Q3 2022 Treace Medical Concepts Inc Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Mhm.
Good afternoon, everyone and welcome to our third quarter 2022 earnings conference call participating from the company today will be John Tree, Chief Executive Officer, and Mark Harris, 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 market today, after which we will host a question and session a question and answer session.
The press release can be found at the Investor Relations section of our website at investors thought trace dot com.
This 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 at various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
All forward looking statements are based upon current available information and creates 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 and our Form 10-K for the full year 2021 filed on March four 2022 for a detailed presentation of risks.
With that I will now turn the call over to John .
Thank you Debbie and good afternoon, everyone and thank you for joining us on our third quarter 2022 earnings conference call.
In the third quarter, we continued to execute on our strategic plan with positive momentum carried through resulting in sustained strong revenue growth and steady gains in our key operating metrics.
Revenue in the quarter increased 53% and increased 51% in the first nine months of 2022.
With our investments clearly delivering on our growth our operations are poised to scale beginning in Q4.
Before I go into details about the quarter, let's start with our market summary on where we stand today.
Our disruptive lack of flashy solution was specifically developed to correct. The root cause of the bunyan and address a large and underserved market.
We have identified an addressable 5 billion U S market of $1 1 million annual surgical candidates.
Which only 450000 undergo bunion surgery, each year, mainly due to limitations associated with current standards of care.
In the third quarter of 2022, we penetrated approximately 5% of the estimated 450000 annual sudden yet surgical bunion procedures in the U S.
Up from three 5% in the third quarter of 2021, and reflecting approximately 2% market penetration of the $1 1 million annual U S surgical candidates.
Turning to our Q3 results.
Revenue in the third quarter was $33 1 million, representing 53% growth over the third quarter of 2021.
During Q3, we continue to benefit from our commercial strategies and investments with improving demand trends as the quarter progressed.
Therefore, we're extremely pleased not only with our topline growth, but also a sustained positive trends in our key operating metrics, including.
Our expanding direct bunion and focused sales team, which accounted for 74% of our Q3 revenue mix coming in well ahead of our 70% target for the year.
Strong steady increases in the number of new surgeon users ended Q3 with 2218 active surgeons up 39% year over year.
Our year over year increase in trailing 12 months surgeon utilization with $10 one kits per surgeon in Q3 up from 10.0 cats a year ago.
And strong blended average selling prices of $5794 per case, representing 6% growth over the prior year due to continued adoption of our lack of class b many insertion system.
Complemented by increasing utilization of our Dr. Plasty Midfoot correction system.
And from early benefit from our very recently commercialized technologies, specifically, our S foray anatomic plating system and speed release and try to home tissue release instruments.
Speaking to our S. Four a plating system for a moment, we've been very pleased with the early response, we're seeing in the market specifically.
Specifically, we're seeing that surgeons are converting from our conventional plating kits to the S. Four a system because of its advanced anatomic fit and design advantages.
As adoption adoption trends continue we believe this has the potential to positively contribute to our blended ASP over time as <unk> carries a premium price versus our conventional planning systems.
Investments in our patient awareness DTC programs expansion of our direct bunion focused sales channel and targeted R&D innovations have supported our revenue growth and momentum.
Excited about the positive impact these investments, we're making on our business, giving us confidence that we have a well defined proven and scalable commercial strategy fueling our growth.
Given these positive trends, we are raising our full year 2022 revenue guidance to 135 million to $138 million, which reflects an increase of 43% to 46% over 2021 revenue.
Shifting now to our commercial and market development activities.
As previously discussed we've been making targeted investments this year with the goal of increasing our market penetration by advancing patient awareness surgeon education and demand for our <unk> and other related procedures.
Expanding the footprint and coverage of our bunion focused direct sales channel.
And driving more targeted R&D arent innovations into the marketplace.
Our DTC patient awareness initiatives are a key component of our commercial strategy and are designed to educate patients on banyu deformities and our differentiated solution encourage patients to seek more information and locate lap of plastic surgeons and their market and ultimately to schedule a surgical consultation.
We employ social media, Google search public relations and other media, including targeted television campaigns with strong metrics and performance data that show active patient engagement further supported by feedback from regularly conducted surgeon surveys.
