CSBTF (CSBTF) Q2 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Kuros Biosciences Half Year Results 2026 Conference Call and Webcast. I will now hand over to Carly Dummer, Vice President, Marketing. Please go ahead.

Thank you. Good morning, everybody, and welcome to the half year financial results webcast. With me today and presenting to you will be Chris Fair, our CEO; and Daniel Geiger, our CFO. The presentation today will be followed by a Q&A. So please submit your questions via the webcast, and I will run that session at the end. A quick reminder that the press release, the webcast deck and the annual report are available on our website, and we will scroll to the disclaimers, which are also available for download if you'd like to read in detail. With that, I will hand over to Chris.

Thanks, Carly. Good morning and good afternoon from wherever you're located. Starting with the first half of 2026, Kuros has reached an important inflection point. We delivered $92.4 million in total medical device sales, representing a 45% growth compared to the first half of 2025. This continues to demonstrate a strong adoption of our core technology platform. But just as importantly, this growth is now translating into profitability. We delivered $12.5 million in adjusted EBITDA, representing a 13.6% adjusted EBITDA margin and generated $4.4 million in net profit for the period. This is a meaningful milestone for Kuros as we are no longer simply a high-growth company. We're now a profitable, high-growth medical technology company with a strong commercial engine, a debt-free balance sheet and continued investment capacity to support our long-term growth ambitions. The charts on this slide show the consistency of our revenue growth, the acceleration of quarterly sales and the important shift into positive net profit. This is the story we want our investors to understand that growth is strong, profitability is emerging and the foundation of this business is becoming increasingly robust. Next slide, please. Our growth is supported by three reinforcing pillars: expanding commercial reach, leadership in evidence generation and operational scale. First, commercially, we continue to see strong growth in all areas in extremities, including foot and ankle and trauma, while also seeing increasing adoption of MagnetOs in spine. Our expanded formulations, including MIS, Flex Matrix are helping us address a broader range of surgeon needs and procedural preferences. Secondly, evidence remains a key differentiator for Kuros. We have three Level 1 studies underway with enrollment on track designed to further demonstrate our performance compared with other key competitors. We also recently published new clinical evidence that reinforces fusion speed in high-risk patients and supports the use in cervical procedures. Third, operationally, we are scaling the platform. We continue to invest in our manufacturing capacity, digital infrastructure and organizational capabilities. Our U.S. facility is expected to go live in the second half of this year, and the next phase of the Netherlands expansion is also expected to be complete in the same time period. Taken together, these initiatives position us to serve a larger market opportunity while building a more resilient, scalable and efficient business. Next slide, please. As we are growing the business, we are expanding our distribution reach, deepening hospital penetration and accelerating surgeon adoption. We do this and continue to gain market share. In the first half of 2026, we saw a 34% growth in our distributor reach compared to the first half of 2025. Hospital account growth has also remained very strong, and surgeon utilization continues to increase as a growing share of U.S. spine surgeons choose us. The key point here is that growth is not dependent upon one single lever. It is being driven by broader commercial platform, more distributors, more hospital access, more surgeons using the product, stronger institutional relationships through our IDN contracts and broader channel access. We estimate that our market share has increased approximately fourfold since 2023, which reflects, again, the continued adoption and the effectiveness of our commercial strategy. For our investors, the takeaway is straightforward. Kuros is strengthening its position in the market through expanded adoption and deeper partnerships and broader access. Next slide, please. Our addressable market remains large and growing. The global orthopedic biomaterial market is expected to grow from approximately $5.5 billion in 2025 to $8.2 billion in 2032. Spine still remains the largest current market opportunity, but we also see attractive opportunities, obviously, in foot and ankle, trauma and other adjacent applications. Our strategy is to continue building from our strength in spine while expanding into additional segments where biologics remain underpenetrated and where evidence can create meaningful differentiation. In spine, we're focused on a targeted engagement, evidence generation and a disciplined sales approach. In foot and ankle trauma, we are one of the few companies specifically focused on biologics in this space, but also providing level 1 evidence generation. And today, more than 150,000 patients worldwide have been treated with MagnetOs since our launch. This gives us a strong base from which to expand. We're not just entering new markets, we are building the clinical, commercial and operational capabilities required to maximize reach over time. Next slide, please. We currently have three very important studies underway. PROOF is evaluating Easypack Putty versus DBM or fibers in a posterior lateral fusion. PRECISE is evaluating Flex Matrix versus Trinity Elite in a posterior lateral fusion and ASTRA in the foot and ankle study is looking at -- versus autograft in the hindfoot and ankle fusion. The enrollment progress is encouraging. PROOF is at 83%, PRECISE 49%, and ASTRA at 14% and active sites are supporting each of these studies, and we engage more and more each day. The importance of these programs goes beyond the individual trials. Together, these studies are designed to strengthen the evidence base for us across spine and extremities, support surgeon confidence and help Kuros continue to differentiate itself in a competitive marketplace. In short, we're investing in the type of rigorous clinical evidence that surgeons, hospitals, importantly, payers increasingly expect. Next slide, please. This slide addresses a practical and important question for surgeons. How can we be confident in our future? Our ability is to build evidence across multiple levels. We start with benchtop data, including surface science, material characterization, then we build on that with preclinical animal data, including histological evidence of bone formation. We don't stop there like many companies do. From there, we move into human clinical data using imaging such as x-ray, CT and 3D reconstruction. And now with surgical exploration biopsy initiative, we're adding a human histological and visual confirmation of bone formation. No other company is doing this. This is important because it helps to demonstrate that not only that fusion ocKuros, but also how and where new bone forms. For Kuros, this evidence portfolio is a strategic asset. It supports surgeon confidence, strengthens our scientific positioning and reinforces the differentiated mechanism and performance profile of MagnetOs. Next slide. This is a recently published peer-reviewed study and another important addition to our clinical evidence portfolio. The study retrospectively evaluated high-risk patients treated with MagnetOs at six months following 1 to 4-level anterior cervical discectomy and fusion or an ACDF. The patient population was clinically challenging with 63% of the patients having three or more comorbidities. Despite that high-risk profile, the study reported a 97.7% six-month fusion rate assessed by CT. That is a clinically relevant early time point for spine surgeons, an important data point for MagnetOs. The study also expands our clinical evidence portfolio which is the cervical indication and supports the broader use of MagnetOs Easypack Putty procedures for early confidence in fusion is highly valuable. The broader message is that our evidence base continues to grow, is increasingly relevant in real-world high-risk patient populations. And with that clinical and commercial foundation in place, we can now turn to the financial model and how revenue scale is translating into operating leverage and profitability. And with that, I'll turn it over to Daniel.

