Q3 2021 Treace Medical Concepts Inc Earnings Call
[music].
Welcome to the truth medical concepts third quarter 2021 earnings Conference call. My name is James and I'll be your operator for today's call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session.
During the Q&A session. If you have a question. Please press star one on your phone.
I'd now like to turn the call over to Sam been securing Sami you may begin.
Thanks James.
Good afternoon, everyone and welcome to our third quarter 2021 earnings call participating from the company today will be John <unk>, Chief Executive Officer, and Mark hair, Chief Financial Officer.
During the call we will offer commentary on our commercial activity and review our third quarter financial results released after the close of the market today after which we will host a question and answer session.
Press release can be found in the Investor Relations section of our website at investors that treats dot com.
Call is being recorded and will be archived in the investors section of our website.
Before we begin we would like to remind you that it is our intent that all forward looking statements made during today's call will be protected under the private Securities Litigation Reform Act of 1995.
Any statements that relate to expectations or predictions of future events and market trends as well as our estimated results or performance are forward looking statements. All forward looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from dosing.
Dissipated or implied by these forward looking statements. All forward looking statements are based upon current available information and treat it seems no obligation to update. These statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings, including our Form 10-Q.
For the third quarter to be filed later today in our prospectus filed on April 26, 2021 for a detailed presentation of risks with that I will now turn the call over to John.
Thank you Sam and good luck.
Good afternoon, everyone. Thank you for joining us on our third quarter 2021 earnings conference call.
The team at <unk> medical.
Key business and operating advancements during the quarter in spite of delta related headwinds.
With another quarter behind us as a public company I'm encouraged once again by strong underlying business fundamentals that we believe positions us well for future growth.
Our team continued to build on our momentum executing on several key financial and operating metrics.
Revenue in the quarter totaled $21 6 million, representing four 7% growth sequentially and 52% growth over the third quarter of 2020.
Despite pandemic related headwinds, including elective surgery delays and cancellations as well as typical Q3 seasonal softness in orthopedic elective procedures, our business continues to perform exceptionally well with solid execution across multiple initiatives, including.
Steady expansion of our customer base and the increase in number of active surgeon users.
Continued increase in surgeon utilization.
Increased average revenue per case.
Benefits from our ongoing shift to direct sales with over 53% of revenue from this channel in the third quarter.
And increased surgeon adoption of our lab capacity, many incision system, which we started rolling out in Q4 of 2020 as well as early positive feedback from our Dr. Plassey system permit for correction, which we launched during the third quarter.
As for the remainder of 2021.
Given our business trends and Covid related uncertainties, we are reaffirming our prior guidance of $90 million to $95 million, which reflects an increase of 57% to 65% over our 2020 annual revenue.
Turning now to discuss our market development activities.
Our addressable market remains large and underserved with a long runway ahead of us.
As at the end of Q3 2021, we believe our market share is around three 5% of the estimated 450000 annual bunion surgical procedures, which is an increase of 20 basis points sequentially.
About one 4% share of our $5 billion total addressable market, representing approximately $1 1 million annual surgical candidates.
A key differentiating driver for our business is our commitment to evident evidenced based medicine.
The 2021 annual meeting of the American orthopedic foot and ankle Society, which is held in Charlotte in September we announced the new interim data from the aligned <unk> clinical study demonstrating consistent positive radiographic and patient reported outcomes starting at six weeks and maintained at 24 months post surgery for patients following a lot of.
Policy procedure.
Building upon previous interim data analysis data on 151 study participants showed early return to wait very long to walking boot in an average of eight three days.
Significant improvement in radiographic measures, a three dimensional funded correction and patient reported pain reduction in quality of life measures life measurements at 12 months and 324 months following the lap of classic procedure.
Return to work within four weeks and a full unrestricted activity within four one months of surgery and continued low recurrence rate with only one out of 104 patients that reached the 12 month follow up time point, demonstrating recurrence for an implied recurrence rate of <unk>, 9%.
As a reminder growth rates reported in the literature with metatarsal osteotomy are highly variable and had been shown to be as high as 78%.
