Q3 2020 OrthoPediatrics Corp Earnings Call
After the speakers remarks, we will have a question and answer session to ask a question you will need to press Star then one on your telephone keypad to withdraw your question press. The pound key. Please note that this conference is being recorded I will now turn the call over to John Medina, John You may begin.
Thank you Holly and thank you everyone for joining todays call with me from the company are Mark <unk>, Chief Executive Officer, Fred height, Chief operating Officer, and Chief Financial Officer, and David Bailey President.
Before we begin I would like to caution listeners that comments made by management. During this conference call will include forward looking statements within the meaning of federal securities laws, including the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995. These.
These forward looking statements involve material risks and uncertainties and the company's actual results may differ materially.
For a discussion of risk factors, including among others. The risks related to kind of a 19 the impact such pandemic may have on the demand for the company's products and the companys ability to respond to the related challenges I encourage you to review the Companys. Most recent quarterly report on form 10-Q, which will be filed with the Securities <unk> Exchange Commission soon.
During the call today management will also discuss certain non-GAAP financial measures, which argues that supplemental measures of performance the.
The company believes these measures provide useful information for investors in evaluating its operations period over period.
For each non-GAAP financial measure referenced on this call. The company has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its earnings release. Please note that non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for walk up.
Pediatrics financial results prepared in accordance with GAAP and.
In addition, the content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast November 5th 2020, except as required by law. The company undertakes no obligation to revise or update any statements to reflect events or circumstances that take place. After the date of this call with that said I'd like to turn.
On the call over to Mark.
Good morning, everyone and thank you for joining us today on our third quarter 2020 earnings Conference call.
I'd like to begin by recognizing all our orthopedic metrics associates for their tremendous effort, which has produced strong results during the recent quarter, including record revenue and improved EBITDA.
The pandemic continues to pose challenges, particularly in some overseas markets, but our associates have been able to excel during these times of unprecedented difficulty.
While the operating environment remains highly uncertain the positive momentum we have seen since may accelerated during the recent quarter and has continued into October.
We delivered accelerating growth in the United States improved our gross margin and to produce improved EBITDA and positive adjusted EBITDA.
This morning, I'll begin by providing an overview of our results by geography and product line, including our thinking on procedure recovery rates in the U.S. and abroad.
Will then discuss our recent acquisitions, following which I will comment on additional progress and factors driving our business.
I'll, then turn things over to Fred for a detailed financial review and the guidance for the fourth quarter and we'll then open the call up for your questions.
The U.S. recovery, which began in the second quarter continued to accelerate in the third and we achieved domestic growth of 17% year over year with trauma and deformity and scoliosis growing in line with total domestic sales and scoliosis, increasing total users 30.
3% on a year to date basis over third quarter 2019.
This was a tremendous improvement over the 12% decline seen during the previous quarter.
Moreover, U.S. sales continued to accelerate monthly during the third quarter and we have seen consistent increases in domestic sales every month since April sharp decline.
October domestic sales continued strong and we and confirm that we are clearly on an upward although choppy trajectory.
However, we are concerned by the recent spike in cold at 19 cases nationally and cannot predict whether there will be another deferral of elective surgeries in this country.
As we consider the final quarter of Twentytwenty. We believe we remain on a solid footing for continued strong domestic growth, which will be slightly improved over Q3's performance.
The recovery overseas continues to lag that in the U.S.
Most pediatric surgery abroad occurs in general hospitals, many of which also treat cobot cases.
It remains a high degree of last minute case, cancellations, which may be due to parental concerns over bringing their children to these hospitals are.
Additionally, given the low procedures, our stocking distributors have made little to no set purchases in Q3, and we expect the same in Q4.
While international sales declined 34% year over year E. M E Bay, and Asia Pac were relative bright spots sales in EM EA grew 5% during Q3 driven in part by agency sales growth, while Asia Pac was up 7% driven in part by strong.
Agency performance in Australia.
Overall agency sales grew 26%.
And accounted for half of third quarter international sales compared to 25% historically.
This helped drive strong gross profit performance in Q3.
Despite the recent growth of Covidien cases in many countries. So far we have seen only localized impact on elective surgeries.
In addition to lagging the U.S. recovery trends overseas are also more variables geography by geography, notably in Latin America, which was the companys sole disappointing region in Q3.
Continued challenges notwithstanding we remain committed to the region and we are continuing our aggressive training programs and surgical society support.