Thank you, Chris. H1 was another strong period for Kuros. Medical Device revenue reached $92.4 million, up 45% year-on-year. Direct MagnetOs sales grew 46%, continuing the strong momentum we have seen over the past periods. Importantly, this growth is not price driven. It reflects continued market penetration, segment expansion and mix with pricing discipline maintained in a competitive market. The P&L is also scaling well. Since H1 '23, revenue has grown by around 566%, while fixed costs increased by around 271%. That is a clear indication of operating leverage coming through the model, and we reached an important inflection point. We delivered for the first ever time half year profitability. Adjusted EBITDA was at CHF 12.5 million, representing a 13.6% margin. Net profit arrived at CHF 4.4 million. Gross margin remained robust as we scaled. This reflects volume growth, continued unit cost optimization, supply chain productivity and tariff mitigation. On the sales and marketing, we continue to invest with discipline. Spend is targeted to areas where we see clear return while also building the early capabilities needed for the trauma opportunity. R&D remains focused and targeted. The priority continues to be evidence generation, line extension and selected new product development. Our main evidence programs, PROOF, PRECISE and ASTRA remain on track as outlined by Chris. At the same time, we continue to support targeted innovation with a cost base that can scale with the business. With regards to G&A, we expensed on top around CHF 2 million of business transformation costs. These relate mainly to product engineers, operators, IT experts and selected IT applications that were not capitalized. So while there is a temporary impact on G&A, this is a deliberate investment in the platform. It strengthens the system infrastructure and capabilities we need to scale efficiently. The key enablers are automation, digitization and the global MRP backbone. Adjusted EBITDA was CHF 12.5 million or a 13.6% margin. This is in absolute terms, 60% versus H1 '25 up compared with revenue growth of 45%. We also delivered CHF 4.4 million of net profit compared with a CHF 2 million loss last year. That marks a meaningful profitability inflection point for the business. EPS improved from a loss of CHF 0.05 to earnings of CHF 0.11. For the first time, the earnings power of the platform is clearly visible in the reported numbers. We closed June with CHF 9.7 million in cash and CHF 44.4 million in receivables. Combined, that represents CHF 54.2 million of cash and receivables. We remain debt-free with strong operating cash flow and an undrawn CHF 12.4 million bridge facility available if needed. The working capital build is deliberate and growth linked. Inventory supports second half demand and the U.S. production ramp. Over time, we expect that net working capital to normalize to a single-digit percentage of sales. CapEx remains focused on capacity and capability. Alpharetta and the Netherlands R&D and production center supports dual sourcing, resilience and future margin expansion. Overall, the organic plan remains funded through operating cash flow. The bridge facility is available as an additional liquidity backstop, but remains undrawn as of H1 '26. Looking ahead, we expect revenue to more than double from CHF 146 million in '25 to CHF 300 million to CHF 330 million by 2028. For '26, we expect growth of approximately 35%. The key drivers are continued adoption, broader access, line extension, selected new products and international expansion. The margin bridge is built around four clear levers: unit cost optimization, commercial operating leverage, targeted R&D investments, G&A operational leverage. Together, these levers deliver more than 6 percentage points of improvement in functional cost ratios. That supports our path to an adjusted EBITDA margin above 20% by 2028. The operating model is illustrative and aligned with our midterm guidance. The individual ratios are indicative and should not be read as separate guidance. Our formal guidance remains revenue of $300 million to $330 million and an adjusted EBITDA margin of above 20% by 2028. And with that, I hand back to Chris. Thank you.

