Q4 2022 Treace Medical Concepts Inc Earnings Call

March 7, 2023

The conference will begin shortly to raise and lower Johan doing.

Okay.

Hello, and welcome to treat medical concepts fourth quarter 2022 earnings conference call.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

To ask a question during this session you would need to press star one on your telephone.

You would then her automated message advising your hand its race.

To withdraw your question. Please press star one again.

I would now like to hand, the conference over to Vivian.

Cervantes of Investor Relations you may begin.

Good afternoon, everyone and welcome to our fourth quarter 2022 earnings conference call participating from the company today will be John case, Chief Executive Officer, and Mark hair, Chief Financial Officer.

During the call you will offer commentary on our commercial activity in the fourth quarter.

All the financial results released after the close of the market today and traditional hosting.

A question and answer session.

Press release can be found in the Investor Relations section of our website.

Investors actually stockpiled.

And of course and will be archived in the investors section of our website.

Before we begin we would like.

Remind you that it is our intention.

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.

Our estimated peoples of affordability on 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 differ from those anticipated or implied by these forward looking statements.

All forward looking statements are based upon current available information and shape assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements.

Please refer to our SEC filings.

Form 10-K for the full year 2022 to be filed on March eight 2023 for a detailed presentation of risks.

For that and now turn the call over to John .

Thank you Vivian and good afternoon, everyone and thank you for joining us on our fourth quarter 2022 earnings conference call.

2022 was another great year of growth and execution of trees.

At the beginning of the year, we strategically increased investments into our proven business strategies, namely growing our direct bunion focused sales channel.

Increasing investments into our patient awareness DTC initiatives, and making targeted R&D investments and lap a plastic innovations as well as in our expanding suite of complementary products.

These investments resulted in strong revenue growth of 50% over 2021 and realize continued gains in our key operating metrics.

Our operations continued to scale through 2022, ending our seasonally strong fourth quarter with positive adjusted EBITDA.

We are proud of the progress we've made and believe we built a strong foundation that will continue to fuel our growth over the coming years.

Before I go into details about the quarter and year lets start out with our market summary on where we stand today.

Our disruptive <unk> solution was specifically developed to correct the root cause of the bunyan and address a large and underserved market.

We've identified an addressable $5 billion plus U S market of $1 1 million annual surgical candidates.

Which only 450000 undergo binding surgery, each year, which we believe is mainly due to limitations associated with current standards of care.

As of the fourth quarter of 2022, we have penetrated approximately five 5% of the estimated 450000 annual funding surgical procedures in the U S up from three 8% in the fourth quarter of 2021, and reflecting approximately two 2% market penetration of the $1 1 million annual.

Surgical candidates that constitute our $5 billion plus total addressable market.

Turning to our Q4 and full year results.

In the fourth quarter was $49 8 million, representing 49% growth over the fourth quarter of 2021 and was slightly above the previously announced revenue range expectation of $49, one to $49 6 million.

During the fourth quarter, we continued to benefit from our commercial strategies and investments with strong demand trends from surgeons and patients and growing sales force productivity.

For the full year 2022 revenue was $141 8 million a 50% increase over 2021 and also slightly above the top end of our pre announced revenue expectation of 141, two to $141 7 million.

Notably our revenue growth in the second half of 2022 was above the growth rate we experienced in the same period for 2021.

Therefore, we're extremely pleased not only with our topline growth, but also sustained positive trends in our key operating metrics during the fourth quarter, including.

Our expanding direct bunion focused sales team, which accounted for 77% of our Q4 revenue mix coming in well ahead of our 70% target for the year.

Strong steady increases in the number of new surgeon users and in Q4 with 2387 active surgeons, which is an increase of 604 during the year up 34% year over year.

Our year over year increase in trailing 12 months surgeon utilization with an average of 10 three kits per active surgeon in Q4 up from $9 eight kits a year ago and strong blended average selling prices of $5907 per lap a classic kits sold in the quarter, representing 10% growth over the prior year.

Here due to steadily increasing contribution from our Doctor Plassey Midfoot correction system as well as our more recently commercialized as far at anatomic plates are speed release in our tri tumor tissue instruments.

Our strategic investments and commercial focus have allowed us to successfully grow our business, giving us confidence we have a well defined proven and scalable commercial strategy.

Therefore, as we turned to 2023, we are providing full year revenue guidance of $187 million to $193 million, which reflects an increase of 32% to 36% over 2022 revenue.

We look forward to balancing aggressive execution on our proven strategic initiatives to maximize our growth and market penetration with modestly improving proving expense leverage.

Given our market differentiation and large $5 billion plus U S opportunity, we remain committed to our growth agenda.

Shifting now to our commercial and market development activities.

As discussed we made targeted investments in 2022 with the goal of increasing our market penetration by <unk>.

Expanding the footprint and coverage of our bunion focused direct sales channel.

<unk>, our patient awareness DTC initiatives.

And driving more targeted R&D investments into the market.

We have a highly specialized team of trees, including our rapidly growing direct sales force one that's 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.

In the fourth quarter, 77% of our revenue was generated by our direct sales force up sequentially from 74% in the third quarter and up from 58% just a year ago.

We were happy to announce last quarter that we surpassed our previously communicated 70% year end target earlier than anticipated and we expect to grow to a higher mix of direct revenue over time.

We ended the fourth quarter with 168 quota carrying direct sales reps and.

An increase of 107% from the 81 direct reps that we had at the end of the year 2021.

Given the strong interest from great candidates to join our employee sales team. We're also happy to announce that.

Seeded our year end target of 150 quota carrying sales reps set forth at the beginning of the year.

We believe these new reps are joining our team because of our unique growth growth profile and culture driven by disruptive 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 85% to 267 sales employees in the fourth quarter compared to 144 employees at the end of last year.

We continue to.

<unk> experienced strong benefits from our expanded direct sales team.

Our direct reps typically scale with significant revenue and cost leverage achieved within 24 months, primarily because they are exclusively focused on our products and fully utilize our suite of corporate resources and programs.

In 2023, we plan to continue to invest in our direct sales channel to drive increased market penetration with a target of having over 200 quota carrying direct reps by the end of the year 2023.

Our patient awareness DTC initiatives are a key component of our commercial strategy.

We remain focused on our patient awareness DTC initiatives that are designed to educate and steadily increase the number of potential patients visiting our website.

