Q1 2024 Treace Medical Concepts Inc Earnings Call
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Speaker Change: I'll come to the Triste medical concepts first quarter 'twenty 'twenty four earnings conference call.
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I would now like to hand, the conference over to your first speaker today, Julie Dewey. Please go ahead.
Good afternoon, everyone and welcome to our first quarter 2024 earnings Conference call. We appreciate you joining us I'm, Julie Dewey treat as Chief Communications and IR Officer with me today are John <unk>, Chief Executive Officer, and Mark hair, Chief Financial Officer during.
The call John and Mark will offer commentary on our commercial activity and review our first quarter financial results released after the close of the market today after which we will host a question and answer session.
Press release and supplemental materials can be found in the Investor Relations section of our website at investors dot trees dotcom.
Speaker Change: This call is being recorded and will be archived in the investors section of our website.
We begin we'd like to remind you that it is our intent that all forward looking statements made during today's call will be protected under the private Securities Litigation Reform Act of 1995.
Any statements that relate to expectations or predictions of future events and market trends as well as our estimated results outlook or performance are forward looking statements. All forward looking statements are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. All forward looking statements are based upon current available information and treats assumes no obligation to update these statements Accordingly, you should not.
Speaker Change: Place undue reliance on these statements. Please refer to our SEC filings, including our Form 10-Q for the first quarter 'twenty 'twenty four filed today and our Form 10-K for the full year 2023 filed on February 27th 2024 for a detailed presentation of risks.
With that I will now turn the call over to John.
John: Thank you Julie and good afternoon, everyone and thanks for joining us.
John: I'm going to focus my comments today on our first quarter 2024 highlights the progress of our numerous product launches, including speedway. Her other growth drivers and then spend some time discussing developments in the market environment, which is underpinning our decision to revise our full year guidance as well as tell you about our exciting opportunities and strategies going forward.
John: During my comments Mark will cover specifics about our Q1 results and our 2020 for guidance.
John: We grew revenue 21% in the first quarter of 2020 for revenue performance was driven by increased procedure kit volume from our expanding base of surgeons and mix driven by increased adoption of our newer technologies in our core bunion and related Midfoot cases, all supported by our dedicated direct sales team.
John: We also benefited from strong patient demand trends that extended our seasonally strong fourth quarter into the first quarter.
John: Additionally, we made encouraging progress with respect to our adjusted EBITDA results, our adjusted EBITDA loss improved 18% to a loss of $8 3 million in the first quarter of 2024 compared to a loss of $10 million for the same period in 2023.
John: We've expanded our position in the footnote go market by adding complementary procedures and technologies to treat related deformities, namely our Dr. Plasty and hammertoe correction systems, both of which coexist frequently with Bunions addressed at the same time, and which together have expanded our Tam by an estimated $750 million without diluting our focus on the five.
John: Plus you expand your market opportunity.
John: Additionally, exiting Q1, we now have full market availability for a number of our newest technologies, including our speedway fixation platform hammertoe system sterile instruments, and our minimally invasive micro lap a proxy procedure.
John: We expect all of these new technologies to contribute to our growth going forward.
John: And we recently announced that we've now treated more than 100000 patients with our lack of flashy procedure recognizing that our success not only measured by numbers towards the transformative change that are differentiated therapies provide to patients to overcome painful lifestyle limiting bunion and related mid foot deformities.
John: Further highlighting our progress in the first quarter, we delivered gains across our key operating metrics in Q1.
John: We drove a year over year increase in volume of Black a philosophy of Dr. Plasty and complementary procedures, which were enabled by our versatile speed play platform.
John: We also benefited from favorable mix as well with new products like <unk>, and our hammertoe systems as well as our expanded offering of procedure specific sterile instruments, all being utilized more frequently in our core procedures.
John: As we.
John: We announced we established our first ever National Bunion data in the United States on April 16th and we launched our new future your patient education brand awareness campaign.
John: The response to this campaign has been very positive driving significant increases in our website traffic and an amplified activity level on our find a doctor locator.
John: <unk> was also named the first medical device partner and official foot and ankle solution partner for the professional Pickle Ball Association tour pick.
