Q1 2024 Paragon 28 Inc Earnings Call
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Operator: Good afternoon, and welcome to Paragon 28's first quarter 2024 earnings conference call. Currently, participants are in a listen-only mode. We will be facilitating a question and answer session at the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to hand the conference over to your host today, Mr. Matthew Brickman, SVP of Strategy and Investor Relations. Mr. Brickman, please go ahead.
Good afternoon, and welcome to Paragon 20, Eights first quarter 'twenty 'twenty four earnings conference call. Currently participants are in a listen only mode.
Operator: We will be facilitating a question and answer session at the end of today's call.
Operator: As a reminder, this call is being recorded for replay purposes.
Matt Brinckman: I would now like to hand, the conference over to your host today, Mr. Matthew Brookman SVP of strategy and Investor Relations. Mr. Brinkman. Please go ahead.
Matt Brinckman: Good afternoon, and thank you for joining Paragon 28's first quarter 2024 financial results and earnings call. Presenting on today's call are Albert DaCosta, Chairman and Chief Executive Officer, and Chrissy Wright, Interim Chief Financial Officer.
Matt Brinckman: Good afternoon, and thank you for joining us here today in 2008 first quarter 2024 financial results and earnings call.
Speaker Change: On todays call are Albert <unk>, Chairman, and Chief Executive Officer, and Chris You're right interim Chief Financial Officer.
Matt Brinckman: Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations, or predictions of future events, results, or performance. These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from those projected.
Speaker Change: Before we begin I would like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 95.
Matt Brinckman: Forward looking statements include statements made as to the Companys or managements intentions hopes beliefs expectations or predictions of future events results or performance.
Matt Brinckman: These forward looking statements are subject to a number of risks uncertainties estimates and assumptions that may cause actual results to differ materially from these forward looking statements.
Matt Brinckman: All forward-looking statements are based upon current available information, and Paragon 28 assumes no obligation, except as required by law, to update these statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. During this presentation, we will refer to the non-GAAP financial measure of adjusted EBITDA and constant currency net revenue. A reconciliation to the most comparable GAAP financial measure, net income, and reported net revenue growth is contained in our press release issued earlier today. And with that, I will turn the call over to Albert.
Matt Brinckman: All forward looking statements are based upon current available information and Paragon <unk> assumes no obligation except as required by law to update these statements.
Matt Brinckman: Additional information concerning certain risks and uncertainties that may impact. These forward looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today.
Albert: During this presentation, we will refer to the non-GAAP financial measure of adjusted EBITDA and constant currency net revenue growth a reconciliation to the most comparable GAAP financial measure net income reported net revenue growth is continuing our press release issued earlier today.
Matt Brinckman: And with that I will turn the call over to Albert.
Albert DaCosta: Thanks, Matt. Good afternoon, and thank you for joining us for our first quarter 2024 earnings call. I am pleased to have our interim CFO Chrissy Wright join us for today's call. Chrissy has been an incredible partner on our board since 2021, serving as our Audit Committee Chair and as a member of our Nominating and Governance Committee.
Albert: Thanks, Matt Good afternoon, and thank you for joining us for our first quarter 2024 earnings call.
Albert DaCosta: I'm pleased to have our interim CFO, Chris you're right joining us for today's call.
Albert DaCosta: Chris has been an incredible partner on our board since 2021, serving as our audit Committee chair and is a member of our nominating and governance Committee.
Albert DaCosta: I am now going to kick things off with a review of our first quarter performance, followed by recent highlights. After that, I'll pass it over to Chrissy to provide further details on our first quarter financial results and guidance. Global revenue for the first quarter of 24 was a record $61.1 million, representing 17.4% of consequency growth, in line with the top end of our preliminary revenue results reported on April 4. Overall, we are pleased with our growth through the first quarter of 24 compared to our strong growth comp in the first quarter of 23, despite one less billing day this year.
Albert DaCosta: I'm now going to kick things off with a review of our first quarter performance followed by recent highlights.
Chrissy: After that I'll pass it over to Christopher to provide further details on our first quarter financial results and guidance.
Albert DaCosta: Global revenue for the first quarter of 'twenty four was a record $61 1 million.
Chrissy: Representing 17, 4% reported and constant currency growth in line with the top end of our preliminary revenue results reported on April 4th.
Chrissy: Overall, we are pleased with our growth through the first quarter of <unk> 24, compared to our strong growth comp in the first quarter of 'twenty three despite one less billing day this year.
Albert DaCosta: We also saw a modest step up from the fourth quarter of 2023, which is typically the seasonally highest revenue contribution of any quarter each year. Importantly, we continue to see balanced top-line performance across all five foot and ankle subsegments. Looking at the US business performance, net revenue for the first quarter of 24 was $51.1 million, representing 13.5% reported growth. During the quarter, we increased our US producing sales rep roster by 6% to 261 reps compared to the first quarter of 23, and we saw an 8% increase in productivity across our rep base. Over the same period, we grew our surgeon customer base by 12% to a record 2,275 surgeons.
Chrissy: We also saw a modest step up from the fourth quarter of 2023, which is typically the seasonally highest revenue contribution of any quarter each year importantly.
Albert DaCosta: Importantly, we continue to see balanced top line performance across all five foot and ankle sub segments.
Albert DaCosta: Looking at the U S business performance net revenue for the first quarter of 'twenty four was $51 1 million.
Albert DaCosta: Representing 13, 5% reported growth during.
Albert DaCosta: During the quarter, we increased our U S producing sales rep roster by 6% to 261 reps compared to the first quarter of 2003 and saw an 8% increase in productivity across our rep base.
Albert DaCosta: Over the same period, we grew our surgeon customer base by 12% to a record 2275 surgeons med.
Albert DaCosta: Medical education remains a core part of our commercial strategy, and our two mobile labs have been important drivers of surgeon adoption to start the year. We are excited to see solid growth in these leading commercial indicators and expect to see continued momentum in these areas throughout the year, in line with our typical seasonal trends. First quarter international net revenue was $10 million, representing 42.2% and 42.5% reported in constant currency growth, respectively. International growth was driven primarily by the United Kingdom and Australia.
Albert DaCosta: Medical education remains a core part of our commercial strategy and our two mobile labs have been important drivers of surgeon adoption to start the year.
Albert DaCosta: We are excited to see solid growth in these leading commercial indicators and expect to see continued momentum in these areas throughout the year in line with our typical seasonal trends.
Albert DaCosta: First quarter International net revenue was $10 million, representing 42, 2% and 42, 5% reported and constant currency growth respectively.
Albert DaCosta: International growth was driven primarily by the United Kingdom and Australia.
Albert DaCosta: Overall, I am thrilled with our international momentum. Our foundation is set for sustainable growth as we drive further investments to clear and launch additional products in new markets outside of the United States. Turning next to our product portfolio, 2024 is off to an incredible start with six full product launches and one limited market release in the first quarter of 24. We remain focused on innovating across all segments, but it's important to note that all products launched so far in 24 are in high-growth foot and ankle segments like bunion, soft tissue, and minimally invasive surgery.
Albert DaCosta: Overall, I'm thrilled with our international momentum our foundation is set for sustainable growth as we drive further investments to clear and launch additional products and new markets outside of the United States.
Albert DaCosta: Turning next to our product portfolio.
Albert DaCosta: <unk> thousand 24 is off to an incredible start with six full product launches and one limited market release in the first quarter of 'twenty four.
Albert DaCosta: We remain focused on innovating across all segments, but it's important to note that all products launched so far in 'twenty four are in high growth foot and ankle segments like bunion soft tissue and minimally invasive surgery.