Become educated on the benefits of <unk>.

Locate experienced <unk> surgeons in their area and ultimately for these patients to schedule a consultation.

Our investment in DTC is resulting in hundreds of thousands of patients visiting our website every month and tens of thousands of patients searching for a lack of policy surgeon in their area.

Now with one out of four surgeons in the U S. Using lab capacity, we have a larger and expanding national surgeon base that can field inquiries from a higher volume of patients.

Given this we believe the time is right to step up our DTC investments in 2023.

Which we've initiated earlier this year than last.

Our surgeon education and training programs also continue to be well received.

Interest and attendance by new surgeons at our training events was strong and oversubscribed very often in 2022.

Likewise, our advanced training events, both online and in person, where our more tenured surgeons can acquire advanced skills and learn new approaches such as our mini incision and Dr. Plassey procedures continued to show strong surgeon demand.

Our education programs play a key role in the effective onboarding of new surgeon users and increasing the skills of our existing users broadening their patient indications.

During 2022, we added a record 604, new surgeons compared to 508 in the same period last year, representing a 34% increase.

We are encouraged to see this continued strong growth in our surgeon user base.

As of the fourth quarter, our active surgeon base, which include surgeons, who performed at least one case in the trailing 12 months has achieved approximately 24% penetration of the estimated 10000 foot and ankle surgeons, who perform bunion surgery in the U S.

As our surgeon base continues to mature we look forward to utilization gains with increased use of our lack of plasty and inductive classic systems as well as further adoption of our growing portfolio of complementary products.

All supported by our expanding direct sales channel and patient awareness DTC initiatives.

We were pleased to see the high level of interest and attendance of new surgeons that are training events in 2022, and it's evident that we offer a great education platform for a growing network of lack of plastic surgeons and we look forward to hosting additional surgeon training events in 2023 across the country and at our new state of the art training facility here at our headquarters in <unk>.

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 both next generation funding correction systems as well as the development of new complementary technologies addressing other bonding related pathologies.

And IP defense of our technology and innovations.

At the end of Q4, we had 40 granted U S patents and over 46 U S patent applications pending.

2022 was a terrific year of innovation for us.

Following full commercialization of our Dr. Plassey system in Q2 and.

In August we announced the full commercial release of our <unk> III and one cut guide our lap of <unk> anatomic plating kit and the speed release and try to tissue release instruments.

While still early adoption of these products has progress nicely and we are encouraged by the favorable response received from the surgeon community for our growing portfolio of Bunion focused technologies.

In February at the American College of foot and ankle surgeons, we highlighted two new exciting product innovations, namely.

Our micro lap of classy system.

This is an advanced instrumentation option designed to further reduce both the incision size and related tissue dissection with the lap of biopsy procedure.

This evolution of our instrumentation allows the binding correction in joint preparation steps of the patented lap a policy procedure to be performed through two centimeter incisions.

And our <unk> implant fixation platform.

This is a new fixation technology platform designed for rapid insertion.

<unk> two centimeter incisions, serving as both an enabling technology for the micro lap a proxy procedure, but also with broader applicability to our standard and many incision lap a philosophy systems as well as a doctor Plassey Midfoot procedures.

We continue to anticipate the commercial release of these technologies during the second half of 2023.

We're excited about the potential benefits this micro lap a classic speed play combination could bring to patients.

As with any procedure that involves smaller incisions and less tissue dissection. We believe this can translate to even faster patient recovery with less pain and swelling.

We look forward to providing additional updates on our new product innovations as we continued 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 clinical data.

The key differentiating driver for our business is our commitment to clinical evidence, which we believe resonates with both surgeons and their 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 walking boot with low recurrence rates at 12 months to 24 months and interim data demonstrating positive patient reported outcome scores following our binding correction procedure.

During the fourth quarter, we announced the treatment of the first patient in our MTA <unk>, Dr. Plassey clinical study.

As a reminder, the MTA <unk> study is a prospective multicenter clinical study that will evaluate outcomes of a Dr. <unk> combined with the lap of biopsy procedure for patients in need a bunion and mid foot deformity correction.

We look forward to providing interim updates on our MTA <unk> study in the future.

At the 2023 American college of foot and ankle Surgeons annual scientific conference in February we announced an interim data analysis from our flagship align <unk> prospective <unk> study on 128 patients with at least 24 month follow up.

Which demonstrated early returned away barragan walking boot in an average of eight one days.

Low recurrence rate of <unk>, 9%.

88% reduction in pain measured using the visual analog scale or vas at 24 months.

<unk> 92, and 90% improvement in walking standing and social interaction patient reported quality of life measures, respectively, using the Manchester, Oxford foot questionnaire, our marks at Q through 36 months.

And notably 97, 3% of patients reporting they were satisfied or very satisfied with the overall results other lap a policy procedure at 36 months.

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 of lack of policy procedure is making on patients' lives not only physically but socially as well as demonstrated by the high 97% patient satisfaction rating at three years post lap of plastic surgery.

As a reminder, later this year, we expect to submit our primary endpoint aligns III manuscript for publication in a peer reviewed journal.

This is a milestone culmination of activities that began five years ago with the first patient enrolled in 2018.

Again, we believe the positive interim patient data coming from our differentiated align <unk> study resonates strongly with the surgeon and patient communities and is further reinforcing market adoption of <unk>.

In closing 2022 was another strong year performance and growth for our company.

We are experiencing significant momentum in all aspects of our business and have developed a specialized and scalable business model that we believe will allow us to continue to advance our growth strategy.

I'm proud of the great execution delivered by our team here and part of each are Florida and throughout the country and we remain highly and extremely excited about our future prospects as we continue to execute on our strategic plans.

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 fourth quarter was $49 8 million.

Up $16 3 million and 49% over the prior year.

Growth was driven by increases in procedure volumes and an increase in blended average selling price due to adoption of our newer complementary technologies, our seasonally strong fourth quarter revenue increased 51% sequentially over Q3.

In the fourth quarter 2022, the number of active surgeons performing at least one case in the trailing 12 months increased 34% year over year to 2387, surgeons, which translates to approximately 24% penetration of the estimated 10000 surgeons in the U S who perform.

By noon procedures.