John: <unk> is the fastest growing sport in the U S and we believe we are uniquely positioned to drive greater awareness of the challenges posed by Bunions and educate patients in this demographic on our pioneering mycoplasma procedure. The number one most commonly used <unk> correction procedure by U S surgeons.
John: Now I'd like to turn to our product launches.
John: Our speed plate launch continues to fuel our growth and we saw strong demand in the first quarter.
John: <unk> usage nearly doubled in Q1 versus Q4 of 2023.
John: Exciting Q1, we've achieved full commercialization of speedway and expect adoption to continue steadily through the remainder of 2024.
John: Additionally, we expect to launch a new speed play configuration in Q3, which is designed to address some incremental larger bone fusion procedures in the foot.
John: Next our micro lap a classic system. This exciting evolution of our instrumentation allows the patented lap a flashy procedures to be performed now through two centimeter incision using our new <unk> fixation technology.
John: Our micro lack of classy system is now fully available and throughout Q1, we witnessed a growing number of surgeons utilizing this minimally invasive bladder plassey approach.
John: While we're excited about the growth opportunity that all of these product launches represent theres, even more expected to come from our robust product development pipeline to deliver a steady cadence of new innovations in the second half of 2024, including many of Dr. Plasty and a red point patient specific instrumentation.
John: We believe both of these technologies will reinforce our market leadership position in the bunyan and related Midfoot correction space.
John: We look forward to providing additional updates on these platforms as well as other new product innovations as we progress throughout the year.
John: Turning to our guidance despite our strong start to the year with expected growth opportunities stemming from product launches and new innovation as I. Just mentioned it has become clear that the market environment and competitive landscape is quickly evolving and we've made the decision to revise guidance for fiscal 2024.
John: We have decided to do this now because we're seeing increased use and surgeon adoption of MSR Theonomy solutions at.
John: At the same time, we are facing even more competition from knockoffs of our lack of oxy products. Both of these dynamics are creating incremental headwinds to our lack of plasma growth.
John: Specific to these knockoff, we fundamentally believe that none of these systems match lack of last year's performance and reproducibility at the surgeon patient interface, nor are they supported by the strong differentiating clinical datasets that lap of plasma offers.
John: We also believe some of these competing products are violating our IP.
John: With this backdrop I would like to spend the next few minutes reviewing our strategy to expand our offerings and advance our business.
John: While building, our leading position in the lap of this segment of the Bunyan market. We've simultaneously been pursuing a strategy to advance <unk> from a company focused solely on lapidus and related solutions to our comprehensive <unk> solutions company.
John: Meaning to implement our strategy to expand our funding solution portfolio. We plan to launch two innovative <unk> Mis osteotomy systems in late 2024 and to the metatarsal osteotomy segment of the market, which accounts for 70% of the overall procedure volume today.
John: Into our base of nearly 3000 surgeon customers.
John: Once launched our customers, who love lap of classy, but still perform on average over half their bunion cases, you didn't metatarsal osteotomy will then have a <unk> product to address all of their lapidus and osteotomy bonding cases.
John: Additionally, we expect our mis osteotomy solutions will afford us the opportunity to appeal to a new group of surgeons those with a strong bias for using osteotomy approaches for the majority of their bunion patients.
John: We expect to see the positive benefit of these new Mif's innovation, starting in the fourth quarter of this year and ramping throughout 2025.
John: I continue to believe we are uniquely positioned to build upon our market, leading lap plassey position, while leveraging that position to make a significant impact in the large osteotomy segment of abundant market.
John: First we are confident in our track record of developing commercializing and rapidly innovating <unk> bunion technologies that achieved broad customer acceptance due to their elegant design reproducibility and clinical effectiveness.
John: We have proven this with lap of Plasty and we've applied this expertise and our instrumented approach to our <unk> Mis osteotomy systems mentioned earlier.
John: And we are confident in our ability to provide a strong educational resource for our surgeon customers as well as educate patients about our innovative therapies.
John: We have proven this with lap a classy and we will apply this experience with our forthcoming <unk> mist osteotomy platforms.
