Q1 2024 SI-BONE Inc Earnings Call

Okay.

Operator: Good afternoon, and welcome to SI-Bone's. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for. I would now like to turn the call over to Saqib Iqbal, Senior Director of Investment Relations at SI-Bone, for a few introductory comments. Thank you for participating in today's call. Joining me are Laura Francis, Chief Executive Officer, and Anshul Maheshwari, Chief Financial Officer. Earlier today, SI-Bone released financial results for the quarter ended March 31st, 2024.

Good afternoon, and welcome to the ESI bonds first quarter 2024 earnings conference call.

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

Be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes I would now.

I'd like to turn the call over to Sergei.

Sergei: <unk> senior director of Investor Relations at Si bone for a few introductory comments.

Sergei: Thank you for participating in today's call. Joining me are Laura Francis Chief Executive Officer, and Anshul Maheshwari Chief Financial Officer.

Speaker Change: Earlier today Si bone released financial results for the quarter ended March 31, 2020 for a.

Speaker Change: A copy of the press release is available on the company's website.

Saqib Iqbal: A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that are 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. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking. Such forward-looking statements are based on the company's current expectations and inherently involve risks and uncertainties. These risks include SI-Bone's ability to introduce and commercialize new products and indications.

Speaker Change: Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.

Speaker Change: Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.

Saqib Iqbal: SI-Bone's ability to maintain favorable reimbursement for its products and procedures; changes in pair requirements for authorization of procedures involving SI-Bone's product; The Impact of Potential Economic Weakness on the Ability and Desire of Patients to Undergo Elective Procedures; SI-Bone's ability to manage risks to its supply chain. The Impact of Future Capital Requirements Driven by New Product Introductions and risks to the continued renormalization of the healthcare operating environment. Other forward-looking statements include our examination of operating trends and our future financial expectations, such as expectations for physician training and adoption.

Speaker Change: These forward looking statements are based on the company's current expectations and inherently involve risks and uncertainties.

Speaker Change: These risks include <unk> ability to introduce and commercialize new products and indications.

Speaker Change: <unk> ability to maintain favorable reimbursement for its products and procedures.

Changes in payer requirements for authorization of procedures involving <unk> products, the impact of potential economic weakness on the ability and desire of patients to undergo elective procedures.

Speaker Change: <unk> ability to manage risks to it supply chain the impact of future capital requirements, driven by new product introductions and risks to the continued renormalization of the healthcare operating environment.

Speaker Change: Other forward looking statements include our examination of operating trends and our future financial expectations, such as expectations for physician training and adoption active physicians, new product and clinical trial enrollment and are based upon our current estimates and various assumptions.

Saqib Iqbal: Active Physicians, New Products, and Clinical Trial Enrollment 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 looks. Accordingly, you should not place undue reliance on these estimates.

Speaker Change: 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.

Speaker Change: Accordingly, you should not place undue reliance on these statements.

Saqib Iqbal: For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our most recent Form 10-K, filed with the Securities and Exchange Commission. During this call, management may also discuss certain non-GAAP measures, including the company's adjusted EBITDA results. For a reconciliation of these non-GAAP measures to GAAP accounting, please see the company's full earnings release issued earlier today. SI-Bone disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 6, 2020. Thanks, Saqib.

For a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our most recent Form 10-K filed with the Securities and Exchange Commission.

During this call management May also discuss certain non-GAAP measures, including the company's adjusted EBITDA results.

Speaker Change: For a reconciliation of these non-GAAP measures to GAAP accounting, please see the company's full earnings release issued earlier today.

Speaker Change: <unk> disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.

Speaker Change: Conference call contains time sensitive information and is accurate only as of the live broadcast today fixed.

Speaker Change: But that's okay.

Speaker Change: Yes.

Laura A. Francis: Good afternoon, and thank you for joining us. I'm pleased with our solid first quarter results, driven by continued robust procedure demand in the U.S. across all our target markets. We delivered $37.9 million in worldwide revenue, representing growth of 16% over the prior year period. I'm particularly impressed with our performance in the first quarter when compared to typical industry seasonality trends and our stellar performance in the prior year. The demand momentum was also evident in our impressive physician engagement. In the first quarter, we maintained a near record number of active U.S. physicians.

Speaker Change: Thanks, Ken Good afternoon, and thank you for joining us.

Speaker Change: I'm pleased with our solid first quarter results driven by continued robust procedure demand in the U S across all our target markets.

Speaker Change: We delivered $37 $9 million in worldwide revenue representing growth of 16% over the prior year period.

Speaker Change: I'm, particularly impressed with our performance in the first quarter when you compare to typical industry seasonality trends and our stellar performance in the prior year.

Speaker Change: The demand momentum was also evident in our impressive physician engagement trends.

Speaker Change: In the first quarter, we maintained a near record number of active U S physicians and completed a record breaking number of new physician training.

Laura A. Francis: As we look at the rest of 2024, we remain enthusiastic about the revenue growth acceleration fueled by three key tailwinds. First, continued growth in our physician base driven by the record level of engagement we're seeing, building on the strong success of IQ3D and expanding adoption of torque across all our cultures. And third, the exciting opportunity to leverage the expanded family of granted employees with our active physician base to accelerate adoption within pelvic fixation and increase procedures per physician. In the first quarter, we received 510K clearance from the FDA for our 9.5 millimeter diameter ICS bedrock granite, with market-expanding indications for placement in the S1 pedicle and pediatric deformities.

Speaker Change: As we look at the rest of 2024, we remain enthusiastic about the revenue growth acceleration fueled by three key tailwind.

Speaker Change: First the continued growth in our physician base driven by the record level of engagement we're seeing.

Speaker Change: Second building on a strong success of <unk> and expanding adoption of torque across all our call points.

Speaker Change: And third the exciting opportunity to leverage the expanded family of granite implants, with our active physician base to accelerate adoption within pelvic fixation and increase procedures per physician.

Speaker Change: In the first quarter, we received five 10-K clearance from the FDA for our $9 five millimeter diameter ICU bed rock granted implant with market expanding indications for placement in the S. One pedicle and pediatric deformity.

Laura A. Francis: These are new but adjacent market opportunities for us. We launched this implant at the end of April with Dr. C.J. Kleck, a key opinion leader at the University of Colorado, Dr. Ali Mezawala, a surgeon who guided the development of our granite technology, and Dr. Ronald Lehman, a nationally recognized expert in the treatment of adult and pediatric spine conditions at Columbia University, utilizing both open and closed head options, performing the first cases in the country, given the high level of enthusiasm and anticipation in the surgeon community and among our commercial organization from Granite 9-5, as well as the 130,000 annual target procedure.

Speaker Change: These are new but adjacent market opportunities for us.

Speaker Change: We launched this implant at the end of April with Dr. C. J Clark a key opinion leader at the University of Colorado, Dr. Ali methyl Wala surgeon, who guided the development of our granite technology and Dr. Ronald Lehman a nationally recognized expert in the treatment of adult and pediatric spine conditions at Columbia University.

Speaker Change: Utilizing both open and closed had option performing the first cases in the country.

Speaker Change: Given the high level of enthusiasm and anticipation in the surgeon community and among our commercial organization from granite 95 as.

Speaker Change: As well as the 130000 annual target procedures, we're confident that this line extension will augment granite pace of adoption.

Laura A. Francis: We're confident that this line extension will augment the grant at the pace of adoption. The addition of Granite 9-5 is the continuation of our strategy, which we laid out in 2021 to build a broad portfolio of innovative products to address unmet clinical needs and accelerate our growth. In the last three years, we successfully launched iFuse Torque in 2021 and Granite in 2022.

Speaker Change: The addition of granite 95 is the continuation of our strategy, which we laid out in 2021 to build a broad portfolio of innovative products to address unmet clinical needs and accelerate our growth.

Speaker Change: And the last three years, we successfully launched ICU torque in 2021.

Speaker Change: Granted in 2022.

Laura A. Francis: Closed-Head Granite Line Extension in 2023 and now Intra and Granite 9-5 in 2024. We've leveraged this industry-leading franchise of highly differentiated solutions to diversify our revenue, and create new markets in pelvic fixation and pelvic trauma. The impact of this strategy is reflected in our strong results since 2021, as we delivered 24% cumulative annual revenue growth and doubled our active position. Before I get into the details of our strategic priority, I want to take this opportunity to recognize a major milestone in the company's history.

Speaker Change: Ted Granite line extension in 2023.

Now intra and granted 95 in 2024.

Leverage this industry, leading franchise of highly differentiated solutions to diversify our revenue streams.

Speaker Change: Expand our call points, and create new markets and pelvic fixation and pelvic trauma.

Speaker Change: The impact of this strategy is reflected in our strong results since 2021.

Speaker Change: As we delivered 24% cumulative annual revenue growth and doubled our active physician base.

Speaker Change: Okay.

Before I get into the details of our strategic priorities.

Speaker Change: Wanted to take this opportunity to recognize a major milestone in the company's history.

Laura A. Francis: We recently celebrated the completion of 100,000 procedures using our product. We take pride in our market leadership and in execution, which includes focusing on education, market access, and awareness of sacral pelvic pain. We feel honored to work with so many impressive physicians who help give patients their lives back every day.

Speaker Change: We recently celebrated the completion of 100000 procedures using our products.

Speaker Change: We take pride in our market leadership, and an execution, which includes focusing on education market access and awareness of saker pelvic condition we.

Speaker Change: We feel honored to work with so many impressive physicians, who help get patients their lives back every day.

Laura A. Francis: Now, let me provide an update on our key initiatives as we look to extend our leadership position, drive strong long-term growth, and create shareholder value, starting with sales infrastructure. Our sales, marketing, and professional education teams provide us with a tremendous competitive advantage. We're impressed with the continued effectiveness of our sales and marketing team, known for their industry-leading expertise and extensive experience across our target market. We've expanded operating leverage and sales and marketing infrastructure by creating hybrid, select sales agents, while consistently delivering unparalleled support and education for a physician. This is evident in our P&L, with three-year cumulative growth in revenue of $24.5 million, while sales and marketing expense grew 14% during that period. We ended the first quarter with 85 quota-carrying U.S.

Now, let me provide an update on our key initiatives as we look to extend our leadership position drive strong long term growth and create shareholder value.

Speaker Change: Starting with sales infrastructure.

Speaker Change: Our sales marketing and professional education teams provide us with a tremendous competitive advantage for.

Speaker Change: We're impressed with the continued effectiveness of our sales and commercial team known for their industry, leading expertise and extensive experience across our target markets.

Speaker Change: We've expanded operating leverage in sales and marketing infrastructure by creating hybrid models with select sales agents, while consistently delivering unparalleled support and education for physicians.

Speaker Change: Is evident in our P&L with three year cumulative growth in revenue of 24%, while sales and marketing expense grew 14% during that period.

Speaker Change: We ended the first quarter with 85 quota carrying U S territory managers, we augment our territory manager bandwidth with clinical support specialists and third party sales agents for case coverage.

Laura A. Francis: Territory managers. We augment our territory manager bandwidth and third-party sales agents for case coverage. The expanded portfolio, as well as the hybrid commercial models, resulted in trailing 12-month revenue per territory at the end of the first quarter of 2024 of approximately $1.6 million, reflecting 26% growth compared to the trailing 12-month period ended in the first quarter of 2023. We expect the annual revenue per territory to steadily grow toward $2 million.

Speaker Change: The expanded portfolio as well as the hybrid commercial model resulted in trailing 12 month revenue per territory at the end of the first quarter 2024 of approximately $1 6 million rift.

Speaker Change: Reflecting 26% growth compared to the trailing 12 month period ended the first quarter of 2023.

Speaker Change: We expect the annual revenue per territory to steadily grow towards $2 million.

Speaker Change: We plan to methodically add territories over the next few years to ensure we maximize the potential of our growing portfolio and facilitate deeper engagement with our position.

Laura A. Francis: We plan to methodically add territories over the next few years to ensure we maximize the potential of our growing portfolio and facilitate deeper engagement with our physicians. Moving on to physician engagement, we exited the first quarter with over 1,100 active physicians, an increase of over 150 active physicians in the quarter compared to the prior year period. 16% growth in U.S. active physicians over the first quarter of 2023. 13th consecutive quarter of double-digit year-over-year growth

Speaker Change: Moving on to physician engagement, we exited the first quarter with over 100 active physicians and increase of over 150 active positions in the quarter compared to the prior year period.

Speaker Change: The 16% growth in U S active physicians over the first quarter of 2023 was the 13th consecutive quarter of double digit year over year growth.

Laura A. Francis: With nearly 12,000 potential target physicians, we remain confident in our ability to grow our active physician base. Our sales force is also leveraging our growing portfolio of proprietary products to drive deeper physician engagement. In the first quarter of 2024, 15% of our active physicians performed more than one procedure type, with our Granite 9-5 implant targeting degenerative spine procedures, which accounts for a significant portion of the procedure volumes for our active physicians.

Speaker Change: With nearly 12000 potential target physicians, we remain confident in our ability to grow our active physician base.

Speaker Change: Our sales force is also leveraging our growing portfolio of proprietary products to drive deeper physician engagement.

Speaker Change: In the first quarter of 2024, 15% of our active physicians performed more than one procedure type.

Speaker Change: With our granite 95 implant targeting degenerative spine procedures, which account for a significant portion of the procedure volumes for active physicians.

Laura A. Francis: We have an exciting opportunity to increase revenue per physician. Since 2018, another important initiative to grow our active physician base has been our academic training program. We've since trained nearly 1,600 residents and fellows, including over 250 in the current 2023-2024 academic year.

Speaker Change: An exciting opportunity to increase revenue per physician over time.

Speaker Change: Since 2018, another important initiative to grow our active physician base has been our academic training programs.

Speaker Change: We've since trained nearly 1600 residents and fellows, including over 250, and the current 2023 2020 for academic year.

Laura A. Francis: We're excited to see strong adoption trends from these positions in the quarters and years that follow their education. In the first quarter of 2024, strong adoption resulted in revenue from this group going 50% compared to the prior year period. Turning to products and solutions, we have a demonstrated track record of building innovative and proprietary products and surgical techniques to address unmet clinical needs and improve patient outcomes. The sustained procedure volume growth we've experienced in the U.S. substantiates the value of our innovation.

Speaker Change: We're excited to see strong adoption trends from these positions in the quarters and years that followed their education.

Speaker Change: In the first quarter of 2024 strong adoption resulted in revenues from this group going 50% compared to the prior year period.

Speaker Change: Turning to products and solutions, we have a demonstrated track record of building innovative and proprietary products and surgical techniques to address unmet clinical needs and improve patient outcomes.

Speaker Change: The sustained procedure volume growth, we've experienced in the U S substantiates the value of our innovation.

Laura A. Francis: We have an active product pipeline with over 10% of our revenue being reinvested in the development of new products and clinical evidence. We expect to launch differentiated products in the coming year to further extend our portfolio leadership and accelerate revenue growth. With applications across SI joint dysfunction, pelvic fixation, and pelvic trauma, iFUSE 3D and iFUSE Torque give physicians access to industry-leading solutions when performing sacral pelvic procedures.

Speaker Change: We have an active product pipeline with over 10% of our revenue being reinvested in development of new products and clinical evidence.

Speaker Change: We expect to launch differentiated products in the coming years to further extend our portfolio leadership and accelerate revenue growth.

Speaker Change: With applications across Si joint dysfunction, pelvic fixation and pelvic trauma IQ3 D and <unk> tour give physicians access to industry, leading solutions when performing saker pelvic procedures.

Laura A. Francis: Over the last three years, iQ's torque has built on the success of iQ3D and been a key contributor to demand acceleration, as well as strong active physician engagement across all our target markets, as we engage select interventional pain physicians, leading with iFuse Torque and also training them on iFuse Intra, our allograft solution. The interventional pain physicians have expressed their excitement about our comprehensive portfolio, as well as better surgical technique and intraoperative support to increase the likelihood of the best patient outcome.

Speaker Change: Over the last three years Ic's torque is built on the success of IQ3 D. And then a key contributor to demand acceleration as well as strong active physician engagement across all our target markets.

Speaker Change: As we engaged select interventional pain physicians, we're leading with ICU torque and also training them on ICU intra our allograft solution.

The interventional pain physicians have expressed their excitement about our comprehensive portfolio as well as better surgical technique and ensure operative support and increase the likelihood of the best patient outcomes.

Laura A. Francis: Adoption trends in the first quarter suggest that ICU's TORC has been the preferred implant for active interventional pain physicians. Based on this experience, as well as the guidance of our Interventional Advisory Board, we're encouraged by the growing confidence of interventional pain physicians to adopt IT's TORC after being treated with the lateral transfixing technique when performing an SI joint fusion procedure, which is reimbursed under CPT code 2727.

Speaker Change: Adoption trends in the first quarter suggests that Ice's torque has been the preferred implant for active interventional pain physicians.

Speaker Change: Based on this experience as well as the guidance of our Interventional Advisory Board. We're encouraged by the growing confidence of interventional pain physicians to adopt ice's torque after being treated in the lateral transfixing technique when performing an Si joint fusion procedure, which is reimbursed under CPT code to <unk>.

Speaker Change: $102 79.

Laura A. Francis: We're encouraged by the pace of ICU's TORC adoption for treating pelvic trauma; toward the end of 2024, we'll launch a complementary pelvic trauma product. With over 120,000 sacral insufficiency fractures a year and a one-year mortality rate of up to 25% for patients treated with bed rest, currently the most common approach, the trauma market will be a long-term growth driver. Within pelvic fixation, ICU's bedrock granite, our breakthrough device, continues to be a game-changing addition to our portfolio.

Speaker Change: We're encouraged by the pace of ICU torque adoption for treating pelvic trauma patients.

Speaker Change: Towards the end of 2024, we will launch a complementary pelvic trauma products with over 120, <unk> sacral insufficiency fractures a year.

Speaker Change: And the one year mortality rate of up to 25%.

Speaker Change: Or the patient is treated with bed rest.

Speaker Change: Currently the most common approach the trauma market will be a long term growth driver for us.

Speaker Change: Within pelvic fixation ice's bedrock granite our breakthrough device continues to be a game changing addition to our portfolio.

Laura A. Francis: We're just scratching the surface in terms of market penetration and adoption of granite, and we're pleased with the increasing demand for the product. As we target 30,000 annual adult deformity procedures, we believe that granite will become the standard of care for fixation and fusion of the SIG, providing a strong foundation at the base of the Long Conway. Since 2022, over 40% of our granite case volume has been for shorter two to four-level lumbar fusion. Current adoption of the larger diameter granite in these shorter level fusion procedures illustrates the increasing interest among the surgeon community to include pelvic fixation in high-risk patients undergoing these procedures.

Speaker Change: We're just scratching the surface in terms of market penetration and adoption of granite and we're pleased with the increasing demand for the product as.

Speaker Change: As we target 30000 annual adult deformity procedure, we believe that granite will become the standard of care for fixation infusion of the Si joint providing a strong foundation at the base of the long construct.

Speaker Change: Since 2020 to over 40% of our granite case volume has been in shorter two to four level lumbar fusion procedures typically used to treat degenerative spine condition.

Speaker Change: Adoption of the larger diameter granite in the shorter lateral fusion procedure illustrates the increasing interest among the surgeon community to include pelvic fixation and high risk patients undergoing these procedures.

Laura A. Francis: As I highlighted earlier, in April, we initiated our launch of the Granite 9.5 implant. We believe that Granite 9-5, including shorter lengths appropriate for placement in the F1 pedicle, will provide a best-in-class offering for the approximately 100,000 annual fusions to the Safeway, as well as engaged deformity surgeons who have expressed an additional preference for smaller diameter implants. Before I hand the call over to Anshul, I want to congratulate our employees for helping nearly 100,000 patients and many more. And now, here's a look at your forecast. It's going to be a beautiful day, especially as we head into the weekend.

Speaker Change: As I highlighted earlier in April we initiated our launch of the granite 95 implant and are planning an expanded rollout in June.

Speaker Change: We believe that granted 95, including shorter lengths appropriate for placement in the S. One pedicle will provide a best in class offering for the approximately 100000 annual fusions to the sacrum as well as engage deformity surgeons, who have expressed an additional preference for smaller diameter implant.

Speaker Change: Before I hand, the call over to onshore I want to congratulate our employees for helping nearly 100000 patients get their lives back.

Onshore: So our world class team your grip and relentless commitment enables us to develop breakthrough products backed by high quality clinical evidence educate payers and physicians and ensure that the nearly half a million dollars annual target patients have access to best in class solutions.

Laura A. Francis: I'm Kelly O'Rourke, and I'll see you next time. To our world-class team, your grit and relentless commitment enables us to develop breakthrough products backed by high-quality clinical evidence, educate payers and physicians, and ensure that the nearly half a million annual target patients have access to the best-in-class. Thank you for all that you do. With that, I'll hand the call over to Anshul to discuss our financial performance. Thanks Laura. Good afternoon, everyone.

Thank you for all that you do.