Surgeon utilization increased to an average of 10, three lack of plessey kits purchased and the trailing 12 months up from an average of nine eight a year ago.

We are pleased with its notable increase as a reminder, we commercialized lack of class six seven years ago and in the past two years alone. We've added 1112 active surgeons nearly half of our total active search base on the average this growing number of active surgeons steadily.

Increase utilization each year, they use the lap of classy due to positive patient outcomes and expanding indications in their practices.

We sold 8426 lap of classy procedure kits in the fourth quarter, a 35% increase versus the prior year's fourth quarter.

Blended average selling price in the fourth quarter was $5907, a 10% increase over the fourth quarter in 2021, driven by the adoption of our <unk> and Dr. Plassey systems as well as early impact from our newer technologies, our <unk> kit speeds release and tried tobey.

<unk>, we continue to see greater uptake of our other complementary forefoot products as we add direct sales reps, who tend to focus more on selling these complementary products, where we lap a classic cases, displacing other competitive bunion related four foot products.

For the full year 2022 revenue was $141 8 million, a 50% increase over 2021 slightly above the top end of our pre announced revenue expectation of $1 41, two to $1 $41 7 million and above our prior 2022 revenue guidance range of $1 35.

$5 to $138 million.

We sold 24656 lap of Plassey procedure kits for the full year 2022, a 41% increase versus the prior year with a blended average selling price of 5753, a 7% increase over the prior year.

Gross margin was 84% in the fourth quarter of 2022 compared to 81, 1% in the fourth quarter of 2021 seven.

The 70 basis point decrease was due in part to an increase in capitalized surgical instruments and related depreciation necessary to support our expanding direct sales force as well as increases in payroll and related costs.

For the full year 2022, gross margin was 86% down from 81, 1% in the year ago period, primarily due to increases in capitalized surgical instruments and related depreciation necessary to support our increased direct sales force as well as increases in payroll and related costs.

Total up.

Operating expenses were $43 5 million in the fourth quarter of 2022, which includes sales and marketing expenses of $29 4 million research and development expenses of $3 7 million and general and administrative expenses of $10 4 million. This compares to total operating expenses of $32 7 million in the fourth quarter.

<unk> of 2021, which included sales and marketing expenses of $22 3 million research and development expenses of $3 4 million and general and administrative expenses of 7.0 million.

For the full year 2022, operating expenses were $149 2 million compared to $93 1 million in the prior year period. The increase in operating expenses reflect strategic investments in our expanding direct sales channel investments in product innovation increased capacity requirements as well as support for.

Other commercial initiatives.

Fourth quarter net loss attributable to common stockholders was $4 4 million or <unk> <unk> per share compared to a net loss of $6 6 million or <unk> 12 per share for the same period of 2021 full year 2022, net loss attributable to common stockholders was $42 8 million or <unk>.

<unk> 77 per share compared to a net loss of $20 7 million or <unk> 43 per share in 2021 as noted we ended the fourth quarter, our seasonally strongest with approximately $300000 in adjusted EBITDA.

Cash cash equivalents in marketable securities were $81 3 million as of December 31, 2022 on February eight we completed a follow on offering of $5 million 476190 shares of common stock, which raised net proceeds of 107 five.

Million.

This is the first time, we raise capital since our IPO and we believe this provides us with additional balance sheet strength and flexibility to continue aggressively executing on our strategic investments and growth initiatives.

Before concluding let me turn to our outlook for full year 2023.

As John mentioned, we are providing full year 2023 revenue guidance of $187 million to $193 million, an increase of 32% to 36% over 2022 revenue.

We remain encouraged by the underlying strength and momentum in our business with our strategic investments clearly delivering on growth for the first quarter 2023, consistent with prior years, we expect a sequential revenue decrease from the fourth quarter due to normal seasonality coming off our usual strong year end performance.

Unlike Q1 2022, we do not expect incremental revenue from rescheduled fourth quarter procedures to benefit the first quarter of 2023.

Turning to the middle of the P&L, we expect that our operations and expenses will continue to grow throughout 2023, as we increase our DTC investments and further expand our direct sales force, while increasing leverage of our fixed costs and overhead expenses. Therefore, we expect to show modest improvements to adjusted EBITDA for the full.

All year compared to 2022.

Before turning the call over to the operator, I would like to provide an update on our IP litigation.

As you recall, we filed a lawsuit in March 2022 to enforce our IP.

Although the terms are confidential, we reached a mutually agreeable resolution to settle the matter and are pleased with the outcome.

Since inception, we have made important investments in our proprietary technologies and remain committed to protecting and growing our IP portfolio with that let me turn the call over to the operator to open the line for your questions.

Thank you.

Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

So with draw your question. Please press star one again.

Please standby, while we compile the Q&A roster.

Okay.

Our first question comes from the line of Robbie Marcus with Jpmorgan. Your line is open.

Oh great.

With congratulations again on a great quarter.

Got it.

Maybe we could talk about the trends that are informing the guide here, you're clearly, adding a lot of reps your revenue per prestige area continues to grow at maybe speak to just how you think about the key drivers.

Guide and any color you want to give us.

To think about.

The growth between the volumes versus the revenue per procedure.

Thanks, Ravi Great Great question.

As John mentioned in the prepared remarks, we feel really encouraged by the strength and the momentum that we experienced in the back half of last year, we had really strong growth in both the third quarter and then again in the fourth quarter and we believe a lot of this has been driven by the investments that we've been making throughout the full year last year.

Namely, it's really that growing and building direct sales channel, which we believe is already beginning to have some dividends that we've experienced and <unk> been able to push through some of the headwinds that we've had historically so that's one of our primary drivers.

Other thing that we're looking for and as we talked about.

Enhanced.

DTC and patient awareness efforts, we think that now that we've got a large and larger surgeon base that it's the right time to continue to invest in and patient awareness.

Now that we've got more surgeons and our sales force that support those additional inquiries.

And.

I feel like I know the answer here, but I'll still ask it anyways, given the growth youre seeing perhaps youre expecting but.

It's a large very large underpenetrated market for instrument kit procedures. There are a lot of companies going after it maybe just give us a sense of what youre seeing out in the field.

Are there any products or companies are losing accounts too.

Whats the competitive.

Message.

That your reps are putting out there to keep the growth engine that one thanks a lot.

Yes, Hi, Ravi John Thanks.

Thanks for the question Ed.