Albert DaCosta: Ultimately, these most recent launches will help advance Paragon 28's portfolio in the fastest growing subsegments in our market and position the company well for sustainable long-term growth. Recently, we launched the Grappler reinforced repair system, adding to our suite of novel syndesmosis repair solutions and broadening our rapidly growing soft tissue portfolio. As a reminder, early in the first quarter, we launched three other soft tissue solutions with the Grappler Knotless Anchor, Bridgeline Tape, and Mr. Tenon Harvester, all of which will typically be used in conjunction with other products and are highly complementary to our existing plating and screw systems. Another solution is our FJ-2000 Power Console and Burr System, designed specifically for extremities and MIS surgery.
Albert DaCosta: Ultimately these most recent launches will help advance paragon 28th portfolio and the fastest growing sub segments in our market and position the company well for sustainable long term growth.
Albert DaCosta: Most recently, we launched a grappler reinforce repair system, adding to our suite of novel Syndesmosis repair solutions and broadening our rapidly growing soft tissue portfolio.
Albert DaCosta: As a reminder, early in the first quarter, we launched three other soft tissue solutions with the grappler not lift inker Fringe line Tate and Mr. Tenant Harvester, all of which will typically be used in conjunction with other products and are highly complementary to our existing plating and screw systems.
Albert DaCosta: Another solution is our F. J 2000 power console and burst system designed specifically for the extremities mis surgery.
Albert DaCosta: Lastly, we launched the Precision MIS Bunion System and have our new Lapidus plant, the Buniomatic, which is on limited market release with full release expected later this year. We continue to see strong momentum from our 2022 and 2023 product launches, which have continued to be significant drivers of growth for the first quarter of this year, especially in areas of external fixation and hindfoot fusion, where we launched our Monkey Rings, Monkey Bars, and Phantom Hindfoot Nail in 2022.
Albert DaCosta: Lastly, we launched precision Ms Bunion system and have our new lapidus plant the <unk>, which is on limited market release with full release expected later this year.
Albert DaCosta: We continue to see strong momentum from our 2022 and 2023 product launches, which have continued to be significant drivers of growth through the first quarter of this year, especially in areas of external fixation and hind foot fusion, where we launched our monkey rings monkey bars, and Phantom hind foot mail in 2022.
Albert DaCosta: Our product launches in 2024 are still relatively fresh and have not yet contributed materially to revenue in the first quarter, but they've been generating a ton of buzz with our rep base and within the Surgeon community.
Albert DaCosta: Our product launches in 2024 are still relatively fresh and have not yet contributed materially to the revenue in the first quarter of <unk>.
Albert DaCosta: Been generating a ton of buzz with our rep base and within the surgeon community.
Albert DaCosta: These launches give us confidence in our guidance for 2024 and P28's ability to drive further growth later this year and beyond. As we look further into 2024, we expect to continue investing in our commercial and educational opportunities to enable P28 to realize the full potential of our new product launches as well as legacy products, both in the US and internationally. In closing, when we founded Paragon 28 in 2011, we set out with the mission to continuously improve the outcomes and experiences of patients suffering from foot and ankle conditions.
Albert DaCosta: These launches give us confidence in our guidance for 2024, and 28 <unk> ability to drive further growth later this year and beyond.
Albert DaCosta: As we look further into 2024, we expect to continue investing in our commercial and educational opportunities to enable <unk> 28 to realize the full potential of our new product launches as well as legacy products, both in the U S and internationally.
Albert DaCosta: In closing when we founded Paragon 28 in 2011, we set out with the mission to continuously improve the outcomes and experiences of patients suffering from foot and ankle conditions that.
Albert DaCosta: That remained our mission through our IPO in 2021 and continues to be our top priority today. Everything we do and every decision we make is to advance P28 on that mission. And I attribute our success to the team's dedication to that unified goal. This is a long-term journey. And while I am incredibly proud of what we've achieved in the past several years, I could not be more excited about the company's future. With that, I will now turn it over to Chrissy. Thank you.
Albert DaCosta: That remains our mission through our IPO in 2021 and continues to be our top priority today.
Chrissy: Everything we do and every decision we make is to advance <unk> 28, along that mission and I attribute our success to the team's dedication to that unified goal.
Chrissy: This is a long term journey.
Chrissy: I'm incredibly proud of what we've achieved in the past several years I could not be more excited about the company's future.
Chrissy: With that I will now turn it over to Christie.
Chrissy Wright: Albert, turning to the rest of the P&L, beginning with growth margin, gross profit margin for the quarter was 80% compared to 82.9% in the first quarter of 2023. The decrease in gross profit margin is primarily the result of higher prices from suppliers, as well as a product and geographic mix shift. First quarter research and development expenses were $7.6 million, or 12.4% of net revenue compared to $7 million, or 13.5% of net revenue in the prior year period. We continue to invest in new product development to improve patient lives through our product pipeline, which remains robust with over 25 active projects in development, including several tied to SMART 28.
Chrissy: Thank you Albert.
Chrissy: Turning to the rest of the P&L beginning with gross margin.
Chrissy Wright: Gross profit margin for the quarter was 80% compared to 82, 9% in the first quarter of 2023.
Chrissy Wright: The decrease in gross profit margin is primarily the result of higher prices from suppliers as wireless product and geographic mix shifts.
Chrissy Wright: First quarter research and development expenses were $7 6 million or 12, 4% of net revenue compared to $7 million or 13, 5% of net revenue in the prior year period.
Chrissy Wright: We continue to invest in new product development to improve patient lives through our product pipeline, which remains robust with over 25 active projects in development, including several types of smart 28.
Chrissy Wright: Selling general and administrative expenses in the quarter were $54.2 million, a $10.4 million or 23.7% increase from $43.8 million in the first quarter of 2023. As a percentage of net revenue, SG&A was 88.8% compared to 84.2% in the prior year period. The increase in SG&A was primarily driven by increased headcount, annual merit increases, investments in the commercial team, increased variable sales representative commission expenses related to net revenue growth, an increase in professional services fees, and an increase in depreciation expense.
Chrissy Wright: Selling general and administrative expenses in the quarter were $54 2 million or.
Chrissy Wright: $10 $4 million or 23, 7% increase from.
Chrissy Wright: $43 8 million in the first quarter of 2023.
Chrissy Wright: As a percentage of net revenue SG&A was 88, 8% compared to 84, 2% in the prior year period.
Chrissy Wright: The increase in SG&A was primarily driven by increased headcount annual merit increases.
Chrissy Wright: Estimates and the commercial team increased variable sales Representatives Commission expenses related to net revenue growth an increase in professional services fee and an increase in depreciation expense.
Chrissy Wright: Adjusted EBITDA for the first quarter of 2024 was a $5.5 million loss compared to a $1.4 million loss in the prior year period. The decrease in adjusted EBITDA is primarily attributable to an increase in operating expenses. While we remain laser-focused on driving operating leverage across the P&L in the months and quarters ahead, the impact of investments made in Q1 has slightly pushed out our expectation for EBITDA breakeven in 2024. Importantly, we are prioritizing initiatives directly associated with our growth strategies and top line performance.
Chrissy Wright: Adjusted EBITDA for the first quarter of 2024 was a $5 5 million dollar loss compared to a $1 4 million dollar loss in the prior year period.
Chrissy Wright: The decrease in adjusted EBITDA is primarily attributable to an increase in operating expenses.
Chrissy Wright: While we remain laser focused on driving operating leverage across the P&L in the months and quarters ahead.
