Q1 2023 SI-BONE Inc. Earnings Call
Speaker 1: I.
Speaker 2: Good afternoon, and welcome to SIBON's first quarter earnings conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. They will once again please edible indicate this will be a gamesay for those of you consume
Speaker 2: This call is being recorded for replay purposes. I would now like to turn the call over to Marissa Vyse from the Gilmartin Group for a few introductory comments.
Speaker 3: Thank you for participating in today's call. Joining me are Laura Francis, Chief Executive Officer, and Anshul Maheshkari, Chief Financial Officer.
Speaker 3: Earlier today, SI-BONE released financial results for the quarter ended March 31, 2023. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws.
Speaker 3: which are made pursuant to the safe harbor provisions of the private securities litigation reform act of 1995.
Speaker 3: Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are followed with a statement.
Speaker 3: These forward-looking statements are based on the company's current expectations and inherently involve risks and uncertainties. These risks include SI-BONE's ability to introduce and commercialize new products and indications, SI-BONE's ability to maintain favorable reimbursement for its products and procedures.
Speaker 3: the impact of potential economic weakness on the ability and desire of patients to undergo elective procedures, SI-Vone's ability to manage risk to its supply chain, the impact of future capital requirements driven by new product introductions, and risks to the continued renormalization of the healthcare operating environment.
Speaker 3: Other forward-looking statements include our examination of operating trends and our future financial expectations, such as expectations for surgeon training and adoption, active surgeons, new products, and clinical trial enrollment and are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events.
Speaker 3: F.I. Bohn disclaims any intentional obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as it's a live broadcast today, May 1, 2023. And with that, I will turn the call over to Laura. Thanks, Marissa. Good afternoon, and thank you for joining us. I am thrilled with our stellar start to 2023. The exceptional performance in the first quarter reaffirms the accelerating procedure demand over the last several quarters.
Speaker 4: education.
Speaker 3: As I look forward, I remain highly confident that our commercial execution, combined with our differentiated product pipeline, will allow us to further expand our total addressable investment, drive revenue growth, and improve our bottom line.
Speaker 3: Over the last three years, we've made significant investments in expanding our direct commercial infrastructure to ensure we've built a seasoned sales force to support growing surge in demand. Our strong revenue growth and accelerating operating leverage over the last several quarters reaffirmed that the commercial strategy is delivering. At the end of our first quarter, our U.S. commercial organization comprised 87 quota-bearing territory reps. We complement our direct sales team with a growing network of agents for case coverage and are selectively evaluating strategies to place instrument sets at high-volume hospitals.
Speaker 3: to meet the demand. At the end of our first quarter, our trailing 12-month average revenue per territory in the U.S. was approximately $1.3 million, representing a 28% productivity gain over the comparable trailing 12-month period ended the first quarter of 2022.
Speaker 3: We're confident that our hybrid strategy will allow our territory managers to drive urgent engagement, deliver strong top-line growth, and achieve higher productivity.
Speaker 3: We are confident that our hybrid strategy will allow our territory managers to drive surgeon engagement, deliver strong top-line growth, and achieve higher productivity. Moving on to surgeon engagement.
Speaker 3: Surgeon adoption is one of the best leading indicators of long-term procedure demand. We exited the first quarter with over 950 active surgeons, an all-time high. This equates to over 40% growth in our active surgeon base over the first quarter of 2022.
Speaker 3: This was the highest quarterly growth rate in our active surgeon base since becoming a public company.
Speaker 3: and the ninth consecutive quarter of double digit year-over-year growth interactive surgeon-based.
Speaker 3: Sequentially, our active surgeon base increased as compared to the fourth quarter of 2022.
Speaker 3: It's also encouraging to see surgeon overlap across our procedures.
Speaker 3: We expect our complementary portfolio to drive deeper engagement and increase procedures per surgeon over time.
Speaker 3: These trends in active surgeon base reaffirm that our portfolio expansion strategy and investment in surgeon education are resonating with our customers.
Speaker 3: Academic programs, which we initiated in 2018, have been a strategic priority for us to engage surgeons early on in their careers.
Speaker 3: We're seeing great success in these training activities and are encouraged by the steady adoption of our procedures by these fellows and residents in the quarters and years that follow their education.