John: Finally, we're confident in our bunion focused direct sales teams ability to deliver these <unk> mis technologies to our base of nearly 3000 lap a classy surgeon users and continue to expand the size of our surgeon customer base over time.
John: We recently trained an initial group of surgeons on one of our new <unk> Mrs. Osteotomy platforms in anticipation of our upcoming limited market release, and a surgeon feedback was overwhelmingly positive I.
John: I could not be more excited about the significant opportunity, we expect from our new <unk> Mrs Osteotomy platforms.
John: At the same time, we continue to focus on expanding our product offerings and the total market we serve to become a comprehensive bonding solutions company.
John: We are taking decisive actions to mitigate the impact of the competitive challenges as well as our revised growth rates by right sizing, our P&L and reducing costs.
John: In addition, we attend to assert and enforce our IP rights.
John: I am confident in our ability to capture the opportunities ahead of us innovate for our surgeon customer base and deliver value for our shareholders.
John: I'll now turn the call over to Mark to review, our first quarter financial performance and provide more details about guidance mark. Thank.
Mark: Thank you John and good afternoon, everyone.
Mark: Revenue for the first quarter of 2024 was $51 1, million% to 21% increase with one less selling day than the prior year growth in the first quarter was driven by increased procedure kit volume from our expanding base of surgeons and increased adoption of our newer technologies all supported by our dedicated <unk>.
Mark: <unk> sales team.
Mark: As John mentioned similar to what we saw last year are seasonally strong fourth quarter extended into the first quarter. This year. There was more carryover from the fourth quarter into the first quarter than originally anticipated, which was the main driver of upside in the quarter grew.
Mark: Gross margin was 82% in the first quarter of 2024 compared to 89% in the first quarter of 2023.
Mark: This decrease was primarily due to a shift in product mix to newer products, partially offset by lower royalty rates.
John: Total operating expenses were $59 9 million in the first quarter of 2024 compared to total operating expenses of $47 9 million in the first quarter of 2023.
John: The increase in operating expenses reflect strategic investments in our expanding direct sales channel investments in product innovation and support for other corporate initiatives.
John: First quarter net loss was $18 7 million or <unk> 30 per share compared to a net loss of $13 5 million or 23 per share for the same period in 2023.
John: Adjusted EBITDA loss improved 18%.
John: A loss of $8 3 million in the first quarter of 2024 compared to a loss of $10 million for the same period in 2023.
John: Cash cash equivalents marketable securities and investment receivable totalled $112 1 million as of March 31, 2024, we believe we have a lengthy runway in terms of our current cash level with sufficient balance sheet strength and flexibility to continue effectively executing on our strategic investments and growth initiatives.
John: As for the foreseeable future.
John: We now turn to our full year 2020 for guidance.
John: As John discussed earlier, we revise our revenue guidance for full year 2024, and now expect revenues of $201 million to $211 million down from 220 million to $225 million representing growth of 7% to 13% compared to full year 2023.
John: We continue to anticipate adjusted EBITDA for the full year 2024 to improve approximately 50% compared to the full year 2023.
John: Given our revised guidance, we now expect relatively flat year over year revenue growth in Q2 and high single digit revenue growth in Q3 and in Q4 versus the prior year now before we open up the call for questions. Let me turn it back to John for some concluding comments John.
John: Thanks Mark.
John: As we wrap up I wanted to take a minute to highlight what we believe to be the key takeaways from this call looking ahead Teresa evolution from a purely lapidus focused company to a comprehensive bonding solution company is underway and on track.
John: We continue to be relentlessly driven by our mission to advance the standard of care and are innovating to meet demand for certain customers and their patients.
John: I'm confident we have the right team in place to navigate the current market challenges we face.
John: Cheap our ambitious goals and ultimately deliver long term value to our shareholders.
Speaker Change: With that now let me turn the call over to the operator to open the line for your questions.
Speaker Change: Thank you.
Speaker Change: At this time, we will conduct a question and answer session.
John: As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
John: To withdraw your question. Please press star one one again.
Operator: Please standby, while we compile the Q&A roster.
Operator: Our first question comes from the line of Robbie Marcus of Jpmorgan. Your line is now open.