Moving on to revenue contribution by business drama and deformity sales increased 8% for the third quarter domestic sales were driven by very strong trauma goes and encouraging signs of recovery in elective deformity correction surgery.
The femur Cannulated screws and Orthofix, all contributed substantially to domestic sales growth as well.
Worldwide Scoliosis sales increased 1% with domestic growth in line with overall U.S. sales growth driven by response and Firefly as well as a 33% increase in total users year to date compared to prior year.
Sports Medicine that other grew 56% reflecting contributions from Telos partners.
Turning to acquisitions, while representing a small percentage of our sales. We remain pleased with the revenue impact of tell us, which one several multi year consulting contracts with new medical technology clients.
We acquired tell us in March to bring into the company state of the art expertise on regulatory trends and clinical trials management.
This expertise is highly sought after in the cold at 19 environment.
Well, we manage tell us on an arm's length basis. So its clients can be assured of confidentiality. We had benefited from Telo says knowledge that enables orthopedic metrics together clinical data on our surgical systems and anticipate future regulations in a sure footed manner.
Orthofix continued to deliver strong growth with a number of new users in sales agencies performing their first cases, 50% of our US sales force is now actively supporting complex external fixation surgery.
Fourth ex was recently approved in Australia, where we're now booking cases.
We anticipate launching or effects in Europe with the CE Mark in Q1 2021.
And in preparation our hiring a European Orthofix sales director to handle the strong demand we are already seeing.
It is clear that the Orthofix acquisition, our first is producing synergy with the extensive line of internally developed surgical systems, we have launched since the IPO, thus, increasing our credibility as the supplier of choice to pediatric hospitals.
Acquired in April Epifix represents another selective technology acquisition that can increase the scale of our scoliosis franchise, which has grown between 20 and 40% annually over the past years.
Epifix is one of two recently approved non fusion technologies and represents a revolutionary approach to how scoliosis is treated.
As a reminder, earlier this year, we received FDA approval to expand the label to 35 to 60 degrees for progressive curves from 40 to 60 degrees. Previously this allows the epifix system to compete head to head with spinal tethering the only other non fusion technology.
The approved for use in skeletal immature patients.
However, epifix is a much simpler surgery been spinal tethering, which comes with a significant learning curve.
As with the Orthofix from a return on capital perspective, we anticipate benefiting from very high revenue contribution per dollar of set inventory.
To date Epifix sales have not been material to the company, but we anticipate this changing next year.
Epifix has achieved significant milestones in its short time with north of Pediatrics. The system is now in various phases of IR be approval at 20 sites in the U.S.
Of these 20 IR. Besides seven are now fully approved to conduct surgery, having received both the IR b and registry approvals.
We anticipate that the balance of the sites will be fully approved by year end or early 2021.
Nine surgeries have occurred at four sites and each case has been an unqualified success.
The other three recently approved sites have scheduled cases, which will be completed very soon.
Surgeons are responding enthusiastically to the results. They can achieve with epifix correction is comparable to fusion, but with a much simpler surgery and reduces procedure times cases are completed within several hours or less.
Surgeons also like the shorter hospital stays for patients, which range from 24 to 48 hours as well as the fast Postop recovery times.
We expect IR be sites to continue their internal approval process with surgeries commencing in most of the 20 hospitals by year end or early 2021.
We have agreed with the FDA that the first 200 patients in the US will be included in a registry and we anticipate that these cases will be completed by mid to late 2021.
Switching gears to factors enhancing our competitive advantage depend.
The pandemic has thus far proven to be an excellent opportunity for strengthening our industry leading position in pediatric orthopedics.
The company has remained committed to supporting our patients and surgeons with no reductions and financial support of important surgical societies in Stark contrast to other industry sponsors.
In Q3. This included maintaining our gold level support of the Scoliosis Research Society, our platinum level support of the American Academy for cerebral palsy, and developmental medicine, and our diamond level sponsorship of the Thirtyth annual Baltimore limb deformity course.
We grew the domestic sales organization head count by 5% over the third quarter 2019 to 166 sales representatives.
Given the uncertain environment, we're proud that our domestic sales agencies continue to make personnel investments that will drive future growth a tangible indicator of their confidence in orthopedic metrics and to the market we serve.
As the U.S. market continues to normalize we expect an increased number of new sales associates to be hired in Q4.
