Q3 2019 Earnings Call

Good afternoon, everyone involved and welcome to Alphatec third quarter 2019 conference call.

I'd like to remind everyone that participants on the call will make forward looking statements. These statements are based on current expectations are subject to uncertainties that could cause actual results to differ materially. These uncertainties are detailed in documents filed regularly with the FCC. During this call you may hear the company referred to reported amount.

Which are in accordance with U.S. cap as well as non-GAAP or for from the measures reconciliation.

non-GAAP measures to U.S. guest can be found in the supplemental financial tables included in the press release, which identify and quantify all included or excluded items and provide management views of why this information is useful to investors.

Joining us on the call today will be Eightx, chairman and CEO , Pat miles and yes.

Jeff Black now I will turn the call over to pass Myles.

Thanks, much and welcome everybody to the creates a conference call.

We appreciate you haven't had provide some color commentary on our performing a whole workforce will remind everybody. What we're building and that that is inorganic innovation machine and so our intention is to revolutionize the approach the spine surgery like reading clinical distinction.

And I can strategically we believe we're positioned us to accelerate growth and Oh wait a second for the slide this but Ah you got to know that our focus is and what happens in the operating room. So if we can create distinction there when we believe will prosper.

So on the next slide would like to really take a look at where we our year to date on the 2019 commitment and so I think there's a bit about a lagging the slides all fall away for a second that that.

When you start to think about our 2019 commitments really what we set out to do is is it create clinical distinction and we felt like 12 product launches would would reflect back and so year to date were at 11.

We thought expanding new product.

<unk> revenue from less than 10 to 35 push it would reflect a except in yeah or some traction with new products what 33%.

Revenue growth of 35% within the strategic sales network, we're at 41% growth and increase are running for surgery or was it so Q1, as well and Oh, that's increased 15% or per surgery. So based upon where we already year to date and based upon the performance we thought it appropriate to.

To raise guidance I'm from previously one of four to one of the nine in total revenue to one of the nine to 112 that make spring Hey, you X number of of one of five to one of those seven and so that contemplates a 26% revenue growth, while we're still working through a sims evolution hit.

In our sales network show.

It's if you look specifically at the numbers in in quarter three I would tell you that yeah, though the white things are going on and so again the slides a bit slow, but you know a 34% revenue growth a year over year the.

Average daily sales fell 32% ones. So it was a strong as well and and really our strongest month was it was in September .

From quarter to quarter, three we grew 8% and that's a 2 million dollar increase.

And then from a oh from a consecutive quarter perspective. This is our fourth consecutive quarter of accelerating double digit a year over year of U.S. growth and so I'm excited about that.

If you if you think back at the beginning of the year 2019, we really said we have we'll really see three key priorities in the first one it is is really around creating clinical distinction.

The second one is about a compelling surgeon adoption and the other one with how we run revitalize the sales channel.

And what I'd like to do it Kinda review, how we perform against those respective priority.

So.

The first 40, Purdy shrunk, creating clinical distinction and that's how do you do things better and the operating room and so we thought that Ah Ah traction would be reflected or success would be would be reflected by by 12 products as I previously said and if we got 45% of our revenue from the new products that would be good so new product.

Hi contribution for Q3 was 42% that's versus 3% in Q3 of 2018.

Then we should gosh 12 products would would no fulfill the obligation or 11 in year to date and and we feel really really good about our 12 and probably the one that the creates significant moves you had them. It is is what we're calling health informatics, because the safe ballpark. So the nerve physiology part of the C thought platform.

And so.

Critically excited about that and so if you start to think about cost as a company you say gosh, if our mantra is where revolutionizing the approach the spine surgery, we better accrete distinction really within the lateral approach. It's it's a area of this fine and that's approach. So two is fine, but I would say that there's more familiar already.

Here at Eightx, and then I would say anywhere else in the world. So this requires though not just having part of the elements that are required within the approach, but having all of them.

And that really.

I'm really requires information as number one and that's where the health informatics are hard to say about platform is gonna be best reflected so that comes up.

The full launch in November in October we launched a number of implants that will support the utility in the lateral and then thirdly, what we did as we watch the App plate, which is enhancing migration plays and if you know anything about lateral surgery or something human promise to with respect to ensure longitudinal ligaments and theirs.

All the time kids don't but she's having operative flexibility is a reflection of sophistication of I think that this group has architected into the into the into that procedure.

So one of the teas Ah Ah collateral surgery, how they stay the his his information and there's a reason why there hasn't been you know.