Operator: Hi, This is actually Lili on for Robbie Thanks for taking the question.
Lili: Maybe just starting with the competitive dynamics.
Lili: What changed it.
Lili: It sounds like for a really long time, you really werent seeing any competitive impact at all and now all of a sudden.
Lili: Created this pretty meaningful impact to your momentum so what happened there.
Lili: Can you give your or talk about your confidence in your ability to recapture some of that share loss that youre seeing especially given you're going up against several larger players.
Lili: Okay.
Speaker Change: Yes, Hi, Lilly John John <unk> here.
Speaker Change: As we talked about competition in the past.
John: What we stated as we know there are more competitors entering the market. We recognize there is competition.
John T. Treace: But we had yet to see anything that was.
Speaker Change: A significant headwind that would toward our ability to hit our communicated revenue targets.
Speaker Change: What we're communicating.
Speaker Change: <unk> here and with this revised guide is that we now are feeling that type of competitive pressure that is creating a headwind. So that's why we had to make the guide change.
Speaker Change: We've discussed the increased use of <unk> in the marketplace, which we believe we have a great solution for later in this year.
Speaker Change: And specific to <unk>, we've seen competitors become a little more aggressive with getting doctors to trial. These alternative products and that's another headwind.
Speaker Change: Surgeons like to often evaluate new things and Theres, just a lot of them out there to try right now so.
Speaker Change: It's hard to say how many of these surgeons will try it for a while a competitive product for a while and then ultimately come back to lap a classy and then how many you might fully convert and stick with the competitive offering we've seen a lot of these scenarios, where surgeons evaluate other systems and they do come back to lap a flashy, but it definitely creates some headwinds but fundamentally.
Speaker Change: We believe that as we get more of our osteotomy mist assets enter the market over time late this year along with our other planned launches this should put us in a much stronger position as we will have a comprehensive suite of bundled offerings to bring to our base.
Speaker Change: Nearly 3000 class eight users who on average are using osteotomy for half or more of their cases.
Speaker Change: I think we've got a great plan in place, we've got a little bit of a hedge.
Speaker Change: A headwind here for the next couple of quarters, and we'll we'll look forward to those those launches at the end of the year.
Speaker Change: Got it that's helpful.
Speaker Change: And then maybe just a follow up on that.
Speaker Change: I appreciate that youre not breaking out Ken.
Speaker Change: Physician Cowen AFP anymore, but.
Speaker Change: Can you talk through which of those pieces is really the driver of the step down.
Speaker Change: Not able to train as many physicians as utilization declining is it the other ancillary products that you are not able to talk on as much. So how should we qualitatively I got to be thinking about.
Speaker Change: Thanks, Alright, thank you.
Speaker Change: Hello, Lee this is Marc maybe I'll take a first shot and then John can add any incremental thoughts you talked about the growth in what is really driving that growth that came from two things as we've talked about it's coming from incremental kit volume as well as mix and that mix is involved in these new products that John talked about we have.
Speaker Change: Speed play, which is a premium priced product we have hammertoe, we havent these incremental.
Speaker Change: Complementary pre.
Speaker Change: Products sterile use instruments that are used in the procedures. So it's really coming the 21% growth in Q1 really came from both both volume as well as mix.
Speaker Change: One neely.
Speaker Change: Sorry, I might've been on mute.
Speaker Change: Good morning, I'll ask me for the full year.
Speaker Change: Should we be thinking about how those pieces play into the lower guide.
Speaker Change: Saying that youre, not breaking them out specifically, but qualitatively what moving lower in both buckets.
Speaker Change: Yes, so that's a great question. So what we will continue to see as increases in both volume as well as our blended ASP. It we've been talking last year, we saw a lot of uplift and what we referred to as blended ASP, meaning that's really the mix and our new product launches that are used at the same time.
Speaker Change: Thats, our core lap a classy procedures. So we will continue to benefit that from that.
Speaker Change: Product mix and new product offerings. This year, but we will continue to see volume increases as well so it's going to come from both the volume increases and then the incremental products. So what we saw in Q1.
Speaker Change: Maybe not at the same.
Speaker Change: Growth rate, but we're going to see similar similar growth from both.