Onshore: With that I'll hand, the call over to onshore to discuss our financial performance.

Anshul Maheshwari: My comments today will be focused on first quarter revenue growth, gross margin trends, productivity, and liquidity. Additionally, all the comparisons provided will be versus the same period in the prior year, unless noted otherwise, starting with revenue growth. Our first quarter worldwide revenue was $37.9 million, representing growth of 16.9%. U.S. revenue also grew 16% to $35.4 million due to increasing U.S. procedure volumes, with our procedure ASP in the first quarter being relatively flat. International revenue in the first quarter was $2.4 million, representing 8% growth.

Onshore: Thanks, Laura Good afternoon, everyone. My comments today will be focused on first quarter revenue growth gross margin trend productivity and liquidity. Additionally.

Onshore: Additionally, all the comparisons provided will be <unk> as the same period in the prior year unless noted otherwise.

Starting with revenue growth.

Onshore: First quarter worldwide revenue was $37 $9 million.

Onshore: Representing growth of 16% U.

Onshore: U S revenue also grew 16% to $35 4 million due.

Onshore: Due to increasing U S procedure volumes with a procedure ESP in the first quarter being relatively flat.

Onshore: International revenue in the first quarter was $2 $4 million.

Onshore: Representing 8% growth.

Anshul Maheshwari: Moving to Gross Margin and Operating Level. Our gross margin for the first quarter was 79%. Gross margin reflects the impact of product and procedure mix, higher freight driven by revenue growth, as well as depreciation from deployment of additional instruments. Operating expenses were $41.9 million in the quarter, representing 10% growth.

Onshore: Moving to gross margin and operating leverage.

Onshore: Our gross margin for the first quarter was 79% the gross margin reflects the impact of product and procedure mix higher freight driven by revenue growth as well as depreciation from deployment of additional instrument trees.

Onshore: Operating expenses were $41 9 million in the quarter, representing 10% growth.

Anshul Maheshwari: The increase was driven by higher commissions related to revenue growth, the impact of stock-based compensation, and research and development investments. The increase in operating expenses was also impacted by the timing of our global sales meeting, which was held in the first quarter of this year versus the second quarter of last year. The net loss improved by 2% to $10.9 million or $0.27 per diluted share. The net loss per diluted share for the first quarter of 2024 also reflects the increase in shares outstanding due to a follow-on common stock offering in May 2022. Our adjusted EBITDA loss in the first quarter was $4 million, which was nearly flat compared to the prior year period.

Onshore: Increase was driven by higher commissions related to revenue growth.

Onshore: Impact from stock based compensation and research and development investments the increase in operating expenses was also impacted by the timing of our global sales meeting, which was held in the first quarter of this year versus the second quarter of last year.

Onshore: Our net loss improved by 2% to $10 9 million or 27 per diluted share.

Onshore: Net loss per diluted share for the first quarter of 2024 also reflects the increase in shares outstanding due to our follow on common stock offering in May 2023.

Onshore: Our adjusted EBITDA loss in the first quarter was $4 million, which was nearly flat compared to the prior year period.

Anshul Maheshwari: Turning to liquidity, we exited the first quarter of 2024 with a robust balance sheet including $157.8 million in cash and marketable security. Additionally, we delivered a 30% improvement in our net cash flow from operations. Given a strong liquidity position, a relatively asset-light business model, and a clear line of sight to adjust the EBITDA break-even, we have the financial resources to self-fund our long-term growth priorities going forward. Finally, moving to our updated Outlook for 2020.

Onshore: Turning to liquidity.

Onshore: Exited the first quarter of 2024, with a robust balance sheet, including $157 $8 million in cash and marketable securities. We delivered 30% improvement in our net cash flow from operations.

Onshore: Given our strong liquidity position, our relatively asset light business model and a clear line of sight to adjusted EBITDA breakeven.

Onshore: We have the financial resources to self fund, our long term growth priorities going forward.

Onshore: Finally, moving to our updated outlook for 2024.

Anshul Maheshwari: Based on our first quarter results, we are increasing our 2024 Worldwide Revenue Guide. We now expect 2024 worldwide revenue of between $164 million and $166 million, implying year-over-year growth of approximately 18 to 20 percent. Considering the potential 2x operating leverage in the business, we expect a significant adjusted EBITDA improvement for the full year 2024, putting us within reach of our adjusted EBITDA breakeven goal. With that, I will turn the call over to Laura. Thanks, Anshul.

Onshore: Based on our first quarter results, we are increasing our 2024 worldwide revenue guidance. We now expect 2024 worldwide revenue of between $164 million and $166 million in.

Onshore: Implying year over year growth of approximately 18% to 20%.

Onshore: Considering the potential to X operating leverage in the business, we expect significant adjusted EBITDA improvement for the full year 2024.

Onshore: Putting us within reach of our adjusted EBITDA breakeven goal.

With that I will turn the call over to Laura.

Laura A. Francis: Thanks onshore.

Laura A. Francis: Based on the momentum in the portfolio, we're set up to deliver a strong 2024. As we look beyond 2024, we're confident that the combination of our commercial footprint, differentiated portfolio across multiple target markets, and planned new product launches in the coming years will allow us to continue delivering top-tier medical device revenue growth. With that, we're happy to take questions, Operator. Thank you. At this time, we will conduct a question and answer session.

Based on the momentum in the portfolio, we're set up to deliver a strong 2024 as we look beyond 2024, we're confident that the combination of our commercial footprint differentiated portfolio across multiple target markets and planned new product launches in the coming years will allow us to continue delivering top tier met.

Laura A. Francis: Device revenue growth.

Speaker Change: With that we're happy to take questions operator.

Speaker Change: Thank you at this time, we will conduct a question answer session.

Laura A. Francis: As a reminder, to ask a question, you'll need to press star 1-1 on your telephone and wait for your name to be announced. For the majority of questions, please press star 11 again. Please stand by while we compile the Q&A route. Our first question comes from the line of Xuyang Li of Jefco.

Speaker Change: Wanted to ask a question you will need to press star one or telephone wafer your name to be announced towards your question. Please press star one again, please stand by while we compile the Q&A roster.

Speaker Change: Our first question comes from the line of young Li of Jeff Co. Your line is now open.

Operator: The line is now open. All right, great. Thanks for taking our questions. I guess to start, I wanted to hear a little bit about the progress with INTRA since you launched. The early feedback from it, I mean, it still sounds like TORC is the focus of a lot of the intervention. And I guess I'm just kind of curious, you know, is the combined interventional portfolio opening doors to new physicians? weren't referring before, is it expanding the market for you? Yeah, thanks for the question, Xuyang.

Alright, great.

Xuyang Li: Thanks for taking our questions.

Xuyang Li: I guess to start wanted to hear a little bit about the.

Xuyang Li: The progress was interests since you launched.

Xuyang Li: The early feedback from it I mean, it still sounds like toric is the focus for a lot of the intervention.

Xuyang Li: And I guess I'm, just kind of curious as the combined.

Xuyang Li: Intervention portfolio opening doors to new physicians, who werent referred before is it expanding the market for you.

Speaker Change: Yes. Thanks for the question young and we are pleased with what we're seeing with intra thus far so we're still obviously very early in this journey, but but we like the early results and how they are setting up.

Xuyang Li: And we are pleased with what we're seeing with the intra thus far. So we're still obviously very early in this journey, but we like the early results and how they're setting up. Especially from the perspective of our strategy, we wanted to engage a subset of interventionalists and get access to this discrete and untapped patient funnel.

Speaker Change: Especially from the perspective of our strategy, we wanted to engage a subset of interventional interventional lists and get access to this discreet and untapped patient funnel. As you said. This is this is additive to our to our current sales with our surgeons. So we're pleased with the level of <unk>.

Laura A. Francis: As you said, this is additive to our current sales with our surgeons. So we're pleased with the level of interventionalist engagement and their interest in being trained with TORC as well as with intra. We're not planning to break down revenue by position or procedure type, but what's impressive is the adoption trends of TORC with interventionalists as they're being trained in the lateral technique. With intra, we're still in the early days, but we do believe that there's a subset of physicians who are going to be initially hesitant to use a metal implant.

Speaker Change: First of all is the engagement and their interest in being trained.

Speaker Change: With torque as well as with intra.

Speaker Change: We're not planning to break down revenue by positioning for.

Speaker Change: Seizure type, but what's impressive is the adoption trends of torque with interventional less as they are being trained in the lateral technique with insurer, we're still in the early days and but.

Speaker Change: But we do believe that there's a subset of physicians, who are going to be initially hesitant to use the metal implant.

Laura A. Francis: And so these physicians are going to be intra users. So we're positioned to be a preferred partner to this call point regardless of what their needs actually are. And as a market leader, we really felt a strong need to address this market. We have the best commercial sales force. We have unparalleled educational and advocacy infrastructure.

Speaker Change: And so these physicians are going to be intra users. So so we're positioned to be a preferred partner to this call point, regardless of what their needs actually are.

Speaker Change: <unk> is.

Speaker Change: As the market leader, we we really felt a strong need to address this market. We have the best commercial sales force, we have unparalleled educational and advocacy infrastructure, we have a comprehensive product portfolio.

Laura A. Francis: We have a comprehensive product portfolio, and we've gotten clear feedback from interventionalists that SI Bone is highly respected for our market leadership position. And we are particularly impressed by the large number of interventionalists who are already working with us or have begun the process of getting trained. All right, great.

Speaker Change: And.

Speaker Change: And we've gotten clear feedback from interventional listed at Si bone is highly respected for for a market leadership position in <unk>.

Speaker Change: And we are particularly impressed by the large number of interventional US who are already working with us or have begun the process of getting trained.

Laura A. Francis: That's very helpful. I guess maybe to follow up, I wanted to ask you about rep productivity. I think the territory managers are doing about 1.6 million. Before, you had a goal of 2 million plus.

Speaker Change: Alright, great Thats very helpful I.

Speaker Change: I guess maybe.

Speaker Change: To follow up.

Speaker Change: I wanted to ask you about rep productivity.

Speaker Change: I think the territory managers are doing about $1 6 million.

Speaker Change: Before you had to go.

Speaker Change: 2 million plus it's more of a milestone not a ceiling.

Speaker Change: But wanted to hear a little bit about.

Laura A. Francis: It's more of a milestone, not a ceiling. But I wanted to hear a little bit about, As you get closer to that two plus million range, what's the next milestone or target you think they can hit before maxing out? And also, your agent base has increased a lot in recent quarters. Maybe thoughts on their contributions so far and adding more agents going forward. Yeah, yeah.

Speaker Change: As you get closer to that two plus million range.

Speaker Change: The next milestone or target you think they can hit before maxing out and also your agent base has increased a lot in recent quarters.

Speaker Change: Maybe thoughts on their contribution so far and adding more agents going forward.

Laura A. Francis: So we are extremely proud of the 26% growth that we had in trailing 12-month rep productivity, getting us up to $1.6 million. And the commercial leadership team has done a really great job of leveraging hybrid commercial models here. So we have junior clinical support specialists that are working with our territory managers to help to identify new physicians, as well as to cover cases.

Speaker Change: Yes, yes. So we are extremely proud of the 26% growth that we had in trailing 12 month rep productivity getting us up to the $1 6 million and the commercial leadership team has done a really great job of leveraging hybrid commercial model here. So we have.

Speaker Change: Junior clinical support specialists that are working with our territory managers that help to identify new physicians as well as to cover cases, and then as you said, we've also added a significant number of them.

Laura A. Francis: And then, as you said, we've also added a significant number of third-party agents that are also selling the product and covering cases as well. So that really has helped us to grow our productivity in a significant way. So, really, four key drivers of that productivity.

Speaker Change: Of third party agents that are also.

Speaker Change: Selling the product and covering cases as well so that really has helped us to grow our productivity in a in a significant way. So really four key drivers to that productivity first is just the caliber of our increasingly seasoned sales force.

Laura A. Francis: You know, first is just the caliber of our increasingly seasoned sales force, complemented by these hybrid commercial models. Secondly, our highly differentiated portfolio of solutions. Third, the synergistic physician call point, which is allowing us to drive physician density. And then, finally, the increase in field surgical capacity with the rollout of instruments and implants to reduce the logistical workload. So in terms of where we're going, as I said, our intention is to continue to grow over time to that $2 million per territory manager level.

Complemented with these hybrid commercial models secondly, our highly differentiated portfolio of solutions third the synergistic physician call point, which is allowing us to drive physician density and then finally the increase in the <unk>.

Speaker Change: Field surgical capacity with the rollout of instruments and implants to reduce the logistical workflow. So in terms of where we're going we as I said, our intention is to continue to grow over time to that $2 million per territory manager level.

Laura A. Francis: We do have a significant number of reps that are already selling in excess of $3 million per territory, and so that's been a guide for us. And in some of those particular territories, they're actually working with two clinical support specialists. In others, they're heavily leveraging third-party agents.

Speaker Change: We do have a significant number of reps that are already selling in excess of $3 million per territory and so that's been a guide for us and in some of those particular territories, they're actually working with two clinical support specialists and others.

Laura A. Francis: And so those are just some of the ways that we're taking this opportunity to continue to grow territory manager productivity, and they give us a lot of confidence that we can actually do more than where we're at currently. But overall, we're going to continue to selectively add to our sales force and maybe exit the year with a little over 90 territory managers but remain focused on driving strong, sustainable, and profitable growth. And we do expect that year-over-year sales force productivity to continue to improve in the year. Alright, excellent. Thank you very much.

Speaker Change: They're heavily leveraging third party agents.

Speaker Change: And so those are just some of the ways that we're that we're getting at.

Speaker Change: At this opportunity to continue to grow territory manager productivity and they give us a lot of confidence that we can actually do more than where we're at currently.

Speaker Change: But overall, we're going to continue to selectively add to our sales force and maybe exit the year.

Speaker Change: With a little over 90 territory managers, but remain focused on driving strong sustainable and profitable growth.

Speaker Change: And we do expect that year over year sales force productivity to continue to improve in the year.

Speaker Change: Alright excellent. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

Laura A. Francis: Thank you. Thank you. One moment for our next question. Our next question comes from the line of Greg Bijou of Bank of America Securities. Your line is now open. Good afternoon. Thanks for taking the questions, and congratulations on a good start. Anshul, maybe it would be good for you to start.

Speaker Change: Our next question comes from the line of Greg Bijou of Banc of America Securities. Your line is now open.

Speaker Change: Okay.

Craig William Bijou: Good afternoon, Thanks for taking my questions and congrats on a good start.

<unk>, maybe for you to start.

Operator: You know, wanted to talk about expectations for operating expense growth and then even some of your comments to the last question, Laura, on sales rep spend, so, or adding sales reps and, you know, what the, what the spend would be. But we'd love to just kind of get your thoughts on operating expense growth for the rest of the year. And, you know, the comments on EBITDA, does that mean that we should or could see EBITDA, positive EBITDA, in Q4 of this year? Is that something that's on the table?

Craig William Bijou: Wanted to talk about your expectations for operating expenses growth and then even some of your comments to the last question more on sales reps spend so.

Craig William Bijou: We're adding sales reps and what the spend would be but we'd love to just kind of give your thoughts on operating expense growth for the rest of the year and.

Craig William Bijou: The comments on EBITDA does that mean that we should or we could see EBITDA positive EBITDA in Q4 of this year is that something that's on the table.

Craig William Bijou: Craig, thanks for the question. We're really pleased with how the quarter played out, both on the top line and also on the leverage side. So just to provide some context, as I shared in my prepared remarks, the first quarter included the impact of our global sales meeting, the timing of that. So you've got OPEX being a bit higher in the first quarter than you did the previous year because of when the global sales meeting happened.

Craig William Bijou: Craig Thanks for the question.

Craig William Bijou: And what we've said in our remarks also is we do expect to see 2X OPEX growth rate, revenue growth rate being 2X OPEX growth rate, sorry. So what that would imply is if you think about the midpoint of the guidance at about 19%, you're looking at OPEX growth of 9.5%. And it's primarily driven by the higher commission rates that you could earn because of the higher revenue as well as some of the accounting on the stock-based side.

Craig: We're really pleased with how the how the quarter played out both on the top line and also on the leverage side. So just to provide some context.

Speaker Change: As I shared in my prepared remarks, the <unk>.

Speaker Change: First quarter included the impact of our global sales meeting the timing of that so you have got opex being a bit higher in the first quarter than you did prior year.

Speaker Change: Because of when the global sales meeting happened.

Speaker Change: What we've said.

Speaker Change: Our remarks also is we do expect to see <unk> opex growth rate.

Speaker Change: Revenue growth rate being <unk> opex growth rate sorry, so what that would imply is if you think about the midpoint of the guidance at about 19% Youre looking at Opex growth of nine 5%.

Speaker Change: And it's primarily driven by the higher commission rates that you could earn because of the higher revenue and as well as some of the accounting on the stock based side. So the leverage continues and we feel really good about that now in terms of.

Anshul Maheshwari: So the leverage continues, and we feel really good about that. Now, in terms of adjusted EBITDA break-even, look, we're early in the year, and as we've always articulated, our strategy is to just have our results speak for themselves and get there in terms of the adjusted EBITDA break-even timeline. And as we go through the year, we'll be able to provide more information on the progress we're making towards that break-even. But what I would leave you with is that we feel really good about the trajectory that we're on, and we feel good about our ability to get to adjusted EBITDA break-even and also very quickly to cash flow break-even given our asset-light model. I got it.

Speaker Change: Adjusted EBIT EBITDA breakeven look we're early in the year and as we've always articulated our strategy is to just have our results speak for themselves and get there in terms of adjusted EBITDA breakeven timeline.

And as we go through the year, we'll be able to provide more information on the progress, we're making towards that breakeven, but what I would leave you with is we're feeling really good about the trajectory that we're on and we feel good about our ability to get to adjusted EBITDA breakeven and also very quickly to cash flow breakeven given our asset light.

Speaker Change: Model.

Anshul Maheshwari: Thanks. Thanks for that. And then, maybe as a follow-up, I did want to talk about your guidance for the year. So you beat it by roughly one and a half million.

Speaker Change: Got it thanks, Thanks for that and then.

Speaker Change: Maybe as a follow up I did want to talk about your guidance for the year. So you beat by roughly $1 5 million I think that was the raise for the year, obviously good to see the raise but.

Anshul Maheshwari: I think that was the raise for the year. Obviously, it's good to see the raise, but maybe if you can just talk about it, it was that conservatism to start the year. What do you see?

Maybe if you could just talk about it was that.

Speaker Change: Conservatism to start the year.

Speaker Change: What do you see.

Anshul Maheshwari: Or how do you see the year progressing and maybe a little bit on the cadence of revenue and how should we think about that? Yeah, I'm happy to take that as well, Craig. So, if you look at the midpoint of the raise, the midpoint of the raise is about a million and a half from the prior midpoint, which is pretty much what we did in Q1 in terms of the upside on our performance. It is still early in the year, so you're right.

Speaker Change: Or how do you see the year progressing and maybe a little bit on the cadence of revenue and how should we think about that.

Speaker Change: Yes, no happy to take that as well.

Speaker Change: So if you look at the midpoint of the raise the mid point of the raise is about a million and half.

From the prior midpoint, which is pretty much what we did in Q1 in terms of the upside on our performance. It is still early in the year. So you are right. We just want to be thoughtful we've got a lot of things that are going in our favor when you think about.

Anshul Maheshwari: You know, we just want to be thoughtful. We've got a lot of things that are going in our favor. You think about the number of physicians that we're training. It was a record number of physicians that had their first training, still seeing really good adoption on the surgeon side, seeing good traction on the interventional side, and with Granite 9.5 being sort of starting to roll out in the second quarter more in June.

The number of physicians that were trading it was a record number of physicians that had their first training still seeing really good adoption the surgeon side scene.

Speaker Change: <unk> seen good traction on the interventional side, and with 95 being sort of rollout in the second quarter more in June and then so all of those things make us feel really good about the business, but still coming out of the first quarter. So we want to be thoughtful.

Anshul Maheshwari: So, all of those things make us feel really good about the business, but it's still coming out of the first quarter, so we want to be thoughtful. In terms of cadence, we do expect revenue growth to accelerate on a year-over-year basis in each of the quarters going forward. So, even the typical seasonality that you see in the third quarter, our expectation is that the rollout of the Granite 9.5 in June should help us offset some of that seasonality. So, NetNet feels really good about the setup that we have in the business coming out of the first quarter. Thanks for taking the questions.

Speaker Change: In terms of cadence, we do expect revenue growth to accelerate on a year over year basis in each of the quarters going forward.

Speaker Change: So even the typical seasonality that you see in the third quarter and our expectation is with the rollout of the Grad at 95 in June should help us offset some of that seasonality. So net net feel really good about the setup that we have into the business coming out of the first quarter.

Speaker Change: Thanks for taking the questions.