Speaker 3: In the first quarter of 2023, the procedure revenue in the cohort of surgeons who were trained as fellows in residence increased nearly threefold compared to the first quarter of 2022.
Speaker 3: Turning to products and solutions.
Speaker 3: With iFuse 3D, iFuse Torque, and now iFuse Bedrock Granite, the value of our innovative, versatile, and complementary product portfolio has positioned us as the top choice for surgeons looking for fake or pelvic solutions.
Speaker 3: Demand for iFuse Torque, which recently completed its second anniversary, remains strong. It provides a complementary technology to iFuse 3D for existing surgeons and has allowed us to engage new surgeons performing minimally invasive SI joint fusion.
Speaker 3: With the expanded clearance covering SI joint dysfunction, trauma, and adult deformity, iFuse Torque is a key growth driver for the company. We're experiencing increased use of iFuse Torque as the second point of fixation for adult deformity procedures.
Speaker 3: In trauma, we remain in the early stages of market development and were encouraged by the steady revenue growth we're seeing in IQ's torque and sacral insufficiency fractures. The trauma opportunity is of strategic importance to us as the Sacral Pelvic Solutions leader and is an important avenue for our growth over the long term.
Speaker 3: Moving to i-Fuse Bedrock Granite.
Speaker 3: As we approach the first anniversary of the Granite launch, we're extremely pleased with the strong surgeon reception and increasing demand for this breakthrough product.
Speaker 3: With Granite now in the approved product list at over 2,600 hospitals, we believe this differentiated device has the potential to become the standard of care for stabilizing the base of long constructs in adult deformity procedures.
Speaker 3: Along with the strong demand for granite, we're seeing a consistent trend in surgeons using some combination of our products with granite to achieve two points of fixation across the SI joint on either side.
Speaker 3: This is driving a significant pull-through opportunity for the overall portfolio and a higher procedure average selling price.
Speaker 3: In addition to the use of granite in long-construct adult deformity procedures, we are encouraged by the steady increase in the use of the product to stabilize the base of shorter, multi-level constructs in degenerative spying procedures. Nearly 40% of our granite cases have been in these short-construct procedures.
Speaker 3: There are over 100,000 shorter multi-level spinal fusion procedures to the sacrum per year in the United States.
Speaker 3: Given our success with granite, we intend to introduce a new product in the granite family in 2024, more targeted toward these shorter construct procedures.
Speaker 3: We believe the expanded portfolio will allow us to target additional degenerative procedures to the sacrum, potentially expanding our total addressable market for the Granite family products by nearly $700 million to nearly $1 billion.
Speaker 3: Before I pass the call on to Anshul, let me provide a quick update on our intellectual property.
Speaker 3: Last week, we were able to extend patent protection, covering our first-generation iFuse implant, by approximately 13 months to December 2025. As a reminder, the patents covering iFuse 3D, our 3D printed and fenestrated triangular titanium implants expire in 2035. I'll now turn the call over to Anshul to provide more details on our financial results.
Speaker 5: Thanks, Laura. Good afternoon, everyone. My comments today will be focused on first order revenue trends, operating leverage, and liquidity, and end with our updated 2023 guidance.
Speaker 5: Starting with our first quarter revenue.
Speaker 5: As Laura noted, our worldwide revenue in the first quarter was $32.7 million, representing growth of approximately 46% compared to the prior year period. We are thrilled with this growth but do want to note as a reminder that the first quarter of 2022 made only a peanut butterillions of dollars.
Speaker 5: compared to the prior year period.
Speaker 5: by approximately 48% compared to the prior year period.
Speaker 5: first quarter increase compared to the fourth quarter of 2022.
Speaker 5: This is encouraging as historically, first quarter revenue is sequentially lower than the fourth quarter.
Speaker 5: Additionally, the sequential monthly US revenue growth as we progress through the quarter reaffirms the growing demand for our solutions.
Speaker 5: In addition to strong volume growth, a US average selling price in the first quarter of 2023 was modestly positive compared to the prior year period.
Speaker 5: International revenue was $2.3 million, reflecting growth of 9% compared to the prior year period. Across Europe , France maintained strong volume growth, offset by underperformance in Germany and the UK.
Speaker 5: Moving to gross marketing and operating leverage.