Speaker Change: Got it thank you.
Speaker Change: One moment for our next question.
Speaker Change: Thank you. Our next question comes from the line of Richard <unk> I'm curious Securities. Your line is now open.
Richard: Hi, Thanks for taking the questions.
Richard: Just the first one.
Richard: It sounds like Youre experiencing stepped up competition.
Richard: Lacoste bucket on your core lap of Plasty.
Richard: <unk>.
Richard: So.
Richard: What do we think in the updated outlook are we just supposed to view it as.
Richard: You continue to see that trailing in that competition.
Richard: Getting worse, and then you offset that with some of the continued.
Richard: Mix items to some extent from the growing portfolio and then we buy time until the MIF.
Richard: Offerings, and osteotomy com and Thats kind of the call down on the outlook or I'm, just trying to understand what the trend is on the core lap of plastic competitive situation over the next two to three quarters before you even have an offering.
Richard: To start to make inroads on the MSR piece.
Richard: Yes, rich this is mark I think the way you articulated it to begin with it is right that we see continued competition.
Mark: From from from competitors in the lap of the space that are competing directly with lava class C. We have a tougher comp in Q2 and we have.
Richard: Easier comps in Q3, and Q4, and we expect to see some benefit from these new product launches in the back half of this year. So that's going to help us with with the growth in the back half.
Richard: Okay.
Speaker Change: Okay, and then just as we think it would be obviously, if the slower topline growth trajectory, but it sounds like youre going to accommodate the P&L accordingly.
Speaker Change: Can you talk a little bit.
Speaker Change: How you plan to manage the P&L.
Speaker Change: Your updated EBITDA guidance is relatively unchanged.
Speaker Change: Yes, it's going to increase 50% year over year.
Speaker Change: How much control do you have over the leverage there.
Speaker Change: It sounds like you need to step up spending as you're exiting the year. So just help me reconcile that.
Speaker Change: Thanks.
Speaker Change: Yes.
Speaker Change: So rich.
Speaker Change: We're evaluating all of these opportunities to reduce costs and we're confident that we can we can definitely manage them.
Speaker Change: Based on our lower revenue guide if you take the midpoint or based on the lower guide there is a healthy component of the cost reductions that come very naturally from reduced variable expenses related to Cogs commissions corporate incentives and then the remaining expenses are discretionary in nature that we know that we can manage and will impact our business.
Speaker Change: <unk> terms. So we're a nimble company, we're nimble enough that we can operate the P&L effectively without losing side on our core opportunities. So we feel comfortable with that.
Speaker Change: <unk>.
Richard: That P&L guidance.
Speaker Change: Okay. Thanks.
Speaker Change: One moment for our next question.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question comes from the line of drew Ranieri of Morgan Stanley. Your line is now open.
Andrew Christopher Ranieri: Hi, John and Mark Thanks for taking the questions maybe.
Andrew Christopher Ranieri: Maybe just.
Andrew Christopher Ranieri: Again.
Andrew Christopher Ranieri: Revisit the competition again.
Andrew Christopher Ranieri: But you mentioned, you're you're at about 3000 surgeons now so maybe just hone in on that a little bit more like what your what youre seeing in your surgeon base and.
Andrew Christopher Ranieri: Think we're also.
Andrew Christopher Ranieri: All kind of struggling to see or really understand is that the 7% to 13% growth guidance that youre, giving now.
Andrew Christopher Ranieri: It's really de risks for the competition at this point.
Andrew Christopher Ranieri: Why why should we be confident that this is the right range. What are you seeing maybe help installed that.
Andrew Christopher Ranieri: Hi, Yes, hi drew its John.
John: I think we feel pretty pretty good about the guide.
John: We've definitely got some headwinds, but we also have tailwind, we're still adding new surgeons.
John: But some of the volume that our surgeons, we're doing are being taken.
John: Taken by some of the competitive trials.
John: Some too.
John: Ms Osteotomy.
John: So we're just seeing a.
John: We plan to continue to add new surgeons, it's just that the efficiency, we're getting per surgeon is a little reduced.
John: And then there is some churn there is some may decide to go with a competitive product.