We believe we have a highly effective DTC strategy and more patients have been asking for lap a classy while visiting their physicians.
Our surgeon education and training programs also continue to be well received.
Interest and attendance by new surgeons that are training events have been strong during 2022.
Likewise, our advanced training events, both online and in person for our tenured surgeons can acquire advanced skills and learn new approaches such as our mini incision and a doctor Plassey procedures continue to show strong demand.
Our education programs play a key role in the effective onboarding of new surgeon users and increasing skills of existing surgeons broadening their patient indications.
Through the first nine months of 2022.
We added 435 active surgeons compared to 317 surgeons in the same period last year.
This represents a 37% increase.
We continue to experience high turned out as evidenced by our most recent national training event in New Orleans, which was heavily oversubscribed.
We're encouraged to see steady gains in our surgeon user base.
As of the third quarter, our active surgeon base, which include surgeons, who performed at least one case in the trailing 12 months has now achieved 22% penetration of the estimated 10000 foot and ankle surgeons, who performed by new surgery in the U S.
As our surgeon base continues to mature we look forward to utilization gains not only with increased use of <unk>, but also our Dr. Plassey system as well as further adoption of our growing portfolio of complementary ancillary products all supported by our expanding direct sales channel and patient education and awareness initiatives.
This past weekend, we held a master's level educational event for our Centurion surgeons. This.
This Centurion group of surgeons represent some of our most experienced lap a classy surgeons in the country.
The event was held at our New company headquarters in <unk>, where we now have expanded didactic and hands on lab space designed for larger group training events.
This first of its kind educational event focused on advanced <unk>, Dr. Plassey techniques.
Pre and post op patient management interactive reviews of challenging cases in clinical research.
And also included hands on training with some of our future technologies, including our micro incision and speed play systems.
We are pleased to see the high level of interest and attendance for this meeting as well as the enthusiasm expressed by the attendees for the unique evergreen learning programs, we provide the lap a plastic surgeon community.
This community is a growing network of surgeons across the country, all with a shared passion for lap of plastic and with a desire to keep advancing their knowledge and honing their surgical skills in an effort to continuously improve the care they provide to their patients we.
We look forward to hosting additional surgeon training events at our new state of the art training facility in the future.
Turning now to our direct sales channel.
We have a highly specialized team of trees, including our rapidly growing direct sales force.
That is 100% focused on bunion and related Midfoot surgery and represents the only such organization. We're aware of in the Med Tech industry.
We believe this has contributed meaningfully to our revenue and market penetration.
We continue to invest in our direct sales team and transition to a higher mix of direct revenue over time.
In the third quarter, 74% of our revenue was generated by our direct sales force up sequentially, 68% from the second quarter and up 53% from just a year ago.
This also came in well ahead of our previously communicated 70% year end target and we now anticipate exiting the year approaching 80% direct revenue mix.
We ended the third quarter with 143 quota carrying direct sales reps, a 77% increase from the 81 direct reps we had at the end of 2021.
On strong interest from candidates to join our employee sales team. We continue to expect to exceed our year end goal of 150 quota carrying sales reps.
We believe these new reps are joining <unk> because of our unique growth profile and our culture driven by innovative technologies that are backed by strong clinical datasets and supported by our market, leading patient and surgeon education programs.
Including associate sales reps clinical specialists and sales management, our employee fleet in the field increased 63% to 234 sales employees in the third quarter compared to 144 employees at the end of last year.
We continue to experience the beneficial impacts from our direct sales team.
Our analytics show that our direct reps on average penetrate their markets faster generate higher surgeon utilization levels and sell at higher blended asps.
Our direct reps typically scale with significant revenue and cost leverage achieved within 12 to 24 months, primarily because they are exclusively focused on our products and fully utilize our full suite of corporate resources and programs.
Speaking now to our product development strategy, we have an R&D team committed to driving innovation to maintain our industry leadership with programs for next generation Bunion correction systems as well as the development of new ancillary products addressing other funding related pathologies.
And IP defense of our technology and innovations at the end of Q3, we had 38 granted U S patents and over 45 U S patent applications pending.
We highlighted two new exciting product innovations at the American orthopedic foot and ankle society or <unk> annual meeting in September , including the lap of classy micro incision system.