Significant competitive traction to the to the market leader in this space is because people have not invested into the very elements that enable you to identify the nerve and then what we've done we've gone a step further and were able to also determine the health of the nurse and so we feel like say five or really uniquely positions Ah input.

While the type of information required and what are what gives a bad capability is you know there's a signal acquisition capability. This that's unique to us and so were always will claimed gosh, we can do that they can't and so.

One other things another element of calls a safe pockets. That's important yes to appreciate where it provides eyes is that integrates into post your fixation surgery.

In 2019, we developed a lot of tools that ultimately will be used in post your approach so surgery and again one of them is the informatics side and so in addition to the implants that we recently launched we launched Uh huh.

Hey, Telus implant, that's a poster obliquely place implants, we launched an entire poster fixation system.

And in the opportunity to integrate these products really represents a great opportunity. So I'm really Q3 was it was it was an outstanding quarter for us in terms of the volume of products that we want.

So when you think a how safe I can't agree to that post fear fixation, I think keeping to realize that really the context of at all and and so the context is most surgery has three levels are less.

So when you have the ability to integrate say flop and and something like single step, which is part of our new puts your fixation system. What you do as you increase the accuracy increased the speed increased the safety and really you create an elegant work flow in terms of post your fixation and so.

The combination to a large degree obviates the need for junket technology that slows workflow and really does nothing to improve the clinical experience in short segment for the worst hugely bullish about how these things and agree and what the effect is gonna be on on surgery.

So the second key priority.

Is that because once you create distinction it's how do you have compelling surgeons and so this is how we did in and then in Q3, two what could be the revenue per case increased 70% also we always talk about how we integrate technology for what you want to see if you want.

She has continued to March up that the number the average number of products sold per surgery and so that's a marching up that was 1.6 and then also if you look at the revenue growth from the top 20 surgeons was 68%.

So you know all this reflects really an increasing surgeon confidence, it's an increase from certain confidence it gets reflected in surgeons, giving us more complex cases doing a higher volume and utilizing more of our technology within each individual surgery and so I would tell you that that's that's kind of a reflection of the.

Oh, the type attraction that were after and that also make mention that really we had a great showing it now so the math is always a demarcation of where we are as a company and you see us continuing to March Ford in a very methodical way.

So the next priority you saw that I want to review his his concerning you know how do we revitalized the sales channels you clearly want a feel forced to can translate the technology and so when you start to look at where we are on that front. You know the target was is how do we create 40% revenue.

Well from a strategic distribution network Oh offset by continued just continued discontinuation of legacy and non strategic relationships I would say, yes that was an aggressive or priority or metric and where we are is a 40% growth from top 20, the sugars year over year 52.

Percent increase you're gonna dollar revenue per distributor. So remember we talked about how to lessen the volume of distributors and increase the though the footprint revenue contribution by the strategic Ah Ah network was 89% and then the revenue growth growth was was 42% and so.

A lot and good things going out and we feel like this is just the early phases of our effort, but I think that the metrics are reflective of traction and that really where we're heading so well I will now turn the call over to Jeff and let him reviews on the financials.

Thanks, Brett I'll, just I'll turn it all spend just a few minutes on key financial highlights for the quarter a more information is obviously provided in the press release today.

Starting with a revenue on slide 15.

Overall Q3 revenue results were above expectations on the strength of 40% growth from strategic distribution Mercy. This growth as Pat mentioned on momentum from new product introductions, which represented 42% of where he was rather than it was in the third quarter.

And well slower than anticipated we saw revenue from legacy distribution continue to wind down as part of the or planned transition.

Where do we expect will continue in 2020.

We'll have more than 10% of our of our U.S. revenue contribution coming from this channel.

Revenue from or National supply agreement continued to decline and this is consistent with expectations as our supply agreement winds down over the next one to two years.

Based on the traction we're seeing on.

New products domestically, we're encouraged by the opportunity to reenter national markets ones for Globus contract runs its course.

Updated guidance of 100 $570 million in U.S. revenue represents up to 28% year over year increase and up to a 40% year over year increase from strategic distribution.

And also represents a nine to 11 million dollar increase to the initial guidance we provided in March.

On U.S. gross margin on Q2 pretty U.S. gross profit of 19.9 million grew by $3.3 billion over last year year over year on a GAAP basis gross margin decreased by 540 basis points to about 71% as compared to about 76% last year.

However, consistent with last quarter on a non-GAAP basis, excluding non cash obsolescence or gross margin in the third quarter was about 79%.

