Q4 2022 Paragon 28 Inc Earnings Call

Speaker 1: Good afternoon and welcome to the Paragon 28 or quarter 2022 earnings conference call. Currently participants are in listen only mode. We'll be facilitating a question and answer session at the end of today's call. As a reminder, this call is being recorded for replay purposes. And I would like to hand the conference over to your host today, Mr. Matthew Brinkman.

Speaker 1: Mr. Brinkman, please go ahead.

Speaker 2: Good afternoon and thank you for joining Paragon 28's fourth quarter 2022 financial results and earnings call. Presenting on today's call are Albert DeCosta, Chairman and Chief Executive Officer and Steve Deutsch, Chief Financial Officer.

Speaker 2: Before we begin, I would like to remind you that management will make statements during this call that will include forward-looking statements within the Meaning and Federal Securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include statements made as to the company's score management and management

Speaker 2: Stop. Forward-looking statements include statements made as the company's or management's intentions, hopes, beliefs, expectations, or predictions of future events. Results or performance. These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ material from these forward-looking statements.

Speaker 2: information, and Paragon 28 assumes no obligation, except as required by law, to update these statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today.

Speaker 2: During this presentation, we will refer to the non-GAAP financial measure of adjusted EBITDA and constant currency net revenue growth. A reconciliation to the most comparable GAAP financial measure, net income, and reported net revenue growth is contained in our press release issued earlier today. And with that, I'll turn the call over to Albert.

Speaker 2: Thanks, Matt. Good afternoon and welcome to our fourth quarter 2022 earnings call. Throughout this call, I will provide an overview of our fourth quarter and 2022 annual performance, followed by a business update. Steve will then provide additional detail regarding our fourth quarter and full year 2022 results.

Speaker 2: plus an overview of our 2023 financial guidance. We will then open the call to Q&A.

Speaker 2: To kick things off, total net revenue for the fourth quarter and full year of 2022 was $51.5 million and $181.4 million, respectively.

Speaker 2: contributing to a 25% constant currency growth rate for the year, which exceeded the top end of our preliminary estimates, preannounced on January 10th.

Speaker 2: We estimate our revenue growth in 2022 is well over three times the growth rate of the overall global foot and ankle market, which we estimate to be 7%, and to be approaching $5 billion annually.

Speaker 2: Importantly, during 2022, which was our first full year as a publicly traded company, we made many strategic and opportunistic investments, positioning P28 for strong momentum for years to come.

Speaker 2: These included expanding research and development investments by over 50% expanding our U.S. sales force by almost 15% doubling the size of our international team and putting in place scalable operating and corporate infrastructures to enable our growth and mission to improve foot navigation outcomes. is calling

Speaker 2: As we think about our future growth and capital deployment, investments in new product development and Salesforce expansion will continue to be our top priorities. These investments will drive our future commercial success and will enable P28 to increase its profitability in cash flow in 2023 and beyond.

Speaker 2: Speaking of cash, we recently completed a follow-on public stock offering which bolstered our cash position and importantly increased our F&A common stock liquidity.

Speaker 2: He will discuss each of these topics further in his prepared remarks.

Speaker 2: With that, I will share more details on our fourth quarter and full year 2022 revenue performance.

Speaker 3: To start, I continue to be impressed with our team's strong execution, regardless of the environment.

Speaker 3: US net revenue for the fourth quarter and full year of 2022 was $45.3 million and $158.1 million, respectively, contributing to a 22% growth rate for the year.

Speaker 3: We saw improvements in all key growth indicators in the US, which we will discuss shortly.

Speaker 3: International net revenue for the fourth quarter and full year of 2022 was $6.2 million and $23.3 million, contributing to 34 percent reported growth and 47 percent constant currency growth compared to the full year of 2021.

Speaker 3: International revenue growth was driven primarily by our largest international markets of Australia, South Africa, and the United Kingdom.

Speaker 3: I will now share details around our key U.S. revenue growth drivers.

Speaker 3: 2022 was a great year for new products for Paragon 28 with 10 launches.