Yes, we kind of go back to the fundamentals here that are our number one competitor as we see it as the osteotomy procedure, it's 70% of the procedure base.

Changing the mindset of the surgeons, who are using lap of plastic for the majority of their bunion cases.

The minority that's where we really focus our efforts with our surgeon education programs, our direct sales force.

And even the patient awareness side comes into play there. So it's converting that procedure not accompanies product specifically that we're after and that's what's been the underlying growth driver of this business for the past seven years, and we're going to continue to focus that said.

There are a few companies on the market and more are entering with products, claiming to be like lap a philosophy, we haven't really seen a notable increase in the pressure or impact on us from those.

Companies or products.

As we know the market is really large over $5 billion and we're just way out ahead of everybody.

We've always expected that these companies would try to come along and Opportunistically get a piece of the market that we.

<unk> pioneered and developed here.

In some ways these companies coming to market or sort of validating us, but keep in mind that these products are coming from companies that have multiple product lines highly distracted sales forces large bags of products to sell of which this.

<unk> like product is just yet another.

With over seven years of use and refinement plasma plasma is just so elegant and reproducible at the Doctor patient interface, how it works and it's protected by a lot of patents, we have a tremendous patent portfolio of 40 issued patents.

And then we're constantly iterate, a technology, making it faster easier for the surgeon and ways to make it a quicker recovery for the patient. So nobody is out there with that level of commitment to iterating, improving and modify rapidly but.

The other barriers, we have or just the.

Beyond that in the IP and the product innovation, our beachhead of clinical data that keeps getting stronger and stronger the bunyan focused direct sales channel.

Powerful surgeon and patient training programs.

While these serve as really great offensive drivers of our business. They offer those serve as great defensive barriers as well so.

Kind of a long answer to your question, but I think for these multiline distracted companies, it's really hard to compete with a rapidly innovating highly focused company with a first mover advantage. That's so far out ahead like we are.

That's really helpful. I appreciate the color.

Sure. Thank you.

Okay.

Please standby for our next question.

Our next question comes from the line of Joe <unk> with Morgan Stanley . Your line is open.

Hi, Thanks for taking the questions and congrats on the great quarter and guide.

Maybe just another guidance question to start.

As you are thinking about the guidance still for this year can you maybe just help us kind of parse out how you're thinking about the maturing surge of days versus utilization improvement.

Youre already at around 10% penetrated for for surgeons, but just maybe how you're kind of thinking about those factors.

The guide and if this is really going to be a year, where all of those mature.

Active surgeons that you've added over the past few years really kind of move up the utilization curve.

Andrew This is mark great question and thanks for joining us.

We've previously commented that.

Our revenue growth year over year is not purely from from new surgeons, but from the increased utilization of our existing surgeon base and so we've been really pleased with it in my prepared remarks I commented on nearly half of our active surgeons have come over the last two years, what we do believe though is that there is an incremental <unk>.

<unk> of utilization year after year it doesn't come <unk>.

Exclusively in year, two or exclusively in year three so we believe that a lot of the patterns that we've seen year. After year. We will continue to hold true as we continue and plan to add new surgeons. This year in 2023, as well and our existing surgeon base will continue to to move up that chain and have <unk>.

Creased utilization on average we have commented that in the most recent 12 month period that new surgeons have been adopting lab capacity at a faster rate than they ever have before so we believe that the surgeons who are coming to our lab is getting trained theyre very interested in adopting <unk>.

The data is proving out that when they do come become a customer they are actually doing more cases.

Then the average shows and what.

More than what we've had historically so all of this built into to our revenue build for the guidance number that we gave so we feel really good about the strong surgeon base, we plan on adding more and we know we've got.

Our direct sales channel to support all of these surgeons in their journey.

Got it thanks, and maybe just a couple of other financial questions too.

Just as we do you think about the seasonality from <unk> to <unk>.

Mark I guess Youre combat that.

First quarter was.

<unk> had the benefit from recapturing some of the Covid procedures, but should we be just maybe help us put a finer bow on that maybe the sequential step down and then second.

Can you help us a little bit more with opex for the year just in terms of your revenue growth rate. Thanks for taking the questions.

Thanks drew.

So I wanted to comment in the remarks that there was a little bit of an anomaly.

We're glad that we're not talking about or making references to COVID-19 anymore, but wanted to.

Just bring to everyones.

That Q1 of 2022 did have some benefit from some rescheduled cases, so historically and if you adjust for some of those.

Some of the benefit in Q1.

The last couple of years, we've had a step down and so Q1 has been roughly about 80% of the revenue plus or minus but around 80% of the revenue in Q4. So that's that's a very normal step down that's.

That's what we experienced last year, if you adjust the revenue out of Q1 and kind of push it back into Q4 that would have been the same. So we would expect something very similar to that as we come into 2023.

Overall, you asked a question about the Opex and we're going to continue to invest in the company John out outlined several things that we will continue to do we continue to build our sales channel. We will continue to invest in R&D and we will have some incremental investments in our DTC.

So there will be some build but overall.

There'll be some improved leverage in 2023 versus 2022.

Yeah.

Thanks for taking the questions.

Thank you.

Okay.

As a reminder, ladies and gentlemen that star one to ask the question.

Please standby for all next question.

Okay.

Our next question comes from the line of Ryan Zimmerman with <unk>. Your line is open.

Good afternoon, thanks for taking the questions and congrats on all of our growth.

Everything is said before sitting here at the American Academy of orthopedic surgeons.

Thinking about kind of who you are and the marginal customers I know, it's not the general Orthopod thats going to necessarily pick up a lap of classic hit but.

As we think about the $1 1 million potential bug in surgeries out there versus those that are having the 450000.

How do you think about that 450000 growing.

Over the next few years, what's it going to take is it more DTC.

Yes.

John your thoughts on general market growth and.

And what moves the needle from.

Actual surgery.

More of those candidates.

Yes.

Hi, Ryan.

To hear from you and thanks, Thanks for the question.

Yes, So I think if you look at all the.

Kind of standard market reports that companies can acquire out there. They would typically show the bunyan procedure base growing at 3% to 4% maybe for the next five years, that's that's my recollection.

Yeah.

How we try to expand that as obviously through our DTC and patient awareness efforts and investments.

If we can get to.