Chrissy Wright: The impact of investments made in Q1 is slightly pushed out our expectation for EBITDA breakeven in 2024.
Chrissy Wright: Importantly, we are prioritizing initiatives directly associated with our growth strategies and topline performance.
Chrissy Wright: Operating cash flow for the first quarter of 2024 was negative $11 million compared to negative $5 million in the prior year period after adjusting for the $9 million legal settlement payment made in Q1 2023. The increase in cash use is attributed to higher operating costs and net changes in working capital. We ended the first quarter of 2024 with $108 million of total liquidity, consisting of $58 million of cash on the balance sheet and $50 million available through our credit facility. Now, turning to our 2024 revenue guide.
Chrissy Wright: Operating cash flow for the first quarter of 2024 with negative $11 million compared to negative $5 million in the prior year period. After adjusting for the $9 million legal settlement payment made in Q1 2023.
Chrissy Wright: The increase in cash used is it.
Chrissy Wright: Tribute that to higher operating costs and net changes in working capital items.
Chrissy Wright: We ended the first quarter 2024 with $108 million a ton of liquidity.
Chrissy Wright: Being a $58 million of cash on the balance sheet and $50 million available through our credit facility.
Chrissy Wright: Now turning to our 2020 for revenue guidance.
Chrissy Wright: For the full year 2024, we are reaffirming our previous net revenue guidance of $249 million to $259 million, representing reported growth of 15.1% to 19.7%, through the rest of 2024 on a quarterly basis and anticipate impacts of seasonality to be consistent with 2020. Our net revenue guidance assumes foreign currency translation rates remain consistent with current translation rates. That is the end of our prepared remarks.
Chrissy Wright: For the full year 2024, we are reaffirming our previous net revenue guidance of $249 million to $259 million.
Chrissy Wright: Representing reported growth of 15, 1% and 19, 7%.
Chrissy Wright: Through the rest of 2024 on a quarterly basis, we anticipate impacts of seasonality to be consistent with 2023.
Chrissy Wright: Our net revenue guidance assumes foreign currency translation rates remain consistent with current translation rates.
Chrissy Wright: That is the end of our prepared remarks.
Operator: We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. Our first question comes from Matthew O'Brien on behalf of Piper Sandler. Your line is now open. Great.
Speaker Change: We will now begin the question and answer session. If you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two.
Operator: To ask a question press star one.
Operator: As a reminder, if youre using a speakerphone please pick up your handset before asking a question.
Matthew O'brien: Our first question comes from the line of Matthew O'brien with Piper Sandler.
Matthew O'brien: Your line is now open.
Matthew O'brien: Great, thanks for taking my questions. Maybe just for starters here, Albert or Chrissy, just...
Matthew O'brien: Great. Thanks for taking my question, maybe just for starters here Albert procedures.
Matthew O'brien: The revenue that you generated in Q1 was good. Actually, there's an acceleration on it for your stack basis. But as I look at the rest of the year here, you're getting easing tops, but you're kind of keeping the growth outlook static. And so I'm just wondering, what is it?
Matthew O'brien: The revenue that you generated in Q1 was good actually is an acceleration on a two year stack basis.
Matthew O'brien: But as I look at the rest of the year Youre getting easing comps.
Matthew O'brien: Keeping.
Matthew O'brien: The growth outlook.
Matthew O'brien: Static and so I'm just wondering what is it is there something specifically domestically or internationally that youre hesitant about or is competition getting more challenging and then the split between the two should we expect more.
Matthew O'brien: Is there something specifically domestically or internationally that you're hesitant about? Or, you know, is competition getting more challenging? And then the split between the two, should we expect more international to drive most of the growth or more of the growth, you know, this year and next? And then I do have a follow-up.
Matthew O'brien: International to drive most of the growth or more of the growth.
Matthew O'brien: This year and next and then I do have a follow up.
Matthew O'brien: Yes.
Albert DaCosta: Hey Matt, it's Albert.
Speaker Change: Hey, Matt.
Speaker Change: Thanks, Albert and thanks for the question so maybe for starters I'll say we have.
Albert DaCosta: Thanks for the question. Maybe for starters, I'll say we have We've got a lot of confidence in the numbers that we set out in February. We expect net revenue to be $249 million to $259 million. That's, that's around 15.1% on the low end to 19.7% on the high end.
Albert DaCosta: We've we've got a lot of confidence in the numbers that we set out in February.
Albert DaCosta: We expect net revenue to be $249 million to $259 million. That's that's around 15, 1% on the low end to 19, 7% of the high end.
Albert DaCosta: The assumptions haven't changed going into that number, and we're definitely thrilled with the performance for Q1. It's always really nice to see an uptick in Q1 versus Q4. We had a lot of our KPIs hit, and we have a lot of confidence in the range that we set out in February. The one thing that I'll say is we're going to keep analyzing that and reporting back as there are changes to be made.
Albert DaCosta: The assumptions haven't changed going into that number and where we are definitely thrilled on the performance for Q1.
Albert DaCosta: It's always really nice to see an uptick in Q1 versus Q4.
Albert DaCosta: A lot of our Kpis hit and.
Albert DaCosta: We have a lot of confidence in the range that we set out in February and one thing I'll say is we're going to keep analyzing that and and.
Albert DaCosta: Report back as there are changes to be made.
Albert DaCosta: On the international question, one thing that I'll tell you, I couldn't be more thrilled about the performance of the business overall, but the international business, in particular, we set out as our mission to improve outcomes for foot and ankle patients and to really put a mark on this market. And you can't do that as a domestic-only company. You really have to be global, and our international reception has been phenomenal.
Albert DaCosta: On the international question.
Albert DaCosta: One thing that I'll tell you.
Albert DaCosta: It couldnt be more thrilled about the performance of the business overall, but.
Albert DaCosta: The international business in particular, yes, we set out as our mission to improve outcomes for foot and ankle patients and to really put a mark on this on this market.
Albert DaCosta: And you can't do that as a domestic only company you really have to be global in our international reception has been phenomenal. We've made a lot of investments in the international business and so youre seeing a lot of those paying off.
Albert DaCosta: We've made a lot of investments in the international business, and so you're seeing a lot of those paying off. It's on a smaller scale, obviously, than the U.S., so the growth rate is higher there, and we expect that to continue. But the ability to participate with global KOLs and really help craft the message about where this market is going and how it's going to get there is thrilling for us.
Albert DaCosta: It's on a smaller scale, obviously than the U S. So the growth rate is higher there and we expect that to continue.
Albert DaCosta: But the ability to participate with global Kols and really help craft the message about where this market is going and how it's going to get there.
Albert DaCosta: It's thrilling for us.
Albert DaCosta: Okay.
Speaker Change: Got it I appreciate that and then the follow up is.
Matthew O'brien: Got it. Appreciate that. And then the follow-up is... In the eBit.com commentary, the pushout, is that just for pushing it up to 25? And then the investments that you're making, are those investments to help you grow faster, or do you have to spend more to kind of grow at these rates?
Matthew O'brien: And the EBITDA commentary that pushed out is that just for pushing it up to 25 and then the investments that you're making are those investments to help your growth faster or do you have to spend more to kind of grow at these rates. Thank you.
Albert DaCosta: Yeah, thanks again for the question. Definitely, those investments were to help us grow, right? We took some opportunities to invest in the commercial team, and we had some R&D investments that we made in Q1. One thing that we've always been really passionate and committed to is we want to make sure that we're spending every dollar to improve this business and to help us get to where we're going. The one thing we want to do is look at efficiencies and really look across the P&L to find operating leverage as we grow this thing so that we continue to build the best business we can.