Later this year, as Daniel briefly mentioned, we expect to bring on the Alpharetta, Georgia manufacturing facility. This creates a dual-source production platform alongside our existing facility in Bilthoven in the Netherlands. This investment is about more than just additional capacity. It strengthens our supply chain resilience, derisks the business, improves flexibility in serving key U.S. customers and helps us position us for long-term growth. It also supports localized production, which can help improve fulfillment responsiveness and also help mitigate tariff-related risks. As demand continues to grow, having manufacturing capability on both sides of the Atlantic provides an important competitive advantage. It gives us greater operational flexibility while supporting economies of scale as the business expands. In short, we're building the infrastructure today that we believe will support the next phase of our growth journey. Next slide, please. Having discussed our recent performance, I'd like to step back and talk about where we're headed. Our vision is to become a trusted global leader in orthobiologics, providing reliable, clinically proven solutions for hospitals, surgeons and our patients that we serve. Our mission remains focused on discovering, developing and delivering innovative biologic technologies. And with that, we see four strategic priorities driving value creation over the coming years. First, we will continue expanding the adoption of our core business by increasing surgeon utilization, broadening our hospital access and driving for further penetration in spine. The MIS represents an important opportunity within this effort and something that has been very, very successful from its launch about a year ago. Secondly, we will extend the portfolio. This includes advancing the MagnetOs platform and developing new technologies, moving into resorbable, settable bone void fillers and exploring additional osteopromotive technologies and other business development opportunities. We'll also continue growing beyond spine. We see attractive opportunities within foot and ankle and trauma, as we've mentioned before. And we also think we can expand to a greater extent in the international marketplace, where we can leverage our clinical evidence, commercial platform, technology expertise and recently achieved MDO approvals. Finally, we can continue scaling the platform itself. Our investments in manufacturing, ERP, MRP systems and digital infrastructure are designed to strengthen our operating leverage and convert revenue growth into expanding profitability over time. Collectively, these priorities represent our view beyond 2028 and provide a clear framework for a sustainable, profitable growth. Next slide, please. Our innovation strategy is intentionally balanced between short, medium and long-term opportunities. In the very near term, as we've discussed, our focus is on product launches and line extensions, including the MIS Gen 2, new Flex Matrix sizes that will get us into new procedures and our resorbable, settable bone void filler program. These initiatives are designed to support commercial growth and expand procedural adoption over the next several years. In the medium term, we're looking for opportunities in developing a resorbable, settable bone void filler that might be combined with antibiotics. While continuing to advance additional organic development programs that can create new market opportunities, add TAM to the business. Long term, we're exploring future product initiatives, including osteopromotive platforms, settable dead space management solutions, and we're also looking at organic and inorganic opportunities that can help broaden the scope of our technology platform. The key message is that Kuros is not relying on a single product or a single growth driver. We are building a disciplined innovation pipeline that balances near-term revenue opportunities with longer-term strategic value creation. This approach allows us to continue strengthening the core business while building the foundation for growth well beyond our current planning horizon. Overall, we're very pleased -- next slide, with our first half performance. We delivered strong growth, achieved a meaningful profitability milestone. We continue to strengthen our clinical evidence leadership, and we've made significant progress on the infrastructure and innovation investments that support our long-term strategy. And so with that, I'd like to thank our employees, our customers, our surgeons, our distributors and importantly, our shareholders for their continued support. And at this time, we'd be happy to now take your questions.

[Operator Instructions] We will now take our first question from the line of Laura Pfeifer from Octavian.

Laura Pfeifer from Octavian. I have two of them. So maybe first on your sales growth, you had very strong 45% growth, but you kept the guidance unchanged of at the level of -- I understood it's at least 35%. I think, Dan, you said around 35%. But anyway, I think it implies quite a moderation in H2 growth. So is there any specific reason that gives you more caution? Or how should we think about the level of confidence you have now looking into Q3 and Q4? And then maybe the other question is on the margins. I think here, you had a very good margin already in H1. I think it was 14% in the second quarter stand-alone, and this compares to your full year guidance of around 14%. So what are the principal positive and negative factors affecting the second half margin? And is it reasonable to assume that in the second half, the profitability should be above the H1 level despite U.S. manufacturing ramp-up?