This is an advanced instrumentation option designed to further reduce both the incision size and related tissue dissection with our procedure.
This evolution of our instrumentation allows our patented lap of biopsy procedure to be performed through two centimeter or smaller incisions.
And our <unk> implant fixation platform.
This is a new fixation technology platform designed for rapid insertion through small incisions, serving as both an enabling technology for the micro lap a policy procedure and with broader applicability for a doctor classing midfoot procedures as well.
As a reminder, the speed played is currently under 500 10-K review with the FDA and is not available for sale in the U S.
We anticipate initial commercial availability of both of these technologies within the first half of 2023 pending FDA clearance.
We're excited about the potential benefits this micro <unk> speed play combination could bring to patients.
As with any procedure that involve smaller incisions and less tissue dissection. We believe this can translate to even faster recovery with less pain unless swelling.
In terms of reimbursement for our products CMS recently released its final rule for 2023, Medicare payment rates for hospital outpatient and ASC services to cover facility costs for surgical procedures, which includes implants used in the surgical case.
As a reminder, our products are used in procedures covered by certain well established CPT codes and we are pleased to note that the 2023 reimbursement rates for these codes have been finalized with mid single digit increases effective January .
This continues a multi year trend of low to mid single digit increases in facility reimbursement rates for the codes associated with our procedures.
We look forward to providing additional updates on our new product innovations as we continue to develop our pipeline centered on our core technologies and IP aimed at improving surgeon user experience patient outcomes and supporting continued market penetration.
Turning to our clinical data.
A key differentiating driver for our business is our commitment to clinical evidence, which we believe resonates well with both surgeons and patients.
From what we can see in the marketplace. We believe we're the only industry participant with a growing body of clinical data demonstrating rapid return to weight bearing and a walking boot with low recurrence rates at 12 months to 24 months and interim data demonstrating positive patient reported outcome scores following are bunion correction procedure.
At the 2020 to annual <unk> Conference, we announced new interim data from the aligned <unk> multicenter prospective clinical study demonstrating positive radio graphic and patient reported outcomes on patients with at least 12 months follow up following the lack of plassey procedure.
Building upon previous interim data analysis data on 159 study participants demonstrated early return to weight bearing and a walking boot at an average of eight three days.
A low recurrence rate defined as loss of radiographic correction with loss of correction observed and one 4% of patients.
And 81% reduction in pain by visual analog scale, or vas, and an 82%, 84% improvement in walking standing and social interaction scores, respectively based on the Manchester, Oxford foot questionnaire, our marks FQ reported at 24 months post procedure.
We believe we're the only company to offer this level of clinical evidence on our commercial surgical bunion product and it's rewarding to see the meaningful impact that <unk> is making on patients' lives.
Not only physically but socially and mentally as well through quantifiable interim data from validated scoring systems.
Again, we believe the positive interim data coming out of our differentiated align <unk> study resonates strongly with surgeon and patient communities and as reinforcing further market adoption of <unk>.
I'd now like to highlight two additional developments within the quarter.
On September 20th we held our first surgeon advisor event at the NASDAQ market site in New York.
The event included presentations from five leading <unk>, Dr. Plastic surgeons, highlighting the significant synergies of these two complementary surgical procedures, given that up to 30% a bunion patients present with a coexisting deformity of the midfoot known as <unk>.
And that the clinical literature demonstrates a higher rate of funding recurrence in patients where the funding is corrected but this mid foot deformities left unaddressed.
I wanted to expand on the significance of our Dr. Platt for innovation.
As a lack of policy system transformed a challenging freehand bunion operation into an instrumented reproducible procedure facilitating the potential for broad adoption by the foot and ankle surgeon community.
We believe a Dr. <unk> followed the same model.
We again are the first to offer an innovated instrumented system designed to deliver reproducible results for yet another technically challenging freehand operation of the Midfoot that has been largely left unaddressed until now.
We're excited about the long term opportunity that <unk> offers to surgeons their patients.
And for our business.
Early surgeon feedback has been very positive.
Our recent surgeon user survey indicates that on average they anticipate using adductor plassey and up to 15% of their lap of plassey procedures.