Speaker 3: Several of these products were entirely new indications or markets for our company, such as external fixation and soft tissue repair. We kick-started our external fixation business when we launched MonkeyBars pin-to-bar and MonkeyRings circular fixation systems, which were highly complementary to existing fracture fixation and Charco franchises.

Speaker 3: In soft tissue, we have launched multiple products that span multiple indications in flood manoeuvre, including the Grappler-Sutra anchor, TinoTac 2.0, Paratrooper Planner Plate, and our React Stabilization System.

Speaker 3: We're also excited to have augmented other existing product lines with launches of our Gorilla Central Column Fusion Plating System, Phantom Hindfoot TTC Nail 2.0, and ParaDerm Non-Fenestrated Thermal Matrix.

Speaker 3: We are incredibly proud of our innovative and broad product portfolio, hosting 75 product families across all foot and ankle market subsegments.

Speaker 3: This continues to be a key differentiator for Paragon 28, enabling deeper relationships with our existing Surgeon customers, adding new customers, and expanding our excellent sales force.

Speaker 3: Innovation has been and will continue to be the tip of the spear of our success. In 2023 and beyond, we plan to bring a balance of new and next generation products to market with over 25 active projects underway, many of which we expect to launch over the next 24 months. Our innovative and broad product portfolio fits nicely in the hands of our best in class and plenty...

Speaker 3: to 213 in the fourth quarter of 2021, and 218 in the third quarter of 2022, representing increases of 10% year over year and 7% sequentially compared to the third quarter of 2022. As a reminder, producing sales reps log revenue in each month of the quarter and account for well over 90% of our US revenue.

Speaker 3: Salesforce productivity gains in our expanded Salesforce resulted in P28 doing business with well over 2,000 US Surgeon customers, including almost 700 US producing surgeons during the fourth quarter, both records and double digit percentage increases compared to the prior year.

Speaker 3: In closing, a sincere thank you to all P28 team members around the world who continue to deliver day in and day out. During 2022, we made investments that will drive our long-term growth and benefit our shareholders. I couldn't be more excited about our future together at Paragon 28. I will now turn it over to Steve.

Speaker 2: Thank you, Albert. Welcome to our fourth quarter and full year 2022 financial results.

Speaker 4: Expanding on Albert's earlier comments,

Speaker 4: Paragon 28's net revenue for the fourth quarter of 2022 was $51.5 million, representing 20% reported growth and 22% constant currency growth compared to the fourth quarter of 2021.

Speaker 4: For a currency headwinds, reduced reported quarterly net revenue and net revenue growth by approximately $700,000.

Speaker 4: for approximately two percentage points respectively.

Speaker 4: Our full year net revenue for 2022 was $181.4 million.

Speaker 4: representing 23% reported growth and 25% constant currency growth compared to the fourth quarter of 2021. Foreign currency headwinds reduced reported annual net revenue.

Speaker 4: net revenue growth by approximately 2.1 million dollars.

Speaker 4: net revenue growth by approximately $2.1 million and two percentage points, respectively.

Speaker 4: Gross profit margin was 82% for both of the quarters of 2022 and 2021.

Speaker 4: Gross profit margin for the full year of 2022 was 82% compared to 81% for 2021.

Speaker 4: The increase for the full year of 2022 was primarily due to lower excess and obsolete inventory expense in the first half of 2022. Research and development costs were $6.6 million, or 13% of revenue, for the fourth quarter of 2022.

Speaker 4: compared to $4.9 million or 11% of revenue for the fourth quarter of 2021.

Speaker 4: Research and development costs were $24.7 million, or 14% of revenue for the full year of 2022, compared to $16.1 million, or 11% of revenue for the full year of 2021.

Speaker 4: During 2022, research and development increased by more than 50%, significantly advancing our product development activities.

Speaker 4: During 2022, research and development increased by more than 50%, significantly advancing our product development activities, including Smart28.

Speaker 4: Selling general and administrative expense was $44.5 million, or approximately 86% of revenue for the fourth quarter of 2022.

Speaker 4: Compared to $35 million or 82% of revenue in the fourth quarter of 2021.

Speaker 4: Selling general and administrative expense was $159.3 million, or approximately 88% of revenue for the full year of 2022 compared to $114.3 million, or 78% of revenue for the full year of 2021.