So I'll take the first one and Daniel can take the second one. I think relative to updating guidance, from a general cadence perspective, that is something we tend to look at in the third quarter time frame as we had last year. So right now, we still see strong commercial adoption of the technology. We're not making any indications of a change in that pace. But again, from an updating of guidance perspective, that's something we look at from a corporate perspective in the Q3 time frame if we're going to make adjustments. Daniel can address the second question.

Yes. With regards to the margin, I would almost say the same. We will give an update, obviously, on the guidance for the top line as well as the margin in the second half or basically in Q3. I mean what we can certainly observe right now is that the margins were slightly better than initially assumed, but there's still quite a lot of business transformation costs coming also in the third and the fourth quarter. And therefore, we will continue to watch this and then give an update once we have the visibility.

Okay. That's helpful. But just maybe specifically on the U.S. manufacturing side. So do you expect to have kind of dilutive effect maybe at least in the initial phase? Or is this not material enough to have a really negative impact on margins in H2?

No. I mean we always said that in order to ramp up the production that we need to have obviously operators shattering and doing the tech transfer, right, from the Netherlands to the U.S., that obviously will dilute to a certain extent. We try to ramp up the team in a way that it is moved to the P&L. But that said, I mean, there will certainly be some dilutive effects. I mean this is what we now always talked about also at the Capital Markets Day that we said 2026 is the year where we will invest in the business transformation and should then further upside margin potential see 2027 and '28.

We will now take the next question from the line of Christian Ehmann from Berenberg.

I'm looking at the surgeon penetration rate. You showed us 16% in H2 -- H1, sorry. Can you talk a little bit about how you see the penetration rate or how you envision the penetration rate to grow in the future? Is it more surgeons or the existing surgeons more often using your product?

Thanks, Christian. I think what we see is it's a little bit of both, right? So when we look at our business and we look at our spine surgeon foundation, we continue to see growth on the number of surgeons, but we have a higher penetration rate. And so what we're seeing with that surgeon group is greater depth into their procedure volumes. So they may start using us in 10% or 20% of their cases. But once they see the results from that patient population, they'll expand that throughout the rest of their practice. So that's an evolution that we continue to see. When we look at the extremity physicians, that's a new foundational group of surgeons that we're just getting to know. And so that's a surgeon base that we are adding at a regular cadence at a very high rate. And so again, when you start thinking about early adopters versus the middle of the curve in the spine marketplace, we're approaching the middle part of the curve on penetration. On the extremity side and trauma surgeons for the most part, we're in the early stage. So we're just getting to know that surgeon base. So again, to the point earlier, we're not relying just on one lever. We have multiple levers that we're pulling from to grow our foundation.

There are no further questions on the phone at this time. I would like to hand back over for -- apologies, there is one more question from the telephone-- coming from the line of Laura Pfeifer from Octavian.

Just a follow-up maybe on the international sales, I thought that the number was quite lumpy and declined while the U.S. sales were really, I think, the biggest part of your revenues. Just I mean, given that it remains a small proportion of group revenue, I think you target the international revenue to be rather in the 5% to 10% range of sales in the medium term. So what is the outlook? I mean, how big could really the sales acceleration be? And has anything happened that maybe makes you more cautious on these markets?

No, I think the international marketplace are a great opportunity for us. And also just a reminder for the group, the international revenue is calculated differently than domestic revenue. International revenue, we sell to a third party and the third party would then sell to the local hospital. And so we don't receive end dollar revenue. It's rather a transitional amount of money. We're registering in 27-plus countries. We have MDR approval. So there's a lot of upside in the international market yet to be seen. We have some strategic initiatives internally that we're looking to add focus and effort, and we hope to see that in the very short to midterm to grow that business so that it can be 5% to 10% of our overall revenue. The contribution margins of that business are also very strong to the business. So I think that we should see incremental growth because it is a distributor-based business where they're buying the product from us, it can be a bit lumpy, as you mentioned. But we still see tremendous upside in the international marketplace.

I would like to hand back over to Carly Dummer for webcast questions now.

Thank you very much. Okay. I will first cover a couple of questions from Tanya from UBS. Similar to the question around surgeon utilization, you indicated 16% surgeon utilization. Can you confirm how many surgeons you're onboarding per month and how you expect this to develop over the remainder of the year? And how long does it take for surgeons to start generating sales?

So providing all the statistical data is not something we traditionally want to do and provide that. But I think that it's good to understand the process of getting a surgeon on board, and we see a little bit of difference, right? So when we start with a brand-new hospital, it can take somewhere between six to eight months from the time that a surgeon would say, I'd like to use the product to the time that the hospital allows the product to be sold. And the reason being is you have to establish pricing and get on contract and go through VAC committees, et cetera, et cetera. But once you're through that process and you're approved through the hospital system or you're on a national contract or an IDN contract, then the use becomes pretty free flowing. The good news is being in over 600-plus hospitals in the United States and approved, the extremity business can piggyback off that. And so when we're already on the shelf, we're able to see a quicker pickup in growth. And then it makes it easier to expand to other surgeons that may not be aware of your technology just yet, but having it available in the hospital. So long answer to a short question, I think that the tactical numbers, we don't normally release, but that's the process that a surgeon will go through and the timing that it takes. So anywhere between four to six months from the time that they agree and they review the data, they find the right patient population to getting it on the shelf for the hospital to use, that tends to be the time frame. And then after they start using it, surgeons will traditionally pick a certain indication, use it for that indication, review the results and then come back and expand after that. It's kind of their cautious approach to approaching clinical evidence in medicine.