Those fence sitting patients with our DTC messages with our stronger clinical evidence and communicate at.

There is a better procedure now a better offering.

There wasn't in the past that recurrence rates can be much lower than they were in the past that you can get back to bearing weight and.

And back to your activities at a predictable time, then we think that can resonate and we think that can bring some of these fence sitting patients over the fence.

And <unk>.

Connecting with our doctors, maybe for a consultation through our website about lap a philosophy. So I think I think in the coming years. That's our project, we're going to try to work to expand our relative portion into.

And to the $1 $1 million as best we can.

And.

Yes, that's where we'll put our efforts.

Fair enough John I know, it's not an easy.

A question and Theres, no magic silver bullet I guess, but.

The commentary and then the second question is just around complementary products I mean, they are so important for a year for you guys as we think about the model and the.

The move higher in Asps.

I'm wondering if you can kind of help us understand what the attachment rates are as you think about them today for your key kind of complementary products.

And where you think you can take that over time or where we should think about that going over time. Thank you for taking my questions.

Sure sure so the complimentary products definitely a great part of our strategy.

And most of our complementary products are all aimed at <unk>.

Proving the outcomes for these <unk> patients we got to have Dr. Plassey, because we recognize people with that mid foot deformity didn't get as good an enduring correction are lasting correction with there and there are plenty of procedure. If you didn't fix the midfoot. So these are all.

Really tied together so the attachment rate I think kind of goes hand in hand asserted is doing at a Dr. Plassey procedure, 99% of the time, they're going to be doing a lap of policy as well.

Our speed released instrument is another excellent example of an instrument that can make the.

Great toe tissue release says more release much easier more predictable for the surgeon.

And this occurs in over 95% of our lab of plastic cases so.

Attachment rate can be very very high there once we get a doctor trained on it and they implement it in their practice.

Other things like the S. Four a place not really complementary but heavy conversion going on right now out in the field to doctors wanting to use that next generation more advanced.

<unk> geometry on their patients and supplanting earlier versions of our <unk>.

Playing with that and then of course in the back half later this year, we will we'll be releasing that.

Micro <unk> technologies.

I think speed play is going to be a really neat technology platform for us its going to be used in a variety of lap a classy another midfoot cases as well.

Great. Thanks, John .

Sure. Thank you.

Thank you.

I am showing no further questions in the queue I would now like to turn the call back to Vivian for closing remarks.

Thank you Carol Honda.

Thanks to everyone for joining us today on behalf of truth medical.

Concludes our call and we look forward to our next update following the close of the first quarter of 2023.

Thank you you may now disconnect.

The conference will begin shortly to raise and lower Johan during Q&A you can dial one one.

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Hello, and welcome to treat medical concept fourth quarter 2022 earnings conference call.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.

You have been here our automated message advising your hand is raised.

To withdraw your question. Please press star one again.

I would now like to hand, the conference over to Vivian.

So <unk> of Investor Relations you may begin.

Good afternoon, everyone and welcome to our fourth quarter 2000, turning to earnings conference call participating from the company today will be John case, Chief Executive Officer, and Mark hair, Chief Financial Officer. During the call you will also.

Gary My commercial activity.

Our financial results, let me answer the closing remarks today.

A question and answer session.

The press release can be found on the Investor Relations section.

Thank you Sachin.

Thanks, Paul and recorded and will be archived on the investors section.

Before we begin I'd like to remind you that in those areas.

Some statements made during today's call.

Thank you.

In Securities Litigation Reform Act.

Any statements from the recent expectations are particularly interesting.

Our sustainable growth and profitability.

Forward looking statements.

Forward looking statements are based upon our clinic.

Assumptions. These statements involve material risks and uncertainties that could cause actual results or events.

Anticipated or implied by these forward looking statements.

All forward looking statements are based upon current available information.

The rollout will do something.

Thank you.

Accordingly, you should not.

These statements.

Please refer to our SEC filings.

Form 10-K .

Just wanted to can be volatile.

Tony.

Thanks <unk>.

And answering the call over to Mr. Qi.

Thank you Vivian and good afternoon, everyone and thank you for joining us on our fourth quarter 2022 earnings conference call.

2022 was another great year of growth and execution of trees.

At the beginning of the year, we strategically increased investments into our proven business strategies, namely growing our direct bunion focused sales channel increasing investments into our patient awareness DTC initiatives, and making targeted R&D investments and lap a plastic innovations as well as in our expanding suite of complementary products.

These investments resulted in strong revenue growth of 50% over 2021 and realize continued gains in our key operating metrics.

Our operations continued to scale through 2022, ending our seasonally strong fourth quarter with positive adjusted EBITDA.

We are proud of the progress we've made and believe we build a strong foundation that will continue to fuel our growth over the coming years.

Before I go into details about the quarter and year lets start out with our market summary on where we stand today.

Our disruptive <unk> solution was specifically developed to correct the root cause of the bunyan and address a large and underserved market.

We've identified an addressable $5 billion plus U S market of $1 1 million annual surgical candidates of which only 450000 undergo binding surgery each year, which we believe is mainly due to limitations associated with current standards of care.

As of the fourth quarter of 2022, we have penetrated approximately five 5% of the estimated 450000 annual bunion surgical procedures in the U S up from three 8% in the fourth quarter of 2021, and reflecting approximately two 2% market penetration of the $1 1 million annual U S.

Surgical candidates that constitute our $5 billion plus total addressable market.

Turning to our Q4 and full year results.

Revenue in the fourth quarter was $49 8 million, representing 49% growth over the fourth quarter of 2021 and was slightly above the previously announced revenue range expectation of $49, one to $49 6 million.

During the fourth quarter, we continued to benefit from our commercial strategies and investments with strong demand trends from surgeons and patients and growing sales force productivity.

For the full year 2022 revenue was $141 8 million a 50% increase over 2021 and also slightly above the top end of our pre announced revenue expectation of 141, two to $141 7 million.

Notably our revenue growth in the second half of 2022 was above the growth rate we experienced in the same period for 2021.

Therefore, we're extremely pleased not only with our topline growth, but also sustained positive trends in our key operating metrics during the fourth quarter, including.

Our expanding direct bunion focused sales team, which accounted for 77% of our Q4 revenue mix coming in well ahead of our 70% target for the year.