Anshul Maheshwari: Thank you one moment for our next question- Our next question comes from the line of Matthew O'Brien from Piper Sandler. Your line is now open, questions. Um, you know, and Laura and Anshul, you've kind of touched on a couple of these here, but the two-year stack growth rate in the U.S. is really strong, much better than we saw the last four quarters of last year. So, what specifically is it that's really driving that?

Speaker Change: Thank you gentlemen for next question.

Operator: Is it a function of those new reps or productivity amongst the new reps that's really driving that? And then the momentum there again seems really good with easier comps, which was Craig's question earlier. Is there anything you're factoring in that could disrupt some of that momentum? I don't know if it's these LCDs that are proposed or other things like that that you're really worried about, but what would slow down some of that momentum that we really saw? So Matt, thank you so much for highlighting that point.

Speaker Change: Our next question comes from the line of Matthew O'brien of Piper Sandler. Your line is now open.

Matthew O'brien: Thanks, so much for taking my questions.

Matthew O'brien: And Laura and financial you've kind of touched on a couple of these here, but the key is stacked growth rate in the U S was really strong much better than we saw in the last four quarters for the.

Matthew O'brien: The fourth quarters of last year. So what is it specifically that is really driving that is it a function of those new reps.

Matthew O'brien: Tivoli amongst the new reps thats really driving that and then.

And there again, it seems really good with easier comps kind of taste question earlier.

Is there anything you are factoring in that can disrupt some of that momentum I don't know if <unk> LCD.

Matthew O'brien: That are proposed or other things like that that you're really worried about but won't slow down some of that momentum that we really saw in Q1.

Speaker Change: So Matt. Thank you so much for highlighting that point as you know last year, we grew at 46% in the first quarter and and if you do your two year stack with the 16% growth Youre talking about a very strong quarter that we have here. So.

Matthew O'brien: As you know, last year we grew at 46% in the first quarter. And if you do your two-year stack with the 16% growth, you're talking about a very strong quarter that we have here. So out of the gates, we really feel great about the way the year has started. And even if you think about historical seasonality trends, as well as that tough comp, it was just a strong quarter across all of the key KPIs.

Speaker Change: Out of the gates.

Speaker Change: We really feel great about the way the year has started.

Speaker Change: And even if you think about historical seasonality trends as well as that tough comp, but it was just a strong quarter across all of the key.

Speaker Change: Kpis and it is a continuation of the strong demand that we've seen over the last few quarters. So in the U S. We saw robust robust demand across all our target markets and across all our call points and it allowed us to deliver 17%.

Laura A. Francis: And this is a continuation of the strong demand that we've seen over the last few quarters. So in the US, we saw robust demand across all our target markets and across all our call points. And it allowed us to deliver 17% procedure volume growth, as well as maintain a relatively stable ASP in the US. Near-record physician engagement with over 1,100 active US users, up 16%. And then getting 510K clearance for Granite 9.5, which is positioning us to build on Granite momentum and further accelerate adoption within pelvic fixation.

<unk> volume growth and as well as maintaining a relatively stable ASP in the U S.

Speaker Change: Near record physician engagement with over 100 active <unk> users up 16% and then getting five 10-K clearance for granted 95, which is positioning us to build on granite momentum and further accelerate adoption within pelvic fixation and then if you even just look beyond the.

Laura A. Francis: And then if you even just look beyond the strong top-line drivers, we continue to see strong operating leverage with a 30% improvement in cash flow from operations versus a year ago. But we're also continuing to invest in our growth priorities, as you can see from the different product introductions. So what we really wanted to do, thinking about that longer-term trajectory, given that we're just starting the year, what we wanted to do was to be thoughtful about our guidance. But, as Anshul said, really expect to see continued acceleration of our growth rate throughout the year. We're not concerned on the LCD side that you mentioned.

Strong topline driver if we continue to see strong operating leverage with a 30% improvement in cash flow from operations versus a year ago. So, but we're also continuing to invest in our growth priorities as you can see from the different product introductions. So what we really want it.

Speaker Change: Do you thinking about kind of that that longer term trajectory given that we're just starting the year. What we wanted to do was to be thoughtful about our guidance, but as actual fed really expect to see continued acceleration of our growth rate throughout the year.

Speaker Change: We're not concerned on the LCD side that you mentioned as I said most of the adoption that we're seeing currently with intervention all is with our torque product.

Laura A. Francis: As I said, most of the adoption that we're seeing currently with Interventional is with our Torque product, and that product is coded to CPT code 27279, where there are no issues. We're not surprised at seeing some of the challenges with CPT code 27278, because it's early days on this right now. But we think that we have the products and solutions in order to address whatever needs our physicians have, whether they're surgeons or interventionalists.

Speaker Change: And that that product is.

Speaker Change: Coded to CPT code $272 79.

Speaker Change: Where there are no issues, we're not surprised at seeing some of the challenges with a CPT code $272 seven eight.

Speaker Change: Because it's it's it's early days on this right now.

Speaker Change: But we think that we have the products and solutions in order to address whatever needs R. R.

Speaker Change: Physicians have whether their surgeons or intervention all lists and given our market leadership position here and our incredible field force we were.

Laura A. Francis: And given our market leadership position here and our incredible field force, we're really excited about where we can go for 2024. And Matt, the only thing on the guidance side I would add, like Laura said, we've got a lot of experience on the reimbursement side, and our strategy anticipated some of this reimbursement challenge.

Speaker Change: We're really excited about where we can go for 2024 and the only thing on the guidance side I would add like Laura said.

Speaker Change: We've got a lot of experience in the reimbursement side and our strategy anticipated. Some of this reimbursement challenge. So we don't expect this to have any any impact on the guidance. We just said.

Laura A. Francis: So we don't expect this to have any impact on the guidance we just set at $164 to $166 million. We appreciate those comments. And then as far as that LCD goes, Is there, the 2781 specifically, I'm obviously new to covering the name, but, and you guys, but just, you know, it seems to me like that would be more of a tailwind for your business because now everybody's going to transition to 279, they're going to use torque, and that's going to be better than intra for you. Is that a dynamic that we should potentially be thinking about? Later throughout, Yeah, you're correct.

Speaker Change: The $164 million to $166 million.

Speaker Change: Okay I appreciate those comments and then as far as that LCD goes.

Speaker Change: Is there.

Speaker Change: The 278, one is specifically.

Speaker Change: Obviously, new to covering the name but.

Speaker Change: But just seems to me like that would be more of a tailwind for your business. Because now everybody is going to transition to seven nine theyre going to use to work in.

Speaker Change: That's going to be better than intra for you is that a dynamic that we should potentially be thinking about.

Speaker Change: Later throughout this.

Speaker Change: Yes.

Speaker Change: Correct.

Speaker Change: Two seven days.

Laura A. Francis: Yeah, you're correct that, you know, we have seen interest from interventionalists starting last year already in our procedure, the lateral procedure using TORC, and we're continuing to see strong interest in that particular procedure over allograft procedures currently, likely due to the uncertainty around reimbursement for 27278 versus 27279. So, and given where we are as the market leader in this particular space, we're able to provide a number of different products, we're able to provide the right education, and we're able to provide the right support from a reimbursement perspective. And finally, our sales team with 85 territory managers and a few less clinical support specialists provides us with the opportunity to adequately support those interventionalists. I got it.

Speaker Change: Yes, you are correct that.

Speaker Change: We have seen interest from interventional lists starting last year already and our procedure the lateral procedure using torque and we're continuing to see strong interest in that particular procedure over allograft procedures.

Speaker Change: Currently likely due to the uncertainty around.

Speaker Change: Reimbursement for $217 78 versus $2 77, nine so and given given where we're at as the market leader in this particular space, we're able to provide a number of different products, we're able to provide the right education, we're able to provide the right.

Speaker Change: Port from a reimbursement perspective, and finally, our our sales team with 85 territory managers and a few less clinical support specialists provides us with the opportunity to to adequately support those interventional list.

Speaker Change: Got it thank you.

Operator: Thank you. Please wait one moment for our next question. Our next question comes from the line of Drew Ranieri of Morgan Stanley. Your line is now open.

Speaker Change: Thank you one moment for our next question.

Okay.

Speaker Change: Our next question comes from the line of Julien <unk> of Morgan Stanley. Your line is now open.

Andrew Christopher Ranieri: Laura, hi, Anshul, thanks for taking the question. Just to start, Laura, you mentioned in your comments that there's a little nuance here. It's declining a bit sequentially. Please help us better understand maybe some of the dynamics that we're having, and then what's embedded from a new doc ad dynamic to reach your full year guidance. And I'll stop there for a... Yeah.

Julien: Hi, <unk>. Thanks for taking the question questions, maybe just to start Laura you mentioned in your comments of maintaining near record docks positions in the quarter.

Julien: That there's a little nuance here.

Julien: It's declining a bit sequentially, but can you just help us better understand maybe some of the dynamics that were happening here.

Speaker Change: What's embedded from a new dock add dynamic to reach your full year guidance.

Speaker Change: And I'll stop there for now.

Laura A. Francis: So we're actually very pleased with where we are at, having over 1,100 docs. It is a few less than we had at the end of Q4, but that is typical for us.

Speaker Change: Yeah.

Speaker Change: So we're actually very pleased with where we're at having over 1100 docs. It is it is a few less than we had at the end of Q4 that is typical for us.

Speaker Change: Last year I think was the exception to that particular rule, but it is very typical from a seasonality perspective that we will have a few less doctors that are performing procedures in Q1 versus Q4, we're very.

Speaker Change: Pleased however, and we did throw in a little bit of qualitative information about training here.

Speaker Change: We had very strong training trends in the first quarter with a combination of surgeons as well as enter intervention lists as well and that's a great forward looking indicator for us. The active surgeon number is just the number of surgeons that performed at least one case.

Speaker Change: In the quarter.

But all of these even more forward looking indicators such as training gives us a lot of confidence in this acceleration into the next few quarters also with new products coming out as well it gives us a lot of confidence to so.

In particular.

Speaker Change: If you think about granted 95 is targeting 100000 degenerative spine procedures and.

Speaker Change: And the expectation that that's going to increase physician and density in the future is exciting and finally with the addition of interventional lists it's increased our target physician.

Laura A. Francis: Last year, I think, was the exception to that particular rule, but it is very typical from a seasonality perspective that we will have a few less doctors that are performing procedures in Q1 versus Q4. We're very pleased, however, and we did throw in a little bit of qualitative information about training here. We had very strong training trends in the first quarter with a combination of surgeons as well as interventionalists, and that's a great forward-looking indicator for us. Finally, with the addition of interventionalists, we increased our target physician number from around 7,500 to around 12,000 in total.

Speaker Change: Number from around 70 502 around 12000 in total so it gives us the opportunity to to sell two additional physicians and also the opportunity to increase the number of procedures per physician per quarter.

Speaker Change: Got it.

Speaker Change: Maybe just on the utilization side for a moment.

Speaker Change: I mean, it looks relatively stable.

Quarter over quarter.

Speaker Change: Just.

Speaker Change: Piggybacking off of the credit not five launch just maybe help us better understand some of the utilization drop or some of the more utilization drivers kind of what you're expecting and I know that there's surgeons physicians are using your products far in excess of that but when do we really start to see it.

Laura A. Francis: So, it gives us the opportunity to sell to additional physicians and also the opportunity to increase the number of procedures per physician per quarter. Just on the utilization side for a moment, it looks relatively stable quarter over quarter. Surgeons are using your products far in excess of that, but when do we really start to see a real, true inflection in utilization? I mean, you're making great progress on the surgeon's side, but when will we kind of see the utilization really kind of pick up? Yeah, yeah, so we did talk a little bit about physician density.

Speaker Change: Real true inflection in utilization I mean, you're making great progress on the surgeon side, but when do we kind of see the.

Speaker Change: The.

Speaker Change: Realizations really kind of pick up thanks.

Speaker Change: Yeah, Yeah. So we did talk a little bit about physician density now we're in these early innings of it.

Laura A. Francis: Now, we're in these early innings of expanding our portfolio, but we are seeing a growing number of physicians that are performing multiple procedure types. We did mention specifically that in the first quarter, around 15% of our active physicians performed more than one type of procedure. But once again, if I go back to Granite 9-5, Granite 9-5 is targeting degenerative spine procedures, and that's the bread-and-butter procedure of our target surgeon.

Speaker Change: Expanding our portfolio, but we are seeing a growing number of physicians that are performing multiple procedure types. We did mention specifically that in the first quarter around 15% of our active physicians performed more than one type of procedure, but once again, if I go back to granite 95.

Speaker Change: Granted 95 is targeting.

Speaker Change: Degenerative spine procedures, and thats, the bread and butter procedure of our target surgeon and so the majority of their practice is going to be in that particular category.

Laura A. Francis: And so the majority of their practice is going to be in that particular category. And we just had our first procedures with Granite 9-5 completed in the month of April, and then we're rolling out, and we expect an expanded rollout and launch in June. So I think you're going to start to see the impact in the second quarter, but I think you're really going to start to see that accelerate in the second half of the year.

Speaker Change: And we just had our first procedures with granite 95 completed in the month of April and then were rolling out and we expected it.

Speaker Change: <unk> expanded.

Speaker Change: Roll out and launch in June So I think youre going to start to see the impact in the second quarter, but I think youre going to really start to see that accelerate in the second half of the year. So very excited about the opportunity that's there with with our surgeons and increasing our density there and then.

Laura A. Francis: So very excited about the opportunity that's there with our surgeons and increasing our density there. And then with interventionalists, the opportunity to further increase the number of physicians, active physicians we're working with quarter by quarter. Thank you.

Speaker Change: And with interventional has the opportunity to to further.

Speaker Change: Increase the number of physicians active physicians were working with quarter by quarter.

Speaker Change: Thank you we'll move for our next question.

Operator: One moment for our next question. Our next question comes from the line of Dave Turkaly of Citizen JMP. Your line is now open. Good evening.

Speaker Change: Our next question comes from the line of Dave <unk> of citizen JMP. Your line is now open.

David Louis Turkaly: Laura, maybe one for you just on the competitive front. You know, it seems like there were several sort of fast imitators on the core SI joint, you know, MIS market. And I'm just curious, like, what you are seeing in terms of, you know, Torque or Bedrock, Granite or, you know, some of these other, sort of markets that you're kind of creating or targeting. But I don't know that I've seen the competition follow as quickly. And I'm curious to see, you know, get your thoughts on what's happening there and what you expect moving forward. Yeah, I think Dave, thanks for the question.

Dave: Good evening.

Maybe one for you just from a competitive front.

Dave: It seems like there was.

Dave: Several sort of vast imitators on the core.

Dave: Hi, Julien.

Dave: Now Ms market and I'm just curious like what are you seeing in terms of toric are bedrock granted or.

Dave: Some of these other.

Sort of markets that youre kind of creating you're targeting but I don't remember what I've seen the competition follow as quickly and I'm curious to see get your thoughts on.

Dave: What's happening there and what you expect moving forward.

Laura A. Francis: And what we pride ourselves on is identifying unmet clinical needs and then developing differentiated products around those unmet clinical needs. And so we're identifying new markets in some cases, so where typically a physician is not operating on a patient, performing a procedure on a patient. So SI joint fusion was in that category, and certainly sacral insufficiency fractures, most of those cases are treated conservatively as well.

Ms Market: Yeah, I think Dave Thanks for the question and what what we pride ourselves on is identifying unmet clinical needs and then developing differentiated products around those unmet clinical needs.

Ms Market: And so we are identifying new markets and in some cases so.

Ms Market: Where they're typically a physician is not <unk>.

Ms Market: Operating on a on a patient performing a procedure on a patient so si joint fusion with was in that category and certainly sacral insufficiency fractures. Most of those cases are are treated conservatively as well so.

Laura A. Francis: So our goal is to either identify these unmet clinical needs and develop new solutions around them, or to develop a significantly improved technique or product, or both that addresses an unmet clinical need, and granite really falls more into that category. And so we expect to see competition coming in, and what they're doing is creating widgets, basically, and selling those into the market. And we think that especially when you're in a market where there is an unmet clinical need, having the capabilities that we have is really important.

Ms Market: Our goal is to either identify these unmet clinical needs and develop new solutions around them or to develop a significantly improved.

Ms Market: Technique or product or both.

Ms Market: It addresses an unmet clinical need in granite really falls more into that category and so we expect to see competition coming in what Theyre doing is creating widgets basically and and.

Ms Market: Selling those into the market and we think that especially when youre in a market where there is an unmet clinical need having the capabilities that we have are really important so whether it's differentiated and patent protected products, whether it is the level.

Laura A. Francis: So whether it's a differentiated patent-protected product, whether it's the level one, level two clinical data that we have, reimbursement support, including the NTAP, for example, for granite, and then just taking an educational approach to the market as well, which is really supported by both our professional education group as well as by our sales force. You know, those are the ways that we really are leading in all of these markets.

On level, two clinical data that we have reimbursement support including the end tap for example for granite.

Ms Market: And then just taking an educational approach to the market as well, which really is supported by both our professional education group as well as by our sales force. Those are the ways that we really are leading in all of these markets and.

Ms Market: We are we know that that's appreciated by physicians in these markets and that's what we're going to continue to do.

Laura A. Francis: And we, you know, we know that that's appreciated by physicians in these markets, and that's what we're going to continue to do. So, you know, I think that we're going to keep disrupting the market. We've launched two products so far this year, and we've talked about a third that we're going to launch by the end of the year. You're going to continue to see us innovate and grow and utilize these competitive advantages that we have in order to build these markets, treat these patients, support the physicians, and build the company. Great; thank you for that. And then, you know, I think you even mentioned ASPs. I think you said they were flattish.

Ms Market: So I think that we're going to keep disrupting the market. We've launched two products. So far this year, we've talked about a third that we're going to launch by the end of the year Youre going to continue to see us innovate and grow and utilize these competitive advantages that we have.

Ms Market: In order to build these markets treat these patients support the physicians and build the company.

Speaker Change: Great. Thank you for that and then given.

Speaker Change: You even mentioned Asps I think you said there.

David Louis Turkaly: But, you know, given that differentiation you're talking about and what we've seen from some of your peers, I'm just curious. I mean, is there the opportunity for price increases? I know we've kind of modeled it declining, you know, over time, but... You seem to have some things that are pretty unique, and I'm just curious. As you look, you know, ahead, do you think there's an opportunity for price, or is that something we shouldn't think about? Thank you. Yes. So, Dave, this is Anshul.

Speaker Change: But given the differentiation you're talking about and what we've seen from some of your peers I'm just curious.

Speaker Change: Is there the opportunity for price increases I know, we've kind of modeled it declining you know over time, but.

Speaker Change: You seem to have some things that are pretty.

Speaker Change: And I'm just curious is.

Speaker Change: As you look.

Speaker Change: No.

Speaker Change: Do you think there's an opportunity potentially for price or is that something we shouldnt think about.

Speaker Change: Yes, so Dave this is actual thanks for the question in terms of the ESP.

Anshul Maheshwari: Thanks for the question. In terms of the ASP, you know, when you think about the opportunity that's ahead of us, we've got almost half a million annual target procedures that we're going after. And so there's a huge opportunity. And for us, we're focused on market development. We maintain ASPs that allow us to maintain our attractive gross margins so that we can continue to reinvest in the business from an R&D standpoint. This is something Tony and the team review on a very regular basis to make sure we can manage the ASP alongside driving adoption. We feel good about that.

Actual: When you think about the opportunity. That's ahead of US we've got almost a half a million annual target procedures that we're going after and so there is a huge opportunity so for US we're focused on market development.

Actual: Maintain asps that allow us to maintain our attractive gross margins. So that we can continue to reinvest in the business from an R&D standpoint.

Actual: This is something Tony and team review on a very irregular basis on how to make sure. We can we can manage the ASB alongside driving adoption.

Actual: We feel good about that.

Anshul Maheshwari: You know, our ASP trending generally is based on the procedure mix versus price erosion to some extent. For example, when you're doing a deformity procedure using four implants versus a DGN procedure using three versus SI joint fusion, you're using three. So those things can have an impact.

Actual: ASP trending generally is based on the procedure mix versus a price erosion to some extent.

Actual: When youre doing the deformity procedure, using four implants versus the DJ and procedure using three versus Si joint fusion using three so those things can have an impact but overall from a per implant AFC recent to be pretty disciplined on holding that.

Operator: But overall, from a per implant ASP, we tend to be pretty disciplined on holding that. Thank you. One moment for our next question. Our next question comes from the line of Caitlin Cronin of Kennecourt Genuity. Your line is now open.

Actual: Yes.

Speaker Change: Thank you gentlemen for next question.

Our next question comes from the line of Kevin Cronin of Canaccord Genuity. Your line is now open.

Caitlin Cronin: Hey, thanks for taking the questions and congrats on a great quarter. Just to start with the training, you mentioned a record number of docs with their first training this quarter. How many of those were interventionalists? And just thoughts on, you know, given the uptake and interest of torque and the lateral trajectory for those interventionalists, would you start thinking about training them in 3D as well? Caitlin.

Caitlin Cronin: Well, thanks for taking the questions and congrats on a great quarter.

