TREACE MEDICAL CONCEPTS, INC.

TREACE MEDICAL CONCEPTS, INC. (TMCI) 2025 Annual Report: A Year of Strategic Growth and Market Expansion

Treace Medical Concepts, Inc. (TMCI) concluded a pivotal fiscal year on December 31, 2025, marked by strategic growth and significant market expansion. This summary offers a comprehensive look at the company's performance, strategic direction, and financial health, as detailed in its annual report.

Company Overview & Core Business: Treace Medical Concepts is a medical device company that focuses on patients with bunions and related foot conditions. Its flagship product, the Lapiplasty® 3D Bunion Correction™ System, offers a comprehensive and lasting solution for bunion correction by addressing the deformity's root cause.

Financial Performance Highlights (Fiscal Year 2025):

• Revenue Growth: The company achieved robust revenue growth, driven by increased adoption of the Lapiplasty system and an expanded sales force.
• Profitability: Despite continued investment in growth, the company's profitability reflects a continued investment phase.
• Gross Margin: Gross margin remained strong, demonstrating efficient manufacturing and effective product pricing.

Management's Discussion and Analysis (MD&A) Highlights: This section details the company's financial condition and operational results for fiscal year 2025.

• Results of Operations:

  • Increased sales volume of the Lapiplasty® 3D Bunion Correction™ System, fueled by expanded surgeon adoption and utilization, primarily drove revenue growth.
  • The company also significantly invested in its sales and marketing infrastructure and research and development, which impacted operating expenses.
  • Despite these investments, gross margin performance remained consistent, reflecting effective cost management and product mix.

• Operational Achievements & Strategic Focus:

  • Surgeon Adoption & Training: The company significantly expanded its surgeon network, training new surgeons who actively utilized the Lapiplasty system during the year. This demonstrates successful market penetration.
  • Product Innovation: Treace Medical continued its investment in research and development, launching new product enhancements or complementary instruments. These innovations aim to improve surgical efficiency and patient outcomes.
  • Market Expansion: Efforts to expand market access and reimbursement coverage for the Lapiplasty procedure progressed, broadening patient access.
  • Strategic Pillars: The company's strategy centers on driving surgeon education, expanding clinical evidence, innovating its product portfolio, and optimizing commercial execution to capture a larger share of the bunion correction market.

• Critical Accounting Policies: The company prepares its financial statements following U.S. Generally Accepted Accounting Principles (GAAP). Applying these policies requires certain estimates and judgments, particularly for revenue recognition, inventory valuation, and stock-based compensation.

Financial Health (Debt, Cash, and Liquidity):

• Cash Position: Treace Medical maintained a healthy financial position, holding ample liquidity for operations and strategic initiatives.
• Debt and Capital Resources: The company's capital structure primarily consists of equity, reflecting a prudent approach to leverage.
• Cash Flow: Investing activities included capital expenditures for manufacturing equipment and R&D facilities, while financing activities primarily related to equity offerings and debt repayments. The company believes its current cash position and anticipated operating cash flows will sufficiently meet its liquidity needs for the foreseeable future.

Competitive Position: Treace Medical operates in the highly competitive orthopedic medical device market, specifically within the foot and ankle segment.

• Competitive Advantages: The company's primary competitive advantage stems from its proprietary Lapiplasty® 3D Bunion Correction™ System. This system addresses the root cause of bunion deformity through a unique triplanar correction approach, a differentiation supported by growing clinical evidence and a robust surgeon training program.
• Market Differentiation: Treace Medical differentiates itself by focusing on surgeon education, clinical outcomes, and a comprehensive system that aims for more predictable and durable results than traditional bunionectomy procedures.
• Key Competitors: The market includes large, diversified orthopedic companies and smaller, specialized foot and ankle device manufacturers. Competitors vie based on product efficacy, clinical data, surgeon preference, sales and marketing capabilities, and pricing.

Key Risks for Investors: Investors should consider several key risks, including:

• Intense Competition: The medical device market is highly competitive, with established players and new entrants.
• Reimbursement Policies: Changes in healthcare reimbursement policies could impact product adoption and revenue.
• Dependence on Lapiplasty: The company currently derives a significant portion of its revenue from the Lapiplasty system, making it susceptible to market shifts or competitive pressures related to this product.
• Regulatory Landscape: Evolving regulatory requirements for medical devices could impact product development and commercialization.
• Product Liability: As a medical device company, Treace Medical faces inherent product liability risks.

Outlook for 2026: Looking ahead, Treace Medical Concepts anticipates continued strong performance in 2026. Management projects revenue growth, driven by ongoing surgeon training, new product introductions, and further market penetration. The company plans continued investment in its sales infrastructure and R&D pipeline to sustain long-term growth and solidify its leadership in the bunion correction market.

Company Snapshot: As of June 30, 2025, the total market value of common stock held by non-affiliates was approximately $265.9 million. Approximately 64.6 million shares of common stock were outstanding as of February 20, 2026. The company is categorized as an "Accelerated Filer," meaning it meets specific size and reporting obligations set by the SEC.