While our international business remains more significantly affected by the pandemic and we cannot predict when consistent over us growth will return there are a number of tailwinds can significantly impact growth in 2021.
These include significant numbers of new regulatory approvals competed in Forrester foreign jurisdictions.
The launch of Orthofix with the CE Mark in Europe, the launch of individually packaged sterile configurations of most orthopedic metrics products that are now in demand by many European hospitals.
And to the upcoming conversion of multiple stocking distributors to sales agencies.
Distributor conversion discussions are in an advanced stage in three M. EA markets and conversion should be completed by year end 2020, or the first quarter Twentytwenty one.
As a reminder.
Our sales agencies here and abroad and around the world do not take title to product.
Instead, they are paid a commission on sales generated but orthopedic metrics decides on the pace of consignment of set inventories, which remain on our books.
Converting a stocking distributor to a sales agency allows us to build customers directly at full hospital prices, thus doubling our revenues and gross margins more importantly, it allows us to accelerate the pace of organic growth in the market.
Regarding inventory investment in operations, we largely maintained instrument implant set deployments with $13.1 million in investments during the first nine months of 2020 versus $13.7 million in the same period last year.
We have made significant progress consolidating the number of our contract manufacturing suppliers. Several years ago, we embarked on a strategy to consolidate 80% of our implant volume in the hands of a single supplier in northern Indiana that was equally dependent on orthopedic metrics.
This strategy has largely been implemented in 2020, giving us lower costs greater control over quality and did increased responsiveness.
Here in Warsaw, we're not constructing a 20000 square foot warehouse nearly three times the size of the warehouse expansion completed only 18 months ago.
We anticipate that the new facility will be completed in Q1 of 2021.
Longer term the current warehouse will be converted to office space for new personnel.
We also expect the beta launch this year of a new mobile App that is now well along in development.
This app will allow surgeons and sales consultants to access all opioids training videos surgeon technique guides and other information on the company's 35 surgical systems, both before and during surgery.
We view ourselves as the market leader in pediatric orthopedics.
We have recently seen a few companies announced initiatives in our market and we welcome the wider commitment of industry to the well being of children.
However, being the market leader is more than just cherry picking one or two lucrative pediatric products.
It is more than just bundling several old products together under a new marketing banner. It is more than so called entrepreneurial initiatives to cobble together a company that seeks a quick sale to a strategic or financial buyer base.
Being the market leader requires a long term multi dimensional commitment.
Innovative product development selective acquisition of complementary technologies investing in non commercial clinical education, and leading the financial support pediatric orthopedic surgical societies.
Being the market leader requires a built to last strategy of steady execution that balances growth with profitability.
We believe that orthopedic Citrix has continued to exercise market leadership and resiliency, even in the pandemic environment. Both during its shutdown earlier this year and during the improved operating environment that is as follows.
In the process nearly all of our Twentytwenty corporate objectives have tracked to plan thus far.
As we consider the last quarter of the year and prospects for 2021, we believe that our market leadership and resiliency will continue to benefit our customers and our shareholders.
With that let me now turn the call over to Fred to review, our financial results and provide an outlook for Q4.
Brad.
Thanks Mark.
Total revenue for the third quarter of 2020 was a record setting $22.2 million and a 7% increase to $20.7 million for the same period last year.
US revenue for the third quarter of Twentytwenty was $19.6 million, a 17% increase compared to $16.8 million for the same period last year, representing 88% of total revenue.
With encouraging signs of recovery seen in elective deformity surgeries.
Scoliosis revenue in the third quarter of 2020 was $6.6 million, a 1.3% increase compared to $6.5 million in the same period last year.
And as Mark mentioned, our domestic scoliosis business showed improvement during the latest quarter.
Lastly, sports medicine other revenue in the third quarter of Twentytwenty was zero point $7 million, representing a 56% increase over the zero point $4 million in the same period last year.
Tell us continues to perform very strongly.
As mentioned earlier, the us growth rate of trauma and deformity and scoliosis grew in line with our overall domestic growth of 17%.
Moving down the income statement gross profit for the third quarter of 2020 was $17.6 million, an 11% increase compared to $15.9 million for the same period last year.
Gross profit margin for the third quarter of 2020 was 79.4% compared to 76.6% for the same period last year.
The strength in gross margin was driven by a large percentage of domestic and over US agency sales with little to no set sales to our OEM stocking distributors as a result of Covance.