Caitlin Cronin: I'll start with the training you know you mentioned a record number of docs are with first training this quarter, how many of those were interventional west and just thoughts on.

Caitlin Cronin: And then the uptake and interest of torque in a lateral trajectory for this intervention was would you start thinking about training them in three D as well.

Laura A. Francis: So, yeah, we are excited about the record number of first trainings that we saw. And there certainly was a heightened interest from interventionalists during the quarter, and that definitely was a contributor to the number of first trainings. But we also saw a strong surge in interest and demand for being trained across our procedures. So pelvic fixation, in particular, with the knowledge that Granite 9-5 had been cleared and was imminent, was certainly a driver as well, and then some of the work that we're doing on the trauma side, too.

Yeah. Thanks for the question Caitlin.

Speaker Change: So yeah. We are excited about the record number of first trainings that we saw and there certainly was.

Speaker Change: Heightened interest from interventional lists.

Speaker Change: During the quarter and that definitely was a contributor to the number of first training, but we also saw strong surgeon interest and demand for being trained across our procedures. So pelvic fixation in particular with the knowledge that debt.

Speaker Change: Granted 95 had been cleared and was eminent was certainly a driver as well and then some of the work that we're doing on the trauma side too. So it's really across the board that we actually saw.

Laura A. Francis: So it's really across the board that we actually saw that interest. And then remind me of the second part of the question. Yeah, no, just any thoughts given kind of the uptake of torque in the lateral trajectory for those interventionalists that we're training? Would you think to start training them in 3D?

Speaker Change: That interest and then remind me of the second part of the question.

Speaker Change: Walmart just any thoughts given kind of the uptake of torque in the lateral is actually for those interventional list that we're training them would you think to start training them.

Speaker Change: At some point.

Laura A. Francis: So, we're not. TORC really has been the product of choice for those interventionalists that are interested in the lateral technique. The ICU's 3D procedure falls into a category that I would call more orthopedic in nature, so that's not a product that interventionalists are naturally gravitating to. But it is definitely a product.

Speaker Change: So.

Speaker Change: We're not.

Speaker Change: Torque really has been the product of choice for those interventions lists that are interested in the lateral technique.

The IQ <unk> procedure falls into a category that I would call more orthopedic in nature. So that's not a product the interventional lists are naturally gravitating to it.

Laura A. Francis: It's the gold standard product that's out there. It has the most clinical data around it, and we have some very loyal users of that particular product. But the interventionalists are actually a little bit surprised at the ease of use with TORC and the technique and the outcomes that they're starting to see with this. Some of the early interventionalists that are performing the procedure. So, TORC really, as it relates to the lateral technique, is the product of choice.

Speaker Change: It is definitely a product it's the gold standard product Thats out there. It has the most clinical data around it and we have some some very loyal users of that particular product.

Speaker Change: But the the interventional lists are actually a little bit surprised at the ease of use with torque and the the technique and the outcomes that they are starting to see what the some of the early intervention lists that are performing the procedure. So torque really as it relates to the.

Speaker Change: The lateral technique is the is the product of choice and then Theres certainly our interventional lifts right now that that prefer a bone allograft product and so.

Laura A. Francis: And then there certainly are interventionalists right now that prefer a bone allograft product. And so, you know, that's the product that some of these interventionalists are at least thinking about before they get more comfortable with the lateral technique. But, you know, you mentioned ICU's 3D, and as I said, we have the most data on that product. And when physicians think about SI joint disorders, they really do think about level one clinical evidence and level two clinical evidence.

Speaker Change: That's that's the product that that some of these interventions lists are or at least.

Speaker Change: Thinking about before they get more comfortable with the lateral technique, but I'd.

Speaker Change: You mentioned ICU three D and as I said there is we have the most data on that product and one when physicians think about Si bone. They really do think about level, one clinical evidence and level two clinical evidence and so we have one study called the Sally.

Laura A. Francis: And so, we have one study called the SALI study, which was evaluating ICU's 3D, and we expect to see the five-year SALI study results coming up in the second half of this year. So, we're continuing to work closely with our portfolio of products, whether it's ICU's 3D with SALI, whether it's TORC with the STACY study or the SAFRIN study, and then Granite and the bedrock technique with our SILVIA study and our POLLIS study.

Speaker Change: Study.

Speaker Change: Which was evaluating <unk> and we expect to see the five year Sally study.

<unk> coming up in the second half of this year. So we're continuing to to work closely with our portfolio of products, whether it's <unk> three D with Sally whether its torque with the Stacy study or with the SaaS <unk> study and then.

Speaker Change: Granite and the bedrock technique with our Sylvia study with our Polish study were continuing to really focus on clinical data and being the market leader in this space.

Laura A. Francis: We're continuing to really focus on clinical data and being the market leader in this space. Just jumping off of that really quickly, any updates on the progress on the STACI or the saffron studies? Yeah, I think you'll be seeing a little bit more here later this year.

Speaker Change: Mhm.

Speaker Change: Just jumping off of that really quickly any updates to the progress on the Stacy or the Satcom studies.

Speaker Change: Yes, I think youll be seeing a little bit more.

Speaker Change: Here later this year, so enrollments and Stacy is expected to be completed this summer and the early results are very promising and exciting.

Laura A. Francis: So enrollment in STACI is expected to be completed this summer, and the early results are very promising and exciting. And, you know, the purpose of STACI was to provide post-market information on lateral minimally invasive SI joint fusion procedures performed with torque when performed by interventionalists. So it's going to give us more information on interventional physicians performing lateral SI joint fusion procedures using our torque product. Safran, you can actually expect to see some initial results that will be available later this year.

Speaker Change: So the purpose of Stacy was to provide post market information on lateral minimally invasive Si joint fusion procedures performed with torque one performed by interventional lists so it's going to give us more information on on the interventional physicians performing.

Speaker Change: Lateral.

Speaker Change: Si joint fusion procedures, using our torque product.

Speaker Change: <unk> you are going to actually expect to see some initial results that will be available later this year, so that will be in line with.

Laura A. Francis: So that'll be in line with the launch of our new trauma product as well. You'll see some clinical data coming through as well as a new product as well. So those are a couple of things in addition to SALE that you can expect to see. Thanks so much.

The launch of our new trauma product as well, you'll you'll see some clinical data coming through as well as a new product as well. So those are those are a couple of things. In addition to Sally you can expect to see.

Speaker Change: Thanks, so much.

Operator: Thank you one moment for next questions. Our next question comes from the line of David Saxon of Needham and Company. Your line is now open. Oh, great. Good afternoon, Laura and Anshul. Thanks for taking my questions and congrats on the quarter. I wanted to follow up on a previous question around pricing. This is probably for Anshul.

Speaker Change: Thank you Juan for next question.

Speaker Change: Okay.

David Joshua Saxon: So, you know, pricing is tracking better than I think it's the low to mid single-digit decline that's assumed in guidance. So is there anything that would cause pricing to get worse throughout the year? I don't know if it's the 9-5 launch, or is that more of an area of conservatism as we think about the guidance? Yeah, Dave. Thank you for the question. So when you think about the low end of the guidance, some of that conservatism on ASPs is reflected there.

Speaker Change: Our next question comes from the line of David Saxon of Needham <unk> Company. Your line is now open.

David Joshua Saxon: Oh, great. Good afternoon learn onshore thanks for taking my questions and congrats on the quarter I wanted to follow up on a previous question around pricing.

David Joshua Saxon: Probably for onshore.

Pricing is tracking better than I think it's a low to mid single digit decline that's assumed in guidance. So is there anything that would cause pricing to get worse throughout the year I don't know if its the the 95 launch or is that more of an area of conservatism as we think about the guidance.

Speaker Change: Yeah, Dave. Thank you for the question. So when you think about the low end of the guide and some of that conservatism on Asps reflected there we haven't really changed our ESP expectations for the rest of again the guidance now in terms of what could have an impact on the ASP youre right with the 95 launch even though there is no duty.

David Joshua Saxon: You know, we haven't really changed our ASP expectations for the rest of the year in the guidance. Now, in terms of what could have an impact on the ASP, you're right with the 9-5 launch, even though there is no change in price per implant, the potential for the shorter construct procedures using two implants versus the deformity procedure using four, you know, could have an impact, but we think there's potential for upside on the ASP front as we progress through the year.

Speaker Change: There is no change in price for implant the potential for the shorter construct procedures using two implants versus the deformity procedure using floor.

Speaker Change: Could have an impact, but we think there's potential for upside on the ASB front as we progress through the year, but again, it's the first quarter. It's early in the year. So we think it's just prudent to hold some of that conservatism.

David Joshua Saxon: But again, it's the first quarter, it's early in the year, so we think it's just prudent to maintain some of that conservatism to see how it unfolds in the second quarter and the third quarter. Okay, great.

Speaker Change: To see how it unfolds into in the second quarter in the third quarter.

Speaker Change: Yeah.

Anshul Maheshwari: And then maybe for Laura, so the Granite NTAP, I think that runs out next October. So how should we think about that as it relates to Granite procedure volumes? How impactful has that NTAP been to Granite adoption that you've seen over the last couple of years? And is there any way you can do workarounds like Granite coding to preserve, you know, this premium facility fee or even a pro fee? Thanks so much.

Speaker Change: Great and then maybe for Lora.

Speaker Change: Granite and tap I think that runs out next October so how should we think about that as it relates to granite volume procedure volumes, how impactful has that been tapped in to granite adoption that you've seen over the last couple of years and is there any way you can do work around them like granite coding to preserve.

Speaker Change: This premium facility fee or even a proceed thanks so much.

Laura A. Francis: Yeah, so the Granite NTAP, we have approximately 18 more months left on the Granite NTAP. It'll go through October 1st, 2025. And what we've been doing is looking at the utilization of the NTAP with Medicare, seeing strong utilization of that NTAP. And so what that's going to help us to do is quantify the value of Granite and pelvic fixation in these particular cases. And so right now, we're looking at a number of different ways in order to make sure that the incremental payment continues after the NTAP is complete.

Speaker Change: Yeah. So the.

Speaker Change: Granted and tap we have approximately 18 more months left on the granite and tap it'll go through October <unk> of 2025 and.

Speaker Change: What we've been doing is looking at the utilization of the and tap with.

Speaker Change: Medicare same strong utilization.

Speaker Change: On on that and tap and and.

Speaker Change: And so what that's going to help us to do is to quantify the value of of granite and pelvic fixation. In these particular cases and so right now we're looking at a number of different ways in order to make sure that the incremental payment continues after the end tapas.

Laura A. Francis: So it could be with a new code, for example, or it could potentially be with an increase in the existing code or pointing to a higher value code. Those are all three different options that we have right now. But we're midway through this.

Speaker Change: Complete so it could be with the new code for example, or it could potentially be with an increase in the existing code or pointing to a higher value code. Those are all those are all three different options that we have right now or midway through this we do think that reimbursement is important we have we have.

Laura A. Francis: We do think that reimbursement is important. We have always focused as a company on ensuring that we have covered lives across the United States. Us building the SI joint fusion market When I started in 2015, there was no coverage. And now we have complete coverage. And SI-Bone and our clinical data were a very big part of the work in order to build that reimbursement for SI joint fusion. So I see Granite and pelvic fixation in a similar way to that. And we expect to continue to focus on using our clinical data and as well as health economic data in order to support incremental reimbursement for pelvic fixation with granite. Great, thanks so much.

Speaker Change: Louise focused as a company on ensuring that we have.

Covered lives across the United States, Thus us building the Si joint fusion market. When I started in 2015, there was no coverage and now we have complete coverage in an Si bone and our clinical data was was a very big part of of the work in order to to build that.

Speaker Change: <unk> four for Si joint fusion, <unk> granite and pelvic fixation and in a similar way to that end.

And we expect to continue to focus on using our clinical data and as well as the health economic data in order to support incremental.

Reimbursement for pelvic fixation with granite.

Speaker Change: Okay.

Thanks, so much.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Sam Brodovsky of Truce Security. Your line is now open. And again, congratulations on that. Good quarter, especially the solid EBITDA result. Ask a quick one to start on gross margin, a little bit above the High End of the Guide for this year. How should we think about that progressing through? Yeah, hey, Sam. Thanks for that question.

Speaker Change: Thank you gentlemen for next question.

Speaker Change: Our next question comes from the line of Sam <unk> of <unk> Securities. Your line is now open.

Sam: Hey, Thanks for squeezing me in and again, congrats on a good quarter, especially the solid EBITDA results I'll just.

Sam: Ask a quick one to start on gross margin a little bit above.

Sam: The high end of the guide for this year, just how should we think about that progressing through the year.

Samuel E. Brodovsky: On the gross margin side, it is still early in the year. And, you know, we're really pleased with how the quarter played out in terms of coming on the high end of the gross margin range. But, you know, again, we're just holding on to our guidance for 78% gross margin. At this point, the key reason being we are going to put more surgical capacity out there, especially as we get into the second half of the year. And that might have a timing impact on gross margin.

Speaker Change: Yeah, Hey, Sam Thanks for the question.

Speaker Change: On the gross margin side. It is still early in the year and we're really pleased with how the quarter played out in terms of coming on so the high end of the gross margin range, but.

Speaker Change: Again, we're just holding onto our guidance for 78% gross margin.

Speaker Change: At this point.

Speaker Change: The key reason being we are going to put more surgical capacity out there, especially as we get into the second half of the year and that might have a timing impact on gross margins. So we want to see how it plays out again in the first half of the year before.

Anshul Maheshwari: So we want to see how it plays out again in the first half of the year before we make any changes to the guidance there. And then I'll just ask a bit of a broader one, thinking more long-term, but the two-to-one ratio of revenue growth to operating profit growth, is that something we should think about happening this year? Is that a consistent operation? hold on to for a while.

Speaker Change: We make any changes to the guidance there.

Speaker Change: And then I'll just ask a bit of a broader one thinking more long term, but the.

Speaker Change: Two to one ratio Rev growth to Opex growth is that something we should think about how this year is that is that the consistent operating model. We can think of the company being able to hold onto for a for a while here. Thanks for taking the question.

Anshul Maheshwari: You know, Sam, thanks a lot. I mean, look, you know, we haven't provided long-term guidance in terms of how OPEX leverage would work out. You know, our view is that our top-line growth is going to remain strong with all the tailwinds that we have in 2024. Plus, like we've talked about, we've got a pretty significant investment in R&D, so we expect new product launches to come out. So our focus on leverage is going to be more driven by how do we drive more product to the call point? How do we drive more density or more procedures per physician?

Speaker Change: Thanks, a lot I mean look we haven't provided long term guidance in terms of how opex leverage would work out.

Speaker Change: Our view is our topline growth is going to remain strong with all of the tailwind that we have in 2024, plus like we've talked about we've got a pretty significant investment in R&D. So we expect new product launches to come out. So our focus on leverage is going to be more driven by how do we drive more product to the Cove point, how do we drive more dense.

Speaker Change: City or more procedures per physician and that should translate into salesforce, leveraging like Laura said earlier.

Operator: And that should translate into Salesforce leverage. And like Laura said earlier, our next milestone is sort of getting to that 2 million, but we've got reps that do more than 2 million today with additional ancillary support, whether it's junior reps or coverage agents. So you know, we think leverage will continue. We feel really good about that. You know, we'll just stay with what we've provided for the year as sort of that two-term leverage, but we don't think it's the end of the leverage.

Speaker Change: Our next milestone is sort of getting to that $2 million, but we've got reps that do more than $2 million today with additional ancillary support whether it's junior reps or or coverage agents. So we think leverage will continue we feel really good about that.

Speaker Change: We'll just stay with what we've provided for the year and sort of that two times leverage, but we don't think it's the end of the leverage we think it will continue at a pretty healthy clip going forward.

Speaker Change: Thank you ma'am for next question.

Operator: Thank you. We'll move on to our next question. Again, as a reminder, to ask a question, you'll need to press star 1-1 on your telephone. Our next question comes from the line of Ross Osborn of Cantor Fitzgerald. Your line is now open.

Speaker Change: Again as a reminder to ask a question you will need to press star one on your telephone.

Speaker Change: Our next question comes from the line of Ross Hawthorne of Cantor Fitzgerald. Your line is now open.

Ross Everett Osborn: Hey guys, congrats on the result. Just one question: with regard to the smaller diameter granite launch, would you discuss feedback or level of early adoption within the pediatric population? Yeah, we're actually excited about the expanded indications for granite 9-5, including pediatric deformity as well as in the S1 pedicle as well. We have gotten inquiries from pediatric deformity surgeons that would actually like to use a smaller granite implant with their patients, and we think that granite 9-5 is going to be a potential solution for them.

Ross Everett Osborn: Hey, guys. Congrats on the results and thanks for squeezing me in.

Ross Everett Osborn: Just one with regard to the smaller diameter gun at large would you just supposed feedback or level of early adoption within the pediatric population. Thank you.

Ross Everett Osborn: Yeah.

Ross Everett Osborn: We're actually excited about the the expanded.

Speaker Change: Indications for granted 95, so and including pediatric deformity as well as in the.

Speaker Change: The Athlon Pat.

Speaker Change: <unk> coal as well so.

Speaker Change: We have gotten inquiries from pediatric deformity surgeons that would actually like to.

Speaker Change: Use a smaller granite implant with their patients and we think that.

Speaker Change: That grant at 95 is going to be a potential solution for them. So we're happy to be able to address that particular need for for those surgeons and for those patients.

Laura A. Francis: So, we're happy to be able to address that particular need for those surgeons and for those patients. But, you know, the S1 pedicle opportunity is quite significant for us, too. That's a significant part of the market that we're not addressing at this point in time and with our previous product. And so, some of these newer surgeons that we talked about in our prepared remarks, they're starting to use the product already for that purpose.

Speaker Change: But the F. One pedicle opportunity is quite significant for us to that's a significant part of the market that were not.

Speaker Change: Addressing at this point in time and with our previous product and so some of these newer surgeons that that we talked about in our prepared remarks.

They are starting to use the product already for that purpose.

Laura A. Francis: And then that's the second area of focus. And then the third is that we did get some feedback from surgeons that just said that the 10-5 or 11-5 product was just larger than what they wanted to use, or they felt uncomfortable using stacked implants or two implants on both sides, which provides both pelvic fixation and fusion. And so, the smaller diameter implant also provides an opportunity for surgeons who are currently using two implants instead to use four implants.

Speaker Change: And then that's the second area of focus and then the third is that we did get some feedback from surgeons that just said that the 10 five or 11 five product was just larger than what they wanted to use or they felt uncomfortable.

Speaker Change: Using stacked implants or two implants on both sides, which provides both pelvic fixation and fusion and so the smaller diameter. Implant also provides an opportunity for surgeons, who are currently using two implants instead to use or implants, so theres a lot of opportunity.

Laura A. Francis: So, there's a lot of opportunity that's here with the granite 9-5 product, whether it's pediatric deformity, as you mentioned, whether it's the S1 trajectory that I talked about, or whether it's surgeons that previously felt that they needed a smaller implant. Or, finally, those that have said, I'd like to use four, but I want something that's a little bit smaller.

Speaker Change: It's here with the granite 95 product, whether it's pediatric deformity as you mentioned, whether it's the X one trajectory that I talked about or whether it's surgeons that previously felt that they needed a smaller implant are finally, those that that have said I'd.

Speaker Change: Like to use for but I want something that's a little bit smaller so great opportunity for us going forward just getting started and just had those first few cases done in April going to see some acceleration into may and June and really excited about what we can do in the second half of the year.

Operator: So, great opportunity for us going forward, just getting started, just had those first few cases done in April. We're going to see some acceleration into May and June, and I'm really excited about what we can do in the second half of the year. Thank you. I'm not asking any further questions at this time.

Speaker Change: Thank you and I'm showing no further questions at this time I would now like.

Laura A. Francis: I would now like to turn it over to Laura for closing comments. I just wanted to say thank you for your participation in today's call, and we look forward to seeing those of you that are going to be at the Bank of America Healthcare Conference. We will see you there.

Speaker Change: To turn it over to Laura for closing comments.

Laura A. Francis: I just wanted to say thank you for your participation in today's call and we look forward to seeing you. Those of you that are going to be at the bank of America Healthcare Conference. We will see you there. Thank you bye bye.

Operator: Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Copyright © 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good afternoon, and welcome to SI-Bone. At this time, all participants are in listen-only mode.

Laura A. Francis: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Laura A. Francis:

Laura A. Francis: Okay.

Laura A. Francis: [music].

Laura A. Francis: Hum.

Laura A. Francis: Yeah.

Laura A. Francis: Yeah.

Laura A. Francis: Hmm.

Laura A. Francis:

Laura A. Francis: [music].

Laura A. Francis: Yeah.

Okay.

Laura A. Francis: [music].

Laura A. Francis: Hum.

Laura A. Francis: [music].

Laura A. Francis: Yes.

Laura A. Francis: [music].

Laura A. Francis: Okay.

Laura A. Francis: Okay.