Speaker 5: In the first quarter of 2023, our gross margin was approximately 82%, in line with our expectations.
Speaker 5: As anticipated, the gross margin reflects the impact of procedure and product mix.
Speaker 5: due to higher total cost of IQ store and granite, increase in depreciation from deployment of instrument trees to support the strong demand for these products.
Speaker 5: depreciation associated with our second facility in Santa Clara, and higher freight costs.
Speaker 5: Operating expenses were $38.1 million in the first quarter of 2023 versus $36.3 million in the prior year period. This 5% increase in operating expenses was mainly driven by higher commissions associated with the revenue growth. We are pleased that we have now demonstrated several consecutive costs.
Speaker 5: as compared to a net loss of $17.4 million or 52 cents for value to share in the prior year period, representing a 38% improvement.
Speaker 5: Adjusted EBITDA in the first quarter improved significantly to negative $3.9 million versus a Adjusted EBITDA of negative $10.7 million in the prior year period.
Speaker 5: This change translates to approximately 63% improvement in the adjusted EBITDA.
Speaker 5: Adjustity Bada also improves sequentially compared to the fourth quarter of 2022.
Speaker 5: and the Bada also improved sequentially compared to the fourth quarter of 2022.
Speaker 5: We ended the quarter with $86 million in cash and marketable securities. A decrease in cash and marketable securities in the first quarter was $11.3 million and improvement of over 30% compared to the prior year period. As a reminder, first quarter cash outflows include the payment of prior year annual dollars.
Speaker 5: We are pleased with the trajectory of a cash utilization in the last few quarters while continuing our investment in growth initiatives.
Speaker 5: Finally, going to our updated guidance for the year. Based on the strong execution in the first quarter, robust surgeon engagement and demand for a portfolio solution.
Speaker 5: We are increasing our 2020 worldwide revenue guidance to 128 million to 131 million dollars.
Speaker 5: Up from a pre-year guidance of $124 million to $127 million.
Speaker 5: Nisgrilized guidance translates to year-over-year growth of approximately 20% to 23% versus the prior range of 17% to 19%.
Speaker 5: We continue to expect 2023 annual gross margins to be approximately 80%. Based on the updated revenue guidance, we anticipate operating expenses will grow with a low-mid single-digit percent in 2023 relative to 2022, and adjusted even the loss will continue to improve year-over-year in 2022.
Speaker 2: With that, I will turn the call over for questions to the operator. Certainly, ladies and gentlemen, if you would like to ask the question, please press star 1-1 on your touch tone telephone. Again, for any questions, please press star 1-1. Please wait while we compile our Q&A roster.
Speaker 2: And our first question is coming from Craig Bidjou of Bank of America. Your line is open.
Speaker 6: Good afternoon, Laura and Entral. Thanks for taking the questions and congrats on a great start to the year here.
Speaker 6: I guess one of the start, I think we've seen a number of companies report pretty robust procedure growth in Q1 and you guys obviously had very, very strong growth even when considering the comp.
Speaker 6: So I guess I wanted your view on what you saw on the procedure side. Was there a kind of demand or, you know, I guess the factors that have been influencing procedure growth over the last several years. Like staffing.
Speaker 6: just willingness to get a procedure done. Are those easy? And maybe just from a high level perspective, what are you seeing on the procedure side?
Speaker 3: Hi Craig, this is Laura. Thanks so much for the question. And yes, we are thrilled with the record 21 performance that we had 46% growth is is something that we're quite proud of and even also the the comp compared to last year that was COVID impacted. It still is.
Speaker 3: are coming to fruition for us. And so what we've really done is, you know, with these years of investment across our product development or clinical research or commercial infrastructure and surgeon education, we're building an industry leading platform here for sacred public.
Speaker 3: the first quarter. So I think that really tells you the extensive acceleration that we're seeing in our business. So it certainly is macro factors. We do think that those macro factors are easing over time, but even with all of that in consideration.
Speaker 3: We're very excited about what we saw in the first quarter, as well as, you know, based on the momentum exiting the first quarter, we're excited about our outlook as we continue to move further away from the pandemic.
Speaker 6: Thank you, Laura. Maybe just on guidance and appreciate the comments that the 2-1 comp was easier than maybe some of the other quarters that you're going to see throughout the rest of the year. But even on a comp adjusted basis.
