Carl Smith (CARL) Q3 2025: 98% Revenue Surge Signals Accelerating Platform Adoption
Carl Smith’s third quarter delivered transformative growth, with revenue nearly doubling and surgeon adoption sharply outpacing expectations. Margin expansion and supply chain efficiency gains reinforce the scalability of its digital-first, capital-light spine surgery model. With a major cervical product launch imminent and reimbursement tailwinds in place, the company’s execution sets a high bar for 2026 momentum.
Summary
- Surgeon Adoption Outpaces Seasonality: New surgeon growth and utilization exceeded typical Q3 trends, reflecting strong field momentum.
- Margin Expansion Driven by Supply Chain Investment: Gross margin gains appear sustainable as expedite fees are eliminated and lead times shrink.
- Cervical Launch and Reimbursement Tailwinds: Upcoming cervical product and favorable payment rulings position Carl Smith for continued share gains.
Performance Analysis
Carl Smith posted 98% year-over-year revenue growth in Q3, with sales reaching $13.1 million. This acceleration was driven by a more than 70% increase in surgeon users and robust utilization that defied typical summer slowdowns. The company’s average revenue per procedure held steady, underscoring that top-line gains are volume-driven rather than price-dependent. Gross margins rose to 75.9%, up from 72.8% a year ago, reflecting operational discipline and targeted supply chain investments.
Operating expenses expanded to $19 million, up from $12.6 million, as Carl Smith invested in sales, marketing, and R&D to support growth and product innovation. The net loss widened modestly to $8.5 million, but management emphasized that operating leverage is building as the business scales. The balance sheet remains robust, with $115.5 million in cash following the July IPO and an expanded credit facility now in place to provide strategic flexibility.
- Outsized Procedure Growth: Volume gains, not pricing, powered the top-line, validating surgeon demand and platform stickiness.
- Margin Structure Improvement: Supply chain investments eliminated expedite fees and cut lead times to eight days, driving sustainable gross margin gains.
- Operating Leverage in Sight: Rising expenses are tied to growth initiatives, but management expects margin improvement as scale kicks in.
Financial performance this quarter highlights the scalability of Carl Smith’s digital surgery platform and the early-stage leverage inherent in its capital-light, 3D-printed, patient-specific implant model.
Executive Commentary
"Our growth in the third quarter was fueled by accelerated surgeon adoption and increased utilization. We grew our surgeon user base by more than 70% year over year, and we saw minimal seasonal utilization headwinds in Q3, despite the typical summer slowdown."
Mike Cordonier, Chief Executive Officer & Chairman
"Gross margins were 75.9% for the third quarter of 2025 and 72.8% in the third quarter of 2024. This year-over-year improvement was primarily driven by lower contract manufacturing costs and reduced inventory reserve expense. These new efficiencies will allow us to nearly eliminate production expedite fees in future quarters."
Leo Greenstein, Chief Financial Officer
Strategic Positioning
1. Digital-First, Patient-Specific Surgery Platform
Carl Smith’s core differentiation lies in its digital surgery platform, which leverages AI-powered preoperative planning and on-demand 3D printing of personalized Aprivo implants. This model enables precise, patient-specific procedures and eliminates the inefficiencies of traditional, one-size-fits-all spine implants. The platform’s ability to reduce revision rates—supported by peer-reviewed clinical data—anchors its value proposition to surgeons, hospitals, and payers.
2. Capital-Light Business Model and Operating Leverage
The company’s make-on-demand approach with single-use, sterile-pack instruments minimizes inventory and tray management, streamlining both hospital operations and Carl Smith’s own cost structure. As utilization rises and lead times shrink, the model delivers increasing margin leverage, positioning the business for eventual profitability as fixed costs are absorbed over higher volumes.
3. Commercial Execution and Clinical Data Flywheel
Surgeon education and peer-driven clinical evidence are central to adoption. Carl Smith is investing in fellowship programs and peer-to-peer initiatives to accelerate training and expand account access. Clinical data, such as a 76% reduction in two-year revision rates versus standard of care, is driving surgeon confidence and hospital buy-in, reinforcing a virtuous cycle of adoption and utilization.
4. Product Pipeline and Reimbursement Expansion
The imminent launch of Aprivo for cervical fusion procedures represents a major new market opportunity, supported by strong initial clinical feedback and enhanced reimbursement via CMS’s NTAP (New Technology Add-On Payment) for inpatient use. Outpatient reimbursement is expected to follow in early 2026, broadening the addressable market and strengthening the economic case for adoption.
Key Considerations
Carl Smith’s Q3 results reflect a company moving from early commercialization to a scalable, data-driven growth phase, with several strategic levers in play:
Key Considerations:
- Surgeon Pipeline Visibility: Scheduled procedures and newly trained users provide strong near-term volume confidence.
- Supply Chain Efficiencies: Lead time reductions and cost elimination are expected to support further gross margin gains as volumes grow.
- Cervical Product Launch Readiness: Existing salesforce and positive early clinical data position the company for a seamless, high-impact launch.
- Reimbursement Milestones: NTAP for inpatient and anticipated outpatient pass-through payments materially improve the product’s economic value to hospitals.
Risks
Execution risk remains as Carl Smith ramps new products and expands its surgeon base, particularly with the cervical launch and broader outpatient penetration. Competitive responses from established spine device players and evolving reimbursement landscapes could impact adoption rates. The company’s ability to maintain rapid growth while controlling operating expenses will be critical to achieving sustainable profitability.
Forward Outlook
For Q4 2025, Carl Smith guided to:
- Full-year revenue of $49 million to $50 million, up 84% year-over-year.
- Gross margin sustainability at or near Q3 levels, with further leverage possible as volume increases.
For full-year 2025, management raised guidance and emphasized:
- Durable, high-quality growth underpinned by expanding surgeon engagement and commercial execution.
- Continued investment in product development, surgeon education, and supply chain optimization to support scaling.
Takeaways
Carl Smith’s Q3 underscores a business gaining operational and commercial momentum, with a differentiated platform and expanding clinical evidence base.
- Growth Engine Validated: Volume-driven revenue and surgeon adoption beat seasonal expectations, confirming demand for personalized spine solutions.
- Margin Structure on Solid Footing: Gross margin improvements are rooted in supply chain investments and are expected to persist as the business scales.
- 2026 Setup Strengthens: The cervical launch, reimbursement catalysts, and a robust pipeline make Carl Smith a key name to watch in digital surgery innovation.
Conclusion
Carl Smith’s Q3 results mark a clear inflection in both commercial scale and operational leverage. The company’s digital-first, data-driven approach is gaining traction, and with new products and reimbursement wins on the horizon, the business is positioned for sustained high-growth and margin expansion into 2026.
Industry Read-Through
Carl Smith’s outperformance and rapid adoption trajectory highlight a broader shift in the orthopedic and spine surgery market toward personalized, digital-first solutions. The ability to deliver predictable outcomes with lower revision rates, supported by real-world evidence, is increasingly valued by payers and providers. For traditional spine implant companies, these results reinforce competitive pressure to accelerate digital transformation and patient-specific innovation. Reimbursement tailwinds for novel procedures signal a structural change in how new technologies can gain traction and scale in procedural medicine.