Laura A. Francis: Yeah.

Laura A. Francis: [music].

Laura A. Francis: [music].

Saqib Iqbal: We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for Now I'd like to turn the call over to Saqib Iqbal, Senior Director of Investment Relations at SI-Bone, for a few introductory comments. Thank you for participating in today's call. Joining me are Laura Francis, Chief Executive Officer, and Anshul Maheshwari, Chief Financial Officer. Earlier today, SI-Bone released financial results for the quarter ended March 31st, 2024.

Laura A. Francis: At this time, all participants are in listen only mode.

Laura A. Francis: We'll be facilitating a question answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes.

Now I'd like to turn the call over to Katie <unk> Senior director of Investor Relations at Si bone for a few introductory comments.

Katie: Thank you for participating in today's call. Joining me are Laura Francis Chief Executive Officer, and Anshul Maheshwari Chief Financial Officer.

Katie: Earlier today Si bone released financial results for the quarter ended March 31 2024.

Katie: A copy of the press release is available on the company's website.

Saqib Iqbal: A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that are 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. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking.

Katie: Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.

Katie: Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.

Saqib Iqbal: These forward-looking statements are based on the company's current expectations and inherently involve risks and uncertainty. These risks include SI-Bone's ability to introduce and commercialize new products and indications; SI-Bone's ability to maintain favorable reimbursement for its products and procedures; changes impair requirements for authorization of procedures involving SI-Bone's products.

Katie: These forward looking statements are based on the company's current expectations and inherently involve risks and uncertainties.

Katie: These risks include <unk> ability to introduce and commercialize new products and indications.

<unk> ability to maintain favorable reimbursement for its products and procedures.

<unk> impaired requirements for authorization of procedures involving <unk> products, the impact of potential economic weakness on the ability and desire of patients to undergo elective procedures.

Saqib Iqbal: The Impact of Potential Economic Weakness on the Ability and Desire of Patients to Undergo Elective Procedures, SI-Bone's ability to manage risks to its supply chain, and the impact of Future Capital Requirements Driven by New Product Introductions, and risks to the continued renormalization of the healthcare operating environment. Other forward-looking statements include our examination of operating trends and our future financial expectations, such as expectations for physician training and adoption, active physicians, new products, and clinical trial enrollment and are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.

Katie: <unk> ability to manage risks to it supply chain the impact of future capital requirements, driven by new product introductions and risks to the continued renormalization of the healthcare operating environment.

Katie: Other forward looking statements include our examination of operating trends and our future financial expectations, such as expectations for physician training and adoption active physicians, new product and clinical trial enrollment and are based upon our current estimates and various assumptions.

Katie: 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.

Katie: Accordingly, you should not place undue reliance on these statements.

Saqib Iqbal: For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our most recent Form 10-K filed with the Securities and Exchange Commission. During this call, management may also discuss certain non-GAAP measures, including the company's adjusted EBITDA results. For a reconciliation of these non-GAAP measures to GAAP accounting, please see the company's full earnings release issued earlier today. SI-Bone disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 6, 2020. And with that, we're done for the day.

Katie: For a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our most recent Form 10-K filed with the Securities and Exchange Commission.

Katie: During this call management May also discuss certain non-GAAP measures, including the company's adjusted EBITDA results for.

Katie: A reconciliation of these non-GAAP measures to GAAP accounting, please see the company's full earnings release issued earlier today.

Katie: <unk> disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.

Katie: Chris call contains time sensitive information and is accurate only as of the live broadcast today fixed.

But that.

Katie: Sure.

Laura A. Francis: Thanks, Saqib. Good afternoon, and thank you for joining us. I'm pleased with our solid first-quarter results, driven by continued robust procedure demand in the U.S. across all our target markets. We delivered $37.9 million in worldwide revenue, representing growth of 16% over the prior year period. I'm particularly impressed with our performance in the first quarter when compared to typical industry seasonality trends and our stellar performance in the prior year. Demand momentum was also evident in our impressive physician engagement.

Chris: Thank you Ken good afternoon, and thank you for joining us.

Chris: Please with our solid first quarter results driven by continued robust procedure demand in the U S across all our target markets.

Speaker Change: <unk> delivered $37 $9 million in worldwide revenue representing growth of 16% over the prior year period.

I'm, particularly impressed with our performance in the first quarter when you compare to typical industry seasonality trends.

Speaker Change: And our stellar performance in the prior year.

Speaker Change: The demand momentum was also evident in our impressive physician engagement trends.

Laura A. Francis: In the first quarter, we maintained a near-record number of active U.S. physicians and completed a record-breaking number of new physician As we look at the rest of 2024, we remain enthusiastic about the revenue growth acceleration fueled by three key tailwinds. First, continued growth in our physician base driven by the record level of engagement we're seeing, building on the strong success of IQ3D and expanding adoption of torque across all our. And third, the exciting opportunity to leverage the expanded family of granted employees with our active physician base to accelerate adoption within pelvic fixation and increase procedures per physician. In the first quarter, we received 510K clearance from the FDA for our 9.5 millimeter diameter ICS bedrock granite, with market-expanding indications for placement in the S1 pedicle and pediatric deformities.

Speaker Change: In the first quarter, we maintained a near record number of active U S physicians and completed a record breaking number of new physician training.

Speaker Change: As we look at the rest of 2024, we remain enthusiastic about the revenue growth acceleration fueled by three key tailwind.

Speaker Change: First the continued growth in our physician base driven by the record level of engagement we're seeing.

Speaker Change: Second building on a strong success of IQ <unk> and expanding adoption of torque across all our call points.

Speaker Change: And third the exciting opportunity to leverage the expanded family of granite implants, with our active physician base to accelerate adoption within pelvic fixation and increased procedures per physician.

Speaker Change: In the first quarter, we received five 10-K clearance from the FDA for our $9 five millimeter diameter ICU bed rock granite implant with market expanding indications for placement in the S. One pedicle and pediatric deformity.

Laura A. Francis: These are new but adjacent market opportunities for us. We launched this implant at the end of April with Dr. C.J. Kleck, a key opinion leader at the University of Colorado, Dr. Ali Mezawala, a surgeon who guided the development of our granite technology, and Dr. Ronald Lehman, a nationally recognized expert in the treatment of adult and pediatric spine conditions at Columbia University, utilizing both open and closed head options, performing the first cases in the country, given the high level of enthusiasm and anticipation in the surgeon community and among our commercial organization from Granite 9-5, as well as the 130,000 annual target procedure.

Speaker Change: These are new but adjacent market opportunities for us.

Speaker Change: We launched this implant at the end of April with Dr. C. J Clark a key opinion leader at the University of Colorado, Dr. Ali muscle Wala surgeon, who guided the development of our granite technology and Dr. Ronald Lehman a nationally recognized expert in the treatment of adult and pediatric spine conditions at Columbia University.

Speaker Change: Utilizing both open and closed had option performing the first cases in the country.

Speaker Change: Given the high level of enthusiasm and anticipation in the surgeon community and among our commercial organization from granted 95.

Speaker Change: As well as the 130000 annual target procedures, we're confident that this line extension will augment granite the pace of adoption.

Laura A. Francis: We're confident that this line extension will augment the grant at the pace of adoption. The addition of Granite 9-5 is the continuation of our strategy, which we laid out in 2021 to build a broad portfolio of innovative products to address unmet clinical needs and accelerate our growth. In the last three years, we successfully launched iFuse Torque in 2021 and Granite in 2022.

Speaker Change: The addition of granite line five is the continuation of our strategy, which we laid out in 2021 to build a broad portfolio of innovative products to address unmet clinical needs and accelerate our growth.

Speaker Change: And the last three years, we successfully launched ICU torque in 2021.

Granted in 2022.

Laura A. Francis: Closed-Head Granite Line Extension in 2023, and now Intra and Granite 9-5 in 2024. We've leveraged this industry-leading franchise of highly differentiated solutions to diversify our revenue. Vanderkulp, create new markets in pelvic fixation and pelvic trauma.

Speaker Change: Ted Granite line extension in 2023.

Speaker Change: And now intra and granted 95 in 2024.

We've leveraged this industry, leading franchise of highly differentiated solutions to diversify our revenue streams and expand our call points and create new markets and pelvic fixation and pelvic trauma.

Laura A. Francis: The impact of this strategy is reflected in our strong results since 2021, as we delivered 24% cumulative annual revenue growth and doubled our active position. Before I get into the details of our strategic priority, I want to take this opportunity to recognize a major milestone in the company. We recently celebrated the completion of 100,000 procedures using our product. We take pride in our market leadership and in execution, which includes focusing on education, market access, and awareness of sacral pelvic pain. We feel honored to work with so many impressive physicians who help give patients their lives back every day.

Speaker Change: The impact of this strategy is reflected in our strong results since 2021.

Speaker Change: As we delivered 24% cumulative annual revenue growth and doubled our active physician base.

Speaker Change: Before I get into the details of our strategic priorities.

Speaker Change: Wanted to take this opportunity to recognize a major milestone in the Companys history.

We recently celebrated the completion of 100000 procedures using our products.

Speaker Change: We take pride in our market leadership, and an execution, which includes focusing on education market access and awareness of CCAR pelvic condition we.

Speaker Change: We feel honored to work with so many impressive physicians, who help get patients their life back every day.

Laura A. Francis: Now, let me provide an update on our key initiatives as we look to extend our leadership position, drive strong long-term growth, and create shareholder value, starting with sales infrastructure. Our sales, marketing, and professional education teams provide us with a tremendous competitive advantage. We're impressed with the continued effectiveness of our sales and marketing team, known for their industry-leading expertise and extensive experience across our target market. We've expanded operating leverage and sales and marketing infrastructure by creating hybrid, select sales agents, while consistently delivering unparalleled support and education for a physician. This is evident in our P&L, with three-year cumulative growth in revenue of 24%, while sales and marketing expense grew 14% during that period. We ended the first quarter with 85 quota-carrying U.S.

Speaker Change: Now, let me provide an update on our key initiatives as we look to extend our leadership position and drive strong long term growth and create shareholder value.

Speaker Change: Starting with sales infrastructure.

Speaker Change: Our sales marketing and professional education teams provide us with a tremendous competitive advantage.

We're impressed with the continued effectiveness of our sales and commercial teams known for their industry, leading expertise and extensive experience across our target markets.

Speaker Change: We've expanded operating leverage in sales and marketing infrastructure by creating hybrid models with select sales agents, while consistently delivering unparalleled support and education for physicians.

Speaker Change: As is evident in our P&L with three year cumulative growth in revenue of 24%, while sales and marketing expense grew 14% during that period.

Speaker Change: We ended the first quarter with 85 quota carrying U S territory managers, we augment our territory manager bandwidth with clinical support specialists.

Laura A. Francis: Territory managers. We augment our territory manager bandwidth. Clinical Support Specialists, and third-party sales agents for case coverage. The expanded portfolio, as well as the hybrid commercial models, resulted in trailing 12-month revenue per territory at the end of the first quarter of 2024 of approximately $1.6 million, reflecting 26% growth compared to the trailing 12-month period end of the first quarter of 2023. We expect the annual revenue per territory to steadily grow toward $2 million.

Speaker Change: Third party sales agents for case coverage.

Speaker Change: The expanded portfolio as well as the hybrid commercial model resulted in trailing 12 month revenue per territory at the end of the first quarter of 2024 of approximately $1 6 million.

Speaker Change: Reflecting 26% growth compared to the trailing 12 month period ended the first quarter of 2023.

Speaker Change: We expect the annual revenue per territory to steadily grow towards $2 million.

Laura A. Francis: We plan to methodically add territories over the next few years to ensure we maximize the potential of our growing portfolio and facilitate deeper engagement with our physicians. Moving on to physician engagement, we exited the first quarter with over 1,100 active physicians, an increase of over 150 active physicians in the quarter compared to the prior year period. 16% growth in U.S. active physicians over the first quarter of 2023. 13th consecutive quarter of double-digit year-over-year growth

Speaker Change: We plan to methodically add territories over the next few years to ensure we maximize the potential of our growing portfolio and facilitate deeper engagement with our position.

Speaker Change: Moving on to physician engagement, we exited in the first quarter with over 100 active physicians and increase of over 150 active physicians in the quarter compared to the prior year period.

Speaker Change: The 16% growth in U S active physicians over the first quarter of 2023 was the 13th consecutive quarter of double digit year over year growth.

Laura A. Francis: With nearly 12,000 potential target physicians, we remain confident in our ability to grow our active physician base. Our sales force is also leveraging our growing portfolio of proprietary products to drive deeper physician engagement. In the first quarter of 2024, 15% of our active physicians performed more than one procedure type.

Speaker Change: With nearly 12000 potential target physicians, we remain confident in our ability to grow our active physician base.

Speaker Change: Our sales force is also leveraging our growing portfolio of proprietary products to drive deeper physician engagement.

Speaker Change: In the first quarter of 2024, 15% of our active physicians performed more than one procedure type.

Laura A. Francis: With our Granite 9-5 implant targeting degenerative spine procedures, we have an exciting opportunity to increase revenue per physician over. Since 2018, another important initiative to grow our active physician base has been our academic training program. We've since trained nearly 1,600 residents and fellows, including over 250 in the current 2023-2024 academic year.

Speaker Change: Our grant at 95 implants targeting degenerative spine procedures, which account for a significant portion of the procedure volumes for active physicians, we have an exciting opportunity to increase revenue per physician over time.

Speaker Change: Since 2018, another important initiative to grow our active physician base has been our academic training programs.

Speaker Change: We've since trained nearly 1600 residents and fellows, including over 250, and the current 2023 2020 for academic year.

Laura A. Francis: We're excited to see strong adoption trends from these physicians in the quarters and years that follow their education. In the first quarter of 2024, strong adoption resulted in revenue from this group going 50% compared to the prior year period. Turning to products and solutions,

Speaker Change: Excited to see strong adoption trends from these physicians in the quarters and years that follow their education.

Speaker Change: In the first quarter of 2024 strong adoption resulted in revenues from this group going 50% compared to the prior year period.

Speaker Change: Turning to products and solutions, we have a demonstrated track record of building innovative and proprietary products and surgical techniques to address unmet clinical needs and improve patient outcome.

Laura A. Francis: We have a demonstrated track record of building innovative and proprietary products and surgical techniques to address unmet clinical needs and improve patient outcomes. The sustained procedure volume growth we've experienced in the U.S. substantiates the value of our innovation. We have an active product pipeline with over 10% of our revenue being reinvested in the development of new products and clinical evidence. We expect to launch differentiated products in the coming year to further extend our portfolio leadership and accelerate revenue growth. With applications across SI joint dysfunction, pelvic fixation, and pelvic trauma, iFUSE 3D and iFUSE Torque give physicians access to industry-leading solutions when performing sacral pelvic procedures.

Speaker Change: The sustained procedure volume growth, we've experienced in the U S substantiates the value of our innovation.

We have an active product pipeline with over 10% of our revenue being reinvested in development of new products and clinical evidence.

Speaker Change: We expect to launch differentiated products in the coming years to further extend our portfolio leadership and accelerate revenue growth.

Speaker Change: With applications across Si joint dysfunction, pelvic fixation and pelvic trauma ICU three D and <unk> tour give physicians access to industry, leading solutions, one performing saker pelvic procedures.

Laura A. Francis: Over the last three years, iQ's torque has built on the success of iQ3D and been a key contributor to demand acceleration, as well as strong active physician engagement across all our target markets, as we engage select interventional pain physicians, leading with iFuse Torque and also training them on iFuse Intra, our allograft solution. The interventional pain physicians have expressed their excitement about our comprehensive portfolio, as well as better surgical technique and intraoperative support that increase the likelihood of the best patient outcome.

Speaker Change: Over the last three years Ice's torque is built on the success of IQ <unk> and then a key contributor to demand acceleration as well as strong active physician engagement across all our target markets.

Speaker Change: As we engage select interventional pain physicians.

Speaker Change: We're leading with Icf's torque and also training them on IP intra our allograft solution.

Speaker Change: The interventional pain physicians have expressed their excitement about our comprehensive portfolio as well as better surgical technique and ensure operative support to increase the likelihood of the best patient outcomes.

Laura A. Francis: Adoption trends in the first quarter suggest that iFuse Torque has been the preferred implant for active interventional pain physicians. Based on this experience, as well as the guidance of our Interventional Advisory Board, we're encouraged by the growing confidence of interventional pain physicians to adopt IT's TORC after being treated with the lateral transfixing technique when performing an SI joint fusion procedure, which is reimbursed under CPT code 27276.

Speaker Change: Adoption trends in the first quarter suggests that Ip's torque has been the preferred implant for active interventional pain physicians.

Speaker Change: Based on this experience as well as the guidance of our Interventional advisory board or <unk>.

Speaker Change: <unk> by the growing confidence of interventional pain physicians to adopt ip's torque after being treated in the lateral transfixing technique when performing an Si joint fusion procedure, which is reimbursed under CPT code $277 million.

Laura A. Francis: We're encouraged by the pace of ICU's TORC adoption for treating pelvic trauma. Toward the end of 2024, we'll launch a complementary pelvic trauma product. With over 120,000 sacral insufficiency fractures a year and a one-year mortality rate of up to 25%, for the patients treated with bed rest, currently the most common approach, the trauma market will be a long-term growth driver. Within pelvic fixation, IQ's bedrock granite, our breakthrough device, continues to be a game-changing addition to our portfolio.

Speaker Change: We're encouraged by the pace of ICU torque adoption for treating pelvic trauma patients.

Speaker Change: The end of 2024, we will launch a complementary pelvic trauma products with over 120, <unk> sacral insufficiency fractures, a year and a one year mortality rate of up to 25% for the patient is treated with bed rest.

Speaker Change: Currently the most common approach the trauma market will be a long term growth driver for us.

Speaker Change: Within pelvic fixation ice's bedrock granite our breakthrough device continues to be a game changing addition to our portfolio.

Laura A. Francis: We're just scratching the surface in terms of market penetration and adoption of granite, and we're pleased with the increasing demand for the product. As we target 30,000 annual adult deformity procedures, we believe that granite will become the standard of care for fixation and fusion of the SIG, providing a strong foundation at the base of the long Since 2022, over 40% of our granite case volume has been in shorter 2-4 level lumbar fusion, Cronin's adoption of the larger diameter granite in these shorter level fusion procedures illustrates the increasing interest among the surgeon community to include pelvic fixation in high risk patients undergoing these procedures.

Speaker Change: Just scratching the surface in terms of market penetration and adoption of granite and we're pleased with the increasing demand for the product.

Speaker Change: As we target 30000 annual adult deformity procedures, we believe the granite will become the standard of care for fixation infusion of ESI Julien.

Speaker Change: Adding a strong foundation at the base of the long construct.

Speaker Change: Since 2020 to over 40% of our granite case volume has been in shorter two to four level lumbar fusion procedures typically used to treat degenerative spine condition.

Speaker Change: Adoption of the larger diameter granite in the shorter level fusion procedure illustrates the increasing interest among the surgeon community to include pelvic fixation and high risk patients undergoing these procedures.

Laura A. Francis: As I highlighted earlier, in April, we initiated our launch of the Granite 9.5 implant. We believe that Granite 9-5, including shorter lengths appropriate for placement in the F1 pedicle, will provide a best-in-class offering for the approximately 100,000 annual fusions to the SACI, as well as engage deformity surgeons who have expressed an additional preference for smaller diameter implants. Before I hand the call over to Anshul, I want to congratulate our employees for helping nearly 100,000 patients get their lives back on track.

Speaker Change: As I highlighted earlier in April we initiated our launch of the granite 95 implant and are planning an expanded rollout in June.

Speaker Change: We believe that granite 95, including shorter lengths appropriate replacement in the S. One pedicle will provide a best in class offering for the approximately 100000 annual fusions to the sacrum as well as engage deformity surgeons, who have expressed an additional preference for smaller diameter implant.

Speaker Change: Before I hand, the call over to onshore I want to congratulate our employees for helping nearly 100000 patients get their lives back.

Laura A. Francis: To our world-class team, your grit and relentless commitment enables us to develop breakthrough products backed by high-quality clinical evidence, educate payers and physicians, and ensure that the nearly half a million annual target patients have access to the best-in-class. Thank you for all that you do.

Onshore: So our world class team Youre grit and relentless commitment enables us to develop breakthrough products backed by high quality clinical evidence educate payers and physicians and ensure that the nearly half a million dollars annual target patients have access to best in class solutions.

Speaker Change: Thank you for all that you do.

Anshul Maheshwari: With that, I'll hand the call over to Anshul to discuss our financial performance. Thanks Laura. Good afternoon, everyone.

Speaker Change: With that I'll hand, the call over to onshore to discuss our financial performance.

Anshul Maheshwari: My comments today will be focused on first quarter revenue growth, gross margin trends, productivity, and liquidity. Additionally, all the comparisons provided will be versus the same period in the prior year, unless noted otherwise, starting with revenue growth. Our first quarter worldwide revenue was $37.9 million, representing growth of 16.9%. U.S. revenue also grew 16% to $35.4 million due to increasing U.S. procedure volumes, with our procedure ASP in the first quarter being relatively low. International revenue in the first quarter was $2.4 million, representing 8% growth.