Speaker 6: It still looks a little bit below Q1. I guess the question is, how should we think about the cadence of that through the year? Is it simply some conservatism, or is there anything else that we should be thinking about for the rest of the year?
Speaker 5: Hey, Craig, this is Anshul. Thanks for that question. So from a guidance perspective, look, you know, Laura already alluded to this, we had a great start to the year. And that's clearly a continuation of the momentum we were seeing, you know, throughout 2022 just ahead of all this.
Speaker 5: And when we provided our initial guidance credit, if you recall, we had talked about a risk adjusted guidance where we took a lot of the tailwinds that we have in the business, ASP trends, grad roll out, Europe stabilization, procedure volume coming back. And we were, I think we were appropriately thoughtful coming in.
Speaker 5: to the year with those estimates on the risk of justifying. And what we've seen already in our Q1 numbers is some of those things have played out better than we had risk adjusted. So our ASP trends, if you recall, we had said we were pricing in about a mid-single-digit decline and we came in positive on the ASP side and the granite rollout has continued very well for us. We really feel good coming out of the first quarter than some of those tailwinds are playing
Speaker 5: for the rest of the year, even though we've seen them play out a little bit. So there's a fair bit of conservatism in there, but we think that's appropriate, given how early we are still in the year.
Speaker 6: Great, thanks, I'm sure. And I'll let others jump in, but congrats on really a great quarter.
Speaker 6: Great thanks and I'll let others jump in, but congrats on really a great, great quarter. Thank you.
Speaker 2: in one moment for our next question. And our next question will come from Drew Rennery of Morgan Stanley , your line is open.
Speaker 7: Hi Laura, hi, I'm Charles. Thanks for taking the questions. Maybe just a group of mine together, but as we're kind of thinking about some of the new products in Laura, I think you said you have a new grant of product coming out in 2020, but you've made a lot of investments in your sales force. You have multiple tailwinds at your back, but just how are you thinking about adding in new technology to not just capture additional procedure while it's shared.
Speaker 3: IPUs and IPUs 3D were our primary products and minimally invasive SI joint fusion continue to form the basis for the company. But we have been very pleased with the reception to our torque product both in our primary market and minimally invasive SI joint fusion and also in the trauma market. And then last year with the introduction of granite we are...
Speaker 3: really pleased with what we're seeing there as well. Our primary focus there was on the adult deformity market. And it is a differentiated product addressing an unmet clinical need there with ensuring that we deal with public with fixation failure in those long times.
Speaker 3: But what we're seeing is that market actually is significantly larger than the adult deformity market that we originally had targeted. And in fact, around 40% of granite procedures are being done in shorter constructs, so 2-4-level constructs.
Speaker 3: versus the longer constructs with scoliosis cases. And so I specifically mentioned new products there that were currently working on a product that will be more targeted towards those short constructs given the opportunity that's there, the market size that's there.
Speaker 3: If you add together the opportunity that we have a public fixation, we think the opportunity overall, the tan that's around a billion dollars in total. And so that is an area of focus for us. And given that we're already working with the surgeon, these are orthopedic and neural surgeons.
Speaker 3: they're doing spying procedures, we see a big opportunity for our sales force to be working closely with those surgeons on these additional products. Got it, thanks. And one last one, just as we are thinking about your updated guidance and to pick a...
Speaker 7: driving kind of that inflection point a bit more and thanks again for taking the questions.
Speaker 3: Yeah, so I did mention that we had a record 950 surgeons who had done at least one procedure in the first quarter. So that growth of over 40% year over year and it was even an increase over the fourth quarter as well, which is typically our strongest quarter.
Speaker 3: So it's nine consecutive quarters of double digit year over year growth and quite frankly, the highest year over year growth rate that we've seen as a public company. We do, as your question, to get to your question, we do see a significant amount of overlap where surgeons are performing.
Speaker 3: multiple procedures. So they're performing procedures for minimally invasive SI joint fusion, adult deformity, degenerative cases, trauma cases with our with our products. And so it really is a testament to our execution here and
Speaker 3: And we started this company with a focus on education and outreach on these, on that clinical needs, and what we're seeing is that building with the group of products that we've developed. In terms of the time frame for surgeons to perform a procedure, it is a little bit different depending upon which procedure type we look at in our primary...