Matthew O'brien: Yeah.
Speaker Change: Thanks again for the question.
Albert DaCosta: Definitely those investments.
Albert DaCosta: We're to help us growth right, we took some opportunities to invest in the commercial team and we had some R&D investments that we took in Q1, one thing that we've always been really passionate and committed to is we want to make sure that we're spending every dollar to improve this business and to help us get to where we're going.
Albert DaCosta: The one thing we want to do is.
Albert DaCosta: Look at efficiencies and really.
Albert DaCosta: Look across the P&L to find operating leverage as we grow this thing so that we continue to build the best business. We can so yes, we took some.
Albert DaCosta: So, yes, we took some opportunities to invest in additional opportunities to grow. We think those investments are really going to support us moving forward. And on the other side of it, we're always looking for leverage, we're always looking for efficiencies to drive better management of the capital, the precious capital that we've got.
Albert DaCosta: It took some opportunities to invest in additional opportunities to grow we think those investments are really going to support us moving forward.
Albert DaCosta: And on the other side of it is we're always looking for leverage were always looking for efficiencies to drive a better management of the capital the precious capital that we've got.
Matthew O'brien: Okay, and I'm sorry to push you a little bit Albert, but is it investment to grow faster or investment just to keep growing at the still elevated levels?
Speaker Change: Okay, and I'm, sorry to push a little bit Albert just is that investment to grow faster or investment just to keep growing that are still elevated levels.
Albert DaCosta: Investments to grow faster. Got it. Thank you. Of course. Thank you.
Speaker Change: Investments to grow faster.
Speaker Change: Got it thank you.
Speaker Change: Okay of course, thank you.
Operator: Thank you for your question. The next question is from the line of George Sellers with Stephen Dink. Your line is now open.
Speaker Change: Thank you for your question.
Operator: Next question is from the line of George Sellers with Stephens, Inc. Your line is now open.
George Stone Sellers: Good afternoon. Thanks for taking the question. Maybe to shift back to the guidance, I'm just curious about the contribution from some of the new devices you launched in the first quarter and towards the end of last year. And also, what does that assume in terms of the underlying market and the competitive dynamics that some others in the market have commented on recently?
George Stone Sellers: Good afternoon, thanks for taking the question.
Speaker Change: Maybe two.
George Stone Sellers: <unk> shipped back to the guidance I'm, just curious what does that assume.
George Stone Sellers:
George Stone Sellers: Yeah.
George Stone Sellers: Contribution from some of the new devices launched in the first quarter and towards the end of last year.
George Stone Sellers: And also what does that assume in terms of the underlying market and the competitive dynamics that.
George Stone Sellers: Some others in the market as commented on recently.
Albert DaCosta: Yeah. Hey, George.
Speaker Change: Yeah, Hey, George.
George: Thanks for the question.
Albert DaCosta: Thanks for the question. Maybe to start with, you know, this is a tickle point for me, but the products we've launched, honestly, really since the beginning, but more importantly, this class of launches and the ones you're referencing late last year and early this year are generating so much excitement. They're in really high-value, high-growth segments of the market, and the reception we're getting is phenomenal. Now, modeling that in, I will tell you, products we launch in Q1, we don't expect to be as material early.
Speaker Change: Maybe to start.
Speaker Change: This is a typical point for me, but.
Albert DaCosta: The products we have.
Albert DaCosta: We've launched honestly really since the beginning.
Albert DaCosta: But more importantly, this class of launches.
Albert DaCosta: Once youre referencing late last year and early this year generating so much excitement there and really high value high.
Albert DaCosta: <unk> growth segments of the market and.
Albert DaCosta: And the reception, we're getting is phenomenal now modeling that Ed and I will tell you products, we launched in Q1.
Albert DaCosta: We don't expect to be as material early on we we would expect maybe in the latter half of the year and into next year to see some meaningful contribution from those products, but the reception that we've gotten so far has exceeded our expectations.
Albert DaCosta: We would expect, maybe, in the latter half of the year and into next year to see some meaningful contribution from those products, but the reception that we've gotten so far has exceeded our expectations, and we're thrilled. We just keep going, you know, our goal, and this market is learning so much every day, and we take that information, and we go back, and we see how we can improve these outcomes and refine systems and improve the offering out there. And the reception that the products have received tells us that we're definitely hitting the mark there. This market is young and growing.
Albert DaCosta: Our expectations and we're thrilled with just keep.
Albert DaCosta: Our goal in this market is learning so much every day.
Albert DaCosta: And we take that information and we go back and we see how we can improve these outcomes and refined systems and improve the offering out there.
Albert DaCosta: And the reception that the products have received tells US that we are definitely hitting the mark there alright. This market is young there's a lot of room for improved outcomes and we felt like where the company on the front of that mission to do that and so.
Albert DaCosta: There's a lot of room for improved outcomes, and we feel like we're the company at the forefront of that mission to do that. And so I'll just put that there. I'll tell you those new products are already generating some momentum for us earlier than expected, and we do have a lot of excitement, too, about what's coming in the second half of the year. We have a lot of good products, and one that I've mentioned on several calls is the Smart 28 launch is still on plan. And so we're just, we think there's going to be a real
Albert DaCosta: Just to put that there I will tell you those new products are already generating some momentum for us earlier than expected and we do have a lot of excitement to about what's coming in the second half of the year. We've got a lot of good products and one that I've mentioned on several calls is this 28 launches still unplanned.
Albert DaCosta: And so we're just we think theres going to be a really good year for that.
Albert DaCosta: Yeah.
Albert DaCosta: Okay, that's great to hear. There is one thing I want to say, yeah.
Speaker Change: Okay. That's great to hear one thing I just wanted to say.
Albert DaCosta: Yes.
George Stone Sellers: I'm sorry, George, one thing I was going to say. I don't mean to minimize the excitement around the Salesforce expansion that we are also pretty excited about this year. We've got some great new sales folks that we expect to start contributing later in the year. And, and so I didn't mean to emphasize everything on the product, but we think there's a lot of KPIs that are going to contribute nicely this year.
Speaker Change: I'm sorry, George one thing I was going to say I don't mean to minimize the excitement around the sales force expansion that we also are pretty excited about this year. We've got some great new sales folks that we expect to start contributing later in the year and so I didn't mean to emphasize everything on product, but we think.
George Stone Sellers: Theres a lot of Kpis that are.
George Stone Sellers: That are going to contribute nicely this year.
Albert DaCosta: Okay, that's helpful to hear. And then maybe digging into that sales commentary and some of the AdjustDiva.com commentary a little bit. The SG&A line really re-accelerated on a year-over-year growth basis this quarter. I'm just curious how we should think about the cadence for growth through the remainder of the year. And maybe to follow up on a prior question, how far out did this quarter sort of push the AdjustDiva.com break-even timeline?
George: Okay, that's helpful at year and.
Albert DaCosta: Then maybe digging into that sales commentary and some of the adjusted EBITDA commentary a little bit.
Albert DaCosta: The SG&A line really re accelerated on a year over year growth basis. This quarter I'm just curious how we should think about the cadence for growth through the remainder of the year end.
Albert DaCosta: Maybe to follow up on that.
Speaker Change: Good question.
Albert DaCosta: Far out did this.
Albert DaCosta: This quarter sort of pushed that adjusted EBITDA breakeven timeline.
George Stone Sellers: Yeah, um, again, thanks for the question. We don't typically comment on the exact timeline for EBITDA. I could say it was a slight push, so not terribly significant.
Albert DaCosta: Yes.