Strong steady increases in the number of new surgeon users and in Q4 with 2387 active surgeons, which is an increase of 604 during the year up 34% year over year.

Our year over year increase in trailing 12 months surgeon utilization with an average of 10 three kits per active surgeon in Q4 up from $9 eight kids a year ago and.

Strong blended average selling prices of $5907 per lap of plasma kits sold in the quarter, representing 10% growth over the prior year due to steadily increasing contribution from our Doctor Plassey Midfoot correction system as well as our more recently commercialized as far at anatomic plates are speed release in our tri tumor tissue.

<unk>.

Our strategic investments and commercial focus have allowed us to successfully grow our business, giving us confidence we have a well defined proven and scalable commercial strategy.

Therefore, as we turned to 2023, we are providing full year revenue guidance of $187 million to $193 million, which reflects an increase of 32% to 36% over 2022 revenue.

We look forward to balancing aggressive execution on our proven strategic initiatives to maximize our growth and market penetration with modestly improving proving expense leverage.

Given our market differentiation and large $5 billion plus U S opportunity, we remain committed to our growth agenda.

Shifting now to our commercial and market development activities.

As discussed we made targeted investments in 2022 with the goal of increasing our market penetration by.

Expanding the footprint and coverage of our bunion focused direct sales channel.

Advancing our patient awareness DTC initiatives and driving more targeted R&D investments into the market.

We have a highly specialized team of trees, including our rapidly growing direct sales force one that's 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.

In the fourth quarter, 77% of our revenue was generated by our direct sales force up sequentially from 74% in the third quarter and up from 58% just a year ago.

We were happy to announce last quarter that we surpassed our previously communicated 70% year end target earlier than anticipated and we expect to grow to a higher mix of direct revenue over time.

We ended the fourth quarter was 168 quota carrying direct sales reps and.

An increase of 107% from the 81 direct reps that we had at the end of the year 2021.

Given the strong interest from great candidates to join our employee sales team. We're also happy to announce that we exceeded our year end target of 150 quota carrying sales reps set forth at the beginning of the year.

We continued to experience strong benefits from our expanded direct sales team.

In 2023, we plan to continue to invest in our direct sales channel to drive increased market penetration with a target of having over 200 quota carrying direct reps by the end of the year 2023.

Our patient awareness DTC initiatives are a key component of our commercial strategy.

We remain focused on our patient awareness DTC initiatives that are designed to educate and steadily increase the number of potential patients visiting our web site.

Become educated on the benefits of lab capacity located.

<unk> surgeons in their area and ultimately for these patients to schedule a consultation.

Our investment in DTC is resulting in hundreds of thousands of patients visiting our website every month and tens of thousands of patients searching for a lack of policy surgeon in their area.

Now with one out of four surgeons in the U S. Using <unk>, we have a larger and expanding national surgeon base that can field inquiries from a higher volume of patients.

Given this we believe the time is right to step up our DTC investments in 2023.

Which we've initiated earlier this year than last.

Our surgeon education and training programs also continue to be well received.

Interest and attendance by new surgeons at our training events was strong and oversubscribed very often in 2022.

Likewise, our advanced training events, both online and in person, where our more tenured surgeons can acquire advanced skills and learn new approaches such as our mini incision and Dr. Policy procedures continued to show strong surge in demand.

Our education programs play a key role in the effective onboarding of new surgeon users and increasing the skills of our existing users broadening their patient indications.

During 2022, we added a record 604, new surgeons compared to 508 in the same period last year, representing a 34% increase.

We are encouraged to see this continued strong growth in our surgeon user base as.

So the fourth quarter, our active surgeon base, which include surgeons, who performed at least one case in the trailing 12 months has achieved approximately 24% penetration of the estimated 10000 foot and ankle surgeons, who perform bunion surgery in the U S.

As our surgeon base continues to mature we look forward to utilization gains with increased use of our lack of plasty and inductor policy systems as well as further adoption of our growing portfolio of complementary products all supported by our expanding direct sales channel and patient awareness DTC initiatives.

We were pleased to see the high level of interest and attendance of new surgeons that are training events in 2022.

As evident that we offer a great education platform for a growing network of lack of policy surgeons and we look forward to hosting additional surgeon training events in 2023 across the country and in our new state of the art training facility here at our headquarters in <unk>.

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 both next generation funding correction systems as well as the development of new complementary technologies addressing other bundled related pathologies.

And IP defense of our technology and innovations.

At the end of Q4, we had 40 granted U S patents and over 46 U S patent applications pending.

2022 was a terrific year of innovation for us.

Following full commercialization of our Dr. Plassey system in Q2 and.

In August we announced the full commercial release of our <unk> III and one cut guide our lap of <unk> anatomic plating kit and the speed of release in <unk> tissue release instruments.

In February at the American College of foot and ankle surgeons, we highlighted two new exciting product innovations, namely.

Our micro <unk> system.

This is an advanced instrumentation option designed to further reduce both the incision size and related tissue dissection with the lap of biopsy procedure.

This evolution of our instrumentation allows the binding correction in joint preparation steps of the patented lack of policy procedure to be performed through two centimeter incisions.

And our <unk> implant fixation platform.

This is a new fixation technology platform designed for rapid insertion through <unk>.

Paul two centimeter incisions, serving as both an enabling technology for the micro lap a policy procedure, but also with broader applicability to our standard and many incision Lipa plassey systems as well as a deduct of plasma midfoot procedures.

We continue to anticipate the commercial release of these technologies during the second half of 2023.

We're excited about the potential benefits this micro lap a classic <unk> combination can bring to patients.

As with any procedure that involves smaller incisions and less tissue dissection. We believe this can translate to even faster patient recovery with less pain and swelling.

Turning to clinical data.

The key differentiating driver for our business is our commitment to clinical evidence, which we believe resonates with both surgeons and their patients.

During the fourth quarter, we announced the treatment of the first patient in our MTA <unk>, Dr. Plassey clinical study.

As a reminder, the MTA <unk> study is a prospective multicenter clinical study that will evaluate outcomes of a Dr. <unk> combined with the lap of classy procedure for patients in need of bunion and mid foot deformity correction.

We look forward to providing interim updates on our MTA <unk> study in the future.

Which demonstrated early returned away bearing in Milwaukee boot in an average of $8 one days.

Low recurrence rate of <unk>, 9%.