Onshore: Thanks, Laura Good afternoon, everyone. My comments today will be focused on first quarter revenue growth gross margin trend productivity and liquidity.

Onshore: Additionally, all the comparisons provided will be <unk> as the same period in the prior year unless noted otherwise.

Onshore: Starting with revenue growth.

Onshore: First quarter worldwide revenue was $37 9 million representing.

Onshore: Representing growth of 16%.

Onshore: U S revenue also grew 16% to $35 4 million.

Onshore: Due to increasing U S procedure volumes with a procedure PSP in the first quarter being relatively flat.

Onshore: International revenue in the first quarter was $2 $4 million.

Onshore: Representing 8% growth.

Anshul Maheshwari: Moving to Gross Margin and Operating Level. Our gross margin for the first quarter was 79%. Gross margin reflects the impact of product and procedure mix, higher freight driven by revenue growth, as well as depreciation from deployment of additional instruments. Operating expenses were $41.9 million in the quarter, representing 10% growth.

Onshore: Moving to gross margin and operating leverage.

Onshore: Margins for the first quarter was 79% the gross margin reflects the impact of product and procedure mix.

Onshore: Are you afraid driven by revenue growth as well as depreciation from deployment of additional instrument trees.

Onshore: Operating expenses were $41 9 million in the quarter, representing 10% growth.

Anshul Maheshwari: The increase was driven by higher commissions related to revenue growth, the impact of stock-based compensation, and research and development investments. The increase in operating expenses was also impacted by the timing of our global sales meeting, which was held in the first quarter of this year versus the second quarter of last year. Our net loss improved by 2% to $10.9 million, or $0.27 per diluted share. However, net loss per diluted share for the first quarter of 2024 also reflects the increase in shares outstanding due to a follow-on common stock offering in May 2022. Our adjusted EBITDA loss in the first quarter was $4 million, which was nearly flat compared to the prior year period.

Onshore: The increase was driven by higher commissions related to revenue growth in.

Onshore: Impact from stock based compensation and research and development investments the increase in operating expenses was also impacted by the timing of our global sales meeting, which was held in the first quarter of this year versus the second quarter of last year.

Onshore: Our net loss improved by 2% to $10 9 million or 27 per diluted share.

Onshore: Net loss per diluted share for the first quarter of 2024 also reflects the increase in shares outstanding due to our follow on common stock offering in May 2023.

Onshore: Our adjusted EBITDA loss in the first quarter was $4 million, which was nearly flat compared to the prior year period.

Anshul Maheshwari: Turning to liquidity, we exited the first quarter of 2024 with a robust balance sheet, including $157.8 million in cash and marketable security. Additionally, we delivered a 30% improvement in our net cash flow from operations. Given a strong liquidity position, a relatively asset-light business model, and a clear line of sight to adjust the EBITDA break-even, we have the financial resources to self-fund our long-term growth priorities going forward. Finally, moving to our updated Outlook for 2025. Based on our first quarter results, we are increasing our 2024 Worldwide Revenue Guide. We now expect 2024 worldwide revenue of between $164 million and $166 million, implying year-over-year growth of approximately 18 to 20 percent.

Onshore: Turning to liquidity.

Exited the first quarter of 2024, with a robust balance sheet, including $157 $8 million in cash and marketable securities. We delivered 30% improvement in our net cash flow from operations.

Onshore: Given our strong liquidity position, our relatively asset light business model and a clear line of sight to adjusted EBITDA breakeven we.

Onshore: Have the financial resources to self fund, our long term growth priorities going forward.

Onshore: Finally, moving to our updated outlook for 2024.

Onshore: Based on our first quarter results, we are increasing our 2024 worldwide revenue guidance. We now expect 2024 worldwide revenue of between $164 million and $166 million.

Implying year over year growth of approximately 18% to 20%.

Anshul Maheshwari: Considering the potential 2x operating leverage in the business, we expect a significant adjusted EBITDA improvement for the full year 2024, putting us within reach of our adjusted EBITDA breakeven goal. With that, I will turn the call over to Laura. Thanks, Anshul.

Onshore: Considering the potential to X operating leverage in the business, we expect significant adjusted EBITDA improvement for the full year 2024.

Onshore: Putting us within reach of our adjusted EBITDA breakeven goal.

Onshore: With that I will turn the call over to Laura.

Laura A. Francis: Thanks onshore.

Laura A. Francis: Based on the momentum in the portfolio, we're set up to deliver a strong 2024. As we look beyond 2024, we're confident that the combination of our commercial footprint, differentiated portfolio across multiple target markets, and planned new product launches in the coming years will allow us to continue delivering top-tier medical device revenue growth. With that, we're happy to take questions, Operator. Thank you. At this time, we will conduct a question and answer session.

Laura A. Francis: Based on the momentum in the portfolio, we're set up to deliver a strong 2024 as we look beyond 2024, we're confident that the combination of our commercial footprint differentiated portfolio across multiple target markets and planned new product launches in the coming years will allow us to continue delivering top tier met.

Laura A. Francis: Device revenue growth.

Speaker Change: With that we're happy to take questions operator.

Speaker Change: Thank you at this time, we will conduct a question and answer session.

Laura A. Francis: As a reminder, to ask a question, you'll need to press star 1-1 on your telephone and wait for your name to be announced. To submit your question, please press star 1 1 again. Please stand by while we compile the Q&A. Our first question comes from the line of Xuyang Li of Jefco.

Speaker Change: Wanted to ask a question you will need to press star one or telephone wafer your name to be announced towards driving a question. Please press star one again, please stand by while we compile the Q&A roster.

Speaker Change: Our first question comes from the line of young Li of Jeff Co. Your line is now open.

Operator: The line is now open. All right, great. Thanks for taking our questions. I guess to start, I wanted to hear a little bit about the progress with INTRA since you launched. The early feedback from it, I mean, it still sounds like TORC is the focus for a lot of the interventional. And I guess I'm just kind of curious, you know; is the combined interventional portfolio opening doors to new physicians? weren't referring before, is it expanding the market for you? Yeah, thanks for the question, Xuyang.

Xuyang Li: Alright, great.

Xuyang Li: Thanks for taking our questions.

Xuyang Li: I guess to start wanted to hear a little bit about the.

Xuyang Li: The progress with entrust since you launched.

Xuyang Li: The early feedback from I mean, it still sounds like toric is to focus for a lot of the intervention.

Xuyang Li: And I guess I'm, just kind of curious as the combined.

Xuyang Li: Intervention portfolio opening doors to new physicians, who werent referred before is it expanding the market for you.

Speaker Change: Yes, thanks for the question young and.

Xuyang Li: And we are pleased with what we're seeing with the intra thus far. So we're still obviously very early in this journey, but we like the early results and how they're setting up. Especially from the perspective of our strategy, we wanted to engage a subset of interventionalists and get access to this discrete and untapped patient funnel.

Speaker Change: We are pleased with what we're seeing with intra thus far so we're still obviously very early in this journey, but but we like the early results and how they are setting up.

Speaker Change: Especially from the perspective of our strategy, we wanted to engage a subset of the interventional interventional lists and get access to this discreet and untapped patient funnel. As you said. This is this is additive to our to our current sales with our surgeons. So we're pleased with the level of <unk>.

Laura A. Francis: As you said, this is additive to our current sales with our surgeons. So we're pleased with the level of interventionalist engagement and their interest in being trained with TORC as well as with intra. We're not planning to break down revenue by physician or procedure type, but what's impressive is the adoption trends of TORC with interventionalists as they're being trained in the lateral technique. With intra, we're still in the early days, but we do believe that there's a subset of physicians who are going to be initially hesitant to use a metal implant.

Professionalism engagement and their interest in being trained.

Speaker Change: With torque as well as with intra.

Speaker Change: We're not planning to break down revenue by physician or per procedure type, but what's impressive is the adoption trends of torque with interventional less as they are being trained in the lateral technique with insurer, we're still in the early days.

Speaker Change: But we do believe that there is a subset of physicians, who are going to be initially hesitant to use the metal implant.

Laura A. Francis: And so these physicians are going to be intra users. So we're positioned to be a preferred partner to this call point regardless of what their needs actually are. And as a market leader, we really felt a strong need to address this market. We have the best commercial sales force. We have unparalleled educational and advocacy infrastructure.

Speaker Change: And so these physicians are going to be intra users. So so we're positioned to be a preferred partner to this call point, regardless of what their needs actually are.

Speaker Change: And as.

Speaker Change: As the market leader, we we really felt.

Speaker Change: A strong need to address this market we have the best commercial sales force, we have unparalleled educational and advocacy infrastructure, we have a comprehensive product portfolio.

Laura A. Francis: We have a comprehensive product portfolio, and we've gotten clear feedback from interventionalists that SI Bone is highly respected for our market leadership position. And we are particularly impressed by the large number of interventionalists who are already working with us or have begun the process of getting trained. All right, great.

Speaker Change: And.

Speaker Change: And we've gotten clear feedback from interventional is the Si bone is highly respected for for our market leadership position.

Speaker Change: And we are particularly impressed by the large number of interventional US who are already working with us or have begun the process of getting trained.

Laura A. Francis: That's very helpful. I guess maybe to follow up, I wanted to ask you about rep productivity. I think the territory managers are doing about 1.6 million. Before, you had a goal of 2 million plus.

Speaker Change: Alright, great Thats very helpful I.

Speaker Change: I guess maybe.

Speaker Change: To follow up.

Speaker Change: I wanted to ask you about rep productivity.

Speaker Change: I think the territory managers are doing about $1 6 million.

Speaker Change: Before you had to go to.

Speaker Change: 2 million plus it's more of a milestone not a ceiling.

Speaker Change: But wanted to hear a little bit about.

Laura A. Francis: It's more of a milestone, not a ceiling. But I wanted to hear a little bit about, you know, as you get closer to that two plus million range, you know, what's the next milestone or target you think they can hit before maxing out? And also, your agent base has increased a lot in recent quarters. Maybe thoughts on their contributions so far and adding more agents going forward. Yeah, yeah.

Speaker Change: As you get closer to that two plus million range.

Speaker Change: What's the next milestone or target you think they can hit before maxing out and also your agent base has increased a lot in recent quarters.

Maybe thoughts on their contribution so far and adding more agents going forward.

Laura A. Francis: So we are extremely proud of the 26% growth that we had in trailing 12-month rep productivity, getting us up to $1.6 million. And the commercial leadership team has done a really great job of leveraging hybrid commercial models here. So we have junior clinical support specialists that are working with our territory managers to help to identify new physicians, as well as to cover cases.

Speaker Change: Yes, yes. So we are extremely proud of the 26% growth that we had in trailing 12 month rep productivity getting us up to the $1 6 million and the commercial leadership team has done a really great job of leveraging hybrid commercial model here. So we have.

Speaker Change: Junior clinical support specialists that are working with our territory managers that help to identify new physicians as well as to cover cases, and then as you said, we've also added a significant number of.

Laura A. Francis: And then, as you said, we've also added a significant number of third-party agents that are also selling the product and covering cases as well. So that really has helped us to grow our productivity in a significant way. So, really, four key drivers of that productivity.

Speaker Change: Third party agents that are also.

Speaker Change: Selling the product and covering cases as well so that really has helped us to grow our productivity in a significant way. So really four key drivers to that productivity first is just the caliber of our increasingly seasoned sales force.

Laura A. Francis: You know, first is just the caliber of our increasingly seasoned sales force, complemented by these hybrid commercial models. Secondly, our highly differentiated portfolio of solutions. Third, the synergistic physician call point, which is allowing us to drive physician density. And then, finally, the increase in field surgical capacity with the rollout of instruments and implants to reduce the logistical workload. So in terms of where we're going, as I said, our intention is to continue to grow over time to that $2 million per territory manager level.

Speaker Change: Complemented with these hybrid commercial models secondly, our highly differentiated portfolio of solutions third the synergistic physician call point, which is allowing us to drive physician density and then finally the increase in <unk>.

Speaker Change: Field surgical capacity with the rollout of instruments and implants to reduce the logistical workflow. So in terms of where we're going we.

Speaker Change: As I said, our intention is to continue to grow over time to that $2 million per territory manager level.

Laura A. Francis: We do have a significant number of reps that are already selling in excess of $3 million per territory, and so that's been a guide for us. And in some of those particular territories, they're actually working with two clinical support specialists. In others, they're heavily leveraging third-party agents.

We do have a significant number of reps that are already selling in excess of $3 million per territory and so that's been a guide for us and in some of those particular territories, they're actually working with two clinical support specialists and others, they're heavily <unk>.

Speaker Change: Leveraging third party agents.

Laura A. Francis: And so those are just some of the ways that we're taking this opportunity to continue to grow territory manager productivity, and they give us a lot of confidence that we can actually do more than where we're at currently. But overall, we're going to continue to selectively add to our sales force and maybe exit the year with a little over 90 territory managers but remain focused on driving strong, sustainable, and profitable growth. And we do expect that year-over-year sales force productivity to continue to improve in the year. Alright, excellent. Thank you very much.

And so those are just some of the ways that we're that we're getting at.

Speaker Change: At this opportunity to continue to grow territory manager productivity and they give us a lot of confidence that we can actually do more than where we're at currently but overall, we're going to continue to selectively add to our sales force and maybe exit the year with a little over 90.

Speaker Change: Territory managers, but remain focused on driving strong sustainable and profitable growth and we do expect that year over year salesforce productivity to continue to improve in the year.

Speaker Change: Alright excellent. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Sure.

Operator: Thank you. Please take the questions one moment for our next question. Our next question comes from the line of Greg Bijou of Bank of America Securities. Your line is now open. Good afternoon. Thanks for taking the questions and congratulations on a good start. Anshul, maybe it would be good for you to start.

Speaker Change: Our next question comes from the line of Greg Bijou of Banc of America Securities. Your line is now open.

Craig William Bijou: Good afternoon, thanks for taking the questions and congrats on a good start.

Craig William Bijou: Onshore maybe for you to start.

Craig William Bijou: You know, wanted to talk about expectations for operating expenses growth and then even some of your comments to the last question, Laura, on sales rep spend, so, or adding sales reps and what the spend would be. But we'd love to just kind of get your thoughts on operating expense growth for the rest of the year. And, you know, the comments on EBITDA, does that mean that we should or could see EBITDA, positive EBITDA, in Q4 of this year? Is that something that's on the table?

Craig William Bijou: Wanted to talk about expectations for operating expenses growth and then even some of your comments to the last question more on sales reps spend so or adding sales reps and what the spend would be but.

Craig William Bijou: Love to just kind of give your thoughts on operating expense growth for the rest of the year and.

Craig William Bijou: The comments on EBITDA does that mean that we should or we could see EBITDA positive EBITDA in Q4 of this year is that something that's on the table.

Anshul Maheshwari: Craig, thanks for the question. We're really pleased with how the quarter played out, both on the top line and also on the leverage side. So just to provide some context, you know, as I shared in my prepared remarks, the first quarter included the impact of our global sales meeting, the timing of that. So you've got OPEX being a bit higher in the first quarter than you did the previous year because of when the global sales meeting happened.

Speaker Change #100: Craig Thanks for the question, we're really pleased with how the how the quarter played out both on the top line and also on the leverage side. So just to provide some context.

Speaker Change #101: As I shared in my prepared remarks, the first quarter included the impact of our global sales meeting the timing of that so you have got opex being a bit higher in the first quarter than you did prior year.

Speaker Change #101: Because of when the global sales meeting happened.

Anshul Maheshwari: And what we've said in our remarks also is we do expect to see 2X OPEX growth rate, revenue growth rate being 2X OPEX growth rate, sorry. So what that would imply is if you think about the midpoint of the guidance at about 19%, you're looking at OPEX growth of 9.5%. And it's primarily driven by the higher commission rates that you could earn because of the higher revenue as well as some of the accounting on the stock-based side.

Speaker Change #101: And what we've said in our remarks also is we do expect to see <unk> opex growth rate.

Speaker Change #101: Revenue growth rate being <unk> opex growth rate sorry, so what that would imply is if you think about the midpoint of the guidance at about 19% Youre looking at Opex growth of nine 5%.

Speaker Change #101: And it's primarily driven by the higher commission rates that you could earn because of the higher revenue and as well as some of the accounting on the stock based side. So the leverage continues and we feel really good about that now in terms of.

Anshul Maheshwari: So the leverage continues, and we feel really good about that. Now, in terms of adjusted EBITDA break-even, look, we're early in the year, and as we've always articulated, our strategy is to just have our results speak for themselves and get there in terms of the adjusted EBITDA break-even timeline. And as we go through the year, we'll be able to provide more information on the progress we're making towards that break-even. But what I would leave you with is that we feel really good about the trajectory that we're on, and we feel good about our ability to get to adjusted EBITDA break-even and also very quickly to cash flow break-even given our asset-light model. I got it.

Speaker Change #101: Adjusted EBIT EBITDA breakeven look we're early in the year and as we've always articulated our strategy is to just have our results speak for themselves and get there in terms of adjusted EBITDA breakeven timeline.

Speaker Change #101: And as we go through the year, we'll be able to provide more information on the progress, we're making towards that breakeven, but what I would leave you with is we're feeling really good about the trajectory that we're on and we feel good about our ability to get to adjusted EBITDA breakeven and also very quickly to cash flow breakeven given our asset light.

Model.

Anshul Maheshwari: And then, maybe as a follow up, I did want to talk about your guidance for the year. So you beat it by roughly one and a half million.

Speaker Change #102: Got it thanks, Thanks for that and then.

Speaker Change #103: Maybe as a follow up I did want to talk about your guidance for the year. So you beat by roughly $1 5 million I think that was the raise for the year, obviously good to see the raise but.

Anshul Maheshwari: I think that was the raise for the year. Obviously, it's good to see the raise, but maybe if you can just talk about it, it was that conservatism to start the year. What do you see?

Speaker Change #104: Maybe if you could just talk about it was that.

Speaker Change #104: Conservatism to start the year.

Speaker Change #104: Do you see.

Anshul Maheshwari: Or how do you see the year progressing and maybe a little bit on the cadence of revenue and how should we think about that? Yeah, no, happy to take that as well, Craig. So if you look at the midpoint of the raise, it is about a million and a half from the prior midpoint, which is pretty much what we did in Q1 in terms of the upside on the performance.

Speaker Change #104: Or how do you see the year progressing and maybe a little bit on the cadence of revenue and how should we think about that.

Speaker Change #105: Yes, no happy to take that as well.

Speaker Change #105: Greg So if you look at the midpoint of the raise the mid point of the raise is about a million and half.

Craig William Bijou: From the prior midpoint, which is pretty much what we did in Q1 in terms of.

Craig William Bijou: The upside on our performance. It is still early in the year. So you're right. We just want to be thoughtful we've got a lot of things that are going in our favor when you think about.

Anshul Maheshwari: It is still early in the year, so you're right. You know, we just want to be thoughtful. We've got a lot of things that are going in our favor. When you think about the number of physicians that we're training, it was a record number of physicians that had their first training, still seeing really good adoption on the surgeon side, and seeing good traction on the interventional side. And with Granite 9-5 being sort of starting to roll out in the second quarter more in June and then, you know, all of those things make us feel really good about the business. But, you know, still coming out of the first quarter.

Craig William Bijou: The number of physicians that were trading it was a record number of physicians that had their first training still seeing really good adoption of the surgeon side scene.

<unk> seen good traction on the interventional side, and with 95 being sort of rollout in the second quarter more in June and then so all of those things make us feel really good about the business, but still coming out of the first quarter. So we want to be thoughtful.

Anshul Maheshwari: So we want to be thoughtful. In terms of cadence, we do expect revenue growth to accelerate on a year over year basis in each of the quarters going forward. So even the typical seasonality that you see in the third quarter, our expectation is that with the rollout of the Granite 9-5 in June should help us offset some of that seasonality. So NetNet feels really good about the setup that we have in the business coming out of the first quarter.

Craig William Bijou: In terms of cadence, we do expect revenue growth to accelerate on a year over year basis in each of the quarters going forward.

Craig William Bijou: So even the typical seasonality that you see in the third quarter and our expectation is with the rollout of the Grad at nine five in June should help us offset some of that seasonality. So net net feel really good about the setup that we have in the business coming out of the first quarter.

Anshul Maheshwari: Thanks for taking the question. Thank you one moment for our next question. Our next question comes from the line of Matthew O'Brien from Piper Sandler. Your line is now open, questions. Um, you know, and Laura and Anshul, you've kind of touched on a couple of these here, but the two-year stack growth rate in the U.S. is really strong, much better than we saw in the last four quarters of last year. What is it specifically that's really driving that?

Speaker Change #106: Thanks for taking the questions.

Thank you gentlemen for next question.