John: Mid or longer term.
John: <unk>.
John: Okay.
Speaker Change: I think that anything else I missed there mark.
Speaker Change: We feel really good I mentioned, a little bit earlier that.
Speaker Change: Comps are much lighter in Q2 excuse me in Q3 and Q4, so that's going to.
John: That gives us additional confidence and then having these new product lines.
John: That have been we've been working on for a long time here, we've developed some great products.
John: Not by ourselves reviews are great surgeon advisory.
John: <unk> group to help us build these new mis.
John: Products, We've got John also mentioned, we have other things that.
John: We've been talking about for a while and we've got a red point products, we have new speed play.
John: Design, that's coming and we have other things as well that we're always coming in the back half of the year with with easier comps. So we feel we feel good about the guidance.
John: It's been properly derisked.
John: Okay.
Speaker Change: Got it Ed again, just with the surgeons.
Ed: Can you talk about maybe like what.
Ed: What attrition rate Youre, maybe seeing in the surgeon base at this point compare that maybe to historical levels.
Ed: And while we do you think about the surgeon base.
Ed: Where in the curve or the adoption curve are you kind of seeing the most impact.
Ed: With that within the kind of the competition dynamic I mean as is happening more to like your your year one year two year three surgeons or is this getting into EBIT.
Ed: More of your tenured base.
Speaker Change: Yes, Great quick credit question drew so.
Speaker Change: We've talked about that.
Speaker Change: We said last year that we plan to grow 250 to 300 surgeons. This year, we're well on track with that we continue to add surgeon say fuel.
Speaker Change: Current and future growth and so we continue to do that what we're seeing is that it's not so much an attrition rate.
Speaker Change: It's more of how often are they going to use our lap of class eight this LAPIS solution in the or and to the extent there are competing products. Both from an MS perspective, that's the osteotomy, it's a <unk>.
Ed: Different approach altogether.
Ed: Two the binding correction or if there is.
Ed: Other LAPIS type.
Ed: Solutions Theres, just a lot more of them and so we're seeing that we continue to add new surgeons. They continue to do but we're expecting them to deal with that first year, but we are seeing.
Ed: Some of our more tenured surgeons who have have.
Ed: Ben been using other auctions, rather than lack of class a exclusively.
Speaker Change: Got it I'll hop back in queue. Thanks.
Speaker Change: Thanks. Thanks.
Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Speaker Change: One moment for our next question.
Speaker Change: Thank you. Our next question comes from the line of Harrison Parsons of Stephens. Your line is now open.
Harrison Parsons: Hi, John and Mark This is Harrison on for George Good afternoon, and thanks for taking.
Harrison Parsons: Taking the questions.
Harrison Parsons: Wanted to just start on right sizing. The P&L I was wondering if you could just expand a little bit on on costs or areas that you could see.
Harrison Parsons: Cost take out.
Harrison Parsons: Is this primarily in the sales and marketing line or are there other areas, we could see some leverage in 2024.
Ed: Hey, Harrison this is mark Greg Great question.
Mark: As I did mentioned before that when there is lower revenue there is a fair and healthy portion of costs that come out because they are purely variable in nature and so there will be reductions in that sales and marketing line item, just because thats, where a lot of the variable expenses come from but there'll also be some some overall reductions.
Mark: <unk>.
Ed: Throughout the P&L, but again, we believe that those are going to be discretionary spending items and we're definitely nimble enough that we can operate the P&L effectively.
Ed: And without losing sight on all of these commercial initiatives and programs and launches that we're talking about so it's yes, there will be some that are variable on the sales and marketing line, but it will impact.
Ed: And some of the G&A and R&D as well.
Ed: Okay.
Speaker Change: Sounds good and then in.
Speaker Change: Terms of protecting your IP.
Speaker Change: Was wondering if because I mean, I guess I know theres been competition.
Speaker Change: For a while is there Ben.
Speaker Change: A new product or.
Speaker Change: Is there something specific to go after there and kind of what's the game plan in terms of protecting that IP.
John T. Treace: Harrison John here.
John T. Treace: We're really not going to comment much on our IP strategy.