Speaker Change: Again, thanks for the question, we don't typically comment on.
George Stone Sellers: The exact timeline for EBITDA I can say it was a slight push.
Albert DaCosta: The one thing I will say is the SG&A increase; we absolutely expect to start leveraging those investments. And so, with that increase, we took advantage of some opportunities to invest in the business there, and we did. But we fully expect to start leveraging that and to see a much different profile for SG&A moving forward.
George Stone Sellers: So not terribly significant the one thing I will say is the SG&A increase we absolutely expect to start leveraging those investments.
Albert DaCosta: And so that that increase we took advantage of some opportunities to invest in the business there and we did.
Albert DaCosta: We fully expect to start leveraging that and to see a much.
Albert DaCosta: A much different profile for SG&A moving forward.
George Stone Sellers: Okay, thanks for the time.
Speaker Change: Okay. Thanks for the time.
Speaker Change: Yes. Thank.
Speaker Change: Thank you George.
Operator: Thank you for your question. Our next question comes from Lina at Craig Bijou with Bank of America. Your line is now open.
Speaker Change: Thank you for your question.
Lina: Next question comes from the line of Craig Bijou with Bank of America.
Lina: Your line is now open.
Craig William Bijou: Good afternoon. Thanks for taking the time to answer the question. Albert, maybe, you know, following up on some of the Salesforce investment that you're making. We kind of love to hear what you're seeing in the market and kind of what's driving it or, I guess, you know, the opportunity that you see and the rationale for making the investments. You know, was there talent available? Did you see? Was it a competitive dynamic that, maybe, you could take advantage of?
Operator: Yes.
Lina: Good afternoon, thanks for taking the question.
Craig William Bijou: Albert maybe following up on some of the sales force investment that you're making.
Craig William Bijou: Love to hear what Youre seeing in the market and kind of what's what's driving or I guess.
Craig William Bijou: The opportunity that you see in the rationale for making the investments.
Craig William Bijou: Was there a talent available did you see.
Craig William Bijou: It was that a competitive dynamic that maybe you could take advantage of where just loves maybe a little bit more color on the opportunity in the Polish or why you thought it was time to invest like you have.
Craig William Bijou: We just love maybe a little bit more color on the opportunity and the, you know, the push or why you thought it was time to invest like you have. So maybe what you see over the next couple of years.
Craig William Bijou: So maybe what you see over the next couple of years.
Albert DaCosta: Absolutely. Great to hear from you, Craig.
Speaker Change: Absolutely great.
Albert DaCosta: Great to hear from you Craig and thanks for the question.
Speaker Change: I will say.
Albert DaCosta: Every time, we launch new technology, it generates a real nice buzz in the market and that brings some opportunities forward.
Albert DaCosta: And thanks for the question. I will say, every time we launch new technology, it generates a real nice buzz in the market, and that brings some opportunities forward. But I don't want that to sound like we're pretty flippant about who we bring on.
Albert DaCosta: I don't want that to sound like we are.
Albert DaCosta: Pretty flippant about who we bring on we are very clinically oriented organization, our products and systems. The way we service that we take deep pride in being a real resource to our surgeon customers and ultimately impacting that patient on the table. So when we are presented with those opportunities what we're really evaluating is.
Albert DaCosta: We're a very clinically oriented organization; our products and systems, the way we service that we take deep pride in being a real resource to our surgeon customers and ultimately impacting that patient on the table. So, when we're presented with those opportunities, what we're really evaluating is the clinical approach to the sales force and making sure we get not only the geography covered but the right partners in place. So, all these things kind of feed together. One thing that Paragon's always been blessed with is we have just a phenomenal culture around developing better solutions. We're not bag fillers.
Albert DaCosta: The clinical approach too.
Albert DaCosta: The sales force and making sure we get not only.
Albert DaCosta: The geography covered but get the right partners in place so.
Albert DaCosta: All of these things kind of feed together, one thing that <unk> always been blessed with as we have just a phenomenal culture around developing better solutions, we're not bag sellers.
Albert DaCosta: And when we launch these systems in the market, it means so much to salespeople, it means so much to surgeons, and it generates a buzz around medical education. Those opportunities all connect. And we are one part product development and an equal part sales force, right? We really have a sales culture here. Most of us came from selling not only medical devices but selling foot and ankle products. We have a deep passion for the procedures themselves, above and beyond the implants.
Albert DaCosta: And when we launch these systems to the market. It means so much to salespeople. It means so much to surgeons that generates a buzz around medical education those opportunities are.
Albert DaCosta: And we are one part product development and an equal part sales force right. We really have a sales culture here with most of US came from selling not only medical devices, but selling foot and ankle products, we have a deep passion for the procedures themselves above and beyond the implants and so that can.
Albert DaCosta: And so that connection just is a really good recipe for us. And so when those opportunities present themselves, and it's the right fit, we have to take advantage of those; we have to be committed to investing in the things that matter. And we can look at efficiencies and the things that don't drive the top line and don't improve our organization. That was a long answer for that, Craig. I apologize, but it's a real sweet spot for Paragon 28. We happen to be a place that a lot of people aspire to go to.
Albert DaCosta: <unk> just as a really good recipe for us and so when those opportunities present and it's the right fit we have to take advantage of those we have to be committed to investing in the things that matter and we can look at efficiencies and the things that don't drive topline and don't improved our organization.
Albert DaCosta: That was a long answer for that Craig I apologize, but it's a real sweet spot for Paragon 28, we happen to be a spot that a lot of people aspire to go to.
Craig William Bijou: No, I think that was great, Albert. Thank you for that. And maybe just following up with a couple quick ones on the P&L side. You know, with your comments, with the script, you talked about guessing a higher variable sales commission. So wanted to get just a little bit more color on that.
Craig: No that was great Albert Thank you for that.
Craig William Bijou: And maybe just following up with a couple.
Craig William Bijou: Quick ones on on the P&L side.
Craig William Bijou: With your comments.
Craig William Bijou: <unk>.
Craig William Bijou: With the with the script you talked about just I guess, a higher variable sales.
Craig William Bijou: Is that something that's being driven by, you know, maybe competitive hires or, or, or competitive hiring in the market? And then secondly, and sorry if I missed this, but the cadence for your EBITDA during the year, I mean, should we think of Q1 and the investments that you made? Should, should the cadence improve sequentially throughout the year?
Craig William Bijou: Emission so wanted to get just a little bit more color on that is that something that's being driven by maybe competitive hires or we're competitive hiring in the market and then secondly.
Craig William Bijou: And sorry, if I missed this but the cadent score your EBITDA during the year I mean should we think of Q1 and the investments that you made should should the cadence improve sequentially throughout the year.
Craig William Bijou: Okay.
Albert DaCosta: Absolutely on the last part. There was an increase due to the Variable Commission piece of it, just the increased sales driving that. There were some investments in bringing on new sales people that also were reflected in that number. We had some R&D spend, we had some additional headcount, and we had some external professional services fees that also impacted that CNA. Yeah, did I answer the EBITDA part of it? We 100% expect the year sequentially to improve over quarter one.
Speaker Change: Absolutely over the last part.
Albert DaCosta: There was an increase due to the variable commission piece of it just the increased sales driving that there were some investments and bringing on new sales folks that also are reflected in that number.
Albert DaCosta: We had some R&D spend we had some additional head count.
Albert DaCosta: And we had some external professional services fees that that also impacted SG&A.
Albert DaCosta: Did I answer the EBITDA part of it we are 100% expect the year sequentially to improve over quarter one.
Craig William Bijou: Okay, thanks for taking the questions.