With our primary endpoint being recurrence at 24 months post surgery and a final patient readout in the first half of 2023. We're encouraged by this interim dataset continues to demonstrate success successful procedural and patient outcomes from lack of plastic surgery reinforcing our belief that we are advancing the standard of care and buy in surgery.
Further in October we announced our first patient treated in our many <unk> clinical study.
The study, which evaluates patient outcomes using our lap of classic millions vision system builds upon our outflow ongoing align <unk> study utilizes a mini incision approach, providing both surgeons and patients another option to surgically manage upon uniforms.
Our many incision system, there's been adapted from our standard lap of plastic system to enable the same three dimensional correction that addresses the root cause of the volume, but through a small three five centimeter incision, providing a more minimally invasive option.
Classy for patients.
<unk> system is designed to realign the entire metatarsal bone to alleviate pain and improve cosmetic appearance.
Opposed the cutting and shifting the bony bump which is the case with traditional metatarsal you ought to be procedures.
We look forward to advancing the <unk> study treating up to 200 patients at up to 20 centers across the U S and reporting on long term outcomes. Following the procedure with a primary effectiveness endpoint being radio graphic recurrence at 24 months.
Building on the success of our proprietary <unk> system in September we were very pleased to win this deal to announce the initial launch of our <unk> platform. They put correction system designed for reproducible correction of the Midfoot, providing additional support for finding patients.
Relatively early are Dr policy system rollout, we are encouraged by the favorable response received from the surgeon community.
The foot deformities may occur in up to 30% opinion patients and studies have found that the recurrence rates following bunnia correction to be meaningfully higher wanted to four rigs of the Midfoot are also left uncorrected near.
Dr. Depace system is designed to address that issue and we believe theres a real opportunity here to improve the outcome for many patients.
Just as our life of classic system has provided an instrumented and reproducible approach for Biogen, we are confident that our doctor Plassey system. Similarly offers enabling technology designed to convert another historically challenging freehand operation into one that's now instrumented for reproducibility.
Turning to surge and initiatives. We're pleased to note that our education and training programs remain well received.
Recently welcomed large groups of surgeons, who are alive lack of policy advanced rigs symposiums held in Dallas and Las Vegas for hands on training sessions led by experienced <unk> and deduct our plastic surgeons.
The feedback we receive from these events was quite favorable reinforcing that surgeon education and training is a top priority for the company.
Certain interest in sign ups for our trading events remain active and do not show any signs of letting up and we look forward to several additional live training events around the country to be held before the end of the year.
Finally, we're committed to driving innovation with R&D initiatives aimed at advancing both next generation systems as well as development of new technologies addressing concomitant conditions.
And diligently protecting those innovations with a robust portfolio of intellectual property.
To that point, we recently announced our 33 granted U S patents and yet another that builds off our pioneering work dating back to 2014 related to instrumentation and surgical methods for three point or <unk> binding correction.
This recent patent complements coverage obtained by another patent granted to us in March of this year.
Our R&D and IP innovations in the space of <unk> on your correction I've been prolific since 2014, and we continue to identify and pursue opportunities to expand our intellectual property portfolio.
And on a final note before I turn the call over to Mark Our executive leadership and board are pleased to welcome two new members to our board of directors effective October one.
Betsy Hannah and BT Jain with Deca.
Cadence of combined experience in the health care leadership between them.
<unk> already made an impact and will help guide us through our next phase of growth as we continue to drive a paradigm shift in the surgical management of Bunions and related mid foot deformities.
I'll now turn the call over to Mark to go over our financial performance.
Thank you John Good afternoon, everyone revenue in the third quarter was $21 $6 million, an increase of four 7% over the second quarter of 2021.
Up from $14 $3 million, a year ago, representing an increase of 52% over the third quarter 2020. The increase was led by our expanded surgeon base and higher utilization rates, which grew the number of lateral classic procedure kits sold. In addition, we saw continued favorable average selling prices in the quarter compared to the.
Prior year.
In the third quarter 2021 sales of lap a classy procedure kits were 3963, a 42, 5% increase versus the prior years third quarter with a blended average selling price of $5455, a 6% increase over the third quarter in 2020 and a moderate <unk>.
<unk> over Q2 of this year.