Speaker 4: During 2022, we made significant investments in selling and marketing, including a nearly 15% expansion of our sales force and trained a record number of surgeons in person.

Speaker 4: We also made important investments in corporate and operational infrastructures, including the successful launch of SAP.

Speaker 4: Adjusted EBITDA for the fourth quarter of 2022 was a $1.5 million loss.

Speaker 4: compared to $100,000 of income for the fourth quarter of 2021. We experienced sequential quarterly improvements in both adjusted EBITDA and adjusted EBITDA margins during each quarter of 2022.

Speaker 4: Adjusted EBITDA for the full year of 2022 with a $10.7 million loss compared to $3.1 million of income for the full year of 2021, reflecting the additional opportunistic investments made during 2022.

Speaker 4: P28's revenue growth rates are expected to continue well above market growth rates.

Speaker 4: And this expected revenue growth, combined with leveraging of investments made in 2022 and earlier, will bring P28 closer to break even adjusted EBITDA on an annualized basis during 2023.

Speaker 4: Turning to liquidity. Coda liquidity was approximately $100 million at December 31, 2022.

Speaker 4: which includes up to $60 million of cash available via our credit facility.

Speaker 4: We had two first quarter 2023 events that impacted our liquidity position.

Speaker 4: including the legal settlement, which includes $21 million in additional payments in the first half of 2023, and our recent follow-on offering, where we raised $69 million of net proceeds.

Speaker 4: by selling 4.3 million shares of common stock.

Speaker 4: The follow-on offering also had a secondary component with 3.2 million shares sold to new and existing institutional shareholders.

Speaker 4: The follow-on offering increased our public toilet by approximately 30%, and we have seen a nice increase in F&A daily volumes since completing the follow-on offering.

Speaker 4: Accounting for these recent events, we have almost $150 million of pro forma liquidity as of December 31, 2022, including nearly $90 million of cash.

Speaker 4: We are pleased with our liquidity position, which we expect to enable us to reach cash flow breakeven, as we expect to see continued improvements in operating leverage and more normalized cash flow.

Speaker 4: Turning to our 2023 net revenue guidance.

Speaker 4: Notwithstanding the strong momentum in our business, we remain mindful of the uncertain economic environment and its potential impact on future elective foot-mancle procedures.

Speaker 4: We estimate full year 2023 revenue of $214 to $218 million, representing 18 to 20 percent reported growth.

Speaker 4: We have had a terrific start to 2023, and we estimate first quarter net revenue year over year reported growth to be an excess of 20 percent.

Speaker 4: despite P28's strong growth comp of 25% for the first quarter of 2022.

Speaker 4: We expect strong performances in each quarter of 2023, but our third quarter is estimated to be the lowest year-over-year growth quarter of 2023, as the third quarter of 2022 was last year's strongest growth quarter at nearly 30%.

Speaker 4: Our revenue guidance also assumes currency translation rates remain consistent with current translation rates.

That is the end of our prepared remarks.

Again, to ask a question, press star 1. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. We will pause here briefly as questions are registered.

First question is from the line of Kyle Rose with Canaccord. Your line is now open. Your line is now open.

Great, good afternoon everybody. So I wanted to start on the product side of the business.

First, maybe just talk a little bit about the ankle portfolio, where you're at as far as the rollout and the adoption of the total ankle, and how we should think about the tail that's fitting in there when we move forward through the year. And then, soft tissue and X-Pix were obviously big in 2022. I just wondered if you could frame those launches for us as we...

one. And just warning you, you loaded that question with a lot of subparts, so, but it's right in my will house. First off, maybe to answer the question about ankle. The ankle segment for us has been pretty exciting really since just before COVID, where we launched a couple of our key ankle fusion products, the TTC nail.

and the ankle fusion plating system we launched just before COVID. And then on the backside of COVID in 2020, we launched the total ankle replacement. So some really significant launches there. And they happen to be products that are pretty heavy on the medical education side. So we really didn't see those products kick into their momentum until mid-2021.