Speaker Change: Okay. Thanks for taking the questions.
Craig William Bijou: Yes.
Speaker Change: Thank you.
Operator: Thank you for your question. Our next question comes from the line of Mike Matson with Needham and Go. Your line is now open.
Speaker Change: Thank you for your question.
Operator: Our next question comes from the line of Mike Matson with Needham <unk> Co. Your line is now open.
Michael Stephen Matson: Yeah, thanks. Not to keep focusing on the SG&A topic, but I guess what I'm wondering is, you know, you mention that you expect to leverage it, but does that just mean that it'll kind of stay flat and your sales will increase? Or were there, because of these rep hires, any kind of one-timers in there, like, you know, upfront payments or something like that that caused the dollar amount to actually be higher this quarter than it will be in future quarters?
Michael Stephen Matson: Yes, I think so not to keep focusing on the SG&A topic, but I guess, what I'm wondering.
Michael Stephen Matson: As you are mentioning that you expect to leverage it but does that just mean that it will kind of stay flat and the sales will increase or were there because of these rep hires were there any kind of kind of one timers in there.
Michael Stephen Matson: Upfront payments or something like that that caused that the dollar amount to actually be higher.
Michael Stephen Matson: This quarter than it will be in future quarters.
Michael Stephen Matson: Yeah, thanks for the question, Mike. Maybe I'll pass that one to Chrissy.
Speaker Change: Yes. Thanks for the question, Mike, maybe I'll pass that one to Christie.
Chrissy Wright: Yeah, absolutely. Hi, Mike. Nice to meet you. In terms of our total OPEX spend as a percent of revenue, we do expect that to reduce over sequential quarters from what we see in Q1, both as a result of an increase in revenue and as a result of leveraging our operating expense investments we've made in Q1 and prior quarters over the remaining quarters of 2024.
Chrissy Wright: Yes, absolutely hi, Mike Nice to meet you.
Chrissy Wright: Terms of our total opex spend as a percent of revenue, we do expect that to recur.
Chrissy Wright: All of our sequential quarters from what we see in Q1.
Chrissy Wright: Both as a result of an increase in revenue and as a result that leveraging our operating expense investments. We've made in Q1 in prior quarter over the remaining quarters for 2024.
Michael Stephen Matson: Okay, so my interpretation of what you're saying is that don't expect the dollar amount of OPEX to go down, but it should at least be stable, stable-ish, I guess, and the revenue grows, and so then you get leverage. Is that kind of what you're saying? I mean, the run rate of OPEC stays in kind of the low 60s. Is that a reasonable assumption?
Mike: Okay. So my interpretation of what you are saying is that don't expect the dollar amount of Opex to go down but.
Michael Stephen Matson: It should at least be stable stable ish.
Michael Stephen Matson: The revenue grows and so then you get five or does that kind of what youre, saying I mean that the run rate of opex stays in kind of a low <unk>.
Michael Stephen Matson: A reasonable assumption or.
Chrissy Wright: That's a reasonable assumption. We get leverage as the growth on that operating expenses is a slower rate than the growth rate on revenue.
Speaker Change: That's a reasonable assumption.
Chrissy Wright: Leverage at the growth on that operating expenses, it's slower growth rate than the growth rate on revenue.
Speaker Change: Okay got it.
Michael Stephen Matson: And then, you know, you did launch a number of products kind of aimed at the bunion market. But I think you're saying that, you know, those products, along with some of the other products you introduced toward the latter part of last year and early part of this year, haven't really contributed yet. But I just wanted to see if, you know, you're seeing any kind of share gains or anything like that in the bunion category as a result of Bunumatic and some of these other products.
Chrissy Wright: And then you did launch a number of products kind of in the financing market.
Michael Stephen Matson: Think you are seeing that those products along with some of the other products introduced towards the latter part of last year and early part of this year haven't really contributed yet, but I just wanted to.
Michael Stephen Matson: You are seeing any kind of share gains or anything like that in the funding category was also up on your <unk> and some of these other products.
Albert DaCosta: Yeah, absolutely. I'll tell you, our four-foot franchise continues to grow nicely. And those products in particular, we believe we are definitely taking some share with some of the newer entrants, like the MIS bunion portfolio has just been received really, really well. I think we really hit a sweet spot with patients' interest, right, what patients are looking for. And so that product is doing really well. It's exceeding our expectations. The combination of that with the FJ2000, the power console that really delivers the perfect torque and speed for the burr to do those MIS procedures, that tandem has just been really well received. But it is early in the cycle.
Speaker Change: Yeah, absolutely I'll tell you our four foot franchise continues to grow nicely and.
Albert DaCosta: And those products in particular, we believe we are definitely taken some share with some of the newer entrants like the Miss a bunion portfolio has just been received really really well I think we we really hit a sweet spot with patients interest rate what patients are looking for and so that product is doing really well.
Albert DaCosta: Exceeding our expectations the combination of that with the FDA 2000 power.
Albert DaCosta: Power console that really delivers the perfect torque and speed for the bird to do those mis procedures that tandem has just been really well received.
Albert DaCosta: We launched that really in Q1. And so, you know, the normal ramp-up of a product; we would expect more meaningful contribution at the end of the year. But I wouldn't underestimate, too, the power of the excitement around those products bringing surgeons to medical education right now and reminding them of other products that they might not have either been aware of, or they weren't top of mind. The power of new products and the energy they generate has always been really good for us. Okay.
Speaker Change: It is early in the cycle, we launched that really in Q1, and so the normal ramp up of a product we would expect more meaningful contribution at the end of the year, but I wouldn't underestimate the power of the excitement around those products, bringing surgeons to medical education right now and.
Albert DaCosta: Reminding them of other products that they might not have either been aware of or are they wasn't top of mind and so the.
Albert DaCosta: That's the power of new products in the energy. It generates has always been really good for us.
Michael Stephen Matson: Okay, I got it. Thank you.
Speaker Change: Okay got it thank you.
Speaker Change: Thank you.
Speaker Change: Got it thanks.
Operator: Thank you for your question. Our next question comes from the line of Brandon Vazquez with William Blair. Your line is now open.
Speaker Change: Thank you for your question.
Michael Stephen Matson: Our next question comes from the line of Brendan <unk> with William Blair. Your line is now open.
Brandon Vazquez: Hi, good afternoon, guys. This is actually Justin Lin on for Brandon.
Operator: Sure.
Operator: Hi, Good afternoon, guys. This is actually Justin Lin on for Brandon.
Justin Lin: Thinking kind of beyond your short-term EDA commentary here, longer term, what are some of the levers you can pull to maybe make the business more profitable? You know, is it as simple as kind of increasing volume and naturally growing into that fixed cost infrastructure, or is it more nuanced?
Justin Lin: Thinking kind of beyond your short term EBITDA commentary here longer term what are some of the levers you can pull to maybe make the business more profitable.
Justin Lin: Paul is kind of increasing volume in naturally growing into that fixed cost infrastructure or is it more nuanced.
Justin Lin: Hey Justin, I'll pass that one to Christy as well.
Speaker Change: Hey, Justin I'll pass that one to Christy as well.
Chrissy Wright: Nice to meet you. I think you're on the right track as it relates to leveraging our operating investments that we've made historically in GNA. As the company became public, we had to make significant investments to upgrade our systems and processes. And over time, we'll be able to leverage those investments to a greater degree; selling and marketing obviously have some opportunity for leverage as well. But as we grow, we'll look for those opportunities to be as efficient in the fixed cost structure there.
Justin Lin: Jonathan Nice to meet you.