Sales and marketing expenses in the third quarter of 2020 increased 5% to $9.2 million compared to $8.8 million in the same period last year. This was driven by an increase in unit volumes sold and associated commissions in the U.S and international markets with sales agencies.
General and administrative expenses in the third quarter of Twentytwenty were $9.8 million, an increase of 35% over $7.3 million in the third quarter of 2018 the.
The increase in expense was primarily driven by the increased noncash stock compensation.
One dollar expense in the current quarter includes zero point $8 million for the accretion of the happy fixed acquisition installment payments.
<unk>. This is the difference between the net present value of the liability and the total anticipated value expected to be paid in the future.
Separately from interest expense, we also had a non-cash charge another expense for the fair value adjustment of contingent considerations of $900000 associated with the happy six year for payment, which is based on sales performance.
Net loss from continued operations for the third quarter of 2020 was $4.5 million compared to a net loss of $2.9 million in the same period last year net.
Net loss per share in the third quarter of 2020 was 24 cents per basic and diluted share compared to 18 cents per basic and diluted chair in the same period last year.
Turning to our balance sheet as of September 30th 2020, or cash and restricted cash was 89 $7 million compared to $114 $4 million as of June 30th 2020.
Related to our debt on July 15th 2020, we repaid or $20 million principal amount outstanding under our term loan agreement together with all unpaid interest and other related amounts payable.
And currently we have no outstanding.
Long term debt.
We also expanded our $15 million revolving credit facility up to $25 million and extended the expiration date from January of 2023 to January of 2024 at a 10% interest rate with the full $25 million currently available to us.
The change in property and equipment during the third quarter of 2020 was $1.3 million, which compares to $2.0 million. During the same period last year, reflecting a decrease in construction in process, which includes partial sets waiting to be deployed and.
Including implants $4.0 million of consign sets were deployed during the quarter compared to $1.7 million during the third quarter of 2019.
Year to date, we have now deployed $13 $1 million upset compared to $13.7 million in 2019.
We now turn to our outlook.
Regarding our performance during the last quarter of 2020, the company expects overall sales growth in the fourth quarter to be similar to the third quarter of 2020.
Fourth quarter sales growth in the U S is expected to accelerate slightly while the international sales decline in the fourth quarter should be similar to that of the third quarter.
As we discuss the recovery overseas is lagging the domestic market and performance by geography is uneven, particularly in Latin America.
As we continue into the remainder of the ball and I. The winter months. There's also the continued dynamic of the pandemic to consider both in the U S and abroad.
As we continue to advance our strategic review and planning sessions, we see a number of tailwind benefiting growth in 2021.
These include robust appy fixed growth that will start to have a significant impact on our revenue.
We expect <unk> conversions will continue to accelerate both here and in Europe.
Individually package sterile products will be launched in Europe.
We will convert at least three E. M E. A stocking distributors two sales agencies with a doubling of revenue and gross margins in those countries.
And the company expects to continue to gain share O U S as well as within the major pediatric centers in the U S.
Consequently, while the pandemic environment will continue to evolve and potentially in unexpected ways.
Are proven business model.
Consistent and strong execution.
Continued folk focus on cost containment and are strong balance sheet, all combine to provide us confidence in the future.
Let me now turn the call over to Mark for some final comments. Thanks.
Thanks Fred.
In conclusion, the past nine months have been a strong reminder of how fortunate we are to serve the surgeons in health care providers, we're proud to call our customers.
We have unbounded admiration for their sacrifices as they put their lives on the line to improve the lives of children.
I would also like to thank our associates throughout the world for their personal leadership that has allowed us to treat more than 188000 children since 2008.
I'm confident that are consistent execution will continue strengthening orthopedic matrix, leading market position and pediatric orthopedics and I'm confident that we will emerge from the covid endemic even stronger than when we entered it.
With that let's turn the call over to your questions. Please.
Thank you and as a reminder, if you would like to ask a question. Please press Star then one on your telephone keypad.
And our first question is going to come from the line of Ryan Zimmerman B P. I G.
Thank you good morning, everyone eight right I'm Gonna sound good.
Good. Thank you I just want to fuck on a couple of dynamics that you've talked about one <unk> <unk> I think in a recent investor meetings, you you're talking about a dynamic in the fall where the scoliosis Susan was an extended into the fall a little bit you know typically done in summer and so I'm wondering marker. If you can give some commentary and thoughts around you know.