Nine degrees for draw from last year, which is primarily due to product mix.

As reported in the last three quarters, we continue to see margin pressure from noncash obsolescence related to our legacy products as we introduce new products.

Well expect to see continued margin pressure over the mid term as we introduce new products and we obsolete legacy products. So we think a non-GAAP . Your gross margin is a valuable metric to track through this transition.

And again, we continue to fridges and believe it schedule will be in the mid 70% range on gross margin.

[noise] onto piano highlights operating expenses here or or or presented on a non-GAAP basis. They reflect what we considered more normalized darn DNS DNA, they exclude noncash stock based compensation mitigation restructuring other nonrecurring charges.

And as you can see would continue to invest in our product pipeline, which is reflected in increased R&D expense in both absolute dollars and as a percentage of revenue compared to last year.

We expect continued investment to support its 10, new product introductions introductions, each year and continued technology development.

And as well or S. Three an increase in absolute dollars and as a percentage of sales.

Most of this increase is tied to variable sales compensation related directly to revenue increase we've also made opportunistic investments in the sales channel in new key geographies.

In fact, our core Genie expenses should remain relatively flat over the past few quarters.

And we're still and still well below where we exited 2016, when we initiated the they took turnaround.

We'll continue to invest in the sales channel and should start to see yesterday expense leverage as new products drug revenue growth.

And enhance predictability.

Onto the balance sheet, we ended the quarter with just under $50 million and cash following a successful follow on offering the generated net proceeds of $54 million and importantly expanded our institutional shareholder base.

Operating cash burn ticked up some in Q3, which we expected as we moved capital investments in instrument and implant sets to support.

New product launches, which had been a big driver of over revenue growth.

We expect these investments to fluctuate quarter to quarter based on the timing of product launches, but the bulk of this cash investment for 2019 is behind us.

We continue to expect 2020 to being investment here as we support new product launches with Capex from new instrument inside sets and expand our distribution channel.

In addition to our existing cash balance we have $20 million remaining Arlana credit squadron.

This will payments on our squadron term debt don't commence until mid 2021, So we're better positioned from a cash perspective, and we have been in the last several years and you have to runway now to support.

Our planned growth strategy.

[noise].

Before I wrap up and turned back to power I wanted to recap a couple of relevant trends first our commitment to drive revenue growth is is continuing to be realized Q3 quarters, our fifth consecutive quarter of year over year revenue growth.

We saw 8% sequential growth in Q3, which is typically a flat to down quarter in spine.

And in Q3, we delivered our largest U.S. revenue quarters since the second quarter 2016.

Second we continue to deliver on our commitment to transition the sales channel because scalable committed distribution partners.

And finally, we're making high impact investments in R&D sales and marketing while holding the line on on GA.

R&D is now at 13% to 14% of revenue Rs unit growth has primarily been from variable sales compensation strategic investments in the sales channel and product marketing. These are all enabling the revenue acceleration we've seen in 29.

I would that'll turn the turn back over time for closing comments.

Thanks much Jeff.

I think what's you're gonna see a in the coming years is is a so far.

Focus on being methodical and running at Ah Ah being a growth company by creating clinical distinction that revitalizing a sales channel and compelling surgeon adoption and so you'll hear these.

Seems to over and over again, and we believe that the.

The traction is really just starting in terms of what are interested in becoming a one of the key players in this in this industry so anyway.

Thanks, much for your attention and I will turn it over for questions.

Thank you ladies and gentlemen, if you have a question at this time. Please press Star then the number one on your touched on telephone. If your question has been answered. Your question look yourself from the Q. Please press the pound key to prevent any background noise. We ask that you. Please place your line on me. Once your question has been stated.

Our first question comes from the line of Brooks O'neil with Lake Street Capital. Your line is open. Please go ahead.

Thank you good afternoon, guys congratulations on the progress pretty exciting.

Thanks Brooks.

So I have a couple portions first study.

I'm very excited about Oh put a informatics platform you're about to launch.

Let's talk a little bit about how you see.

Pulling through product CEO .

Oh kinds of products you been introducing this year.

In the future.

For sure Brooklyn.

It was my intention with regard to the diatribes on both lateral surgery.

As well as poster fixation and what are they starting first I guess with post your fixation is because the latter one is very straightforward inputs. Your fixation. The surgeons intention is to.