88% reduction in pain measured using the visual analog scale or vas at 24 months.

And notably 97, 3% of patients reporting they were satisfied or very satisfied with the overall results other lap a classy procedure at 36 months.

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 to lap a proxy procedure is making on patients' lives not only physically but socially as well as demonstrated by the high 97% patient satisfaction rating at three years post lap of plastic surgery.

As a reminder, later this year, we expect to submit our primary endpoint align <unk> manuscript for publication in a peer reviewed journal.

This is a milestone culmination of activities that began five years ago with the first patient enrolled in 2018.

Again, we believe the positive interim patient data coming from our differentiated align <unk> study resonate strongly with the surgeon and patient communities and is further reinforcing market adoption of <unk>.

In closing 2022 was another strong year performance and growth for our company.

I am proud of the great execution delivered by our team here in <unk>, Florida and throughout the country and we remain highly and extremely excited about our future prospects as we continue to execute on our strategic plans.

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 fourth quarter was $49 8 million.

Up $16 3 million and 49% over the prior year.

Blending procedures.

Surgeon utilization increased to an average of 10, three lack of plessey kits purchased and the trailing 12 months up from an average of $9 eight a year ago.

We are pleased with its notable increase as a reminder, we commercialized lap of class six seven years ago and in the past two years alone. We've added 1112 active surgeons nearly half of our total active search base on the average this growing number of active surgeons steadily.

Increase utilization each year, they use the lap of classy due to positive patient outcomes and expanding indications in their practices.

We sold 8426 lap a classy procedure kits in the fourth quarter, a 35% increase versus the prior year's fourth quarter.

Blended average selling price in the fourth quarter was $5907, a 10% increase over the fourth quarter in 2021, driven by the adoption of our lap of classy and Dr. Plassey systems as well as early impact from our newer technologies, our <unk> kit speed release and <unk>.

For the full year 2022 revenue was $141 8 million.

A 50% increase over 2021 slightly above the top end of our pre announced revenue expectation of $1 41, two to $1 $41 7 million and above our prior 2022 revenue guidance range of $1 $35 million to $138 million.

We sold 24656 lap of plastic procedure kits for the full year 2022, a 41% increase versus the prior year with a blended average selling price of 5753, a 7% increase over the prior year.

Gross margin was 84% in the fourth quarter of 2022 compared to 81, 1% in the fourth quarter of 2021. The 70 basis point decrease was due in part to an increase in capitalized surgical instruments and related depreciation necessary to support our expanding direct sales force as <unk>.

Well as increases in payroll and related costs.

Total op.

<unk> expenses were $43 $5 million in the fourth quarter of 2022, which includes sales and marketing expenses of $29 4 million research and development expenses of $3 7 million and general and administrative expenses of $10 4 million. This compares to total operating expenses of $32 7 million in the fourth quarter.

<unk> of 2021, which included sales and marketing expenses of $22 3 million research and development expenses of $3 4 million and general and administrative expenses of 7.0 million for.

Other commercial initiatives.

77 per share compared to a net loss of $20 7 million or <unk> 43 per share in 2021 as noted we ended the fourth quarter, our seasonally strongest with approximately $300000 in adjusted EBITDA.

Yeah.

Before concluding let me turn to our outlook for full year 2023.

As John mentioned, we are providing full year 2023 revenue guidance of $187 million to $193 million, an increase of 32% to 36% over 2022 revenue.

Unlike Q1 2022, we do not expect incremental revenue from rescheduled fourth quarter procedures to benefit the first quarter of 2023.

All year compared to 2022.

Before turning the call over to the operator, I would like to provide an update on our IP litigation.

As you recall, we filed a lawsuit in March 2022 to enforce our IP. Although the terms are confidential we reached a mutually agreeable resolution to settle the matter and are pleased with the outcome.

Inception, we've made important investments in our proprietary technologies and remain committed to protecting and growing our IP portfolio with that let me turn the call over to the operator to open the line for your questions.

Thank you.

Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

So withdraw your question. Please press star one again.

Please standby, while we compile the Q&A roster.

Okay.

Our first question comes from the line of Robbie Marcus with JP Morgan Your line is open.

Oh great.

<unk>, congratulations again on a great quarter.

Got it.

Maybe we could talk about the trends that are informing the guide here, you're clearly, adding a lot of reps. Your revenue per procedure continues to grow at maybe speak to just how you think about the key drivers.

Guide and any color you want to give us on how.

To think about.

The growth between the volumes versus the revenue per procedure.

Thanks, Ravi Great Great question.

Mainly it's really that growing and building direct sales channel, which we believe is already beginning to have some dividends that we've experienced and what <unk> been able to push through some of the headwinds that we've had historically so that's one of our primary drivers.

Other thing that we're looking for and as we've talked about.

Enhanced excuse.

Excuse me enhanced DTC and patient awareness efforts, we think that now that we've got a large and larger surgeon base that it's the right time to continue to invest in.

Patient awareness.

Now that we've got more surgeons and our sales force that support those additional inquiries.

And.

I feel like I know the answer yet, but I'll still ask it anyways given the growth youre seeing there.

<unk>, but.

It's a large very large underpenetrated market for instrument kit procedures.

Lot of companies going after it maybe just give us a sense of what youre seeing out in the field.

Are there any products or <unk>.

And easier, losing accounts too and what's the competitive message.

That your reps are putting out there to keep the growth engine.

A lot.

Yes, Hi, Ravi John .

Thanks for the question Ed.

Yes, we kind of go back to the fundamentals here that are our number one competitor as we see it as the osteotomy procedure at 70% of the procedure base and changing the mindset of the surgeons, who are using lap of plastic for the majority of their bunion cases versus the minority that's where we really focus our efforts with our surgeon education.

Programs, our direct Salesforce.

There are a few companies on the market and more are entering with products, claiming to be like lap of Plasty. We haven't really seen a notable increase in the pressure or impact on us from those.

Companies or products.

As we know the market is really large over $5 billion and we're just way out ahead of everybody.

We've always expected that these companies would try to come along and Opportunistically get a piece of the market that we.

<unk> pioneered and developed here.

<unk> like product is just yet another.

The other barriers, we have or just the.

Beyond that in the IP and the product innovation, our beachhead of clinical data that keeps getting stronger and stronger the bunyan focused direct sales channel.