How that is playing out and what that says maybe about the durability or the seasonality you expect going forward here and what it could suggest for fourthquarter around scoliosis and then I have a follow up.
Certainly Ryan day Bailey has actually been talking to a number of our scoliosis surgeons personally on this issue.
Ryan how are you.
I I think what we are seeing is a bit of a tail on this summer scoliosis season, we started to see that tail kind of continue to pick up through the balance of the end of summer and early into the fall while it's too early to determine what the long term ramifications are of Covid in terms of the seasonality of our business I think what we can say is.
That we're very pleased with the rate of surgeon adoption of our products in the scoliosis space and we are starting to see a bit of a ramp into the into the back few.
A few months of the year here that would probably signal that we're picking up some of those cases that work done during the normal scoliosis season in the summer.
Telephone then you know on this on this initiative to offer individually pastel products.
Yeah is there something competitively that change that uhm triggered your interest in pursuing kind of that individual's package still product portfolio. I'm. Just curious kind of you know that we've seen that in some other markets are soon that with some other competitors I'm just wondering if that's something you're in.
Now pursuing more aggressively, particularly in the European market and and maybe what the driving forces behind that.
I think David and I can both comment on that very quickly. My observation has been this is something we've been working on three years and has been an enormous undertaking in terms of finding the appropriate people, who can sterilize and configuring products and gaining regulatory approval to make that happen. This has been something that has been in <unk>.
And in Europe for some time.
Monday's in 21, as you do expect stocking distributors to purchase assets.
Potentially lower margins in the 21, thanks for taking the questions guys.
Yeah, Ryan Thanks for including me [laughter].
Third quarter is always our highest gross margin.
When you look back in history, because the revenue is always the highest in the third quarter and then traditionally the fourth quarter revenue is always a little softer and so the margins will come down a little bit in the fourth quarter.
With that being said, we do anticipate that in 2021, we will get the benefit of the more sales coming from our agencies outside the U.S.
So while 2020 has been a little unusual and with limited set sales. We do think that we can continue kind of the 76% ish plus or minus gross margin next year, which is similar to what we're going to see this year as we do increase agency sales and at the same time stock.
Got to sell sets at the zero margin that we've done historically.
Understood. Thank you.
Thank you Ryan.
And our next question will come from the line of and Dave Turkaly JMP Securities.
Great Good morning, guys.
Congrats on the domestic rebound I just wanted to get your thoughts quickly.
Obviously, you did mention some concern over some cobot hotspots.
Are you seeing anything.
Recently, a that gives you any more pause domestically.
What are your sort of assumptions as we move into it for right now that we're in for Q.
About.
Do you think elective procedures and hospital shutdowns may occur again, or any areas where that might be happening.
So far we're not seeing that occurring.
And I think that we're.
We are simply guarded as to what the future might might bring I think we would agree with others, who observe that hospital stays generally are not shorter treatment is more robust for covered patients.
And we continue to of course see the majority of our business occurring in pediatric hospitals that would be unaffected internationally. It is a different story.
In the UK there it has begun yesterday, a lockdown circuit breaker or for the situation and that will impact the surgeries in non pediatric centers, Italy.
Italy, France, Spain are not quite as bad but that is occurring there as well. So it internationally, where we are much more guarded with regard to the impact of the deferral of elective surgeries.
Got it and you mentioned the three conversion.
Conversions that are likely to happen I was just wondering if you could comment on.
How many others are there that you could look to do.
Let's say over the next couple of years.
Yes, Dave stay Bailey I think that there are others I think these three are probably the big ones for us at the moment and so weve really focused our attention on ensuring that we can get these accomplished had been in the works all year and as you can imagine this isn't a simple process and it isn't aided frankly by.
The cobot environment were traveling to outside of the United States has been very difficult. So the great majority of our focus has been on and on getting this these three done and I think we'll be very very pleased to have that accomplished here by year end or into the first quarter and I think those three markets will have a substantially.
Larger impact than any of the other markets at least in the short term that we may choose to take towards the agency model that said there are others are those would primarily be other substantial markets in western Europe and we are in early discussions with few others. We may see the opportunity to do this with a one.
One or two middle eastern markets, but at this time, our heavy focus is really on these three markets in Europe that I think will substantially benefit benefit us in 2021.