Contributing approximately $4000 of additional revenue to lap a plastic cases of Dr. <unk> represents a significant incremental market opportunity that we are focused on penetrating applying our formula of rapid design innovation surgeon training clinical data and direct to patient awareness activities.
Promoted and supported through our bunion focused direct sales force and fleet of expert clinical specialist employees.
Dr. <unk> is driving increased interest and treat medical products and our training programs and is also helping us gain new account approvals.
And finally, I am pleased to introduce and welcome two new Board members Lance Berry and Jane Kiernan.
Langton Jane bring decades of combined experience, leading medical device companies to our board.
Their perspectives will be valuable as we accelerate our strategic execution into our next phase of growth.
In closing we are executing to our plan supported by strong balance sheet that we believe is adequate to fully fund our planned commercial market and product development initiatives and take us into profitability.
Develop a specialized and scalable business model centered around our disruptive first mover technologies backed by strong IP clinical datasets and positive reimbursement trends that are advancing the standard of care and the surgical correction of bunions and related mid foot deformities.
Our differentiated and proven commercial strategy driven by industry's only bunion focused direct sales channel and DTC patient awareness and education initiatives.
All supported by a talented team of over 375 trees medical employees, all with a shared passion for our mission to improve the surgical outcomes for <unk> patients.
With that I'll now turn the call over to Mark to review our financial performance.
Mark.
Thank you John Good afternoon, everyone revenue in the third quarter was $33 1 million up from $21 6 million a year ago, representing an annual increase of 53% driven by increases in procedure volumes and an increase in blended average selling price due to adoption of our new technologies.
Third quarter revenue increased 10% sequentially over Q2.
In the third quarter 2022, the number of active surgeons performing at least one case on trailing 12 months increased 39% year over year to 2218, surgeons, which translates to 22% penetration of the estimated 10000 surgeons in the U S who performed bunion procedures.
Surgeon utilization increased to an average of $10 one cases per year up from an average of 10 cases a year ago.
This is notable.
As a reminder, we commercialized lap a class six seven years ago and in the past two years alone. We've added 1085 active surgeons nearly 50% of our total active surgeon base.
We're pleased with this growing number of surgeons, who on the average steadily increased utilization each year that you slap a classy due to positive patient outcomes and expanding indications in their practices.
We sold 5705 lack of plastic procedure kits in the third quarter, a 44% increase versus the prior year's third quarter blended average selling price was $5794 a 6% increase over the third quarter in 2021, driven by the adoption of our lab capacity.
And Dr plastic systems as well as early impact from our newest technologies, our <unk> kit speed release and try Tom instruments, we continue to see greater uptake of our other complementary or ancillary forefoot products as we add direct sales reps, who tend to focus more on selling these ancillary products.
While it lack of plastic cases, displacing other competitive by interrelated forklift products.
Gross margin was 80% in the third quarter of 2022 compared to 84% in the third quarter of 2021.
Basis point decrease in gross margin was due in part to an increase in capitalized surgical instruments and related depreciation for our new products and anticipated increased demand typically seen during our seasonally strong fourth quarter.
Total operating expenses were $37 7 million in the third quarter of 2022, which includes sales and marketing expenses of $25 million research and development expenses of $3 8 million and general and administrative expenses of $8 9 million. This compares to total operating expenses of $22 8 million in the third quarter of.
<unk> 2000, 22021, which included sales and marketing expenses of $16 million research and development expenses of $2 5 million and general and administrative expenses of $4 3 million.
The increase in operating expenses reflects strategic investments in our expanding direct sales channel investments in product innovation increased capacity requirements as well as support for other commercial initiatives.
Third quarter net loss was $12 $1 million or <unk> 22 per share compared to a net loss of $6 4 million or <unk> 12 per share for the same period 2021.
Cash and cash equivalents were $88 5 million as of September 32022.
Turning to our outlook for full year 2022, as John mentioned, we remain encouraged by the underlying strength and momentum in our business with our strategic investments clearly delivering on growth. Therefore, we are raising our full year 2022 revenue guidance to $135 million to $138 million an increase of 43.
To 46% over 2021 revenue.
This compares to our prior revenue guidance of $130 million to $134 million.
With productivity gains from our direct sales force as well as increasing leverage in the middle of our P&L, we expect our operations to scale beginning in Q4 with that let me turn the call over to the operator to open the line for your questions.