Matthew O'brien: Is it a function of those new reps or productivity amongst the new reps that's really driving that? And then the momentum there again seems really good with easier comps, which was Craig's question earlier. Is there anything you're factoring in that could disrupt some of that momentum? I don't know if it's these LCDs that are proposed or other things like that that you're really worried about, but what would slow down some of that momentum that we really saw? So Matt, thank you so much for highlighting that point.

Speaker Change #106: Our next question comes from the line of Matthew O'brien of Piper Sandler. Your line is now open.

Matthew O'brien: Thanks, so much for taking my questions.

Matthew O'brien: And Laura and financial you've kind of touched on a couple of these here, but the two year stacked growth rate in the U S was really strong much better than we saw in the last four quarters for the.

The fourth quarters of last year. So what is it specifically that's really driving that is it a function of those new reps.

Matthew O'brien: Tivoli amongst the new reps thats really driving that and then.

Matthew O'brien: And there again, it seems really good with easier comps kind of takes question earlier.

Matthew O'brien: Anything you're factoring in that can disrupt some of that momentum I don't know if thats <unk> LCD.

Matthew O'brien: Our proposed or other things like that that you are really worried about but won't slow down some of that momentum that we really saw in Q1.

Speaker Change #107: So Matt. Thank you so much for highlighting that point as you know last year, we grew at 46% in the first quarter and and if you do your two year stack with the 16% growth Youre talking about a very strong quarter that we have here. So.

Laura A. Francis: As you know, last year we grew at 46% in the first quarter. And if you do your two-year stack with the 16% growth, you're talking about a very strong quarter that we have here. So out of the gates, we really feel great about the way the year has started. And even if you think about historical seasonality trends, as well as that tough comp, it was just a strong quarter across all of the key KPIs.

Speaker Change #107: Out of the gates.

Speaker Change #107: We really feel great about the way the year has started.

Speaker Change #107: And even if you think about historical seasonality trends as well as that tough comp, but it was just a strong quarter across all of the key kpis and it is a continuation of the strong demand that we've seen over the last few quarters. So in the U S. We saw robust.

Laura A. Francis: And this is a continuation of the strong demand that we've seen over the last few quarters. So in the US, we saw robust demand across all our target markets and across all our call points. And it allowed us to deliver 17% procedure volume growth, as well as maintain a relatively stable ASP in the US. Near record physician engagement with over 1,100 active US users, up 16%. And then getting 510k clearance for Granite 9.5, which is positioning us to build on Granite momentum and further accelerate adoption within pelvic fixation. And then, if you even just look beyond the strong top-line drivers, we continue to see strong operating leverage with a 30% improvement in cash flow from operations versus a year ago.

Speaker Change #107: Demand across all our target markets and across all our call points and it allowed us to deliver 17%.

Speaker Change #107: Procedure volume growth and as well as maintaining a relatively stable ASP in the U S.

Speaker Change #107: Near record physician engagement with over 100 active <unk> users up 16% and then getting five 10-K clearance for granted 95, which is positioning us to build on granite momentum and further accelerate adoption within pelvic fixation and then if you even just look beyond the.

Speaker Change #107: Strong topline driver if we continue to see strong operating leverage with a 30% improvement in cash flow from operations versus a year ago. So, but we're also continuing to invest in our growth priorities as you can see from the different product introductions. So what we really want it.

Laura A. Francis: But we're also continuing to invest in our growth priorities, as you can see from the different product introductions. So what we really wanted to do, thinking about that longer-term trajectory, given that we're just starting the year, was to be thoughtful about our guidance. But, as Anshul said, we really expect to see continued acceleration of our growth rate throughout the year. We're not concerned on the LCD side that you mentioned.

Speaker Change #107: Do you thinking about kind of that that longer term trajectory given that we're just starting the year. What we wanted to do was to be thoughtful about our guidance, but as actual fed really expect to see continued acceleration of our growth rate throughout the year.

Speaker Change #107: We're not concerned on the LCD side that you mentioned as I said most of the adoption that we're seeing currently with intervention all is with our torque product.

Laura A. Francis: As I said, most of the adoption that we're seeing currently with interventional is with our TORC product, and that product is coded to CPT code 27279, where there are no issues. We're not surprised at seeing some of the challenges with CPT code 27278, because it's early days on this right now. But we think that we have the products and solutions in order to address whatever needs our physicians have, whether they're surgeons or interventionalists.

Speaker Change #107: And that that product is.

Speaker Change #107: Coded to CPT code $270 79.

Speaker Change #107: Where there are no issues, we're not surprised at seeing some of the challenges with a CPT code $272 78.

Speaker Change #107: Because it's it's it's early days on this right now.

Speaker Change #107: But we think that we have the products and solutions in order to address whatever needs R. R.

Physicians have whether their surgeons or intervention all lists and given our market leadership position here and our incredible field force we.

Laura A. Francis: And given our market leadership position here and our incredible field force, we're really excited about where we can go for 2024. And Matt, the only thing on the guidance side I would add, like Laura said, we've got a lot of experience on the reimbursement side. And our strategy anticipated some of this reimbursement challenge, so we don't expect this to have any impact on the guidance we just set at $164 to $166 million. I appreciate those comments and corrections.

Speaker Change #107: We're really excited about where we can go for 2024 and Matt the only thing on the guidance side I would add like Laura said.

Speaker Change #107: We've got a lot of experience in the reimbursement side and our strategy anticipated. Some of this reimbursement challenge. So we don't expect this to have any any impact from the guidance. We just said.

Speaker Change #108: The $164 million to $166 million.

Laura A. Francis: And then as far as that LCD goes... The 2781 specifically, I'm obviously new to covering the name, but, and you guys, but just, you know, it seems to me like that would be more of a tailwind for your business because now everybody's going to transition to 279, they're going to use torque, and that's going to be better than intra for you. Is that a dynamic that we should potentially be thinking about? Later throughout, Yeah, you're correct.

Matt: Okay I appreciate those comments and then as far as that LCD does is.

Speaker Change #110: Is there.

Speaker Change #110: <unk> thousand 701 is specifically.

Speaker Change #111: New to covering the name but.

And you guys, but just seems to me like that would be more of a tailwind for your business. Because now everybody is going to transition to 279, theyre going to use torque and that's going to be better than intra for you is that a dynamic that we should potentially be thinking about.

Speaker Change #111: Later throughout this.

Yes, you are correct or close to seven days.

Laura A. Francis: Yeah, you're correct that, you know, we have seen interest from interventionalists starting last year already in our procedure, the lateral procedure using TORC, and we're continuing to see strong interest in that particular procedure over allograft procedures currently, likely due to the uncertainty around reimbursement for 27278 versus 27279. So, and given where we are as the market leader in this particular space, we're able to provide a number of different products, we're able to provide the right education, and we're able to provide the right support from a reimbursement perspective. And finally, our sales team with 85 territory managers and a few less clinical support specialists provides us with the opportunity to adequately support those interventionalists. Thank you.

Yes, Youre correct that.

Speaker Change #111: Yeah.

Speaker Change #111: We have seen interest from interventional lists starting last year already and our procedure the lateral procedure using torque and we're continuing to see strong interest in that particular procedure over allografts procedures currently likely.

Speaker Change #111: Due to the uncertainty around.

Speaker Change #111: Reimbursement for $217 78 versus $2 seven to 709, so and given.

Speaker Change #111: Given where we're at as the market leader in this particular space.

Speaker Change #111: <unk> able to provide a number of different products, we're able to provide the right education, we're able to provide the right support from a reimbursement perspective, and finally, our our sales team with 85 territory managers and a few less clinical support specialists provides us with the opportunity.

Speaker Change #111: To to adequately support those interventional list.

Speaker Change #112: Got it thank you.

Operator: Thank you one moment for our next question. Our next question comes from the line of Drew Ranieri of Morgan Stanley. Your line is now, Laura. Hi, honestly, thanks for taking the question. Just to start, Laura, you mentioned in your comments that, "I know that there's a little nuance here."

Speaker Change #113: Thank you we'll move it for next question.

Speaker Change #113: Okay.

Speaker Change #113: Our next question comes from the line of Julien <unk> of Morgan Stanley. Your line is now open.

Julien: Hi, Laura Thanks for taking the question questions, maybe just to start Lori you mentioned in your comments of maintaining near record docks positions in the quarter I know that there's a little nuance here.

Andrew Christopher Ranieri: It's declining a bit sequentially. Please help us better understand maybe some of the dynamics that we're having and then what's embedded from a new doc ad dynamic to reach your full year guidance. And I'll stop there.

Declining a bit sequentially, but can you just help us better understand maybe some of the dynamics that were happening here and then what's embedded from a new dock add dynamic to reach your full year guidance.

Speaker Change #114: And I'll stop there for right now.

Laura A. Francis: Yeah. So, we're actually very pleased with where we are at, having over 1,100 docs. It is a few less than we had at the end of Q4. That is typical for us. Last year, I think, was the exception to that particular rule, but it is very typical from a seasonality perspective that we will have a few fewer doctors that are performing procedures in Q1 versus Q4.

Speaker Change #114: Yeah.

Speaker Change #114: So we're actually very pleased with where we're at having over 1100 docs. It is it is a few less than we had at the end of Q4 that is typical for us.

Speaker Change #114: Last year I think was the exception to that particular rule, but it is very typical from a seasonality perspective that we will have a few less doctors that are performing procedures in Q1 versus Q4.

Laura A. Francis: We're very pleased, however, and we did throw in a little bit of qualitative information about training here. We had very strong training trends in the first quarter with a combination of surgeons as well as interventionalists, and that's a great forward-looking indicator for us. So, it gives us the opportunity to sell to additional physicians and also the opportunity to increase the number of procedures per physician per quarter. Just on the utilization side for a moment, looks relatively stable quarter over quarter. The Granite Nine 5 launch could help us better understand some of the utilization drivers or some of the more utilization drivers and what you're expecting.

Speaker Change #114: Gary.

Speaker Change #114: Pleased however, and we did throw in a little bit of qualitative information about training here.

Speaker Change #114: We had very strong training trends in the first quarter with a combination of surgeons as well as enter intervention lists as well and that's a great forward looking indicator for us. The active surgeon number is just the number of surgeons that performed at least one case.

Speaker Change #114: In the quarter.

Speaker Change #114: But all of these even more forward looking indicators such as training gives us a lot of confidence in this acceleration into the next few quarters also with new products coming out as well it gives us a lot of confidence to so.

Speaker Change #114: In particular.

Speaker Change #114: If you think about granted 95 is targeting 100000 degenerative spine procedures.

Speaker Change #114: And the expectation that that's going to increase physician and density in the future is exciting and finally with the addition of interventional lists it's increased our target physician.

Speaker Change #114: Number from around 70 502 around 12000 in total so it gives us the opportunity to to sell two additional physicians and also the opportunity to increase the number of procedures per physician per quarter.

Got it.

Speaker Change #115: Maybe just on the utilization side for a moment.

Speaker Change #115: I mean, it looks relatively stable.

Speaker Change #115: Quarter over quarter.

Speaker Change #115: Just.

Speaker Change #115: Piggybacking off of the credit not five launch just maybe help us better understand some of the utilization drop or some of the more utilization drivers kind of what you're expecting and I know that there's surgeons physicians are using your products far in excess of that but when do we really start to see it.

Laura A. Francis: And I know that surgeons and physicians are using your products far in excess of that, but when do we really start to see a real, true inflection in utilization? I mean, you're making great progress on the surgeon side, but when do we kind of see the utilization really kind of pick up? Yeah, yeah, so we talked a little bit about physician density. Now, we're in the early innings of expanding our portfolio, but we are seeing a growing number of physicians that are performing multiple procedure types. We did mention specifically that in the first quarter, around 15% of our active physicians performed more than one type of procedure.

Speaker Change #115: Real true inflection in utilization I mean, you're making great progress on the surgeon side, but when do we kind of see the the.

Speaker Change #115: The utilization really kind of pick up.

Speaker Change #115: Yeah, Yeah. So we did talk a little bit about physician density now we're in these early innings of expanding our portfolio, but we are seeing a growing number of physicians that are performing multiple procedure types. We did mention specifically that in the first quarter.

Speaker Change #115: Around 15% of our active physicians performed more than one type of procedure, but once again, if I go back to granite 95 granted 95 is targeting.

Laura A. Francis: But once again, if I go back to Granite 9-5, Granite 9-5 is targeting degenerative spine procedures, and that's the bread and butter procedure of our target surgeon. And so the majority of their practice is going to be in that particular category. And we just had our first procedures with Granite 9-5 completed in the month of April. And then we're rolling it out, and we expect an expanded rollout and launch in June. So I think you're going to start to see the impact in the second quarter, but I think you're really going to start to see that accelerate in the second half of the year.

Speaker Change #115: Degenerative spine procedures, and thats, the bread and butter procedure of our target surgeon.

Speaker Change #115: And so the majority of their practice is going to be in that particular category.

Speaker Change #115: And we just had our first procedures with granite 95 completed in the month of April and then where we're rolling out and we expect it.

Speaker Change #115: <unk>.

Speaker Change #115: Expanded.

Speaker Change #115: Rollout and launch in June so I think youre going to start to see the impact in the second quarter, but I think youre going to really start to see that accelerate in the second half of the year. So very excited about the opportunity that's there with the with our surgeons and increasing our.

Laura A. Francis: So very excited about the opportunity that's there with our surgeons and increasing our density there. And then with interventionalists, the opportunity to further increase the number of physicians, active physicians we're working with quarter by quarter. Thank you. Please take a moment for our next question. Our next question comes from the line of Dave Turkaly of Citizen JMP. Your line is now open. Good evening.

Speaker Change #115: Density there and then with interventional has the opportunity to to further.

Speaker Change #115: Increase the number of physicians active physicians were working with quarter by quarter.

Speaker Change #116: Thank you we'll move for our next question.

Operator: Laura, maybe one for you just on the competitive front. You know, it seems like there were several sort of fast imitators on the core SI joint, you know, MIS market. And I'm just curious, like, what are you seeing in terms of, you know, TORC or Bedrock Granite or, you know, some of these other companies. I don't know that I've seen the competition follow as quickly, and I'm curious to see, you know, get your thoughts on what's happening there and what you expect moving forward. Yeah, I think Dave, thanks for the question.

Speaker Change #116: Our next question comes from the line of Dave <unk> of citizen JMP. Your line is now open.

Dave: Good evening.

Dave: Maybe one for you just from a competitive front.

Dave: It seems like there was.

Dave: Several sort of best imitators on the core.

Dave: Sorry Julien.

Dave: Ms market and I'm, just curious like what are you seeing in terms of.

Dave: Worker bedrock granted or you.

Dave: Some of these other.

Dave: Sort of markets that youre kind of creating you're targeting but I don't know that I've seen the competition follow as quickly and I'm curious to see get your thoughts on.

Dave: What's happening there and what you expect moving forward.

David Louis Turkaly: And what we pride ourselves on is identifying unmet clinical needs and then developing differentiated products around those unmet clinical needs. And so we're identifying new markets in some cases, so where typically a physician is not operating on a patient, performing a procedure on a patient. So SI joint fusion was in that category, and certainly sacral insufficiency fractures, most of those cases are treated conservatively as well.

Speaker Change #117: Yeah, I think Dave Thanks for the question and what what we pride ourselves on is identifying unmet clinical needs and then developing differentiated products around those unmet clinical needs.

Speaker Change #117: And so we are identifying new markets and in some cases so.

Speaker Change #117: Where they're they're typically a physician is not <unk>.

Speaker Change #117: Operating on a on a patient performing a procedure on a patient so si joint fusion with was in that category and certainly sacral insufficiency fractures. Most of those cases are are treated conservatively as well so.

Laura A. Francis: So our goal is to either identify these unmet clinical needs and develop new solutions around them, or to develop a significantly improved technique or product, or both that addresses an unmet clinical need, and granite really falls more into that category. And so we expect to see competition coming in, and what they're doing is creating widgets, basically, and selling those into the market. And we think that especially when you're in a market where there is an unmet clinical need, having the capabilities that we have is really important.

Our goal is to either identify these unmet clinical needs and develop new solutions around them or to develop a significantly improved.

Speaker Change #117: Technique or product or both.

Speaker Change #117: It addresses an unmet clinical need in granite really falls more into that category and so we expect to see competition coming in what Theyre doing is creating widgets basically and and.

Speaker Change #117: Selling those into the market and we think that especially when youre in a market where there is an unmet clinical need having the capabilities that we have are really important so whether it's differentiated and patent protected product whether it is the level.

Laura A. Francis: So whether it's a differentiated patent-protected product, whether it's the level one, level two clinical data that we have, reimbursement support, including the NTAP, for example, for granite, and then just taking an educational approach to the market as well, which is really supported by both our professional education group as well as by our sales force. You know, those are the ways that we really are leading in all of these markets.

Speaker Change #117: On level, two clinical data that we have reimbursement support including the end tap for example for granite.

Speaker Change #117: And then just taking an educational approach to the market as well, which.

Speaker Change #117: Really is supported by both our professional education group as well as by our sales force. Those are the ways that we really are leading in all of these markets and we are.

Laura A. Francis: And we, you know, we know that that's appreciated by physicians in these markets, and that's what we're going to continue to do. So, you know, I think that we're going to keep disrupting the market. We've launched two products so far this year, and we've talked about a third that we're going to launch by the end of the year. You're going to continue to see us innovate and grow and utilize these competitive advantages that we have in order to build these markets, treat these patients, support the physicians, and build the company.

Speaker Change #117: We know that that's appreciated by physicians in these markets and that's what we're going to continue to do so.

Speaker Change #117: Think that we're going to keep disrupting the market. We've launched two products. So far this year, we've talked about a third that we're going to launch by the end of the year Youre going to continue to see us innovate and grow and utilize these competitive advantages that we have in order to build there.

Speaker Change #117: These markets treat these patient support the physicians and build the company.

Laura A. Francis: Great, thank you for that. And then, you know, I think you even mentioned ASPs. I think you said they were flattish, but you know, given that differentiation you're talking about and what we've seen from some of your peers, I'm just curious, is there the opportunity for price increases? I know we've kind of modeled it declining, you know, over time, but you seem to have some things that are pretty unique, and I'm just curious.

Speaker Change #118: Great. Thank you for that and then thank.

Speaker Change #118: Could you even mentioned Asps I think you said they were.

Speaker Change #118: But given the differentiation you're talking about.

Speaker Change #118: And what we've seen from some of your peers I'm just curious.

Speaker Change #118: Is there the opportunity for price increases I know, we've kind of modeled it declining you know over time, but.

Speaker Change #118: You seem to have some things that are pretty unique and I'm just curious is.

David Louis Turkaly: As you look, you know, ahead, do you think there's an opportunity potentially for price, or is that something we shouldn't think about? Thank you. Yes. So, Dave, this is Anshul.

Speaker Change #118: As you look.

Speaker Change #118: No.

Speaker Change #119: Do you think there's an opportunity potentially for price or is that something we shouldnt think about.

Yes, so Dave this is actual thanks for the question in terms of the ASP.

Anshul Maheshwari: Thanks for the question. In terms of the ASP, you know, when you think about the opportunity that's ahead of us, we've got almost half a million annual target procedures that we're going after. And so there's a huge opportunity. And for us, we're focused on market development. We maintain ASPs that allow us to maintain our attractive gross margins so that we can continue to reinvest in the business from an R&D standpoint. This is something Tony and the team review on a very regular basis to make sure we can manage the ASP alongside driving adoption. We feel good about that.

When you think about the opportunity. That's ahead of US we've got almost a half a million annual target procedures that we're going after and so theres a huge opportunity so for US we're focused on market development.

We maintain asps that allow us to maintain our attractive gross margins. So that we can continue to reinvest in the business from an R&D standpoint.

Speaker Change #119: And this is something Tony and team review on a very regular basis on how to make sure. We can we can manage the ESP alongside driving adoption.

Speaker Change #119: We feel good about that.

Anshul Maheshwari: You know, our ASP trending generally is based on the procedure mix versus price erosion to some extent. For example, when you're doing a deformity procedure using four implants versus a degen procedure using three versus SI joint fusion, you're using three. So those things can have an impact.

Speaker Change #119: ASP trending generally is based on the procedure mix versus a price erosion to some extent.

Speaker Change #119: When you're doing the deformity procedure, using four implants versus the DJ and procedure using three versus Si joint fusion using three.

Speaker Change #119: So those things can have an impact, but overall from a per implant AFC, we seem to be pretty disciplined on holding that.

Anshul Maheshwari: But overall, from a per implant ASP, we tend to be pretty disciplined on holding back. Thank you. One moment for our next question. Our next question comes from the line of Caitlin Cronin of Kennecourt Genuity. Your line is now open.

Speaker Change #119: Okay.

Speaker Change #120: Thank you gentlemen for next question.

Speaker Change #120: Our next question comes from the line of Kevin Cronin of Canaccord Genuity. Your line is now open.