and 2022 is a pretty exciting year for those products as they started to take off. I will say on the total ankle side, one of the amazing things there is I think that's a part of our portfolio that never stops growing. So we'll continue to look.

and expand that offering into more and more indications around ankle replacement. And I think that even ties directly to the total talus replacement that you mentioned, which was one of our acquisitions in 21 of the Additive Orthopedics line. That product is really, really exciting for how it complements everything around the ankle and gives Travis always the momentum of the eye into how much has he found and wearable for them. And this is one terrific application that the dancers put together to end the healing that is a huge deal for a lot of our

Surgeons options that didn't exist before and so there's a lot of excitement around all of those products in our ankle portfolio one area that we launched really late in 22 was the beginning of the super malleolar system which is a realignment of the ankle and We launched a part of that and more of a beta launch and you're going to see some of that really kicking in and Q1 here

as we continue to expand that supramalleolar offering, and that's gonna be one more complimentary piece to the ankle portfolio. And so that's been an exciting area there. As far as DiZior and additive orthopedics, additive orthopedics was...

instantly complementary to what we do. And so we saw some really nice traction with that one. The Dizior software acquisition was more of an internal project in the beginning phases where we started using that in our own development strategies and answering some questions and

and lightning speed, and so we were pretty excited to use that in-house. But you could expect to start to see some of the commercial introduction here in the next 12 months, maybe a limited launch at the end of this year, and then maybe some continued launches on that platform next year.

And I'm really excited about that, because I think once you see it, it's hard to unsee it, and you're really going to start to appreciate what the benefit can be to the foot and ankle surgeon, and more importantly to the patients as we're improving outcomes there. So Kyle, I appreciate the question. I hope I answered all the parts of that. Oh, I think you had one more question about the X-fix and soft tissue. Yeah. And you're absolutely awesome.

amazing launches for us last year. The X-Rex in particular is one that, that was a space in the market where we really didn't participate yet. And so that was a really nice introduction for us and we saw great momentum last year. Actually momentum that exceeded our expectations. And then we launched a couple of really key products in the soft tissue space.

The soft tissue is a little bit different in that I think there's a soft tissue component that you can expect to see in almost every indication around foot and ankle. And so the soft tissue portfolio is something you're going to continue to see expanding over time. And it's really exciting for us to be able to participate in almost every aspect of a foot and ankle surgery today with improved.

technology that hopefully is going to mean something to the outcomes for these patients.

Great, and then I'm going to be greeting you and just ask one follow up. It's just, look, you went public in 2021. You made some big investments in the commercial structure as well as training. You just completed another financing. How should we think about what that does with respect to pulling forward some investments you might have made in the past?

new product development, continue to provide world-class medical education. But the increases that we saw on a year-over-year basis in 2022 won't continue as we move forward. So while we're going to increase our operating expense investments in those categories, we're going to stay here, this year.

the year-over-year increase in 23 won't be as significant. In fact, it'll be less than our expected revenue growth for this year, which is gonna drive pretty significant leverage into our P&L as we move forward.

Thank you. Thank you.

Thank you. Thank you for your question.

The next question is from the line of Matthew O'Brien with Piper Sandler. Your line is now open. Hey, this is Phil on for Matt. Thanks for taking our questions and congrats on another strong quarter. I guess just for starters, I'll ask about the guidance. My question is 18 to 20 percent.

not bracketed the street. I was just hoping to get color on your expectation for cadence, any seasonality. And you mentioned the general macroeconomic landscape. What exactly is built in into guidance there? You know, what gets you to the top end of that range and vice versa? That we would certainlyador simply to top up in next season. But we think that concepts would ultimately focus at

How should we think about any ability for upside to flow through to the EBITD line? Thank you.

Thanks Bill, Steve. Good question. And maybe I'd start by saying that P28 really is as strong as it's ever been. And our expectation is that we're going to continue to grow far and above the overall foot and ankle market growth rate, which we estimate to be 7%. And that's driven by our best and class and innovative and broad portfolio.

that combined with our great commercial team are really differentiators for us. So that is a baseline expectation as part of our guidance and that's what we can control. You know what we can't control are certain things uncertainties like inflation and interest rates and their potential impact on foot and ankle elective procedures. So as we begin the year we're just you know we're looking at that and being prudent thinking through.

the guidance for the full year and we're seven or eight weeks into the new year but we're incredibly excited about what we've done so far. January and February have been terrific and clearly exceeded our plans so we expect to grow at least 20 percent in the first quarter and January and February have us well on our way.