Thank you.
At this time, we will conduct a question and answer session.
As a reminder.
You will need to press star one.
And your telephone and wait for your name to the amount.
Please standby, while we compile the Q&A round.
Our first question comes from Robbie Marcus of JP Morgan Your line is open.
Hi, this is actually <unk> on for Ravi.
For taking my question and congrats on a good quarter.
Maybe just to start.
So you've been pretty substantially expanding your surgeon base quarter over quarter. So maybe if you could just talk about how youre balancing between driving adoption in new accounts and driving deeper penetration in existing lines and how would you compare the level of penetration and lots of policy share in some of those.
More experience accounts versus the new airlines.
Yes, Hi, Lilly John here.
I think we're focused on both fronts, where especially with our aggressive addition of new sales reps to the team we're building new surgeon relationships.
The reps are bringing new doctors to our training events getting them up and going on <unk> and then we're also working on the other side of <unk>.
Going deeper with our existing more tenured users as well and those users can be brought by the reps to advanced training courses, where surgeons will.
<unk> to broaden their indications.
Over time.
And Theyre also impacted downstream by our patient outreach initiatives. So I think we're working on both fronts, bringing on new users and focusing on increasing utilization with our existing user base as well.
Got it Thats helpful.
Maybe just a follow up.
We've seen you expand your portfolio pretty meaningfully over the last year or so with.
Robert I'm, sorry, I'd like to policy and some other new products.
What sort of impact have you seen that had on lots of policy adoption over the last few quarters have you seen that have any sort of halo will factor our poker.
Got it okay. Thank you.
Yes, great great Great question Doug.
Dr. <unk> for instance is a great example of that we're seeing a lot of new surgeon interest and treat medical products in general by offering a Dr. Platt fee and it just plays into this portfolio effect, we are having.
Those two overlapping technologies in a surgical case.
To hit that in training very efficiently and seeing surgeons coming onboard to our training events.
With interest in adductor, Plasty and other surgeons with interest and lap a classy and both of them get exposed to both and then I think our sales reps do a really nice job of rounding out the utilization to include some of our other ancillary products as they start to develop that relationship with the surgeon and the presence in the over time so.
We're definitely having a compound effect.
By having these new technologies offered.
Great. Thank you.
Please standby for the next question.
Our next question comes from drew <unk> from Morgan Stanley . Your line is open.
Hey, John and Mark Thanks for taking my questions and congratulations on a great quarter.
Maybe just just to start I know youre going to be anxious to talk about 2023, but just as you're starting to kind of think about next year can you just help us with any puts and takes any framework that we should be considering you're growing tremendously this quarter guidance moves higher I mean, it seems like you have nothing but tailwind at your back.
I'm looking at consensus it looks like it's.
$171 million.
Kind of now implying 25% growth off your updated guidance number but just.
Are you comfortable there and just maybe just talk about any moving pieces, we should be considering for next year.
Okay. Thanks drew and great topic I appreciate the question.
Yes.
John and I have been thinking about it is first of all we're really pleased with the Q3 results.
We put a lot of initiatives in place that are really working well.
To build the direct sales channel.
Some of our DTC efforts.
And our new product innovation. So we're really pleased where we are we're really tracking to expectations here, it's a little bit early to get into next year 2023, right now when we're right in the middle of our biggest quarter here, but with that said.
We are.
We really feel like we're poised to scale as we mentioned in our prepared remarks.
At.
We've really positioned ourselves well for this large Q4.
Season, as well as going into next year. So we'll provide more specifics in our Q4 earnings call next time, but we're really feeling good about where we are in all the positive metrics, we talked about the number of surgeons the utilization the blended asps. So we feel like we're really poised and positioned.
Good next year, but we'll get into more specifics next time.
Got it thank you and maybe just on the.
This horse side.
It sounded like Youre kind of comment a little bit above the 150.
Reps by year end.
Just maybe help put this in context of <unk>.
Now talking more about being a scalable business it sounds like youre likely going to see leverage in the fourth quarter.
But how should we kind of be thinking about a broader salesforce build.
Over the next.
612 months even.
Hi drew.