Speaker 3: then they need to identify a patient and then perform a procedure. So what we typically said is that it takes around 12 months to truly ramp up with surgeon. In the case of pelvic fixation, we're seeing something different than that because what we're doing here with pelvic fixation is really...
Speaker 3: bringing a new product that provides not just pelvic fixation but also fusion into these short and long construct cases. And so it really is fitting very nicely into the surgeon workflow and it's something that we're seeing a more rapid adoption period versus.
Speaker 2: will come from Young Lee of Jefferies. Your line is open.
Speaker 8: All right, great. Thanks so much. I wanted to echo my sentiments on the great quarter as well. I guess first question, just on the 40% growth in US active surgeons, now up to 9.50, what was wondering, what's driving that? How much is coming from previously? Definitely.
Speaker 8: But previously trained, but inactive surgeons sort of coming back into the fold versus new surgeon ads. And how much of that is driven by the new products or the portfolio effect? Yeah. In terms of the active surgeon growth, you mentioned are we seeing reactivations? We certainly are seeing reactivations.
Speaker 3: So we are seeing a lot of additional surgeons that are coming on board and doing procedures for the first time. Some of them are competitive conversions as well because they're moving from one product to in most cases our torque product for those newer surgeons that are conversions.
Speaker 3: In terms of the product portfolio, when we look at the product portfolio, around half of the increase in the number of new surgeons are coming from our core primary minimally invasive SI joint fusion procedure. And then the other half are actually coming from these new procedures in pelvic fixation and fusion.
Speaker 8: or internal procedure. So it's really across the board that we're seeing the increase. Okay excellent. That's really helpful. My follow-up question, I guess I'm just wondering, you know, very good progress on EBITDA loss narrowing. I guess I'm wondering, you know, if you can provide us with the latest thoughts on sort of EBITDA break even or the progression towards that, you know, it seems like if you sort of maintain this type of progress, you could, you know, get there quicker than what consensus is assuming. Yeah, so young thanks for that question.
Speaker 5: We are really pleased with what we have done from a leverage perspective. Our operating leverage is pretty linear to top line growth. So as our revenue accelerated in 2022 and in the first quarter of 2023, our leverage accelerated as well. And a lot of that is driven by the investments that we have made that were required to support the level of growth that we're now.
Speaker 5: the market penetration and growth. But we continue to expect operating leverage to improve your year over year throughout 2023 and that will help us progress towards achieving that adjusted EBITDA break even like you said and you know not that far future.
Speaker 5: administration and growth. But we continue to expect operating leverage to improve year over year throughout 2023 and that will help us progress towards achieving that adjusted EBITDA break even like you said and you know not that far future. All right great thank you.
Speaker 9: In one moment for our next question. And our next question will come from Sam Brudowski of Shrewd's, Dear Line is open. Hi, thanks for taking the questions and I'll echo everyone else and congrats on the strong quarter and start to the year. Just to go back to guidance quickly and appreciate the commentary on the Conservatives of the Marla Rancho, but it would look like it implies a sequential decline in revenue and QQ, so it would be great to hear what you're seeing and when you see in April and how you think about growth in the second quarter versus versus why Q.
Speaker 5: Yeah, no, happy to take that seven first congrats on your role as well. Look, on a sequential basis, it's really difficult because the first half of this year, over the last three years, actually has been significantly distorted by COVID. And for us, even if you look back to 2019 to see sequentially what the trend was, the portfolio is much broader now. So, we really don't have a good precedent.
Speaker 5: for sequential trends coming into 2023. But what we take confidence in is the sequential monthly trends that Laura talked about in the US revenue growth as we progress through the first quarter, the record active surgeon base that we exited the quarter with when these are exciting for looking indicators for us that we might be entering a period of strong demand.
Speaker 5: So we like what we saw in the first quarter, exiting the first quarter, but, you know, I don't think I want to put too much emphasis on the quarter by quarter trends at this point, especially this early with the expanded portfolio.
Speaker 9: Okay, that's helpful. And then we're not on ASP. It's just to make sure it sounds like there's no change in terms of the forward guidance.