Regarding upside for EBITDA, what we built into our prepared remarks is a $5 to $10 million improvement in EBITDA compared to 2022. And that continues to give us the ability to make critical investments and opportunistic investments that we see to expand our sales force.

to continue accelerating new product development and also continuing to train a number of surgeons around the world. So, you know, we're excited as we can be. You know, our business is as strong as I've ever seen it. Albert is more, you know, excited than I've ever seen him in the two and a half years I've known him, so onward and upward as we roll into 23.

Thanks for that color. And I guess just from a competition standpoint, I appreciate your comments about growing three times the rest of the market. Can you provide any color on who you're taking share from maybe and where do you see the broader market here in 2023? You know.

exiting the COVID era, quote unquote, alongside some of these macroeconomic challenges, do you expect the market to continue to grow perhaps above what it has done historically, or what do you see on that front? Thank you.

Yeah, no, we expect the market to continue to be resilient and we think 7% or above is a sustainable growth rate with the type of environment that we're operating within today. Now, if we do see uncertainty develop that change and.

Interest rates continue to go higher, inflation goes higher, and that changes employment, data, and statistics. You know, we can't forecast for that, but what we know about our business is that it's incredibly resilient, and about a third of our market is non-elective. So we have a nice hedge against recession.

And we have proven in the past that we can grow our business even in tough environments. And that's really a shout out to our commercial team around not only the US, but around the world to figure out a way to get things done.

Thank you so much.

Thank you for your question.

Next question is from the line of Craig Bijo with Bank of America. Your line is now open.

Good afternoon, guys. Thanks for taking the questions. I wanted to start with rep productivity. Obviously, you had strong rep productivity in 22, and it sounds like your Salesforce expansion in 23 might not.

be quite as large as it was in 22, if I'm reading your comments right, Steve. So obviously that would mean that productivity is going to improve again.

And just wanted to get a little bit more color on you know where you see that productivity coming from are you capturing? You know are the docs doing more more procedures with with your products Are you getting more revenue per case and so any any any more detail on that would be great?

Thanks Craig and you know if the impression was given that we don't expect our Salesforce to continue to expand that was you know an erroneous perception or maybe we didn't state it clearly enough but we continue to expect our Salesforce to expand.

It grew 15 percent overall in 2022. And in the fourth quarter we saw the best increase year-over-year in producing rep count that we had seen about 10 percent. So we have what I would call more balanced growth in the fourth quarter in the U.S. about equal parts.

excuse me, Salesforce productivity, as well as increased number of producing reps. And that's what, you know, we think back to when we were going public, that was the way we really thought about the business, equal parts productivity, equal parts gains in number of Salesforce. And so that's really what we're expecting as we move forward. And to answer your other question, you know, we continue to see terrific gains in productivity and where that starts with.

is these new products that we're bringing to market, and then the training on these new products for existing surgeons, but also new surgeons that we didn't get to before, because maybe we didn't have an X fix, or maybe we didn't have an ankle. So that drives productivity. And that's gonna continue. We're just getting started on some of these new products.

We launched a number of new products in midpoint of 2022. They're really starting to roll, so much to the extent that we're buying and making sure that we have enough inventory. We're off to such a great start this year, making sure we can continue to meet the demand for these products.

Yeah, equal parts productivity and Salesforce expansion as we move forward in the US. Got it. Thanks, Steven. Maybe clarification. I meant that the Salesforce expansion, it sounded like it wouldn't be at the same rate as it was in 22. But again, correct me if that's it. That's wrong.

No, look, we think we can continue to increase our sales force, you know, without giving specific guidance on where those are going. You know, we said we can double that over time. And I think a double digit increase in our sales force from a producing wrap overall perspective as well is very, very feasible and likely for us as we roll forward.