Great. Thank you, Chris. Another couple of questions from Tanya. How did the Medtronic partnership contribute to sales in H1? Is the share of revenues increasing?

So the great news is our partnership with Medtronic continues to be strong and meaningful. Again, we have not previously nor we will today talk about the percentage of our revenue, but they're an excellent partner of ours. We continue to grow the business inside the relationship with Medtronic as well as outside the relationship with Medtronic. As I've said in the past, we want to make sure that we have balance within the system that we're just not relying on a singular relationship or distribution partner. And so also, as we grow our extremities business, the percentage of our revenue that's dedicated to spine and invariably our spine relationship with Medtronic becomes a lesser percentage of total revenue. Again, derisking the business as we continue to grow. So the partnership remains strong. We continue to work well together, but we're also growing the business outside of the Medtronic relationship.

Similar to the prior question about international sales, what was the reason for the weak Q2 sales? Can you talk about how you think of the international market strategically and if this will become a focus and how we will accelerate share gains in that space?

So there were a handful of marketplaces that had some regulatory challenges or shifts. I think more of anything, this is more of a timing of revenue. Again, to Laura's comment earlier, that can be a bit lumpy from time to time as it is a distributor-based relationship, not on procedures. I think that from a focus perspective, it certainly is one of our focuses to get that percentage up as far as a total percentage of overall revenue. We have some strategies currently ongoing, renewed focus in this arena. So we do believe this will continue to grow in the future. But we do also think that there's some opportunities for improvement from an infrastructure and focus standpoint, and we're taking those measures now.

Great. I'm now going to hand back over to the conference line. We have Christophe from Kepler Cheuvreux.

I just wanted to know if you can provide more granularity on the growth, especially on the growth mix, how much of the first half growth came from deeper market penetration in existing spine accounts versus new surgeon conversion, for instance? And also among MIS, extremity and trauma, which of this is currently contributing the most to that incremental growth you have delivered?

So thanks for the question. I think that the overall message here is that we're not dependent upon one of these levers. And the level of detail that you asked in the question, we just don't normally provide. But what I can say is a couple of things. The number of hospital growth -- the hospitals that we're growing into continues to expand, both in spine and extremities. So our base gets wider. The number of surgeons that we're onboarding, we're outpacing what we predicted on the extremities side and also our spine continuously grows on the number of new surgeons that we're bringing into the fold. On top of that, we see existing surgeons expanding their practice. So we are not dependent upon one lever of just getting an additional surgeon to do five more cases in the next month. We're getting existing customers to expand just from using it in their cervical cases, into their lumbar cases. We're getting surgeons to say, I've got a partner who's never used the product. How do we get that partner to use it and that helps. Our IDN strategy, our national contract strategy domestically, that's adding brand-new hospital systems that we didn't have access to before. So the question is well focused, but it also -- it's coming from different areas, all well measured and heading in the right direction. So although we don't give away the data, you're on the right track in the sense that we are expanding across all platforms, whether it's new surgeon acquisition, whether it's spine versus extremities, we're expanding across the board.

Okay. And maybe one more on the profitability, if I can, before handing over. On the adjusted EBITDA, so what you have reported in the first half is already quite close to the full year target. So I just wanted to know if we should expect further sequential margin expansion in H2? Or should we consider that the manufacturing start-up and the commercial investment will offset the operating leverage in the second half?

Well, as I mentioned already before when I answered the question to Laura, I think right now, we believe that there will be some dilution, of course, because as I said, we are building currently a second production team in the U.S., which will eat into the margin, as you can imagine. But as said, I mean, once we have full visibility, which will be around Q3, then we will also give an update there. But it's certainly a positive trend we have seen now in H1, and let's see how this continues.

Next, we have Martin from Baader. First, a comment, congratulations on the strong performance in H1 2026. And then we've got a few questions here. Could you provide more details on the profitability trends? The gross profit margin increased by 2.1 percentage points, while operating costs as a percentage of revenues decreased by 2.2 percentage points. Was this influenced by raw material prices? What impact did energy prices have? And how did they evolve?