Speaker 9: to the expectation for ASP to decline in the load and the mid-singer digits is that right? And if it's given us any color on, you know, why that would be different than what we saw on one queue. Thank you. Yes, Sam. No, you're accurate. Our guidance for the rest of the year does not achieve any changes to our risk-adjusted metrics that we considered. So the ASP.
Speaker 5: We've already done better than that in the first quarter.
Speaker 5: And you feel good about it, but again, it's one quarter. We want to be able to see the trend sustain itself as we progress through the year. And you know, that will be reflected in future revenue numbers. Thanks for the questions. And one moment for our next question.
Speaker 2: Our next question will come from Dave Turcally of J&P Securities. Your line is open. Thank you.
Speaker 3: Laura, I know you mentioned a second facility in Santa Clara. I was just curious if you might make a comment on capacity and what you're doing there versus the original. Yeah, in terms of our capacity, we do actually have two facilities now in Santa Clara. There's one facility that primarily has office operations. The second facility has our warehouse and some of the assembly that we do here specifically for instruments that also have an R&D lab that's there as well. That building is more of an operational facility. We do feel comfortable that we have the capacity to grow at the rate that we're growing at.
Speaker 3: SI joint fusion business to a multi-product business and we're not missing a beat. That's great to hear and my follow-up would be on the um
Speaker 6: The new grant, so I think I heard you say when you originally launched the grant that you thought that might deformity might be a 250 million and now you're saying with a shorter construct, maybe that goes to a billion so there's I think 750 million incremental. Could you just walk us through the math there like ASP or implants and then would that construct possibly qualify for a new technology add on payment as well? Next week, some
Speaker 3: Yeah, thanks for the questions. So you're right. Granite was originally developed for the adult deformity market. When we thought about Granite as a product, we were focused on long constructs and we were making an assumption of the certain number of cases around 30,000 cases with two implants.
Speaker 3: that are long construct cases, we're actually seeing surgeons use four implants versus two. And so that total addressable market is now closer to around 300 million. What has been really exciting for us is to actually see how many surgeons want to use this product in short construct degenerates. Bye.
Speaker 3: in those cases, which short-construct cases are appropriate for pelvic fixation. It's a much larger market in total. So there's around 100,000 cases that go down to the sacrum, those two to four level.
Speaker 3: cases and so versus the 30,000 you're talking about a much larger market size that's here. In those cases it's usually two implants instead of the four, but if you add it all together you're getting an incremental market opportunity of 600 to 700 million dollars in the short construct market.
Speaker 3: And certainly we're looking at the product itself, and we're looking at the reimbursement opportunity there, too, as we have in all of these other cases. And so what it shows us is the big opportunity that we have in public fixation infusion.
Speaker 2: Thank you. One moment for our next question. And our next question will come from Kyle Rose of Canaccord. Your line is open, Kyle.
Speaker 10: Great, thanks for squeezing me in here and congrats on a good quarter. So, look, I just wanted to dig one layer deeper into some of the upside you're seeing. I guess maybe could you just help us understand how much that's coming from primary SIJ versus some of the deformity in trauma side? Obviously, you've got some big initiatives with the broader portfolio. And then I'll just ask my second question. Who's going to plan on building equipment now?
Speaker 10: We've seen pretty strong growth in the number of distributors you're working with. So I just wondered if you could help us understand how much of the performance or the growth in 2023 expectations should we think about coming from that distributor group versus the direct and the territory manager and CSS group. Thank you.
Speaker 3: Thanks, Kyle. So, I mean, as you know, we don't break out separately product by product, you know, what our growth rates were. We now have our three primary products with with IQ3D, Torque and Granite. These are all sacred pelvic solutions. But what I will tell you is that we saw an MQ1.
Speaker 3: for pelvic fixation. In terms of distributors that you asked about, we have increased the number of distributors pretty significantly in the United States, and that increase has largely been led by covering granite cases.
Speaker 3: Granite cases do tend to be different than a primary SI joint fusion. So I said that granite cases, we see a much more rapid adoption of those particular cases because they fit into the workflow very quickly. And there's not necessarily the same education process.