Thanks. Thanks This is John .
I think we're very happy with what we're seeing with these new repetitions and we've been on a very aggressive build out program. This year and we're going to continue to build that out next year.
I think what we're going to be looking for is what's that right optimum ratio of surgeons per rep.
We're dialing in on that efficiency really really well now and we're starting to figure out where to take that but we'll continue to invest in.
In our direct channel into next year, and obviously see some scaling.
And then 24 and beyond.
We'll just keep tuning it and growing it appropriately.
Got it and last one for me.
It's just.
Kind of following up on I think <unk> question earlier, but as Youre thinking about these new product launches, maybe just asking a little differently I think your 20%, 22% penetrated in our surgeon base today, but how should we kind of think about a doctor plasty and some of these newer products, maybe expanding surgeon penetration.
<unk>.
The next 12 months or so it sounds like it's more of a door opener for you. It might've been a barrier before by not having this product, but curious how this could really impact and mark just a housekeeping question I'm, sorry, I missed the procedure kits in the quarter. Thank you.
Okay.
I'll grab the first side of that and Mark can get the procedure kit number for you here, but.
I think we're going to continue to penetrate with with a doctor philosophy. We're in the early innings of this ballgame with Dr. <unk>, but we have tremendous interest within our current existing lap a plastic surgeon user base and then again that combination of having both a doctor flashing and lap a plastic.
In our portfolio is kind of supercharging more interest in coming to our trainings and as these procedures compounding cases, Dr <unk>, adding $4000 or so on top of a lap of policy procedures. So we really like that we really like what we're seeing and its impact on blended asps I wouldn't really say it was a barrier.
Not having it as a hindrance is just a it is another breakthrough from <unk> medical. It's the first time surgeons have had the ability to tackle a really challenging deformity of the midfoot and so it's been just largely unaddressed and we're giving those enabling tools and we're coupling that with excellent advanced.
Training, so that they really feel confident in doing it and then offering our clinical specialist employees that were going on these surgeons first one to three cases and be there and make sure. They go really smooth the learning curve on adductor Plassey is pretty quick relative frankly to lap a classy so the doctor uptake on it can happen pretty.
Quick again, it's never going to be the volume of <unk>, but we really like the add on capability.
And really the clinical problem that we're solving with this.
Andrew with respect to the procedure kits, we sold 5705 in the quarter. So that's a 44% increase from the prior year.
Thank you.
Please standby.
<unk>.
Our next question comes from Ryan Zimmerman.
Your line is open.
Hey, good afternoon, thanks for taking the questions and congrats as well on a great quarter I wanted to ask.
John on the fourth quarter, a little bit sorry for the near term question, but as we think about asps.
Try and spend a lot of time thinking about both asps and your doctor metrics.
But if I recall seasonally you see maybe a more benign.
Benign bond if you will maybe less variability in cases in the fourth quarter, just due to patients kind of achieve.
Achieving their deductibles earlier in the year and getting that money in surgery done and so I'm. Just wondering if you can elaborate on kind of what your product mix in your case mix index could look like in the fourth quarter as we think about.
ASP is.
In the fourth quarter.
Yeah, Hey, Ryan Thanks, Thanks for the question.
Yes, we talked about.
Maybe last quarter, some some lumpiness in our blended ASP.
Quarter to quarter, but over time being upward into the right.
We also mentioned that.
Traditionally in Q4, you get this high compression of patients, particularly in November December and maybe more flow to the private afcs, where they'll make a tradeoff and use of premium labor plassey kit, but maybe not or other ancillary products.
And that having maybe a little bit of a dampening effect on blended asps, but I think from.
Mark and I are seeing things right now.
I think we're going to continue to see some some good strong up into the right momentum and our blended asps as we go into Q4 that would be our expectation is as we sit here today.
That's very helpful. John I appreciate the color.
It's good to note for investors.
Maybe turn into.
The P&L for a little bit.
I appreciate your comments, Mark and John about being poised to scale, but if you look at the P&L. This quarter kind of maybe where we were thinking relative to kind of like it came in at an operating expenses on the sales and marketing line and so forth just help us think through kind of what poised to scale.
Really means particularly from a spend perspective.
If you could and just how to think about kind of some of those investments that youre, making.