Speaker Change: <unk>, but.
Speaker Change: As and when things May happen, we will we will communicate to you as we progress.
Speaker Change: Understood.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Thank you. Our next question comes from the line of Danielle <unk> of UBS. Your line is now open.
Speaker Change: Hey, John and Mike. This is Simon Megan on for Danielle. Thanks for taking my question. When you think about the competition that year.
Simon Nigan: When you think about the competition are currently facing us this coming in the form of larger competitive headwinds from surgeons not converting over from osteotomy or is this purely from the competitive lots of plastic products. Just wondering how should we and how we should think about that.
John: Yes, Simon John here.
Simon Nigan: It's really not one competitor per se, but it's an amalgamation of a number of competitors big companies small companies public and private they.
Simon Nigan: We're now selling products intended to directly compete with <unk>.
Simon Nigan: Classy.
Simon Nigan: Several of those companies also offer MSS the RV products.
Speaker Change: Which as of this time.
Speaker Change: We do not have but that's a temporary situation for us.
Speaker Change: And there are more competitors today than there were last year.
Speaker Change: But we are focused on effectively navigating this market environment and continue to work to capture opportunities ahead, and innovate for our surgeon base and we've got a great Miss Osteotomy platform coming in Q4, and we're very excited about the capabilities that will happen.
Speaker Change: Transforming <unk> medical into a full line.
Speaker Change: In product company and fueling the next leg of the growth of this business.
Speaker Change: Sure.
Speaker Change: That's really helpful and just a quick follow up for you.
Speaker Change: There were a couple of comments on how efficiency per surgeon has.
Speaker Change: And maybe a bit less than expectations.
Speaker Change: Do we think that this is impacting I guess, maybe your future targets for.
Speaker Change: Total lack of plastic penetration growth and how should we think about this impacting utilization over the next I guess over the near term.
Speaker Change: Yes, that's a great question.
Speaker Change: Yeah.
Speaker Change: One thing that we continue to see is a nice steady uptake of surgeon net adds. So we continue we had 475.
Speaker Change: <unk> last year.
Speaker Change: We've had a lot of surgeons adds we've had healthy surgeon additions this year as well. So we continue to see that it's been more of.
Speaker Change: Surgeons have always had the option of how to approach Bunions and so we believe that lap of classy provides a great solution. We have a lot of clinical data, we believe more than any other LAPIS type solution and so we have a lot of confidence that our lap of plastic solution gives great results.
Speaker Change: It's elegantly designed for surgeons, we constantly and regularly here how much. They appreciate the design in the or we've made it faster and more effective and more efficient. However, surgeons have always had the option of whether or not they're going to approach.
Speaker Change: A patient surgery with a lapidus procedure.
Speaker Change: Or and osteotomy and there have been some.
Speaker Change: Some differences between the two approaches and so we continue to see that in some surgeons are continued to use <unk>, but may.
Speaker Change: Hum.
Speaker Change: May decide that maybe the percentage of the lap, but it sort of lap a plastic procedures and their overall patient base is shifting a little bit. So it's more of that I don't want to say that that's the answer for every surgeon because every surgeon is different but we've definitely seen a trend that <unk> are more and more.
Speaker Change: More of the overall price.
Speaker Change: Procedure base.
Speaker Change: And Mark I think that's why we're pretty excited about this upcoming <unk> program that we're going to be launching because now we can be the solution provider for those cases that they are opting to do.
Speaker Change: <unk> on today instead of a lot of the classic potentially so.
Speaker Change: Julia operator are you there.
Julia: Yes, I am showing no further questions at this time I would now like to turn it back to Julie Dewey for closing remarks.
Julie D. Dewey: Thank you and thanks, everybody for joining us today, we appreciate your time and interest if you have more questions. Please reach out and we'll look forward to talking to you next quarter. This concludes our call.
Julie D. Dewey: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Julie D. Dewey: Okay.
Julie D. Dewey: [music].
Julie D. Dewey: Okay.
Julie D. Dewey: Yes.
Julie D. Dewey: [music].
Julie D. Dewey: Okay.
Julie D. Dewey: Okay.
Julie D. Dewey: [music].