Safely and Reproducibly place fixation and and so what happens is most surgery is not complex and I think so often we move you know really to the edge of Super complex surgery or revision surgery, and that's that's that's less than 15% of the surgery and so the way this.

Yeah integrates into say our Invictus system is a is that there are feature sets on invictus ultimately attach to the alpha informatics and so what a surgeon can tell as if he's in the pedicle. When you start to think about work flow and you start to think about most Georgia is being three levels are less the ability to have this really expedite.

The process and make sure the search and those that they've placed a screw safely is very very high until our bets on the major part of the market is that something like say five integrated with Invictus, especially single step in percutaneous screw placement is really going to be the way that people do things in the operating in.

So.

We're bullish on on that application.

As it relates to lateral surgery.

No I would tell you with what lease commenced the as our chief.

Medical officer, our familiarity with lateral surgery is really what I would consider over the top but he's the guy who popularized good don't Wanna get into an invention argument.

The the reality is is that he.

He is exceedingly burst in exceedingly curious as it relates to how to continue to evolve that that technique and so our opportunity to integrate shape up in a way that not only identifies and keeps us work and save after where the nerve her but we can also tell how long have the durbin retracted and and what makes that Oh, we're able to.

Do that is really kind of the unique signal acquisition element, which is why we acquired the technology in the first place. So the point is is the things that we expect that are coming to fruition and we're just trying to move methodically and move into those recreated I. Appreciate you, calling as you know progress because that's what we deem. It. This is just progress toward what are in.

Pensions.

That's great I really appreciate that Leverages as Q1 or two others that are kind of related to your commentary right. There number one I'm sure you don't want to reveal any proprietary competitive information, but could you vision. The informatics platform expanding to include other applications as you go.

Board and then too.

As you know I had the good fortune to be a doctor per month.

The that's conference in Chicago, and talking a little bit about this new approach the laterals surgery that does it require flipping the patient.

How do you see that impacting alphatec over the next year or two.

Yeah, Yeah, Yeah. The first put your question was better than the second part [laughter]. Okay. Yeah, Yeah, Yeah. The beauty Oh this platform it is literally.

You know a lot of a computing technology is come so far and so our ability to deliver information and that's why we will the alpha informatics nomenclature is because we're physiologies really the first thing that we're going to deliberate through this platform, but if you think about you know we will communicate that.

So many people say pedicle screws equals spine surgery, and it's just an untrue.

It's much more sophisticated so if a understanding where the nerves our if alignment because an element theres a lot of technology that we could deliver through this.

Platform to be very consequential and so our interest is to continue to deliver.

Information through that platform that ultimately is what the surgeon requires that the tiny needs and I think that these are hard at things for companies and that's why most companies as it relates to lateral have done a retractor them in plan and habits embarked upon this design effort because it's it's hard and so the great parties is you're going to see.

Our original reflection of it here.

In November and we can't be more excited about the walk in terms of continued to add value into surgery.

That's great.

You don't want to talk about Dr pepper matter or what.

Yeah, He's well then hand to hand that no.

Yeah, you know, we believe that that there are ways to continue to evolve a lateral surgery. Okay is it as I said in the image comments. There is more expertise with regard to lateral surgery here than anywhere else and what happens is and we built this company around Ohio in there that kinda no out here. So I would expect that you're going to continue this.

He evolution in the things that we're doing surgically and that means we believe single position surgery.

He'd be done different than it's been described elsewhere.

Yep, that's great. Thank you very much I'm excited about the future.

Thanks.

Thank you and our next question comes from the line of Matthew O'brien with Piper Jaffray. Your line is open. Please go ahead.

Afternoon, Thanks for taking my questions.

I guess just for starters Pat.

The U.S. performance was pretty eye popping. This quarter can you just deconstruct some of the performance that you saw.

Be it existing accounts.

Going deeper in accounts some of the products that you're introducing safe op, how that all ties together.

However, the kind of performance we saw here in Q3.

Yes, I appreciate the question.

One of the things that we've been talking about since we started to and kind of redo. The company has been you. How do you first of all create confident and so I think what you're seeing it is you're seeing surgeons.

Having greater confidence in the mechanisms that we're designing from a from a very experienced.

Product development team and so what happens it as they say gosh I'll use. This is very simple surgery and then they have success with it may continue to elevate that type of complexity that they're willing to.

Utilize our products and and then what happens is as you start to add.

Interbody product to a poster fixation product and then you had a biologic too late to an inner body to a petition and so what we're seeing is good because we're very pocketed kind of a distribution network and so we have we have.