Yes. I mean on the gross profit margin, what we certainly see is now that with the larger scale, we see obviously now also the benefit coming through. So Chris also alluded to that economies of scale is certainly an important lever for us. What we also see is that now with the U.S. production coming live, we should see a further reduction of transportation cost. We haven't seen that to the full extent right now, but we are now starting to stagger basically also shipments from Europe to the U.S., given that we have quite some inventory in the U.S. and therefore, try to manage that and smooth it as well from a transportation cost perspective. Raw material, I would say, was fairly stable. We haven't really seen that much of a downtrend there and also energy prices was fairly stable. I mean we work with certain secured energy prices. And therefore, currently, we see that as also a stable component. And last but not least, I think in the long run, certainly, the labor cost will also help us to further bring that down. But don't forget, majority of the costs are really the calcium phosphate going in there and the syringes. And therefore, we will work on that end to further optimize the procurement in order to further get benefits. But it's all going into the right direction. We have just started cost improvement programs in procurement and production and continue to now benefit also from the data and the visibility we get by production batch. So this is part of the digitalization we did of the production and the supply chain, and this now starts to pay off. So we are now able to focus on cost efficiency programs.

Great. What are the capital expenditure plans for H2 2026 and the subsequent years?

I mean we said that we're going to invest CHF 11 million to CHF 12 million in the U.S., about CHF 2 million to CHF 3 million in the Netherlands and then about CHF 1 million IT applications, right? We have spent now about half of that, a little bit less. So we will continue to spend in the U.S. specifically, but also in the Netherlands because both locations are super strategic for us. And from that end, we will continue to see some pressure on the cash, if that's the question. We have, as said, this backstop facility, which supports us if needed. We always have looked at cash from that perspective that we will see in Q3 a low point, and then we'll see a catch-up in Q4 along the lines of our operating cash flow modeling, right? And I mean what I can say to the full audience here is that we have implemented a year ago a 13-week cash flow model and a 15-month cash flow model. So we know exactly where the cash is going, how we're going to hedge it from an FX perspective and how we manage it. So all what we see currently from a trend perspective is all planned. So there's no surprise right now, and everybody is focused and calm in their execution. And from that end, that's fine. In terms of '27 and beyond, it's somewhere in the range of CHF 2 million to CHF 3 million, but certainly not big capital expenditure. Don't forget, this is not an expensive business from a capital point of view.

You mentioned capacity expansion in the Netherlands and the new facility in the U.S. What sales are anticipated once these sales levels are anticipated, once these are fully operational?

Well, we've already given guidance on midterm of $300 million to $330 million. And so that right now until we look at adjusting guidance, as Daniel mentioned, in the third quarter, those will be the levels that we're putting out there. I think it's really important to understand the strategic value of these different arenas for manufacturing. Number one, it provides bandwidth for growth. Number two, it provides localized inventory production to help be closer to a just-in-time inventory system in the sense that we're providing inventory and not having as much net working capital tied up. I think it also allows for new product and innovation. If we have to have places to all the products that we have in the pipeline, we have to have a place to make them. So for all those reasons and then also getting operational leverage and as Daniel mentioned, with some of the programs we have ongoing currently, for all these reasons, this investment in the infrastructure is so important for setting the foundation for this next tier of growth that we are going to experience.

Thank you, Chris. We actually have a similar question from Jose from Chopard. For the second half of 2026, what proportion of total production do you expect to allocate to the U.S. facility versus the Netherlands facility?

Yes. From a percentage perspective, we're not going to push out -- again, we're just bringing online the manufacturing facility here in the U.S. Products that are sold in 2026 will, for the most part, be sold from products that were manufactured in the Netherlands. As we continue to grow, we also, again, look at product development and we're in the right location to produce those products, we're going to balance out our manufacturing strategy to make sure we have capacity. We've derisked the business, look at the cost and tax implications as well. But from a percentage perspective, I'm just happy that getting another facility online from a derisking of the business is really, really important, number one, in the sense that we now have some capacity built in because we've been growing at such a high cadence and really pressing and pushing the operations in the pipeline and just maximizing all of that. And so now this provides a little bit of breathing room. So now we have more capacity for new product development. So from my perspective, that's the greatest strategic advantage of these two arenas.

And final question from Martin. Is there a version of MagnetOs available for robot-assisted surgery?

It's funny you say that. Actually, when we were developing the MIS there was a fair amount of interaction with several partners of looking at this and being used with different robotic platforms. And so the technology itself can be used in cannulas and has been used on cannulas in different robotic platforms. Robotics is not an area that we're going to get into, but we certainly have reached out and worked with partners, including Medtronic on their robotic platforms to make sure that our product is compliant with their delivery tools.

Great. Thank you. Next up, Renee from Octavian. Given the strong clinical evidence, how do you see the dynamics of MagnetOs competing to the more extensive growth factor segment? And is there an opportunity to raise prices going forward?