The number of active surgeons performing at least one case on the trailing 12 months in the third quarter increased 41% year over year to 1592, while utilization increased 16, 3% year over year to an average of 10.0 lack of policy procedure kits per active.
<unk>.
Gross margin increased to 84% in the third quarter of 2021 compared to 79, 6% in the third quarter 2020.
The 80 basis point gross margin expansion was due to increases in the number of lack of plassey procedure kits sold increases in blended asps and operational efficiencies Tony.
Total operating expenses were $22 $8 million in third quarter of 2021, including sales and marketing expenses of 16.0 million.
Research and development expenses of $2 $5 million in general and administrative expenses of $4 $3 million. This compares to total operating expenses of $11 $4 million, including sales and marketing expense of $8 1 million.
Research and development expenses of one $5 million in general administrative expenses of $1 8 million in the third quarter of 2020, the increase in expenses reflect investments made to support our growing business.
Third quarter net loss was $6 4 million or <unk> 12 per share compared to a net loss of $2 8 million or <unk> <unk> per share for the same period of 2020.
Cash and equivalents were $109 5 million as of September 30th.
2021, before concluding let me turn to our outlook for the remainder of 2021, we are reaffirming our full year 2021 revenue expectations of $92 $95 million, which represents 57% to 65% growth over 2020 full year revenue as a reminder, consistent with prior.
<unk> the fourth quarter is our seasonally largest quarter as many patients elect to have surgery. After meeting their annual insurance deductibles and user time over winter holidays to recover we are encouraged by the underlying strength and momentum of our business and comfortable at the midpoint of our revenue guidance range.
Mindful of the potential for continued Covid headwinds additional hospital staffing shortages or other factors that could negatively impact elective surgeries and our revenue our 2021 outlook reaffirms our commitment to focused execution and growth in our business with that let me turn the call over to the operator to open the line.
For your questions.
Thank you we can now begin the Q&A session. If you have a question. Please press star one on your phone.
Wish to be removed from the question queue, you May press the pound sooner the hash key.
And if you're using a speakerphone you may need to pick up the handset first before pressing the numbers. Once again, if you have a question. Please press star one on your phone.
And our first question comes from Robbie Marcus from Jpmorgan.
Hi, This is actually Lili on for Robbie Thanks for taking the question.
I was hoping you could just dive a little bit deeper into what you've been seeing on near term COVID-19 trends.
And how has that trended in the fourth quarter and what's assumed in guidance in terms of the recovery.
Yes.
Yeah.
Hi, John.
John.
We're definitely seeing a tail off in <unk>.
Delta case delays electric case cancellations or deferrals.
Recurring mainly in the southeast.
These are the geographies that impacted us most or gave us the most headwind during Q3 and.
We're hopeful that the headwinds experienced theyre going to continue to abate as the quarter progresses.
Third we're watchful for potential hospital staffing constraints impacting electric cases or.
Additional regional Delta flare ups of the holidays began with more large gatherings.
People.
We continue to believe the disruptions to procedures will be more of a scheduling issue with the surgical procedures are being rescheduled to a later time as too.
As opposed to an outright cancellation so.
Okay. That's helpful. Thanks, and just a quick follow up.
Is there any early feedback you can share on the launch of the Dr policy system.
How does that ramp progressed and how significant of a driver to sales can that be in 2021.
Yes.
While it's still early in the product rollout of the surgeon training. We are very pleased with the early response, we're seeing from surgeons using the system as well as our clinical resource we're seeing on the patient side not only in terms of.
Correcting these misalignment of the Midfoot, but also improving the cosmetic look to a more normal appearing and slimmer foot.
Once the mid point for me and the funding of both been corrected.
We probably had a marginally slight impact from this system with the early launch during Q3 on our blended ASP.
And we expect that will continue to increase as we expand surgeon adoption over the coming 369 months. So.
Great. Thank you.
Our next question is from.
Drew Ranieri of Morgan Stanley.
Hey, John and Mark Thanks for taking the questions just on capacity for a moment I know, it's very early days, but I was just wondering if you could provide a little bit more in terms of maybe the surgeon adoption that you are seeing are these existing lap a plus a lap of plasty users are you pulling some surgeons that have maybe.