Significantly strong clinical people in different parts of the country that our prospering because they understand how to sell the clinical attributes of our portfolio and so what you'll see over time as you'll see really that combination of of some of the stryker prowess from a from a sales force know how standpoint start to measure.

And along those lines pad as far as that grows in the revenue per case, I mean, you know up 17% pretty pretty very strong.

How do we think about the opportunities to keep growing that metric over the next couple of years.

You know, what's what's interesting. It is it's a metric that we follow very closely here, which is how many products only selling into surgery and so if we have a specific approach what our intention is to say what products make up that approach in does it make it a meaningful and so when you start.

I think about what will those newer physiology play in surgical surgery. Our intention is to make sure to what we have the ability to doing is to provide value here physiologically within that utility and so what we want to see it is the whole the convoys sales will ultimately pool.

Revenue and so every procedure that we have what we do as we in essence identify how many products per approach, we're showing in and that's really reflects the lead indicator of how we're going to do from a revenue perspective, because it just means we're getting more consequential as it relates to the application.

Got it and then.

Just last one for me is just.

Disruption in the space, there's been a couple of.

Somebody is getting together again taking out.

What are you seeing as far as.

Opportunities in terms of.

Potentially capturing some new new distribution folks and then some new accounts as well.

No. It's that candidly, it's good again, the I think theres a lot of cynicism and a lot of people, who don't see the world and as many distinctions path as we do surgically and so they think this is a commoditized space and so what happens is what everybody else thinks it's a commodity but we're going to do is creating.

Up distinction to compel them to come over.

And so what happens is you get a bunch of people who are excited about what we're doing and and what happens as you start to grow some and lasting we're going to get ahead of ourselves, but we were thrilled with the type of people who are wanting to sit around the atech table because there are a sophisticated bunch.

Very helpful. Thank you.

Thank you and our next question comes from the line.

Rose with Canaccord. Your line is open. Please go ahead.

Great. Thank you very much for taking the question then.

Congrats on a strong quarter here, so I kind of wanted to start on conduct dealing on some of mass previous questions I guess just.

You talked about the 11 product launch year to date. This comes on top of the proxy launched last year. You you you've obviously brought into distribution pounds, maybe just from a big picture help us understand where you are in the lifecycle of those new products coming on board.

And then from a distribution side I.

I mean, how much of the productivity or are we not seen yet as far as you know sales reps that you've brought on their sitting on the sidelines or you are just now becoming more productive help us understand where we are just from a gross standpoint.

Yeah, Yeah, great Yeah, Great question, but I tell you.

When it companies more mature what you see is you'll see you'll see it take 18 months after launch to really start to see products hit stride.

And so you know I'm not suggesting the you know that day.

Everything is going to continue as methodically as as we just reflected good but our growth is yet to to be reflected in the whole drag of a more mature company if that makes sense.

And so you know our enthusiasm is that literally the products of just come out and.

You guys. Appreciate it takes some time to get into the hospitals. It takes some time to get to the approval process. It takes time to compel surgeon. These things take time to get rolling So I would tell you that we're in such the early stage of people just having confidence in what we're creating and we've yet to see the reflection of all of these things coming together proceed.

It really in a way that compels people in a very meaningful way and so we love. It again this business and you know where everybody else, maybe complaining where we love this business in Anda, we love the surgery and the ability to continue to creep distinction. So I think we're very where we're we're very early.

And and then you know the kids is.

You don't only quick confidence in the surgeons, but also in that in sales people and so what happens is as we bring sales people over you know and they start to see what we're doing then yes. It's kinda that residual then you guys come on and they got to sit out for a while potentially depending upon where it or acid and so you know what's.

I think some of the some of the financials that Jeff communicated where you know what with some people sit on the sidelines. These are people who are serious about creating a meaningful distributorships and then we're getting growth out of the places that we've invested in last year and so these are 18 months drags. It's like we've made these decisions back.

18 to 20 months ago in terms of where we should be today and so our are interested now is to say gosh. When we look like 24 months from now what decisions are making today to get there and that's where it's like you got to make sure that we have the sophistication from a sales force perspective, they can translate those.

Those things.

No that that's the that's very helpful. I appreciate the color I guess, there's not another way of asking that as you know what it when you look at the growth year to date I mean, you about you obviously increase your guidance for the strategic channel closer to the 40% range.

But when we look ahead.

I guess I, just without giving specific guidance for 2020, I guess is there any reason that we should expect this momentum to slow down we enter the year I mean, obviously, you're going to have tough comps, but like you. Just said you've been you've got new products that are kind of on an 812 18 months.