Chrissy Wright: I think youre on the right track as it relates to leveraging our operating investments that we've made historically in G&A as the company became public we had to make significant investments to upgrade our systems and processes and over time, we'll be able to leverage those investments to a greater degree.
Chrissy Wright: Selling and marketing, obviously has some opportunity for leverage as well, but as we grow we'll look for those opportunities can be as efficient in the fixed cost structure there.
Chrissy Wright: And, as Albert has mentioned multiple times, our focus on investing appropriately and innovation and technology will continue to be a focus for us. And I would expect us to have consistent investment as a percentage of revenue on R&D for the foreseeable future.
Chrissy Wright: And as Albert has mentioned multiple times, our focus on investing appropriately.
Chrissy Wright: Innovation and technology will continue to be a focus for us and I would expect us to have consistent investment as a percentage of revenue on R&D for the foreseeable future.
Justin Lin: Got it. That's helpful. And I guess, can you maybe talk about your hiring plans for 2024 in the US, some of the accelerated investments that you've talked about? Does that include maybe hiring more reps than you're originally thinking? You know, I think the street models have you adding a little bit more than I think 20 reps this year. Curious to hear your thinking behind that.
Speaker Change: Got it that's helpful.
Justin Lin: And I guess can you.
Justin Lin: Maybe talk about your hiring plans for 2024 in the U S side of the accelerated investments that you talked about does that include maybe hiring more reps than you were originally thinking.
Justin Lin: The street models have you're adding a little more a little bit more than I think 20 reps. This year curious to hear your thinking behind that input.
Albert DaCosta: Yeah, one thing we don't normally communicate is the number of reps that we're anticipating bringing on. If you remember, the report, the reported information that we give is the production rep count. And there can be some seasonal fluctuation in that number, but that's really where we see the impact. Sometimes when you bring new folks on, there's a period of, you know, no productivity as they're getting situated, they're learning the products, they're getting familiar with the hospital systems.
Justin Lin: Yes.
Justin Lin: One thing we don't normally communicate is the number of reps that we're anticipating bringing on if you remember.
Albert DaCosta: The report the reported information that would give us the producing rep count.
Albert DaCosta: There can be some seasonal fluctuation in that number, but that's really where.
Albert DaCosta: We see the impact sometimes when you bring new folks on there is a period of.
Albert DaCosta: No productivity as Theyre getting situated they're learning the products theyre getting familiar with the hospital systems.
Albert DaCosta: And so we really look at when people start becoming producing reps. And that number, if you remember, is a person who sells a product in each month of a quarter. And that's the number that you see that we measure and we communicate out that we think is really meaningful as a direction about where we're going. And there's still a lot of room for us to increase that number. I wouldn't say doubling where we are today, it's short of that likely, but we still have a lot of opportunity to keep expanding our sales force in the US and, honestly, geographically and internationally as well.
Albert DaCosta: So we really look at when people start becoming producing reps and that number if you remember as a person who sells a product in each month of a quarter.
Albert DaCosta: And that's the number that you see that we measure and communicate out that we think is really meaningful to us as a direction about where we're going right and theres still a lot of room for us to increase that number.
Albert DaCosta: I wouldn't say.
Albert DaCosta: Doubling where we are today, it's short of that likely but we still have a lot of opportunity to keep expanding our sales force in the U S and honestly geographically and internationally as well.
Justin Lin: understood. Thank you.
Speaker Change: Understood. Thank you.
Justin Lin: Yes.
Operator: Thank you for your question. Our next question comes from the line of Dave Turkaly with Citizens JMP. Your line is now open.
Speaker Change: Thank you for your question.
David Louis Turkaly: Our next question comes from the line of Dave <unk> with citizens JMP.
David Louis Turkaly: Your line is now open.
David Louis Turkaly: Hey, good evening. Albert, maybe just to push a little bit on the Bunyan commentary.
David Louis Turkaly: Hey, good evening.
David Louis Turkaly: But maybe just to push you a little bit on the <unk> commentary.
David Louis Turkaly: You know, I know you don't typically speak a lot about the subsectors specifically, but I'm just curious if you think the market is still one of the highest growing subsectors, you know, of the five, let's say, subsectors. And I was wondering if you might be able to comment, like, was that a double-digit growth driver for you in the quarter?
David Louis Turkaly: I know you don't typically speak a lot about the sub sectors, specifically, but.
David Louis Turkaly: I'm just curious if you think.
David Louis Turkaly: The market is still one of the highest growth.
David Louis Turkaly: The five let's say sub sectors.
David Louis Turkaly: I was wondering if you might be able to comment like where you're able to was that a double digit grower for you in the quarter.
Albert DaCosta: Yeah, hey, hey, Dave. And thanks for the question. Maybe the best way to answer this, I think kind of going back, if one of the things we're really becoming sensitized to more than ever is the pathway to bunion is pretty unique. There's a lot of different pathways that lead to a bunion, right? So some people are born with them, some people develop them later in life from wearing the wrong shoes, some people are a flat foot derivative of a bunion, you've got what's called a metadaptive category of bunion, people who are born with club feet, and so those pathways each have very different considerations and, honestly, very different deformity patterns.
Speaker Change: Yeah, Hey, Dave and thanks for the question.
Albert DaCosta: Maybe the best way to answer this I think kind of going back.
Albert DaCosta: One of the things, we're really becoming sensitized to more than ever is the pathway to a bunion is pretty unique theres a lot of different pathways that lead to a bunion right. So some people are born with them. Some people develop them later in life from wearing the wrong shoes, some people or a flat foot derivative of ammonia.
Albert DaCosta: <unk> got a what's called a meta ductus category, a bunion people, who are born with club feet.
Albert DaCosta: And so.
Albert DaCosta: Those pathways each have very different considerations and honestly very different deformity patterns.
Albert DaCosta: Right. And so Paragon's approach to Bunyan solutions has always been, it's not one size fits all, but it's really tailoring solutions to the needs of each of those unique pathways. I think there's probably no one better than Paragon 28 in that particular sense.
Speaker Change: Alright, and so paradigms approach to Bunions solutions has always been it's not one size fits all but it's really tailoring solutions to the needs of each of those unique pathways.
Albert DaCosta: And I think that concept is working and has worked for us really well. In the absence of reporting the exact growth for us, I could say all of our subsegments continue to see really strong growth. And all of our investments in R&D still are blended across all of the subsegments of Foot & Ankle. That's one of our proudest moments, right?
Albert DaCosta: There's probably no one better than Paragon 28, and that particular sense and I think that concept is working and has worked for us really well.
Albert DaCosta: And the absence of.
Albert DaCosta: Reporting the exact growth for us I can say all of our subset segments continued to see really strong growth in all of our investments in R&D still our blended across all of the sub segments of fortnite ankle, that's one of our proudest moments right.
Albert DaCosta: The bunion market happens to be a really complicated and a very big market that is growing nicely. The ankle market is also a really nice growing market, you know, flatfoot in PCFD. So, none of my babies, I don't call any of my children, you know, favorites.
Albert DaCosta: <unk> bunion market happens to be a really complicated and a very big market that is growing nicely.
Albert DaCosta: The ankle market is also a really nice growing market flatfoot PCF D. So.
Albert DaCosta: None of my baby's I don't call any of my children.
Albert DaCosta: Favorites.
Albert DaCosta: And it just so happens that we've launched a really nice cluster around the bunion and forefoot segment over the last few months, and we happen to see and feel a lot of great energy around that.