Great, thanks. And one, if I could ask one more, just, you know, obviously, our US growth was pretty strong in the second half. So any color on how to think about US or US growth in in 2023.

Yeah, look, I think our international business will continue to grow at a rate above our US business. Because if you think back, we started our international business in late 16. And this year we did $23 million. And so we have a much smaller base butI an

This should be a high team, 25% grower for us, something like that. Sorry, not high teams, mid-20s to north of that for our international business. And it's a great growth opportunity for us. Albert mentioned in his remarks that we've expanded our teams and...

you know, we're really getting a lot of traction, even growing faster in our larger markets because of the investments we've made there, but also a lot of new markets that are coming on board. Got it, thanks for taking the questions in a successful year. Thank you. Thank you.

Thank you for your question. Next question is from the line of Mike Matson with Needham. Your line is now open. Yeah, thanks. I was wondering if you could talk about just your outlook for expanding internationally in 2023. Do you have any new countries or anything like that you're planning to enter or any kind of distributor conversions or anything like that?

Hey Mike, we've made a number of investments in our three big markets, what I would call our big three.

South Africa, Australia, and the UK, you know, investments from leadership, investments in inventory, investments in medical education, on training opportunities. And we expect those markets, though we've got pretty good market share there in those three markets, we expect those to continue to grow or even accelerate as we move forward. So those three are really important to us, and we can...

folks here in the coming weeks and going through their business plans as we move forward because big opportunities, really exciting surgical procedures taking place in those markets and we believe the international market is not only important to drive our top line growth there and consolidate it. It's also critical because

Our mission is to improve patient outcomes globally. And we know that we can't do that without a really balanced approach to surgical procedures. And there's some great, great surgeons and some great procedures internationally that we can look at and understand and complement our technologies here in the US.

Okay, got it. And then just within your surgeon customer base, I guess mainly in the US, I guess I shouldn't say surgeon specifically because I wanted to ask about kind of where you feel like you're at with your mix of surgeons and podiatrists and if you feel like you're growing fit.

faster in one of those groups than the other or kind of adequately addressing both of them? Yeah, no, it's a great question and I was looking at it this morning actually. And sorry, I'm flipping a paper here and I'm putting on my glasses if you could see that, Matt, because these numbers are so small that Matt gave me. But look, we're

You know, there's a much higher mix of podiatry in the foot and ankle market in terms of the overall market just purely because of the number of surgeons that are podiatrists in the marketplace versus orthopedic surgeons. But we see a disproportionate amount of revenue and a growing amount of revenue from MDs and D Coun centrists running video as well. MS mass New Girl cry over wakey onto an Frederick Clark also

And so, you know, we're approaching 50-50 in terms of the split there, and a lot of that has been driven by these new products and, you know, things like Xfix, things like Total Ankle. A lot of those are more naturally suited to, you know, some of these orthopods. But of course the DPOs are a very important part of our...

our business and driving a lot of the ankle procedures. We're seeing a terrific mix and growth in both categories.

Yeah, and I would just add to that, you know, we've really focused on the surgeons who specialize in foot and ankle, and so we've seen a lot of our momentum there. There's a whole other piece of the market that's really your trauma-oriented surgeons in dessert products that can help delay or Falcon flood and also convert to a Toyota Ford Mustang. I think that definitely Deadpool and the ove spect Definitely gross combination of

and some of even the pediatric type surgeons where we still see tons of opportunity. And recent launches, you know, additions to our fracture fixation line have drawn a lot of attention from maybe some of those trauma surgeons and even some of the specialists who like to focus on...

You know the fracture fixation side of things so we have seen Some really nice momentum in a lot of those categories, but we still also have a lot of room there to grow.

Okay, great. Thank you. Thank you for your question.

Next question is from the line of Dave Turcoli with GMP Securities. Why is that open?

Hey, good evening guys. Steve, I was wondering if I could maybe get a comment on the, I might have missed it, but CapEx for the year and just sort of spending plans. I think you said you're done with the SAP and I know you have that legal settlement coming up, but like sort of outside of the R&D and Salesforce investments, anything else we should be anticipating?

the pretty lower levels of overall free cash flow use, 21 and prior. So as we go into 23 we expect to see more normalizing of those increases in working capital as well as capex.

that you would have in your model would be, we've got this legal settlement, another $21 million that will be paid in part this quarter and paid in part in the second quarter. And then we also could have, you know, $5 to $10 million of other urn out M&A related payments.