Yeah. Thanks, Ryan that's a good question and something that we talk about regularly here from our operating perspective, we've talked about some of the growth that we've had over the last couple of years a lot of the investments the growth in the sales channel. There is a lot of build there. We've also talked about.
Expansion into a needed facility.
Where we can do more of our sales training, our R&D development and those things.
Prototyping warehousing all of those infrastructure needs and so this quarter reflects some of those investments and we believe that from that perspective.
We've kind of achieved.
A level that will.
Increased but only moderately going forward from a G&A perspective.
We'll continue to invest in sales and marketing.
As John talked about that we're focused on on that built in so that will continue into next year as well.
But hopefully that kind of helps you think about kind of the levels, where we are from a G&A perspective, and we will be of course building and investing more in product development. So the R&D line as well, but I think a lot of the major changes have really taken place over the.
The course of the last 12 to 18 months. So I think we're getting closer to that.
Steadier state level.
Okay.
Congrats again.
Thanks Ryan.
Thank you please standby.
Question.
Our next question comes from.
No.
Michael Your line is open.
Thank you very much.
Jumping between calls so I apologize.
Yes.
My question has been asked.
First you.
Obviously, you had a brilliant quarter congratulations.
But I get asked frequently about the kind of pressures.
We're seeing and hearing from other companies.
Right.
Staffing shortages of one countering out there or the consumer.
And just wondering.
It is sort of silly, but.
You don't seem to be seeing how immune.
Do you think you can continue to be in this complicated time.
Maybe you could just talk around that kind of a topic.
If you don't mind. Thank you.
Yes, Thanks, Rick that's a great topic and.
As a company we're not immune from some of these macro conditions that are happening out there, but as we've said in prior quarters, whether the topic was related to supply chain or different.
Different COVID-19 strands that what we're really focused on here as a company is executing our plans our initiatives and our strategic.
Playbook and so we're going to continue to do that really keep our heads down and really focus on what those items that we have control over and so far it's been working for us. So.
We see the same things that other companies are seeing but we believe as we are building a stronger sales force as we're doing all of those things that we've learned over the last few years work for us that will continue to to invest in those strategic areas of the company that have a return to us so.
So hopefully that provides a little more color as far as where our focus is.
Great.
And.
As you as you said <unk> had a number of products launched this year.
Yes.
<unk> came out of left field with an opportunity.
I'd be curious to hear where you are with that.
Penetration in your view, but I was wondering if you could talk a little.
More about what we could expect what you're expecting from the pipeline.
<unk>.
Sure.
A little bit.
I missed again I apologize if I missed it.
If you already talked about it we can talk about it offline.
Hey, Rick This is John I can hit it.
Quickie, So I think we're in the early innings.
Of the of Dr. <unk> <unk>.
<unk> opportunity first of all very early on lots of interest getting more and more cases every quarter.
Great feedback our S. Four a plating system.
Just very recently released uptake has been.
Very rapid.
It's early but it's adding adding.
Adding to our blended asps because it sells at a premium price and then our our tissue released tools.
Those are really nice theyre, adding several hundred dollars to a good number of cases already and we will continue to we think see more upside from those as we go forward and that as we look into 2023, we talked about earlier in the call the.
The micro incision system, the instrumentation for doing a lap of classes through two centimeter or smaller incision and the potential impacts that could have on quicker recovery and less swelling for patients.
Then the speed play technology, which is our next generation fixation platform that.
Enabling technology for micro lab capacity, but it's also a platform that can be used in mid foot procedures with a Dr. <unk> as well so beyond that we've got a pretty robust internal development pipeline that will kind of have a <unk>.
Steady rhythm of new product introductions as we go through the next 12 months to 24 months.
Got you. Thanks, so much.
Thanks, Craig.
I will now turn it back to Vivian.
Investor Relations Jill Martin.
Please go ahead.
Thank you operator.
On behalf of take medical Thank you everyone for joining us on our third quarter earnings Conference call.
This concludes our call and we'll report our next update following the close of our fourth quarter 2020.
Paul.
Ladies and gentlemen. This concludes today's call you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial one one.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Yes.
Yes.
Sure.
Okay.
Yes.
Okay.
[music].
[music].
[music].