So pricing is an interesting thing. a lot of the conversations that we have and I have with different hospital systems, what they're realizing is that with our clinical evidence from a cost-benefit analysis versus advanced -- other advanced biologics, the best bang for the buck as it were, they're seeing the value proposition that we provide. Our pricing strategy has been straightforward in the event that if you are a cost-conscious buyer, you can have access to our core technology through the granules at a lower price point. If you wish to have something that's more advanced, i.e., an MIS delivery mechanism, we'll take price premiums that way. What this allows is based on the different types of buyers that we have and also the different settings as we have different settings between hospitals and surgery centers, et cetera, pricing does matter because the reimbursement landscape is different. And so we're very thoughtful on our pricing strategy by product line to ensure that the base technology can still be accessed in a lower cost procedure. And so that's how we've priced the products. Traditionally, price increases once you're in a contract, especially with hospital systems, those contracts run between one, two and three years domestically. And so getting a price increase is not something that's easy to do. Normally, price increase comes with new technologies or new platforms or new features and benefits you're introducing into the technology. But that's been our pricing strategy from the get-go, and it's been very -- it's been -- it's worked so well.

Great. Related question from Sergei at Octavian. Once the two manufacturing sites are up and running and your MagnetOs MIS Gen 2 is launched, is it right to assume that gross margins will be able to reach 90%?

Yes. I mean, I said, I mean, unadjusted or adjusted basically, we are for tariffs, we are at 90%. So from that end, as I said, we will continue to further optimize the unit cost. And the more we scale, the more we will be able to bring down the fixed cost per unit. And therefore, it might well be that we will further be able to increase it. But as I said, I mean, this is at the later stage where we're going to comment on that if we see it then coming through. But the expectation is not totally incorrect, yes.

Great. I think this question has partially been answered. Renee from Octavian. In your press release, you mentioned market share gains across all segments. Can you please elaborate on which areas you currently see the biggest momentum and where you see the biggest opportunities going forward?

So sure. I think that from a market share perspective, we're seeing growth, as I mentioned earlier, across the board from existing customers expanding the new procedures if they started in cervical, they might be moving into the lumbar area, et cetera. But we are seeing significant pickup in the foot and ankle based on our effort, our focused effort there and also as our early expansion efforts in the trauma indications. And so as we've laid out before, our strategy is to start with a small group and a focused arena, ensure we have the right product for the right procedure and that we have the right study allocated for that. And so what we've been seeing in the first half of this year as we started going out into the trauma indications, we're seeing great feedback because surgeons now have 6, 8, 10-week, 12-week data coming back and saying, holy cow, this is working quite well. This is better than what I used to use. And so that's with a focused group of surgeons. So we are seeing greater penetration. But again, the reaction to new marketplaces like trauma or foot and ankle is similar to what we saw in spine, and that's very, very encouraging as we continue to expand into those communities.

Great. I have a couple more questions from Tanya from UBS. Can you update or provide some additional color on Q2 exit rates? How has the Q3 performance been so far?

Yes. So on Q2, again, when we look at the numbers, we saw a significant increase over Q1. I believe it was 42.9% and 49%, if I'm correct. And so it's a pretty significant step-up. Again, when we start looking at Q3, we're not going to comment on that until the numbers are in. But as we've discussed in the past, there is a cyclical nature to our business in the sense that a good portion of the business comes in the second half. And the reason being is in the U.S. health care system, Q4 tends to be the highest quarter for procedure volumes and with a high exposure of about 95% of our revenue coming from the U.S., you would see that impact. And so that's where we see the delta between the first half and the second half. We don't see that changing. The procedure volumes tend to be that way, have been that way. And most med tech companies with a high U.S. exposure will also experience that. So that's what we've seen so far. But no, we've had a great significant step-up from Q1 to Q2 as we saw in the revenue line, continued growth, continued adoption, and that seems to be going forward.

Great. And final question from Tanya. I think Daniel you've spoken to most of this. For CapEx, what remaining investments are outstanding for the U.S. facility and the Netherlands expansion? Do you expect a higher CapEx number in the second half?

No, about the same, probably a little bit more, but as said, max, we're going to spend CHF 15 million to CHF 16 million. You can do the math if you look at our fixed asset table. But it's about half of what we spent so far. And that said, all well planned through and nothing to worry about.

Great. One question from Andreas from Alpha Capital. Could you provide a more precise indication of the expected start date of production in the U.S.?

No. At this point in time, we're comfortable in talking about the second half of this year as what we've talked about in the past. So no new indication there. Everything seems to be on track and online. From an office perspective, we've been able to move our offices in and production is on track and moving according to plan. So no surprises there.

Henrietta from AWP. Do I understand correctly that sales growth was volume-driven and not price driven?

Correct.

Peter from One Investment. Did the CMS Medicare inpatient prospective payment system review recently released to provide any reimbursement news for Kuros? Is a differentiated reimbursement outcome something you target with the results from Kuros primary research program in any of the focused therapeutic areas?