Thank you.
Thanks, Dave.
Thank you. Our next question is going to come from the line of Mike Matson with Needham and company.
Good morning, Thanks for taking my questions.
I guess I wanted to start with the international business. The decline that you saw there.
Obviously, there's some procedural impact, but I was wondering if you.
Could quantify or have a feel for the difference in the kind of de stocking slash.
Set sales impact versus the actual.
Procedure decline that happened there maybe you just don't have visibility into that.
Yes.
It's about 5.75 0.5 in that range. It was about three and a half about this time last year. So it's at a significant change in the overall cost of.
US products being sold into Brazil.
Okay. Thanks Thats helpful.
And then this move to this.
Supplier the 80% of your.
Manufacturing.
Can you has that helped your gross margin or do you expected to help your gross margin in that can you quantify what the impact of that is expected to be.
The assessment that you made that we were going to have to digest. Some of the technologies that we've acquired here over the last few years. Obviously, you know we have a huge ramp in the Orthodox business and we're aggressively still launching and deploying sets in training the sales force on the apathetic side. We're just you know we're not even and we're barely started in the first inning.
Here on Alpha fix while the apathy acquisition isn't a complicated wasn't complicated in terms of joining the organizations certainly launching that product in the United States and around the world is consuming a lot of energy. So I don't expect that you. You you you can expect not to see anything major on the horizon or it.
Least short term you might see some small bolt on stuff, particularly an external fixation area, we really like our position with the Orthodox hexapod, but there are some add on technologies and products. There that I think could strengthen our market position, but those would be very small and we continue to be interested in <unk>.
<unk> says as we've said in the past around now Digitization of the O R. Enter operative navigation solutions Preoperative planning solutions and so you know we are always in discussions there with how we craft our strategy in pediatrics, which we feel is frankly very different than than how the.
D O R as being digitized in the adult space, but nothing major on the horizon at least in the near term.
Can't predict that nobody can.
But regardless of go bid, we're very confident in our ability to continue to grow the business.
We have many many really positive growth drivers that we are going to be coming online here next year, and we're going to do very well to continue to take share both domestically and outside of the us.
Countries outside of the U S. So we're investing and growing those locations as well and we we would fully expect that that will continue into next year at a similar pace. The the really encouraging part is that when we talk about Appy fix for example, or for sex those systems are.
Very very capital proficient and so as those two systems become larger and larger percentage of our sales the knee for capital deployment Uhm, We'll go down and they were encouraged by that and think that will continue to benefit from that you know starting next year, a little bit but definitely beyond that point.
The return we're seeing obviously is a little skewed because we look at it on a trailing 12 months sales basis, and so with the second quarter sales softness excuse the the overall return, but the bottom line is we are absolutely pleased with the return we're getting on all of the set and particularly the new products that are.
Is from these accounts I would say more than half of these accounts are not.
Active users of the response system so.
So and there are as you know very substantial accounts with very substantial well known key opinion leaders. So while they may be using our tramon limb deformity products that havent historically been active users of the response system and even in some of these accounts, Matt we have struggled historically to get our product or the.
The response product approved because of potential contracting obligations. They have with another supplier like Medtronic heard a few and we're in a good spot now in that circumstance because if you remember correctly. The epifix device requires the use of two response screws and so to use the analytics device within an RV site. The site is.
Or 2030 years and so the fact that I think these accounts consistently see sales reps, we have extremely low turnover within our selling organization, they're being serviced across multiple different products by the same sales force I think the trust that were ultimately building with our customers now for six years of scoliosis.
Sales and 12 years of a product sales with these accounts.
Is a bit of a tidal wave that is every quarter every year, attracting more and more customers to our company more broadly and we have good technologies on the scoliosis side and I think it's bolstered by the add on of technology, So like Firefly as well as technologies like the mid C. And you know, we're just we're seeing kind of all.
Which is drastically different than a tethering procedure and even more drastically different than a fusion procedure and we have some of our first patients now that are a few months out completely returning to normal activities.
So the feedback from the customers have been has been extremely positive more.
More recently, we had a first user group discussion, where we had a number of the surgeons that in the RV sites that are waiting approval and that was led by one of the surgeons who has done a few of these procedures and there was very good strong participation and the surgeon was surgeons were very proud to share the results and their.
France is with the product after the first few months.
Right.
Thanks Kayla.
[music].