Albert DaCosta: And it just so happens that we've launched a really nice cluster around the bunyan and four foot segment over the last few months and we happen to see and feel a lot of great energy around that.
David Louis Turkaly: Thank you for that, and then I have two quick follow-ups, I think, for Christy, but any other days, changes that we should be aware of 2, 3, and 4Q, and the interest expense of $2.6 million, is that kind of what we should expect as we move throughout the year? Thank you.
Speaker Change: Thank you for that and then alright.
David Louis Turkaly: Two quick follow ups I think for Christie.
David Louis Turkaly: Any other days.
David Louis Turkaly: Does that we should be aware of two three and four <unk> and.
David Louis Turkaly: The interest expense of $2 $6 million is that kind of what we should expect.
David Louis Turkaly: As we move throughout the year. Thank you.
Chrissy Wright: Do you mind repeating the first part of your question? I think I missed one of the words. While you're thinking of perhaps what it is, I'll answer the second part of your question first. Yes, I would model interest expense consistent with Q1 in terms of our outstanding debt for the remainder of the year. Yeah, the first one was.
Christy: Do you mind repeating the first part of your question I think I missed one of the word Wow youre thinking of perhaps what it is ill answer the second part of your question first yes, I would model interest expense consistent with Q1 in terms of our outstanding debt.
Chrissy Wright: For the remainder of the year. The first one was just the number of days.
David Louis Turkaly: Yeah, the first one was just the number of days, like, you know, I think you said there was one fewer in one queue. I'm curious if there's... Any other deltas in 2, 3, or 4 key that we should be aware of in terms of selling days?
David Louis Turkaly: I think you said there was one fewer in <unk> I'm curious if there is.
David Louis Turkaly: Any other delta is in Q3 or four key that we should be aware of.
David Louis Turkaly: In terms of selling days in Q.
Chrissy Wright: Yes, thank you so much. I was curious whether it was day sales outstanding or days of inventory, but billing days, as it relates to Q2, there are two billing day differences between 2024 and 2023. And for the remainder of the year, it is pretty consistent year over year.
Speaker Change: Yes. Thank you so much I was curious whether it with days sales outstanding our days of inventory, but billing days as it relates to Q2. There are two billing day difference between 2024, and 2023 and for the remainder of the year and it's pretty consistent year over year.
David Louis Turkaly: 2Q has two more or two less, days to two more we had a
Chrissy Wright: <unk> has two more or two less.
Chrissy Wright: days. Two more. We had a headwind in Q1 of about 200 basis points, and we expect a tailwind for the remainder of the year.
David Louis Turkaly: Days, two more we had a headwind in Q1 of about.
Chrissy Wright: 200 basis points.
Chrissy Wright: And we expect a tailwind for the remainder of the year.
Speaker Change: Thank you for that.
Speaker Change: Of course.
Chrissy Wright: Thank you for your question. Our next question comes from a line from Caitlin Cronin with Canaccord. Your line is now open.
Speaker Change: Thank you for your question.
Caitlin Cronin: Our next question comes from the line of Caitlin Colin with Canaccord.
Caitlin Cronin: Your line is now open.
Operator: Hi, thanks for taking my question. Just a quick one to start off. You noted that the Lapidus clamp is currently in limited release; when do you expect the product to be released?
Caitlin Cronin: Hi, Thanks for taking my questions.
Caitlin Cronin: Just a quick one to start off he noted that the Japanese client that is currently in limited release when do you expect full launch of the product.
Caitlin Cronin: Yeah. Hey, Caitlin.
Caitlin Cronin: Yeah, Hey, Caitlin and thanks for the question.
Speaker Change: Just want to point out that I'm actually wearing a shirt that says by pneumatic so supporting the product.
Caitlin Cronin: That product has been great.
Caitlin Cronin: I feel like I'm, saying this about everything but that product has been really well received I think we really addressed some limitations that existed out there and the reproducibility of that system is phenomenal. So one generating a lot of excitement to we're expecting.
Albert DaCosta: And thanks for the question. I just want to point out that I'm actually wearing a shirt that says Bunyalmatic. So I'm supporting the product. That product has been, I feel like I'm saying this about everything, but that product has been really well received. I think we really addressed some limitations that existed out there, and the reproducibility of that system is phenomenal. So one, generating a lot of excitement. Two, we're expecting a more fulsome launch coming up here in the next few months. I'd likely target mid-year to see that, and we have high aspirations about what that's going to do. It was awesome.
Albert DaCosta: Fulsome launch coming up here in the next few months.
Albert DaCosta: Likely target mid mid year to see that.
Albert DaCosta: And we have high aspirations about what that's going to do.
Caitlin Cronin: And then, you know, U.S. revs were just a little light even considering the selling day and the comp impact in Q1. Any real dynamics to call out there?
Albert DaCosta: Awesome.
Caitlin Cronin: No.
Caitlin Cronin: Rob just a little light and considering the selling and down the comp impact in Q1.
Caitlin Cronin: One any of those dynamics to call out there.
Albert DaCosta: I don't know that I could call out any unusual situations in the quarter. It was really, really nice for us to see that sequential step up. Again, that's a little bit uncommon for Q1 versus Q4. There is some fluctuation typically around, you know; Q1 can see some fluctuations around the fracture fixation market, in particular. But given the headwinds of fewer selling days and the sequential growth, I think we're pretty thrilled about the performance there.
Caitlin Cronin: Hi.
Caitlin Cronin: I don't know that I could call out any unusual situations in the quarter.
Albert DaCosta: It was really really nice for us to see that sequential step up.
Albert DaCosta: Again, thats, a little bit uncommon for Q1 versus Q4.
Albert DaCosta: There is some fluctuation typically around Q1 can see some some fluctuations around the fracture fixation market in particular.
Albert DaCosta: But given given the headwinds of Av.
Albert DaCosta: The fewer selling days.
Albert DaCosta: The sequential growth I think we're we're pretty thrilled about the performance there.
Albert DaCosta: Yeah.
Albert DaCosta: And one thing to point out, yeah, I think, I think we mentioned that in the prepared remarks, but, Q1 of 23 was our toughest comp. I mean, we grew what was a 27% constant currency in 23 Q1. So to see the growth that we achieved in Q1 this year was a really, really powerful piece for us.
Speaker Change: Great. Thanks, so much and one thing to point out.
Albert DaCosta: Yes, I think I think we mentioned that in the prepared remarks, but <unk>.
Albert DaCosta: Q1 of 'twenty three was our toughest comp I mean, we we grew what it was at 27% constant currency and 23 in Q1, so to see the growth that we achieved in Q1. This year was really really powerful piece for us.
Albert DaCosta: Yes.
Albert DaCosta: Okay.
Caitlin Cronin: Yeah, thank you. Thank you for your questions. There are no additional questions waiting at this time. I would now like to pass the conference back to the management team for any further remarks.
Speaker Change: Yes. Thank you.
Caitlin Cronin: Thank you for your question.
Caitlin Cronin: There are no additional questions waiting at this time I would now like to pass the conference back to management team for any further remarks.
Albert DaCosta: Yeah, thank you all again for your time today. If you have any further questions, please reach out. Otherwise, we look forward to seeing many of you at future investor conferences and industry conferences. This concludes our call. Have a great day. Thank you.
Speaker Change: Yes. Thank you all again for your time today and if you have any further questions. Please reach out otherwise we look forward to seeing many of you at future investor conferences and industry conferences. This concludes our call a great day. Thank you.
Operator: That concludes today's call. Thank you for your participation, and you may now disconnect your line.
Speaker Change: That concludes today's call. Thank you for your participation and you may now disconnect your line.