<unk> been on the sidelines from using our technology.
Getting their first start with a doctor plastics.
Yes, Thanks John.
We've been providing the system at our training labs over the last quarter and training doctors. In addition to the lap of plastic system.
I will say at the <unk> conference in September.
Phoenix Surgeon conference there was a very positive reception to it.
And we expect to do several training of doctors that are interested that course, but.
To get to the heart of your question.
Very positive response to it once they get trained and we're starting to see some some nice early uptake.
Got it.
Appreciating that.
Both sides, whether it's a surgeon that hasnt use will have a flat fee due in the case of the Dr. Plasty for our salespeople will bring in the lap of policy system too.
Or lap of plastic customers.
Using the Dr. <unk> and there are lots of plastic cases.
Got it thank you.
And just understandably I mean, I think one of maybe the only a few small cap companies that have.
Met or beaten our expectations kind of in the quarter.
And even consensus but just curious if you could quantify maybe what the delta impact or staffing shortage impact might have cost you in the quarter, just kind of given the underlying momentum that we're seeing in the business from surgeon active surgeon adoption as well as utilization.
Well.
I think clearly it impacted us.
That said this is such a powerful business with so much underlying momentum that even through those those headwinds were able to outperform in Q3.
So I think it's hard to necessarily quantify where the growth rate would have been or how far beyond our over performance. We would have over performed but this is just a very strong.
Business with a lot of momentum the team is executing very very well and we're proud of our performance in Q3 and.
Looking forward to our.
Our performance in Q4.
Got it and then just lastly on the fourth quarter.
I understand.
The implied revenue guidance there in the fourth but just looking over the past couple of years you've had.
Net income positive in the fourth quarter over 2019 and 2020.
Is that going to be a similar dynamic here in the fourth quarter 2021, or should we be thinking that maybe you are spending a little bit more in the middle of the P&L in terms of.
Building out a direct sales organization, but any color there would be helpful. Thank you.
Yes. Thanks Shar. This is mark I'll take that one.
We're definitely looking to to have increased momentum in the investment in our sales and marketing.
And that's ultimately what we're looking to do.
Yeah.
From a from a net income perspective.
Our focus remains on really driving the topline and that's what we're really aiming to do so.
Don't necessarily looking to to be that.
Net income positive.
Now, but just to really maintain our first mover advantage and continue to get that additional support from our marketing efforts in building the commercial team.
Which we've continued to do very successfully so that's really been our focus and we will continue to be our focus for the next short and medium term.
Great. Thanks for taking my questions I appreciate it.
Absolutely thanks sure.
Our next question from Danielle.
<unk> of <unk> Leerink.
Hi, This is Andrew.
Sure Danielle thanks, so much for taking our question.
I was hoping that you could talk a little bit about physician training.
And kind of.
And what we should expect.
Going forward into the <unk>.
Into 2022.
D C kind of a similar rate to what we've seen in thank you.
Or do you think it would.
Could it trend higher.
Sure.
Was there any impact.
Thank you.
From Covid.
So is that with respect to the training of our new surgeon training is that the question yeah, sorry again.
Yes, it's Erin.
Yeah, Okay, sorry, this is John.
Not meaningful not a meaningful dampening.
You always get some some drop out or cancellations the day before the day of course, but that's typical but pretty strong demand it doesn't appear to be letting up in any way.
<unk> becomes more iconic and more accepted in.
Interest growth in a Dr Plasty and to hear about that.
That being taught at these these events and it just gives them more reasons to want to come so.
Seasonally we do taper off a little bit in the fourth quarter.
Really November December because of our surgical volume spikes, so high and frankly, a lot of doctors that don't have as much time to go to courses.
The final two months, because they're too busy operating.
But I think for next year.
To see a robust training program out of our company.
Very aggressive training program at our core.
And we would expect certain demand for those training events to remain really strong.
Okay.
And then also just.
On the adoption.
Within the two market opportunities just kind of walk.
Wanted to get a sense of whether.
The share gains that you see.
Dan has been.
Jim.
Yeah Amit.
In cases, primarily or kind of a max thanks.
Thank you so much.
Sure I think it's a mix.