Powerful surgeon and patient training programs.

While these serve as really great offensive drivers of our business the offer those serve as great defensive barriers as well so.

That's really helpful. I appreciate the color.

Sure. Thank you.

Okay.

Please standby for our next question.

Our next.

Question comes from the line of Joe <unk> with Morgan Stanley . Your line is open.

Hi, Thanks for taking the questions and congrats on the great quarter and guide.

Maybe just another guidance question will start but.

As you are thinking about the guidance still for this year can you maybe just help us kind of parse out how you are thinking about the maturing surge of days versus utilization improvement.

Youre already at around 10% penetrated for surgeons, but just maybe how you're kind of thinking about those factors.

And the guide and if this is really going to be a year, where all of those mature.

Active surgeons that you've added over the past two years really kind of move up the utilization curve.

Andrew This is mark great question and thanks for joining us.

We've previously commented that.

Lot of our revenue growth year over year is not purely from from new surgeons, but from the increased utilization of our existing surgeon base and so we've been really pleased with it in my prepared remarks I commented on nearly half of our active surgeons have come over the last two years, what we do believe though is that there is an incremental <unk>.

<unk> of utilization year after year it doesn't come.

Creased utilization on average we have commented that in the most recent 12 month period that new surgeons have been adopting lack of class a at a faster rate than they ever have before so we believe that the surgeons who are coming to our lab is getting trained theyre very interested in adopting <unk>.

The data is proving out that when they do come become a customer they are actually doing more cases.

Then the average shows and what.

More than what we've had historically so all of this built into to our revenue build for the guidance number that we gave so we feel really good about this strong surgeon base, we plan on adding more and we know we've got.

Direct sales channel to support all of these surgeons in their journey.

Got it thanks, and maybe just a couple of other financial questions too.

Just as we do you think about the seasonality from <unk> to <unk>.

Mark I guess Youre combat that.

First quarter was.

<unk> had the benefit from recapturing some of the Covid procedures, but should we be just maybe help us put a finer bow on that maybe the sequential step down and then second.

Can you help us a little bit borrow with opex for the year just in terms of your revenue growth rate. Thanks for taking the questions.

Thanks drew.

So I wanted to comment in the remarks that there was a little bit of an anomaly.

We're glad that we're not talking about or making references to COVID-19 anymore, but wanted to.

Just bring to everyones.

Memory that Q1 of 2022 did have some benefit from some rescheduled cases, so historically and if you adjust for some of those.

Some of the benefit in Q1.

The last couple of years, we've had a step down and so Q1 has been roughly about 80% of the revenue plus or minus but around 80% of the revenue in Q4. So that's that's a very normal step down that's.

So there will be some build but overall.

There'll be some improved leverage in 2023 versus 2022.

Yeah.

Thanks for taking the questions.

Thank you.

Okay.

As a reminder, ladies and gentlemen.

Star one to ask the question.

Please standby for our next question.

Okay.

Our next question comes from the line of Ryan Zimmerman with <unk>. Your line is open.

Good afternoon, thanks for taking the questions and congrats on all of our growth.

Everything is said before sitting here at the American Academy of orthopedic surgeons.

Thinking about kind of who your marginal customers now I know, it's not the general arthropod thats necessarily pick up a lap of classic hit but.

As you think about the $1 1 million potential bugging surgeries out there versus those that are having the 450000.

How do you think about that 450000 growing.

Over the next few years whats it going to take is it more DTC.

Yes, John .

John your thoughts on general market growth and.

And what moves the needle from.

Actual surgery.

Trade more of those candidates.

Yes.

Hi, Ryan.

To hear from you and thanks, Thanks for the question.

Yes, So I think if you look at all the.

Yeah.

How we try to expand that as obviously through our DTC and patient awareness efforts and investments.

If we can get to.

Those fence sitting patients with our DTC messages with our stronger clinical evidence and communicate that.

There is a better procedure now a better offering than there was in the past that recurrence rates can be much lower than they were in the past that you can get back to bearing weight and.

Back to your activities at a predictable time, then we think that can resonate and we think that can bring some of these defense fitting patients over the fence.

And <unk>.

Connecting with our doctors, maybe for a consultation through our website about lack of plastic. So I think I think in the coming years. That's our project, we're going to try to work to expand our relative portion into.

And to the $1 $1 million as best we can.

And.

Yes, that's where we put our efforts.

Fair enough John I know, it's not an easy.

A question and Theres, no magic silver bullet I guess, but.

The commentary and then the second question is just around complementary products I mean, they are so important for a year for you guys as we think about the model and.

The move higher in Asps.

I'm wondering if you can kind of help us understand what the attachment rates are as you think about them today for your key kind of complementary products.

And where you think you can take that over time or where we should think about that going over time. Thank you for taking my questions.

Sure sure so the complimentary products definitely a great part of our strategy.

And most of our complementary products are all aimed at <unk>.

Proving the outcomes for these patients we got to have Dr. Plassey, because we recognize people with that mid foot deformity didn't get as good an enduring correction are lasting correction with there there are plenty of procedure. If you didn't fix the midfoot. So these are all.

Really tied together so the attachment rate I think kind of goes hand in hand asserted is doing at a Dr policy procedure, 99% of the time, they're going to be doing a lap of plasma as well.

Our speed released instrument is another excellent example of an instrument that can make the.

The great toe tissue release says more release much easier more predictable for the surgeon.

And this occurs in over 95% of our lab of plastic cases so.

Attachment rate can be very very high there once we get a doctor trained on it and they implement it in their practice.

Other things like the S. Four a place not really complementary but heavy conversion going on right now out in the field to doctors wanting to use that next generation more advanced plating geometry on their patients and supplanting earlier versions of R.

Are playing with that and then of course in the back half later this year, we will we'll be releasing the.

Micro lab Atlassian speed play technologies.

I think speed play is going to be a really neat technology platform for us its going to be used in.

Alrighty, a lap of classy another midfoot cases as well.

Great. Thanks, John .

Sure. Thank you.

Thank you.

Im showing no further questions in the queue I would now like to turn the call back to Vivian for closing remarks.

Thank you Tim Honda.

Thanks to everyone for joining us today on behalf of truth Medical This concludes our call and we look forward to our next update following the close of the first quarter of 2023.

Thank you you may now disconnect.

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