Lifecycle to kind of hit productivity and it feels like we've got another condra, both distribution and in those products, you're coming up that curve to support next year. I guess is that a fair way to think about it or how should we be thinking about you know growth on a go forward basis.

I guess.

The way to think about it is is this thing has been so lumpy since since we've gotten here and so yes, I would say that.

Be conservative we haven't figured everything else out there we have figured everything out yet and so what we're trying to do is just be how do we continue to to be very predictable in all things clinically surgically financially and otherwise and so we're still a new little company and so we're doing our best to put our best.

Put forward and debt. So last thing we want to do is get ahead of ourselves and start making you know.

Outlandish predictions is all we want to do see how do we make surgery better through the means by which we know how to do it and we'll put that together and compel people quarter to quarter. So the filter.

What would be at this for a long time art I got to face great living in San Diego and we have a ton of people who want to live in San Diego and work in San Diego and so are interested to build a monster over the next however, many years.

Terrific well I'll leave it there gentlemen, thank you very much. Thanks. Thank you go.

Thank you and ladies and gentlemen, again, if you have a question at this time. Please press Star then one.

Next question comes from the line of Shanley H.C. Wainwright. Your line is open. Please go ahead.

Hi, guys congratulations on another great quarter and thank you for taking my questions.

My first question, Yes, Oh, maybe to get up and more color on the quote story here like you mentioned strong goes from a revenue per.

Surgery more additional products use person degree and also a growth from a surgeon.

Well revenue per se. So I'm just wondering like what are some of your metrics what the what are some of your goals for these metrics that you hope to reach overall and how do you feel about the.

Balance between increased penetration per surgery versus increase footprint to getting to more surgeons to getting countries more surgeons were expanding geographies.

Yes, it's a great question and really the interest clearly is both in and what happens is as you become more meaningful from a from a a feature set within the context of a spine procedure. What happens is you can pull more people and usually when you see more product.

Use per procedure within a specific procedure what'll happen is there will be more reason why the surgeon to utilize that that company because what they've done is architected a solution that ultimate creates predictability and so you know the types of metrics are the very ones that we described in the in the in the deck and what we do.

This is.

Clearly you guys shoot at the aggregate we go down to every procedure identify.

What are the elements of this procedure the ultimate creeps distinction and what will happen is it's rarely one product that creates distinction within the context of a procedure and knowing that ultimately reflects the the compelling of Oh. The surgeons. So we will expand the number of surgeons, we do business with while we continue to drive the volume of products within each individual.

Feature and so you know when you're chasing perfect surgery that that ultimately is how you how do you get there and so and that's that's our interest.

Oh I see thank you for that.

My second question is Oh, no gross margins and CNH I'm, just wondering how will those numbers hold up over the next couple quarters and for example, also how do new products compared on those figures cotwo versus your older products.

Yes. All this is just a question on on margin I think the expectation is that we'll continue to see some pressure from you know from legacy products I.

I think you don't expect to see is similar margin profile new versus legacy products, there will be potentially some some mix in that.

That might impact.

Large one way or the other but I think overall at scale once we get through the noncash obsolescence charges I think think about a margin profile and new product sort of very similar to legacy products.

Oh I see thanks for that and my final question is on more on the strategic side. So it was we are approaching the end of 2019 and into next year and the company obviously.

Actually since great growth. This year. So I was wondering what are some of your top takeaways from how do your strategy has worked out this year and what are the key areas. You feel like you said you will be focusing on next year.

Yeah.

I I would tell you that what's you're gonna be hearing in 2023 is is we're gonna preclinical distinction, we're going to revitalize the sales channel and we're going to compel surgeon adoption and that is this business and having done this before the strategy hasn't changed much for that for the 17.

As I was I was doing this before and the the beauty is is if the right strategy and show.

Continue to actually your own stuff and that's why you're going to you know continue to see us do that and and you've got to be a meaningful clinically and it's not anything more cosmic than that and so I would tell you the better we do that in terms of the number of distinctions would drop to the subject of the more prosperous will be.

Great. That's all I have thank you. Thanks again.

Thanks, Mike.

Thank you and I'm showing no further questions at this time and I would like to turn the conference back over to Mr., Pat miles for any closing remarks.

Yeah, just thanks, everybody for your interest in Eightx fine we're still in the early phase of revitalizing This company and excited about our prospects. So thanks, so much pickup.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.