But beyond that, it's a pretty, pretty normalized year as we roll into 23 and we expect to see pretty significant improvements in free cash flow.

Great. And then one minor thought, I think you mentioned a dermal matrix is part of your soft tissue launches. I'm just curious if there's anything you could comment on that.

Great. And one mind of all, I think you've been to the dermal matrix as part of your soft tissue. One, because I just curious if there's anything you could comment on that. Because I've heard about the

A bunch of other ones and I don't know if I was familiar with that specifically. Thanks.

Sure, you got it. I'll take that one, Dave, and great to hear from you. I think the non-phenestrated dermal matrix was something that we were still missing for tissue augmentation and was a really nice complement to a lot of the procedures we're in today and even some procedures that we're not participating in quite yet.

potentially you don't need that type of fenestration.

Next question is from the line of Neal Chattergy with Be Rylee. Neal is not open. Okay guys, thanks for taking the questions. Anything you're asking the quarter. Um.

Maybe just first off, I was just kind of curious if you could just talk about the mobile unit for medical education and how that might be helping to raise awareness. I think it was on a PPCT tour if I recall right. Just curious if that's helping to add any traction in certain regions.

You got a great tear for me, Neil, by the way. And thanks for the question. Yeah, that mobile lab has been just a beautiful complement to our medical education resources, right? We've got an amazing facility here in Denver. And when it's appropriate, we love to get people here to really understand how we're approaching improvements.

But this was a chance for us to bring medical education to them and really open the opportunities to get people exposed to our technology to bring people in to to work with them in that facility. So that's a roundabout way of saying we're thrilled with.

the success of the mobile lab from last year. We saw record numbers in Q4, which is not typically the strongest season for medical education, and we crushed it with that. So again, beautiful compliment. One other piece is, we've mentioned this before, but Paragon 28's on a mission to really improve outcomes for patients, to really help with research and understanding limitations that might exist today in our site.

Great. Great. And just one follow-up here. Just curious, and I think you kind of touched on it maybe a little bit when you were talking about this year, but just curious if there's a broader update on the Smart28 initiative and –

you know, if things were made on track with, you know, the pre-op planning tools and potentially seeing that it sounds like maybe like latter half of the year and at the 2020-24, just curious on expectations for that, you know, upon launch.

Yeah, absolutely. And Neil, you know that I get really excited thinking about what that could mean, right? I'd love to see what your picture players are going to lead to with P Kitty and Carol and

We always talk about how complex and what a marvel the foot, foot and ankle environment really is when you, when you start to appreciate how many bones and the interactions of those bones and the soft tissues that are related with the lower extremity and the fact that we bear weight and we wear shoes and, and so everything gets more complicated and that three-dimensional awareness is critical to realigning and restoring function to the foot.

There is no better tool that we can think of than software to help give surgeons the three-dimensional perspective of both diagnosing the deformity as well as predicting how to best correct and realign the feet, right, for gate and better outcomes. So Dizio was one of the most significant pieces for us in our smart 28 aspirations there.

And for those reasons that I just mentioned, I would expect to see the, you know, but it's going to be a limited launch, but I'd expect to start to see some commercial introduction of what that technology is later this year, potentially early next year. And I think it's all going to really start to...

start to make sense. So we'll launch one of the first modules later this year, like I mentioned, and I think it's gonna give both the investment community as well as surgeons and all the stakeholders a great understanding of what we've been so excited about and what that could mean to better outcomes.

Great. Thanks. I'll hop back in the queue. Yeah.

Great, thanks. I'll hop back in the queue. Yep. You got it. Thank you.

Thank you for your question. There are currently no further questions registered, so as a reminder, it is star one on your telephone keypad. There are no additional questions waiting at this time, so I'll pass the conference back to the management team for any closing remarks. Thank you again for your time today. We look forward to seeing many of you at the end of the session.