Speaker 3: is going to be around 45 minutes. A typical adult deformity case is probably around six hours in total. And so what we're doing is we're gaining leverage by working with distributors that are covering these particular cases. And what it does is it's allowing us to increase the rep productivity. I had mentioned that we had a
Speaker 3: 28% increase year over year. We're at around 1.3 million in productivity. So it's helping us to gain operating leverage on the business and that model is working very well for us. And Kyle, just one clarification. These are agents, not what you'd think typically to get distributors.
Speaker 3: an increase year over year. We're at around $1.3 million in productivity. So it's helping us to gain operating leverage on the business. And that model is working very well for us. And Kyle, just one clarification. These are agents, not what you'd typically think of distributors. Great, thank you for taking the question.
Speaker 3: I think what he means by that, just to be clear, is a distributor, you're typically just selling products to them. This is a, we're not doing that. This is just a case where the cases are being covered by an agent. One moment for our next question. And our next question will come from Ross Osborne of Cancer Fitzgerald. Your line is open.
Speaker 3: Hi everyone, congrats on the quarter and thanks for taking our questions. So maybe just one for me on the NTAP. Did you see more cases during the quarter relative to the fourth quarter where the NTAP is being paid out? Yeah, it's a good question. So we do think the NTAP is really important to our Granite business.
Speaker 3: receive up to an additional $9800 of payment for an adult deformity procedure. And as you may imagine, that's important to the hospital and it's important to the surgeon as well. So it's something that we educate on with the facility as well as with the surgeon. We are continuing to see the acceleration that's here.
Speaker 3: There is data on who is using the NTAP, but there are significant delays on that data. So to be honest with you, we do not have that information yet. It's usually available a couple times a year, and so we expect to see something late summer, early fall to really understand what the...
Speaker 2: And one moment for our next question.
Speaker 2: And our next question will come from David Saxon of Needham & Company. Your line is open.
Speaker 10: Yeah, hi Lauren and Joel. Thanks so much for taking the questions and congrats on the quarter. I wanted to start on Torque and Trauma. I think in the script you called out it was your second anniversary. So I wanted to ask you know what inning are we in in terms of set deployment and how's the Salesforce doing?
Speaker 3: given that it's a different call point. Yeah, thanks for the question, David. The opportunity in trauma is a pretty large opportunity. Our best estimate is around $350 million in total for pelvic ring fractures, and most of that is in sacral insufficiency fractures, typically with patients that have osteoporotic bone. And we work with assureal
Speaker 3: In some cases, it's a different call point. It's a general ortho surgeon that's focused on trauma. In some cases, it's actually our typical ortho or neuro spine surgeon. And we do think that our FAFRON study is going to be an important element to educating surgeons on the treatment of the sacral insufficiency fraction.
Speaker 3: the patient. So we do see this as a little longer term opportunity but very very familiar to us. It feels a lot like starting out in our minimally invasive SI joint fusion market where we had to really educate on the condition and we needed to encourage surgeons.
Speaker 3: to treat cases that previously they weren't treating. So it's a great long-term opportunity for us. In terms of set deployment, implants and so on, we have been doing a good job keeping up with all of that. But as I said, I would say most of the deployment has been for the core market versus trauma.
Speaker 10: Okay, got it. That's helpful. And then maybe for my second, you know, when, when the salesforce is talking to prospective doctors, are you hearing any of the same points and pushback you did kind of earlier on them in the launch or is the idea that, you know, the SI joint can be a source of pain? Is that?
Speaker 3: of the company and at that time there were very few surgeons who believed that the SI joint is a pain generator but with a lot of work and education, clinical data, over 80,000 cases later over 3,000 surgeons using
Speaker 3: Our products, what we've seen, and universal coverage out there as well in the United States, there aren't many surgeons that you'll speak to anymore that will say they don't think the SI joint is a pain generator. And now what we're really trying to do is make sure that they understand the product, the educational approach, the reimbursement, the healthy.
Speaker 3: I just want to say thank you all for joining the call today. I am really excited about the growth potential ahead of us this year and even beyond. We have all the pieces in place to deliver exceptional outcomes for patients, support our surgeons, expand our portfolio and...
Speaker 3: and create significant value for our shareholders too. So once again, thank you for your ongoing support and trust in our company. Goodbye. And this concludes today's conference call. Thank you for participating. You may now disconnect.