We convert.
New customers on both sides with 70% of the incumbent procedure is being in the mid <unk>.
By volume, we're probably converting more of those than necessarily.
Transitioning of certain it does lap it is primarily to the lack of plastic system, which we do as well but.
I'd say were.
Doing well on both fronts and we'll continue to do so.
Great. Thanks, so much for taking the question.
Sure.
And our next question from Rick Wise of Stifel.
Hey, Ryan.
Are you doing.
Okay.
Hi.
I hate to go back to Covid again, but.
We've heard everybody listening answering so many calls and it's been so much discussion about.
Monthly trends.
Our survey data.
Obviously.
Our number than consensus numbers on the top line, but what.
We've heard a lot.
July strong August September week, and various things about October.
Either.
Stable.
Quick one to September or improving a little bit.
Is there anything to be gleaned from your trends in recent months.
Help us think about the setup for the fourth quarter or.
Has it been less volatile than others because of the unknown.
Penetration in the market the launch of new technologies, just wondering how we should think about it.
And I think that's a great question, Rick I would say that we definitely felt similar trends to what you were describing.
Q3.
It is a little bit.
And I think John Hughes.
Too many calls did I hear you say the words something about the innovation pipeline.
<unk>.
And obviously, you're launching new products regularly but just wondering how we should think about it as we contemplate not so much the next quarter, but.
234 quarters.
I'm sure you haven't told us everything.
Is there a lot in the pipeline should we expect the stated cadence of innovation.
And if that's the case.
Ken.
Talk to us about how you might deal with so many new products and training is that the feasibility of doing that [laughter] about fishing expedition question [laughter]. Okay.
Up.
Yeah, No I think.
Think that's right we have developments along a couple of different fronts at a pretty active R&D pipeline as they are very active R&D pipeline in advancing the lap of plastic platform, making it faster easier to use less invasive.
And once again, if you have a question please press star one.
And we have no more questions.
Okay.
So on behalf of truth medical Thank you for joining US today. This concludes our call and we look forward to our next update following the close of the fourth quarter and full year of 2021. Thank you.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect.
Yeah.
[music].
[music].
[music].
Welcome to the <unk> medical concepts third quarter 2021 earnings Conference call. My name is James and I'll be your operator for today's call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session.
During the Q&A session. If you have a question. Please press star one on your phone.
I'd now like to turn the call over to Sam Benzinger, Sam you may begin.
Thanks Jane.
Good afternoon, everyone and welcome to our third quarter 2021 earnings call participating from the company today will be John <unk>, Chief Executive Officer, and Mark hair, Chief Financial Officer.
During the call we will offer commentary on our commercial activity and review our third quarter financial results released after the close of the market today after which we will host a question and answer session.
Press release can be found in the Investor Relations section of our website at investors <unk> Dot com.
Call is being recorded and will be archived in the investors section of our website.
Before we begin we would like to remind you that it is our intent that all forward looking statements made during today's call will be protected under the private Securities Litigation Reform Act of 1095.
Any statements that relate to expectations or predictions of future events and market travelers as well as our estimated results or performance are forward looking statements. All forward looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from dosing.
Dissipated or implied by these forward looking statements. All forward looking statements are based upon current available information and treats assumes no obligation to update. These statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings, including our Form 10-Q.
For the third quarter can be filed later today in our prospectus filed on April 26, 2021 for a detailed presentation of risks with that I will now turn the call over to John.
Thank you Sam.
Good afternoon, everyone. Thank you for joining us on our third quarter 2021 earnings conference call.
The team at <unk> medical.
Key business and operating advancements during the quarter in spite of delta related headwinds.
With another quarter behind us as a public company on encouraged once again by strong underlying business fundamentals that we believe positions us well for future growth.
Our team continued to build on our momentum executing on several key financial and operating metrics.
Revenue in the quarter totaled $21 6 million, representing four 7% growth sequentially and 52% growth over the third quarter of 2020.
Despite pandemic related headwinds, including elective surgery delays and cancellations as well as typical Q3 seasonal softness in orthopedic elective procedures, our business continues to perform exceptionally well with solid execution across multiple initiatives, including.