Operator: Hey, thanks for taking the questions and congrats on a great quarter. Just to start with the training, you mentioned a record number of docs with their first training this quarter. How many of those were interventionalists? And just thoughts on, you know, given the uptake and interest of torque and the lateral trajectory for those interventionalists, would you start thinking about training them in 3D as well? Caitlin.

Caitlin Cronin: Oh, thanks for taking the questions and congrats on a great quarter.

Caitlin Cronin: Let's just start with the training you know you mentioned a record number of docs are with post training this quarter, how many of those were interventional west and just thoughts on.

Caitlin Cronin: Given the uptake and interest of torque in a lateral trajectory for this intervention was would you start thinking about training them in three D as well.

Operator: So yeah, we are excited about the record number of first trainings that we saw. And there certainly was a heightened interest from interventionalists during the quarter, and that definitely was a contributor to the number of first trainings.

Speaker Change #121: Yes, thanks for the question Caitlin.

So yeah. We are excited about the record number of first trainings that we saw and there certainly was.

Speaker Change #122: Heightened interest from interventional lists.

Speaker Change #123: During the quarter and that definitely was a contributor to the number of first training, but we also saw strong surgeon interest and demand for being trained across our procedures. So pelvic fixation in particular with the knowledge that that.

Caitlin Cronin: But we also saw a strong surge in interest and demand for being trained across our procedures. So pelvic fixation, in particular, with the knowledge that Granite 9-5 had been cleared and was imminent, was certainly a driver as well. And then some of the work that we're doing on the trauma side, too. So it's really across the board that we saw that interest. And then remind me of the second part of the question. Yeah, no, just, any thoughts given the kind of uptake of torque and the lateral trajectory for those interventionalists that we're training? Would you think to start training them in 3D?

Speaker Change #123: Granite 95 had been cleared and was eminent was certainly a driver as well and then some of the work that we're doing on the trauma side too. So it's really across the board that we actually saw.

Speaker Change #124: That interest and then remind me of the second part of the question.

One of them or just any thoughts given kind of the uptake of torque in the lateral trajectory for those interventional list that we're training them would you think to start training them.

Laura A. Francis: So we're not. TORC really has been the product of choice for those interventionalists that are interested in the lateral technique. The ICUs 3D procedure falls into a category that I would call more orthopedic in nature. So that's not a product that interventionalists are naturally gravitating toward.

Speaker Change #124: At some point.

Speaker Change #124: So.

Speaker Change #124: We're not.

Speaker Change #124: Torque really has been the product of choice for those interventions lists that are interested in the lateral technique.

Speaker Change #124: The <unk> procedure falls into a category that I would call more orthopedic in nature. So that's not a product the interventional lists are naturally gravitating to it.

Laura A. Francis: It is definitely a product. It's the gold standard product that's out there. It has the most clinical data around it.

Speaker Change #124: It is definitely a product it's the gold standard product Thats out there. It has the most clinical data around it and we have some some very loyal users of that particular product.

Laura A. Francis: And we have some very loyal users of that particular product. But the interventionalists are actually a little bit surprised at the ease of use with TORC and the technique and the outcomes that they're starting to see with this, some of the early interventionalists that are performing the procedure. So TORC really, as it relates to the lateral technique, is the product of choice.

Speaker Change #124: But the the interventional lists are actually a little bit surprised that the ease of use with torque and the the technique and the outcomes that they are starting to see with this some of the early intervention lists that are performing the procedure. So torque really as it relates to the.

Speaker Change #124: The lateral technique is the is the product of choice and then there is certainly our interventional lifts right now that that prefer a bone allograft product.

Laura A. Francis: And then there certainly are interventionalists right now that prefer a bone allograft product. And so that's the product that some of these interventionalists are at least thinking about before they get more comfortable with the lateral technique. But you mentioned iFUSE 3D.

Speaker Change #124: And so.

Speaker Change #124: That's that's the product that that some of these interventions lists or at least.

Speaker Change #124: Thinking about before they get more comfortable with the lateral technique, but.

Speaker Change #124: Mentioned ICU three D and as I said there is we have the.

Laura A. Francis: And as I said, we have the most data on that product. And when physicians think about SI bone, they really do think about level 1 clinical evidence and level 2 clinical evidence. And so we have one study called the SALI study, which was evaluating iFUSE 3D.

Speaker Change #124: The most data on that product and one when physicians think about our Si bone. They really do think about level, one clinical evidence and level III clinical evidence and so we have one study called the Sally study.

Speaker Change #124: Which was evaluating <unk> and we expect to see the five year Sally study.

Laura A. Francis: And we expect to see the five-year SALI study results coming up in the second half of this year. So we're continuing to work closely with our portfolio of products, whether it's iFUSE 3D with SALI, whether it's TORC with the STACY study or with the SAFRIN study, and then Granite and the bedrock technique with our Sylvia study and our Paula study. We're continuing to really focus on clinical data and being the market leader in this space. Just jumping off of that really quickly, any updates on the progress on the STACI or the saffron studies? Yeah, I think you'll be seeing a little bit more of this here later this year.

Speaker Change #124: Results coming up in the second half of this year. So we're continuing to to work closely with our portfolio of products, whether it's ICU three D with Sally whether its torque with the Stacy study or with the SaaS <unk> study and then.

Speaker Change #124: Granite and the bedrock technique with our Sylvia study with our Polish study were continuing to really focus on clinical data and being the market leader in this space.

Speaker Change #124: Mhm.

Speaker Change #124: Just jumping off of that really quickly any updates to the progress on the Stacy or the Satcom studies.

Speaker Change #124: Yes, I think youll be seeing a little bit more.

Laura A. Francis: So enrollment in STACI is expected to be completed this summer, and the early results are very promising and exciting. And, you know, the purpose of STACI was to provide post-market information on lateral minimally invasive SI joint fusion procedures performed with TORC when performed by interventionalists. So it's going to give us more information on interventional physicians performing lateral SI joint fusion procedures using our TORC product. Safran, you can actually expect to see some initial results that will be available later this year.

Here later this year, so enrollments and Stacy is expected to be completed this summer and the early results are very promising and exciting and so the purpose of Stacy was to provide post market information on lateral minimally invasive Si joint fusion procedures.

Speaker Change #124: With torque one performed by interventional lists so it's going to give us more information on the intervention all physicians performing lateral.

Speaker Change #124: Si joint fusion procedures, using our torque product.

Speaker Change #124: Safran.

Speaker Change #124: You're going to actually expect to see some initial results that'll be available later this year, so that will be in line with.

Laura A. Francis: So that'll be in line with the launch of our new trauma product as well. You'll see some clinical data coming through as well as a new product. So those are a couple of things, in addition to Sally, you can expect to see. Thanks so much. Thank you one moment for next question- Our next question comes from the line of David Saxon of Needham and Company. Your line is now open. Oh, great. Good afternoon, Laura and Anshul.

Speaker Change #124: The launch of our new trauma product as well, you'll you'll see some clinical data coming through as well as a new product as well. So those are those are a couple of things. In addition to Sally you can expect to see.

Speaker Change #125: Thanks, so much.

Speaker Change #126: Thank you we'll move next question.

Speaker Change #126: Okay.

Speaker Change #126: Yes.

Speaker Change #126: Our next question comes from the line of David Sachs. One of Needham <unk> Company. Your line is now open.

David Joshua Saxon: Thanks for taking my questions and congrats on the quarter. I wanted to follow up on a previous question around pricing, which is probably for Anshul.

David Sachs: Oh, great good.

David Sachs: Afternoon learn onshore thanks for taking my questions and congrats on the quarter I wanted to follow up on a previous question around pricing.

David Sachs: This is probably for onshore so pricing is tracking better than I think it is a low to mid single digit decline. That's assumed in guidance. So is there anything that would cause pricing to get worse throughout the year I don't know if its the the 95 launch or is that more of an area of conservatism as we think about the guidance.

Anshul Maheshwari: So, you know, pricing is tracking better than I think it's the low to mid single-digit decline that's assumed in guidance. So is there anything that would cause pricing to get worse throughout the year? I don't know if it's the 9-5 launch, or is that more of an area of conservatism as we think about the guidance? Yeah, Dave. Thank you for the question. So when you think about the low end of the guidance, some of that conservatism on ASPs is reflected there.

Speaker Change #128: Yes, Dave. Thank you for the question. So when you think about the low end of the guide and some of that conservatism on Asps reflected there we haven't really changed our ESP expectations for the rest of again the guidance now in terms of what could have an impact on the ASP youre right with the 95 launch even though there is no there is no.

Anshul Maheshwari: You know, we haven't really changed our ASP expectations for the rest of the year in the guidance. Now, in terms of what could have an impact on the ASP, you're right with the 9-5 launch, even though there is no change in price per implant, the potential for the shorter construct procedures using two implants versus the deformity procedure using four, you know, could have an impact. But we think there's potential for upside on the ASP front as we progress through the year. But again, it's the first quarter; it's early in the year.

Speaker Change #128: Change in price for implant.

Speaker Change #128: The potential for the shorter construct procedures using two implants versus the deformity procedure using floor.

Speaker Change #128: Could have an impact, but we think there is potential for upside on the ASP front as we progress through the year, but again, it's the first quarter. It's early in the year. So we think it's just prudent to hold some of that conservatism.

Speaker Change #128: To see how it unfolds into in the second quarter in the third quarter.

Anshul Maheshwari: So we think it's just prudent to maintain some of that conservatism to see how it unfolds in the second quarter and the third quarter. Okay, great. And then maybe for Laura, so the Granite NTAP, I think that runs out next October. So how should we think about that as it relates to Granite procedure volumes? How impactful has that NTAP been to Granite adoption that you've seen over the last couple of years? And is there any way you can do a workaround like Granite coding to preserve this premium facility fee or even a pro fee? Thanks so much.

Speaker Change #129: Okay, Great and then maybe for Lora, so the granite and tap I think that brings out next October so how should we think about that as it relates to granite volume procedure volumes, how impactful has that been tapped in two granted adoption that you've seen over the last couple of years.

Lora: Is there any way you can do work around like granite coding to preserve.

Speaker Change #131: This premium facility fee or even a proceed thanks so much.

Laura A. Francis: Yeah, so the Granite NTAP, we have approximately 18 more months left on the Granite NTAP. It'll go through October 1st, 2025. And what we've been doing is looking at the utilization of the NTAP with Medicare, seeing strong utilization of that NTAP. And so what that's going to help us to do is quantify the value of Granite and pelvic fixation in these particular cases. And so right now, we're looking at a number of different ways in order to make sure that the incremental payment continues after the NTAP is complete.

Lora: Yeah. So.

Lora: The granite and tap we have approximately 18 more months left on the granite and tap it'll go through October <unk> of 2025 and.

Lora: What we've been doing is looking at the utilization of the and tap with with Medicare.

Lora: <unk> strong utilization.

Lora: On on that and tap and.

Lora: And so what that's going to help us to do is to quantify the value of of granite and pelvic fixation. In these particular cases and so right now we're looking at a number of different ways in order to make sure that the incremental payment continues after the end cap.

Laura A. Francis: So it could be with a new code, for example, or it could potentially be with an increase in the existing code or pointing to a higher value code. Those are all three different options that we have right now.

Lora: Is complete so it could be with the new code for example, or it could potentially be with an increase in the existing code or pointing to a higher value code. Those are all those are all three different options that we have right now or midway through this we do think that reimbursement is important we have we have.

Laura A. Francis: But we're midway through this. We do think that reimbursement is important. We have always focused as a company on ensuring that we have covered lives across the United States.

Lora: Always focused as a company on ensuring that we have.

Lora:

Lora: Covered lives across the United States, Thus us building the Si joint fusion market. When I started in 2015, there was no coverage and now we have complete coverage and Si bone and our clinical data was was a very big part of of the work in order to to build that reimbursement for <unk>.

Laura A. Francis: Us building the SI joint fusion market When I started in 2015, there was no coverage. And now we have complete coverage. And SI-Bone and our clinical data were a very big part of the work in order to build that reimbursement for SI joint fusion. So I see Granite and pelvic fixation in a similar way to that. And we expect to continue to focus on using our clinical data and as well as health economic data in order to support incremental reimbursement for pelvic fixation with granite. Great, thanks so much.

Lora: Si joint fusion, so I see granite and pelvic fixation.

In a similar way to that end.

Lora: And we expect to continue to focus on using our clinical data and as well as the health economic data in order to support incremental.

Lora: Reimbursement for pelvic fixation with granite.

Speaker Change #132: Okay, great. Thanks, so much.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Sam Brodovsky of Jewish Security. Your line is now open. And again, congratulations on the good quarter, especially the solid EBITDA result. Ask a quick one to start on gross margin, a little bit above the high end of the guide for this year. Just how should we think about that progressing through? Yeah, hey, Sam.

Speaker Change #132: Yeah.

Speaker Change #133: Thank you gentlemen for next question.

Our next question comes from the line of Sam <unk> of <unk> Securities. Your line is now open.

Sam: Hey, Thanks for squeezing me in and again, congrats on a good quarter, especially the solid EBITDA results I'll just.

Sam: Ask a quick one to start on gross margin a little bit above.

Sam: The high end of the guide for this year, just how should we think about that progressing through the year.

Samuel E. Brodovsky: Thanks for that question. On the gross margin side, it is still early in the year. And, you know, we're really pleased with how the quarter played out in terms of coming on the high end of the gross margin range. But, you know, again, we're just holding on to our guidance for 78% gross margin. At this point, you know, the key reason being that we are going to put more surgical capacity out there, especially as we get into the second half of the year. And that might have a timing impact on gross margin.

Speaker Change #134: Yeah, Hey, thanks for the question on.

Speaker Change #134: The gross margin side. It is still early in the year and we're really pleased with how the quarter played out in terms of coming on so at the high end of the gross margin range, but.

Speaker Change #135: Again, we're just holding onto our guidance for 78% gross margin.

At this point.

Speaker Change #135: The key reason being we are going to put more surgical capacity out there, especially as we get into the second half of the year and that might have a timing impact on gross margins. So we want to see how it plays out again in the first half of the year before we make any changes to the guidance there.

Anshul Maheshwari: So we want to see how it plays out again in the first half of the year before we make any changes to the guidance there. And then I'll just ask a bit of a broader one, thinking more long-term, but the two-to-one ratio of revenue growth to operating profit growth, is that something we should think about happening this year? Is that a consistent operation?

Speaker Change #136: And then I'll just ask a bit of a broader one thinking more long term.

The two to one ratio Rev growth to Opex growth is that something we should think about this year is that is that the consistent operating model. You can think of the company being able to hold onto for a for a while here. Thanks for taking the question.

Anshul Maheshwari: Hold on for a while. You know, Sam, thanks a lot. I mean, look, you know, we haven't provided long-term guidance in terms of how OPEX leverage would work out. But, our view is that top-line growth is going to remain strong with all the tailwinds that we have in 2024. Plus, like we've talked about, we have a pretty significant investment in R&D, so we expect new product launches to come out.

Speaker Change #137: Thanks, a lot I mean look we haven't provided long term guidance in terms of how opex leverage would work out.

Speaker Change #137: Our view is our topline growth is going to remain strong with all the tailwind that we have in 2024, plus like we've talked about we've got a pretty significant investment in R&D. So we expect new product launches to come out. So our focus on leverage is going to be more driven by how do we drive more product to the Cove point, how do we drive more dense.

Anshul Maheshwari: So our focus on leverage is going to be more driven by how do we drive more product to the call point, how do we drive more density or more procedures per physician, and that should translate into Salesforce leverage. And like Laura said earlier, you know, our next milestone is sort of getting to that 2 million, but we've got reps that do more than 2 million today with additional ancillary support, whether it's junior reps or coverage agents.

Speaker Change #137: City or more procedures per physician and that should translate into salesforce, leveraging like Laura said earlier.

Speaker Change #137: Our next milestone is sort of getting to that $2 million, but we've got reps that do more than $2 million today with additional ancillary support whether it's junior reps or or coverage agents. So we think leverage will continue we feel really good about that.

Anshul Maheshwari: So, you know, we think leverage will continue. We feel really good about that. We'll just stay with what we've provided for the year as part of that two-term leverage, but we don't think it's the end of the leverage. We think it'll continue at a pretty healthy clip going forward.

We'll just stay with what we've provided for the year at sort of the two.

In terms of leverage, but we don't think it's the end of the leverage we think it will continue at a pretty healthy clip going forward.

Operator: Thank you. One moment for our next question. Again, as a reminder, to ask a question, you'll need to press star 1-1 on your telephone. Our next question comes from the line of Ross Osborn on Cancer Fitzgerald. Your line is now open.

Speaker Change #138: Thank you ma'am for next question.

Speaker Change #139: Again as a reminder to ask a question you will need to press star one on your telephone.

Speaker Change #139: Our next question comes from the line of Ross Hawthorne of Cantor Fitzgerald. Your line is now open.

Ross Everett Osborn: Hey guys, congrats on the result. Just one question: with regard to the smaller diameter granite launch, would you discuss feedback or level of early adoption within the pediatric population? Yeah, we're actually excited about the expanded indications for granite 9-5, including pediatric deformity as well as in the S1 pedicle as well. We have gotten inquiries from pediatric deformity surgeons that would actually like to use a smaller granite implant with their patients, and we think that granite 9-5 is going to be a potential solution for them. So, we're happy to be able to address that particular need for those surgeons and for those patients. But, you know, the S1 pedicle opportunity is quite significant for us, too.

Ross Everett Osborn: Hey, guys. Congrats on the results and thanks for squeezing me in.

Just one with regard to the smaller diameter granite launch would you just specialty bag or level of early adoption within the pediatric population. Thank you.

Ross Everett Osborn: Yeah, we're we're actually excited about the the expanded.

Ross Everett Osborn: Indications for granted 95, so and including pediatric deformity as well as in the.

Ross Everett Osborn: The Athlon Pat.

Ross Everett Osborn: <unk> coal as well so.

Ross Everett Osborn: We have gotten inquiries from pediatric deformity surgeons that would actually like to.

Ross Everett Osborn: Use a smaller granted implant with their patients and we think that.

Ross Everett Osborn: That grant at 95 is going to be a potential solution for them. So we're happy to be able to address that particular need for for those surgeons and for those patients.

Ross Everett Osborn: But the Epsilon pedicle opportunity is quite significant for us to that's a significant part of the market that were not.

Laura A. Francis: That's a significant part of the market that we're not addressing at this point in time and with our previous product. And so some of these newer surgeons that we talked about in our prepared remarks, they're starting to use the product already for that purpose. And then that's the second area of focus. And then the third is that we did get some feedback from surgeons that just said that the 10-5 or 11-5 product was just larger than what they wanted to use, or they felt uncomfortable using stacked implants or two implants on both sides, which provides both pelvic fixation and fusion.

Ross Everett Osborn: Addressing at this point in time and with our previous product and so some of these newer surgeons that that we talked about in our prepared remarks.

Ross Everett Osborn: They are starting to use the product already for that purpose.

Ross Everett Osborn: And then that's the second area of focus and then the third is that we did get some feedback from surgeons that just said that the 10 five or 11 five product was just larger than what they wanted to use or they felt uncomfortable.

Ross Everett Osborn: Using stacked implants or two implants on both sides, which provides both pelvic fixation and fusion and so the smaller diameter. Implant also provides an opportunity for surgeons, who are currently using two implants instead to use for implants, so theres a lot of opportunity.

Laura A. Francis: And so the smaller diameter implant also provides an opportunity for surgeons who are currently using two implants instead to use four implants. So there's a lot of opportunity that's here with the granite 9-5 product, whether it's pediatric deformity, as you mentioned, whether it's the S1 trajectory that I talked about, or whether it's surgeons that previously felt that they needed a smaller implant. Or finally, those that have said, I'd like to use four, but I want something that's a little bit smaller.

Ross Everett Osborn: It's here with the granite 95 product, whether it's pediatric deformity as you mentioned, whether it's the <unk> trajectory that I talked about or whether it's surgeons that previously felt that they needed a smaller implant are finally, those that that have said it.

Ross Everett Osborn: Like to use for but I want something that's a little bit smaller so great opportunity for us going forward. Just getting started just had those first few cases done in April going to see some acceleration into may and June and really excited about what we can do in the second half of the year.

Laura A. Francis: So, great opportunity for us going forward. We're just getting started. We just had those first few cases done in April. We're going to see some acceleration into May and June, and I'm really excited about what we can do in the second half of the year.

Operator: Thank you. I'm showing no further questions at this time. I would now like to turn it over to Laura for closing comments. I just wanted to say thank you for your participation in today's call, and we look forward to seeing those of you that are going to be at the Bank of America Healthcare Conference. We will see you there. Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change #140: Thank you I'm showing no further questions at this time I would now like.

Speaker Change #140: To turn it over to Laura for closing comments.

Laura A. Francis: I just wanted to say thank you for your participation in today's call and we look forward to seeing you. Those of you that are going to be at the bank of America Healthcare Conference. We will see you there. Thank you bye bye.

Laura A. Francis: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.