million, representing growth of 7% to 10% compared to FY2024. There was no change to previous projections, and leadership continues to target breakeven Adjusted EBITDA for the full year 2025. The company also expects to cut cash burn by 50% for the full year 2025 versus 2024. No specific per-quarter guidance was offered, but growth is anticipated to be strongest in Q3 and Q4 2025, coinciding with the full rollout of new products and historical seasonal patterns.

For investors, key areas to watch include evidence of faster revenue growth or new market share gains in the back half of 2025, as indicated by management's commentary that revenue growth is expected to be more back half–weighted, with a shift of approximately 1% of full-year revenue from Q2 into Q4 and an expectation of accelerating growth rates in the third and fourth quarters (Q3 and Q4 2025), and ongoing risks from margin pressure, patent litigation, and challenges in capturing a larger segment of the more than $5 billion annual addressable bunion surgery market.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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