Steady expansion of our customer base and the increase in number of active surgeon users.
Continued increase in surgeon utilization.
Increased average revenue per case.
Benefits from our ongoing shift to direct sales with over 53% of revenue from this channel in the third quarter.
And increased surgeon adoption of our lab capacity, many incision system, which we started rolling out in Q4 of 2020 as well as early positive feedback from our Dr. Plassey system permit for correction, which we launched during the third quarter.
As for the remainder of 2021.
Our business trends and Covid related uncertainties, we are reaffirming our prior guidance of $90 million to $95 million, which reflects an increase of 57% to 65% over our 2020 annual revenue.
There you go walking boots, and an average of eight three days.
Significant improvements in radiographic measures, a three dimensional banja correction and patient reported pain reduction in quality of life measure life measurements at 12 months in through 24 months following the lap of classy procedure.
Return to work within four weeks and to fawn restricted activity within $4 one months of surgery.
And continued low recurrence rate with only one out of 104 patients that reached the 12 month follow up time point, demonstrating recurrence for an implied recurrence rate of 9%.
As a reminder, recurrence rates reported in the literature with metatarsal osteotomy are highly variable and have been shown to be as high as 78%.
With our primary endpoint being recurrence at 24 months post surgery and a final patient readout in the first half of 2023.
We are encouraged by this interim dataset continues to demonstrate success successful procedural and patient outcomes from lots of plastic surgery reinforcing our belief that we're advancing the standard of care and buying surgery.
Further in October we announced our first patient treated and our many three D. A posse clinical study.
Sessions led by experienced Marvel Classic and a doctor plastic surgeons the.
The feedback we receive from these events was quite favorable reinforcing that surgeon education and training is a top priority for the company.
Certain interest in sign ups for our trading events remain active and do not show any signs of letting up and we look forward to several additional live training events around the country to be held before the end of the year.
Finally, we are committed to driving innovation with R&D initiatives aimed at advancing both next generation systems as well as development of new technologies addressing concomitant conditions.
And diligently protecting those innovations with a robust portfolio of intellectual property.
To this point, we recently announced our 33 granted U S patent and yet another that builds off our pioneering work dating back to 2014 related to instrumentation and surgical methods for three point or.
Or <unk> binding correction.
This recent patent complements coverage obtained by another patent granted to us in March of this year.
Our R&D and IP innovations in the space of <unk> on your correction I've been prolific since 2014, and we continue to identify and pursue opportunities to expand our intellectual property portfolio.
Trailing 12 months in the third quarter increased 41% year over year to 1592, while utilization increased 16, 3% year over year to an average of 10.0 lap of plassey procedure kits per active surgeon.
Gross margin increased to 84% in the third quarter of 2021 compared to 79, 6% in the third quarter 2020 to 80 basis point gross margin expansion was due to increases in the number of lack of plassey procedure kits sold increases in blended asps and operational efficiencies.
Total operating expenses were $22 $8 million third quarter of 2021, including sales and marketing expenses of 16.0 million.
Research and development expenses of $2 $5 million in general and administrative expenses of $4 3 million. This compares to total operating expenses of $11 $4 million, including sales and marketing expense of $8 1 million.
Research and development expenses of one $5 million in general administrative expenses of $1 8 million in the third quarter of 2020.
The increase in expenses reflect investments made to support our growing business.
Third quarter net loss was $6 4 million or <unk> 12 per share compared to a net loss of $2 8 million or <unk> <unk> per share for the same period of 2020.
Cash and equivalents were $109 $5 million as of September 30th.
2021, before concluding let me turn to our outlook for the remainder of 2021, we are reaffirming our full year 2021 revenue expectations of $90 million to $95 million, which represents 57% to 65% growth over 2020 full year revenue as a reminder, consistent with prior.
Product rollout of surgeon training, we are very pleased with the early response, we're seeing from surgeons using the system.
Well as a clinical resorts were seeing on the patient side not only in terms of correcting these missile alignments of the Midfoot, but also improving the cosmetic look to a more normal appearing and slimmer foot.
Once the mid point of forming an opinion that both been corrected.
We probably had a marginally slight impact from this system with the early launch during Q3 on our blended ASP.