So certainly, so the first -- the answer to the first question is no, it didn't affect anything that we get reimbursed for because we come under a DRG. Some of those were related to specific procedures that we don't participate in. And so -- but to the second question, when we do product development, are we targeting reimbursement opportunities. I think it's always part of the analysis when we look at going into new market spaces or new product opportunities is what's the reimbursement landscape? Is there an opportunity to have unique identifiers or unique reimbursement codes attached to your technology? And having done this in my career over several times, that can be a blessing and could also be a curse because sometimes not having the reimbursement on the front end will slow the revenue ramp, but while you try to work through the reimbursement landscape to get your specific code. Sometimes it works, sometimes it doesn't and also making sure that it lines up with the procedures and your marketing clearances. So the reimbursement landscape is a tricky with it, as I say. For us here in the procedures that we currently attach ourselves to, we fall under a standard DRG, so there's no unique reimbursement. So we don't have to have a massive reimbursement staff trying to help with pre-authorizations or anything else to that nature. But we do take it into consideration when looking at new product opportunities, whether it's organic or inorganic and what that reimbursement landscape is.

Great. With five minutes left, we have a group of questions from Andrew from Goodhart. After years of accelerating absolute growth, for the first time, net revenue declined slightly this quarter despite a much bigger sales organization. Have you reached peak absolute growth? Or do you think this can reaccelerate?

Yes. I don't know if I... I'd have to look at the numbers, but I don't see that within the numbers. I mean we went from Q1 to Q2 was a relatively even money. So we had a massive -- I'm sorry, from Q4 to Q1 of this year, that was relatively even. Normally, the first quarter is a pullback after the fourth quarter. The second quarter was a high growth over the first quarter. We continue to grow from the sales feet on the street and continue to expand into new market opportunities like extremities. So no, I still think absolute growth is trending in the right direction. Again, 45% growth. And I would also say, looking at where we are as a business compared to our competitive companies out there, there's not a company that's growing at this cadence, this rate and this absolute dollar revenue at a profitable piece as well. So I think that we still see that growth profile continuing. And again, by broadening our base and getting into extremities, albeit at a lower price point per procedure, is important for us strategically from, again, derisking the business, growing from a wider platform and improving profitability. This also allows us for new product opportunities as we prepare for things like getting into a new marketplace, such as the cement space or the bone and void filler space. And so I think that that's also something to take into consideration.

Great. I think you spoke a little bit to this already, Chris. Growth in spine surgeons that are using MagnetOsS has outstripped revenue growth. So the average surgeon is using slightly less MagnetOsS. Is this just due to recent surgeon acquisition and the fact they're not fully ramped or because you targeted higher volume surgeons first or another reason, how much scope is there for the current surgeons to increase their own volumes?

Great question. And so surgeon penetration by surgeon is something we track internally. But I think you could think about it this way. As we continue to add new surgeons to the mix as they do their first cases, they're also waiting. And so you end up having this stacked surgeon of, hey, they did two or three cases, they want to wait to see the results of that before they do 10 cases a month or 20 cases, whatever it's going to be. And so as you're adding surgeons, you're also expanding your surgeons that you currently work with. And so it can get lumpy from time to time. But directionally correct, we're adding to the number of surgeons that are using the product, and we're expanding the foundation within each one of those surgeons. So I think that both of those are moving in the right direction. From a timing perspective, it can get a little bit lumpy from time to time, but all moving directionally correct.

Great. We have two minutes, so we'll try and get through all of these questions. Stripping the data from the chart, it looks like sales commissions looked as if they increased to 42% of sales in H1. What was driving this increase? And where do you see it trending in the next 24 months?

Yes. So from a commission perspective, we think that, that line will remain stable, if not slightly downward. But I think it's something that we've talked about in the past that commissions, you have to be cautious with messing with commissions with an independent sales network. And I think that when we start looking at the overall cost of delivering the product, and profitability compared to other orthopedic companies with a large exposure to U.S. revenue, which is all $10.99 and commission-based. We're probably one of the best companies and if not the best within the orthopedic sector relative to this metric. And so we continue to manage it, and we continue to improve upon it. But as we continue to scale the cost of management and the number of people managing it, we'll pick up sales efficiencies there, which will drive down the overall commission structure, which does account for variable comps for W-2 staff.

Great. We are at time. So I'll end there and hand over to Chris for any final closing remarks.

Thank you, Carly. Again, I want to thank each of you for attending this webcast, being a supporter of the company and our journey. We are set up for a tremendous amount of success in the future. But it's also important to look back in the journey we've been on, not just in the first half of this year, but certainly during my time and Daniel's time here, this company has transformed. And we are in a transition year, but we continue to outpace the growth in the industry. We continue to provide great products to the clinicians and the patients that we serve. And we have such a bright future ahead of us with all kinds of operational leverage and profitability to come. So with that, I want to say thank you for attending, and thank you for your continuous support.