And we expect that will continue to increase as we expand surgeon adoption of the coming 369 months. So.
Great. Thank you.
Our next question is from.
Drew Ranieri of Morgan Stanley.
Hey, John and Mark Thanks for taking the questions.
Just on the plastics for a moment I know, it's very early days, but I was just wondering if you could provide a little bit more in terms of maybe the surgeon adoption that you are seeing are these existing lap a plus <unk> users are you pulling some surgeons that have maybe been on the sidelines from using our technology.
Getting their first start with the Dr plastic.
Yes, Thanks John.
We've been providing the system at our training labs over the last quarter and training doctors. In addition to the lap of plastic system.
I will say it.
<unk> conference in September.
Orthopedic surgeon conference there was a very positive reception to it.
Lastly, and.
We expect to do several training of doctors that had interest at that course, but.
To get to the heart of your question.
We were able to outperform in Q3.
So I think it's hard to necessarily quantify where the growth rate would've been or how far beyond our overperformance, we would've overperformed, but this is just a very strong.
Business with a lot of momentum the team is executing very very well and we're proud of our performance in Q3 and.
Looking forward to.
Our performance of Q4.
And then just lastly on the fourth quarter.
I understand the implied revenue guidance there in the fourth but just looking over the past couple of years you you've hit net income positive in the fourth quarter over 2019, and 2020, I mean is that going to be a similar dynamic here in the fourth quarter of 2021 or.
Should we be thinking that maybe you're spending a little bit more in the middle of the P&L in terms of Ah building out of direct sales organization, but any color there would be helpful. Thank you.
Yeah. Thanks. Thanks for this is mark I'll I'll take that you know, we're definitely looking to to have increased momentum and the investment in our sales and marketing and that that is ultimately what we're looking to do.
[laughter].
From a net income perspective, you know our focus remains on really driving the top line and that's what we're really aiming to do so.
Don't necessarily looking to to to be that.
Training program is that our core and we would expect certain demand for those training events to remain really strong.
Okay.
And then also just.
On the adoption.
Within the two market opportunities just kind of wanted to get a sense of whether the share games that that you've seen have been.
From either osteotomy, Lop infusion cases, primarily uhm or kind of a mix.
Thanks, so much.
Sure I think it's a mix.
We we convert.
New customers on both sides with 70% of the income.
Procedure.
Still at a reduction in elective surgeries were aware of that but in addition to that we are seeing some hospitals that have staffing shortages. So.
We're just not 100% sure how that's going to play out in the rest of the fourth quarter.
But we have seen some loosening of some of those headwinds as we've entered the fourth quarter. So we're still optimistic.
Gotcha.
And I think John used.
Again too many cars did I hear you say.
So think about.
Innovation pipeline.
And obviously, you're launching new products regularly but just wondering how we should think about it as we contemplate not so much the next quarter, but.
And obviously, you're launching new products regularly but just wondering how we should think about it as we contemplate not so much the next quarter, but.
Next 234 quarters.
I'm sure you haven't told us everything.
Is there a lot in the pipeline should we expect a steady cadence of innovation.
And if that's the case.
Ken.
Talk to us about how you might deal with so many new products and training.
It may mark.
Obviously.
Sales and marketing stepped up.
Couple of million sequentially each quarter of this year at you're talking about building. Your commercial team maybe you could just give us a little more color on where we are in that process, where these dollars are going to trend.
In coming quarters and.
Is that process, just going to keep going and going and going.
Yeah, Great Great credit question wreck, absolutely we continue to plan to invest in that commercial organization. We think that has a great return on investment and what we're doing is we're building in the commercial team.
We're adding.
Hiring a lot of sales reps to drive this business and in addition to that or spending.
Are investing in the marketing focus.
We've stepped up our efforts across the board and we continued to step that up and so I would I would look for increased investment in the fourth quarter over what you saw on the third.
Gotcha. Thank you very much.
Absolutely.
Thanks, Rick.
And once again, if you have a question please press star one.
And we have no more questions.
So I'll be <unk> medical thank you for joining US today. This concludes our call and we look forward to our next update following the close of the fourth quarter and full year of 2021. Thank you.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect.