Q1 2024 AxoGen Inc Earnings Call
Operator: Greetings and welcome to the AxoGen Inc 2024 First Quarter Financial Results Conference Call. At this time, all participants are in the send-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference call is being recorded. It's now my pleasure to introduce your host, Hiro Tamayo, Vice President of Finance and Investor Relations. Thank you, Harold. You may begin.
Greetings and welcome to the extra Gen 820 countries for our first quarter financial results Conference call.
At this time, all participants are in listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press Star then zero on your telephone keypad.
As a reminder, this conference call is being recorded.
It's now my pleasure to introduce your host here Tomorrow, Vice President Finance and Investor Relations. Thank you Harold you may begin.
Tomorrow: Thank you Keith good morning, everyone.
Hiro Tamayo: Thank you. Good morning, everyone.
Hiro Tamayo: Joining me on today's call is Karen Zaderej, AxoGen's Chairman, Chief Executive Officer, and President, and Nir Naor, Chief Financial Officer. Karen will discuss the first quarter of 2024 financial results, and Nir will provide an analysis of our financial performance and guidance and discuss our outlook for the year, followed by a question and answer session. Today's call is being broadcast live via webcast, which is available on the investor sections of AxoGen's website. Following the end of the live call, a replay will be available on the investor section of the company's website at www.axogeninc.com.
Tomorrow: Joining me on today's call are Sky that are actually just chairman and Chief Executive Officer, and President and Chief.
Speaker Change: Chief Financial Officer.
Speaker Change: Pat will discuss the first quarter of 2024 financial results and he will provide an analysis of our financial performance and guidance and discuss our outlook for the year, followed by a question and answer session.
Speaker Change: Today's call is being broadcast live via webcast, which is available on the investor sections of the <unk> website.
Speaker Change: All of them here in the last call a replay will be available in the investor section of the company's website at Ww that extra Jamie Dot com.
Hiro Tamayo: Before we get started, I'd like to remind you that during this conference call, the company will make projections and forward-looking statements, including our financial guidance, our expectations regarding our ability to expand our footprints and expand revenue from core accounts, anticipated growth for revenue categories, marketing opportunities with nerve applications associated with breast OMF protection and the surgical treatment of pain, and new products. Our expectations regarding the timing of the launch of Avive Plus, our statement regarding the timing of the complete biologics license application submission for Advanced NerveGraft, as well as our statement regarding the timing of approval of the BLA. Our expectations that, assuming approval of the BLA, Advanced NerveGraft will be designated as a reference product and the expected market exclusivity of such designation.
Speaker Change: Before we get started I'd like to remind you that during this conference call. The company will make projections and forward looking statements, including our financial guidance.
Speaker Change: Patients regarding our ability to expand our footprint and expand revenue from core commerce anticipated growth for revenue categories marketing opportunities with nerve applications associated with Bruce on mask protection surgical treatment of pain and new products.
Speaker Change: Patients regarding the timing of the launch of a five class a statement regarding the time needed to complete biologics license application submission for advanced nerve graft as well as the statements regarding the timing for loyalty.
Speaker Change: Patients that assuming approval of the BLA advanced aircraft will be designated as a reference project and the expected market is interesting D such designation in.
Speaker Change: Our expectations around cash flow.
Hiro Tamayo: And our expectations around cash flow, ensuring that we will continue trending towards cash flow, breaking the improper ability. Forward-looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risk and uncertainties, including, not without limitation, the risk and uncertainties reflected in the company's annual and periodic reports, such as hospital staffing issues, regulatory processes and approvals, surgeon and product adoption, and market awareness of our products.
We continue trending towards cash flow breakeven and profitability.
Speaker Change: Forward looking statements are based upon current beliefs and assumptions and are not guarantees of future performance and are subject to risks and uncertainties, including not without limitation, the risks and uncertainties reflected in the company's annual and periodic reports.
Speaker Change: So stephanie issues regulatory process and approvals surgeon in product adoption and market awareness of our products and forward looking statements are representative only that's what the data base.
Hiro Tamayo: The forward-looking statements are representative only as of the date they are made and, except as required by applicable law, we assume no responsibility to publicly update or revise any forward-looking statements. In addition, for a reconciliation of non-GAAP measures, please reference today's press release in our corporate presentation on the investor sections of the company's website. Now, I would like to turn the call over to Karen. Karen? Thank you.
Speaker Change: As required by applicable law, we assume no responsibility to publicly update or.
Speaker Change: Or revise any forward looking statements. In addition for a reconciliation of non-GAAP measures. Please reference today's press release and a corporate presentation from the investors section of the company's website now I would like to turn the call over to Pat Okay. Thank.
Pat: Thank you Harold.
Karen Zaderej: And thank you all for joining us today as we discuss our 2024 first quarter financial results. We had a solid first quarter, and we're pleased with both the positive trends in revenue and the bottom line. Our performance underscores the progress we continue to make towards profitability and generating positive cash flow. During today's call, I'm going to highlight the progress we've made across our business, as well as some changes we've made on the disclosure and reporting side, which both Nir and I will discuss later in the call. Revenue for the quarter increased by 12.9% to $41.4 million compared to last year.
Pat: And thank you all for joining us today as we discuss our 'twenty 'twenty four first quarter financial results.
Pat: We had a solid first quarter and we're pleased with both the positive trends in revenue and bottom line.
Our performance underscores the progress we continue to make towards profitability and generating positive cash flow.
Speaker Change: During today's call I'm going to highlight the progress we've made across our business as long as some changes we've made on the disclosure and reporting side, which both near and I will discuss later on in the call.
Speaker Change: Revenue for the quarter increased by 12, 9% to 41 4 million compared to last year.
Karen Zaderej: We're pleased with this quarter's top-line performance, which was at a run rate above the midpoint of our annual guidance. Looking closely at the quarter, growth was broad-based across our products and applications. We saw a strong January and February, and our typical step-up in volume occurred in April rather than March this year.
Speaker Change: We're pleased with this quarter's top line performance, which was at a run rate above the midpoint of our annual guidance.
Speaker Change: Looking closely at the quarter growth was broad based across our products and applications.
Speaker Change: We saw a strong January and February and.
Speaker Change: And our typical step up in volume occurred in April rather than March this year.
Karen Zaderej: We remain confident that we will achieve our 2024 top line goal. As part of the disclosure and reporting changes I alluded to in my opening comments, we've made the strategic decision to remove our revenue breakdown between scheduled and emergent trauma applications. Our growth strategy continues to be focused on going deeper in high potential accounts and building a nerve repair business in these accounts across all of our targeted nerve repair applications.
Speaker Change: We remain confident that we will achieve our 2020 for topline guidance.
Speaker Change: As part of the disclosure and reporting changes I alluded to in my opening comments, we've made the strategic decision to remove our revenue breakdown between scheduled and emergent trauma applications.
Speaker Change: Our growth strategy continues to be focused on going deeper in high potential accounts and to build a nerve repair business and these accounts across all of our targeted nerve repair application.
Karen Zaderej: We believe the performance and key metrics pertaining to sales productivity and our progress in our core accounts provide the most clarity on the business model versus estimates of revenue by application. We will continue to talk qualitatively about the applications for nerve repair and our growth to give you color on both the opportunities in front of us and the progress we're making. As I said earlier, our growth strategy continues to be focused on going deeper in our existing core accounts, where we see significant opportunities to expand our footprint in multiple clinical applications, as well as increase the number of core accounts.
Speaker Change: We believe the performance and key metrics pertaining to sales productivity.
Speaker Change: And our progress in our core accounts provide the most clarity on the business model versus estimates of revenue by application.
Speaker Change: We will continue to talk qualitatively about the applications for nerve repair and our growth to give you a color on both the opportunities in front of us and the progress we're making.
Speaker Change: As I said earlier, our growth strategy continues to be focused on going deeper in our existing core accounts, where we see significant opportunity to expand our footprint in multiple clinical applications as well as increasing the number of core accounts.
Karen Zaderej: Most of our core accounts have the opportunity for significant expansion across surgeon users and applications, resulting in upside in total revenue. As a reminder, core counts are defined as those generating more than $100,000 in revenue over the trailing 12 months and represent approximately 65% of our total revenue.
Speaker Change: Most of our core accounts have the opportunity for significant expansion across surgeon users and applications.
Speaker Change: Noting an upside in total revenue.
Speaker Change: As a reminder, core counts are defined as those generating more than $100000 in revenue over the trailing 12 months and represent approximately 65% of our total revenue.
Karen Zaderej: Today, our largest core accounts are over a million dollars annually, and we look to continue to grow our core accounts toward their full potential. We ended the first quarter with 115 direct sales representatives, down one sequentially and compared to a year ago.
Speaker Change: Today, our largest core accounts are over a million dollars annualized and we look to continue to grow our core accounts toward their full potential.
Speaker Change: Yeah.
Speaker Change: We ended the first quarter with 115 direct sales representatives.
Speaker Change: One sequentially and compared to a year ago.
Karen Zaderej: We believe our revenue growth can continue to be driven primarily by increased productivity of our sales force, and we will evaluate and add additional sales reps as their territories approach targeted levels. Our direct sales force is supplemented by independent sales agencies that represent approximately 10% of our total revenue. As the leader in the nerve repair market, driving innovation to provide advanced solutions for surgeons and their patients is a key pillar of our growth.
Speaker Change: We believe our revenue growth can continue to be driven primarily by increased productivity of our sales force and we will evaluate and add additional sales reps in their territories approach targeted levels.
Speaker Change: Our direct sales force is supplemented by independent sales agencies that represent approximately 10% of our total revenue.
Speaker Change: As the leader in the nerve repair market.
Speaker Change: Driving innovation to provide advanced solutions for surgeons and their patients is a key pillar of our growth.
Karen Zaderej: We've previously announced three innovations to our portfolio, which included two new products in the protection space and the re-sensation technique for implant-based breast neurotization. We saw strong surgeon and patient interest in implant-based breast neurotization and grew the number of surgical teams trained in this new technique. We're on track to expand our education efforts with three national recensation surgeon training programs in 2024.
Speaker Change: We've previously announced three innovations to our portfolio, which included two new products to the protection space and the recent station technique for implant based breast nerdy version.
Speaker Change: We saw strong surgeon and patient interest in implant based breast organization and grew the number of surgical teams trained and this new technique.
Speaker Change: We're on track to expand our education efforts with three National recent station surgeon training programs in 2024.
Karen Zaderej: Nerve protection continues to represent a significant growth opportunity for AxoGen. As previously mentioned, we saw a need for multiple product solutions to address the diverse types of non-transfected nerve injuries. Our first portfolio expansion was the launch of AxoGuard HA Plus Nerve Protector, and we have been pleased with the surgeon acceptance of the product and the progress of the launch, including the positive impact we're seeing on surgeon activation and new use cases in targeted applications.
Speaker Change: Nerve protection continues to represent a significant growth opportunity for oxygen.
Speaker Change: As previously mentioned, we saw a need for multiple product solutions to address the diverse types of non transected nerve injuries.
Speaker Change: Our first portfolio expansion with the launch of Axa Guard H E plus nerve protector and we've been pleased with the surgeon acceptance of the product and the progress of the launch including the positive impact we're seeing on surgeon activation and new use cases and targeted applications.
Karen Zaderej: We're continuing to expand our offering for nerve protection with the 5 Plus Soft Tissue Matrix, which broadens our nerve protection portfolio and targets acutely traumatized nerves. The Vive Plus Soft Tissue Matrix is a resorbable nerve protection implant that functions as a barrier, providing temporary protection and tissue separation during the critical phase of healing.
We're continuing to expand our offering for nerve protection with the bus plus soft tissue matrix, which broadens our nerve protection portfolio and targets acutely Traumatize nurse.
Speaker Change: Oh, five plus soft tissue matrix is a resorbable nerve protection implant that functions as a barrier, providing temporary protection and tissue separation during the critical phase of healing.
Karen Zaderej: We're pleased with the initial surge of feedback we've received in our limited market release, and we are on track for a full launch in June. With these additions, we believe we offer the broadest portfolio, a protection portfolio for nerve repair, and this will continue to drive growth in the nerve protection market. Moving on to updates to our growing body of clinical evidence. Over the years, we've made significant investments to develop quality clinical evidence to demonstrate the safety, performance, healthcare economics, and utility of our nerve repair solutions.
Speaker Change: We're pleased with the initial surgeon feedback we've received in our limited market release and on track for our full launch in June.
Speaker Change: With these additions we believe we offer the broadest portfolio of protection portfolio for nerve repair and this will continue to drive growth in the nerve protection market.
Speaker Change: Moving on to updates to our growing body of clinical evidence.
Speaker Change: Over the years, we've made significant investments to develop quality clinical evidence to demonstrate the safety performance health care economics and utility of our nerve repair solutions are active clinical programs are progressing as expected as of the ended the quarter. We had 258 peer reviewed publications.
Karen Zaderej: Our active clinical programs are progressing as expected. As of the end of the quarter, we had 258 peer-reviewed publications, including applications in trauma, breast, OMS, and pain. This January, we announced positive top-line results from the REPOSE clinical study comparing standard-of-care neurectomy of symptomatic neuromas to neurectomy and protection of the terminated nerve end with our AxoGuard nerve caps. This post-marketing study met its primary endpoint of reduction in pain as measured by the Visual Analog Scale.
Speaker Change: Including applications in trauma breast on us and pain.
Speaker Change: This January we announced positive topline results from our repose clinical study comparing standard of care neurectomy or symptomatic neuroma generic Jimmy and protection of the terminated nerve and with our Axa Gardner of cat.
Speaker Change: This post marketing study met its primary end point for reduction in pain as measured by the visual analog scale.
Karen Zaderej: In addition, the study investigators found that over the full 12-month course of follow-up, AxoGuard NerveCap demonstrated statistical superiority for reduction in total pain reported by the subjects compared to the standard of care in a record. We believe that these findings will play an important role in surgeon clinical decision-making.
Speaker Change: In addition, the study investigators found that over the full 12 month course of follow up acts of God nerve cap demonstrated statistical superiority for reduction in the total pain reported by the subjects compared to the standard of care interrupt me.
Speaker Change: We believe that these findings will play an important role in surgeon clinical decision, making.
Karen Zaderej: Turning now to the BLA for advanced neurographs, we completed a productive pre-BLA meeting with FDA. We're encouraged by the positive interactions and have aligned with FDA on a rolling submission process and the content of the modules for submission. We believe we're on track for the BLA filing to be completed in the third quarter of 2024, and the submission timeline will allow for a potential approval in mid-2025. In addition, as required under the Pediatric Research Equity Act, we have submitted and reached agreement with the FDA on an initial pediatric study plan proposal.
Speaker Change: Turning now to the BLA for advanced aircraft, we completed a productive pre BLA meeting with FDA.
Speaker Change: We're encouraged by the positive interactions and have aligned with FDA on a rolling submission process and the content of the modules for submission.
Speaker Change: We believe we're on track for the BLA filing to be completed in the third quarter of 2024.
Speaker Change: And the submission timeline will allow for a potential approval in mid 2025.
Speaker Change: In addition, as required under the pediatric research equity Act, we have submitted and reached agreement with the F. D. A of an initial pediatric study plan proposal.
Karen Zaderej: A final decision on the proposed plan is made by the Review Division at the time of approval of the Biologic Marketing Application. Another component of our transition to a biologic was the construction and validation of our new AxoGen processing center. At the end of 2023, we fully transitioned all advanced processing to our new sensor. We believe the advancements in our processing facility will provide the appropriate biologic processing environment as well as expand our processing capacity.
Speaker Change: A final decision on the proposed plan is made by the review division at the time of approval of the biologics marketing application.
Another component.
Speaker Change: Part of our transition to a biologics, what's the construction and validation of our new Acrogen processing Center.
Speaker Change: At the end of 2023, we fully transitioned all advanced processing to our new center.
Speaker Change: We believe the advancements of our processing facility will provide the appropriate biologic processing environment as well as expand our processing capacity.
Karen Zaderej: As a reminder, a BLA approval will complete the regulatory transition of advanced nerve grafts from a 361 tissue product to a 351 biological product. Importantly, we believe Avance will be designated as the reference product for potential biosimilars, providing 12 years of market exclusivity from the approval. In conclusion, we're pleased with our results from the first quarter, which reflect the execution of our growth strategy. The exceptional performance of AxoGen's talented team has been pivotal in achieving these results.
Speaker Change: As a reminder, our BLA approval will complete the regulatory transition of advanced nerve graft from a 361 tissue product to a 351 biological product.
Speaker Change: Importantly, we believe the vas will be designated as the reference product for potential biosimilars, providing 12 years of market exclusivity from the approval.
Speaker Change: In conclusion, we're pleased with our results for the first quarter.
Speaker Change: Which reflects the execution of our growth strategy.
Speaker Change: The exceptional performance of accidents talented team has been pivotal in achieving these outcomes.
Karen Zaderej: Looking ahead, we're focused on delivering and furthering our mission to revolutionize the science of nerve repair. I'll now hand the call over to Nir, who will provide further details on our reporting changes, review our financial highlights, and provide guidance.
Speaker Change: Looking ahead, we're focused on delivering and furthering our mission.
Speaker Change: To revolutionize the science of nerve repair.
Speaker Change: I'll now hand, the call over to Nir, who will provide further details on our reporting changes redo, our financial highlights and provide guidance here.
Nir Naor: Thank you, Karen. It's been a very exciting five months since I joined the AxoGen team. I've been listening carefully to the various teams and quickly learning the vast details behind this robust and innovative team. As part of my diligence, I have seen several different opportunities and changes to enhance our reporting. All of these changes were strictly voluntary, and although our previous practices are acceptable alternatives, I believe that the new practices are more widely used in the industry and provide investors with improved comparability of the company's financial statements.
Nir: Thank you Karen she's been very exciting five months since I joined the atrazine team I've been listening carefully to the various themes and quickly learning the vast details behind this robust and innovative business.
Nir: As part of my diligence I have seen several different opportunities and changes to enhance our reporting.
Nir: All of these changes were strictly voluntary and although our previous practices are acceptable terms, if I believe that the new practices are more widely used in the industry and provide investors improved comparability of the company's financial statements for peers.
Nir Naor: In addition, these changes will provide better transparency and facilitate better resource allocation as we continue our journey to profitability. Our auditors have reviewed these changes and agree that they are acceptable. One of these changes involves our accounting policies for shipping and handling costs. As of the first quarter of 2024, our shipping and handling costs directly related to bringing our products to their final destination, including facility and warehousing overhead, are now included in the cost of goods sold, whereas previously they were included in sales and marketing.
Nir: In addition, these changes will provide better transparency and facilitating better we're supposed to allocation as we continue our journey to profitability.
Nir: Our auditors have reviewed these changes and agree that they are acceptable.
Nir: One of these changes involve the accounting policy for shipping and handling costs.
Nir: Although the first quarter of 'twenty 'twenty, four our shipping and handling costs directly related to bringing our products to their final destination, including facility and warehousing over and are now included in cost of goods sold whereas previously they were included in sales and marketing expenses.
Nir Naor: Additionally, as of the first quarter of 2024, we ceased allocating certain costs to and from certain departments. Previously, such costs had been allocated based on the company's estimates of the proportionate share of total expense to each line. It is important to recognize that all of these changes, which were completely voluntary, had no impact on net revenue, loss from operations, net loss, loss for common share, or capital.
Additionally, as of the first quarter of 'twenty 'twenty four we ceased allocating certain costs doing from certain departments.
Previously such costs have been allocated based on the company's estimates or the proportionate share of total expense to each line item.
Nir: It is important to recognize that all of these changes which were completely voluntary had no impact on net revenue loss from operations net loss loss per common share or capsules.
Nir Naor: We have made available our 2023 reclassified condensed consolidated statements of operations by quarter in our earnings release this morning to provide full transparency of these. Correspondingly, all the 2023 financial results that we refer to include all of these. In addition, we will no longer be disclosing the breakouts on Emergent versus Scheduled Procedure Revenue. This disclosure was based on estimates and provided qualitative information about the applications where our products are used. After looking into this disclosure and speaking with investors and advisors, I came to the conclusion that this disclosure does not provide the best insights into our business model and the successful execution of our commercial strategy. Our strategy is focused on increasing our sales productivity and penetration into high-potential accounts across multiple surgeon specialties and procedural applications.
We have made available our 2023 reclassified condensed consolidated statements of operations by quarter in our earnings release. This morning to provide full transparency of these changes.
Nir: Correspondingly.
Nir: Oh, the 2023 financial results that we referred to are in include all of these changes.
Nir: In addition, we will no longer be disclosing the breakouts on emergent versus scheduled procedure revenue.
Nir: Disclosure was based on estimates and provided qualitative information about the applications, where our products are used.
Nir: After looking into this disclosure in speaking with investors and advisers I came to the conclusion that this disclosure does not provide the best insight into our business model and successful execution of our commercial strategy.
Nir: Our strategy is focused on increasing our sales productivity and penetration into hypothetical accounts across multiple surgical specialties and procedural applications.
Nir Naor: As a result, we have decided to align our reporting more closely with our strategy. Now, turning to our financial results. For this quarter, our revenue was $41.4 million, representing 12.9% growth from the first quarter of 2020. This growth is attributed to a 4.9% increase in unit volume added with a 5.3% mixed favorability and a 2.6% increase in price.
Nir: As a result, we have decided to align our reporting more closely with our strategy.
Nir: And now turning to our financial results for this quarter. Our revenue was 41 $44 million, representing 12.9% growth from the first quarter of 2023.
Nir: This growth is attributed to a four 9% increase in unit volume added with a 5.3 per cent and mix favorability and a two 6% increase in price.
Nir Naor: Our gross profit for the quarter was $32.6 million, an increase from the $28.5 million recorded in the first quarter of 2020. This represents a gross margin of 78.8%, up from 77.7% in the same period last year. Our total operating expenses for the quarter increased by 3.8% to $37.2 million, up from $35.8 million in Q1 of 2020. Our sales and marketing expenses for the first quarter grew by 1.9% to $19.8 million. Sales and marketing expenses as a percentage of total revenue decreased to 47.9% from 53% in the first quarter of 2023, as we saw improved sales productivity as well as determination of royalty payments on a Research and development expenses increased by 17.1% to $7.4 million from $6.3 million in 2023, driven by costs related to the BLA. As a percentage of total revenues, total R&D expenses increased to 17.9%, up from 17.3% in the last quarter of the previous year.
Nir: Our gross profit for the quarter was $32 $6 million, an increase from the $28 $5 million recorded in the first quarter of 2020 three.
Nir: This represents a gross margin of 78, 8% up from 77, 7% in the same period last year.
Yeah.
Our total operating expenses for the quarter increased by three 8% to $37.2 million up from $35 $8 million in Q1 of 2023.
Nir: Our sales and marketing expenses for the first quarter grew by one 9% to $19.8 million.
Nir: Sales and marketing expenses as a percentage of total revenue decreased to 47, 9% from 53% in the first quarter of 2023 as we saw improved sales productivity as well as the termination of royalty payments all of that.
Nir: Research and development expenses increased by 17, 1% to $7 $4 million from $6 $3 million in 2023, driven by costs related to the BLA.
Nir: As a percentage of total revenues total R&D expenses increased to 17, 9% up from 17, 3% in the last quarter of the previous year.
Nir Naor: General and administrative expenses remained almost flat at $9.9 million in Q1 of 2024 compared to $10.1 million in the first quarter of 2020. The quarter ended with a net loss of $6.6 million, or $0.15 per share, compared to a net loss of $7.1 million, or $0.17 per share, in the first quarter of 2020. However, we recorded an adjusted net loss of $2.7 million for the quarter, or $0.06 per share. This is a shift from an adjusted net loss of $4.1 million, or $0.10 per share, in the same period.
Nir: General and administrative expenses remained almost flat at $9 $9 million in Q1 of 'twenty 'twenty four compared to $10 $1 million in the first quarter of 2023.
Nir: The quarter ended with a net loss of $6 $6 million or <unk> 15 per share compared to a net loss of $7 $1 million or <unk> 17 per share in the first quarter of two a country.
Nir: However, we recorded an adjusted net loss of $2 $7 million for the quarter or six cents per share shift from an adjusted net loss of $4 $1 million or 10 cents per share in the same period last year.
Nir Naor: Adjusted first quarter EBITDA was $1 million, compared to an adjusted EBITDA loss of $3.8 million in the previous year. This change stands as a testament to our focused execution and improvement in operational efficiency and underscores our commitment to optimizing our costs. As of March 31st, our balance of cash, cash equivalents, and investments was $23.6 million compared to $37 million at the end of the fourth quarter of 2020. Turning now to our guidance, as outlined in today's press release, we are maintaining our full-year guidance for 2024.
Nir: Adjusted first quarter, EBITDA was $1 million compared to an adjusted EBITDA loss of three $8 million in the previous year.
This change stands as a testament to our focused execution and improvements in operational efficiency and underscores our commitment to optimizing our cost structure.
Nir: As of March 31st our balance of cash cash equivalents and investments were $23 $6 million compared to $37 million at the end of the fourth quarter of 2023.
Nir: Turning now to our guidance as outlined in today's press release, we are maintaining our full year guidance for 'twenty 'twenty four.
Nir Naor: We expect revenue to be in the range of $177 million to $181 million, which represents an annual growth rate of approximately 11 to 14%. We also reiterate our gross margin guidance for the full year to be in the range of 76-79%. Additionally, we expect to be net cash flow positive cumulatively for the period from April 1st through year-end. In summary, we're pleased with our performance in the first quarter. We will continue to execute our strategies, invest in innovation, drive revenue growth, and optimize resource allocation and profitability. And this time, we'd like to open the line to questions.
Nir: Expect revenue to be in the range of $177 million to $181 million, which represents an annual growth rate of approximately 11% to 14%.
Nir: We also reiterate our gross margin guidance for the full year to be in the range of 76% to 79%.
Nir: Additionally, we expect to be net cash flow positive cumulatively for the period from April one through year end.
Nir: In summary, we're pleased with our performance in the first quarter, we will continue to execute our strategy to invest in innovation and drive revenue growth and optimize resource allocation and profitability.
Speaker Change: And at this time, we'd like to open the line for questions.
Speaker Change: Yes, yes. Thank you.
Operator: Yes, yes, thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star, then 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star then 2 if you'd like to remove your question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. One moment, please, while we poll for questions. And the first question comes from Michael Sarcone with Jeffreys.
Speaker Change: We will now be conducting a question and answer session.
She would like to ask a question. Please press Star then one on your telephone keypad.
Speaker Change: <unk> indicated that Youre line is in the question queue.
Speaker Change: You May press Star then two if you'd like to remove your question from the queue.
Speaker Change: All participants using speaker equipment may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker Change: And the first question comes from Michael Sarcone with Jefferies.
Michael Anthony Sarcone: Good morning, and thanks for taking my question. Good morning. So, Karen, just the first one, you know, your comments on performance through the quarter. You talked about a strong January and February and then, you know, a volume uptick in April. Can you maybe give us a little bit of color?
Michael Anthony Sarcone: Good morning, and thanks for taking my questions.
Michael Anthony Sarcone: Good morning.
Michael Anthony Sarcone: Okay.
Michael Anthony Sarcone: Karen just the first one you know your comments on performance through the quarter you talked about the strong January and February and then you know.
Michael Anthony Sarcone: Our volume uptick in April can you, maybe give us a little bit of color on on what happened in March.
Michael Anthony Sarcone: And how that compares to what you've seen historically.
Karen Zaderej: As you know, historically, as the summer months start, a sort of step-up into the second quarter, and that usually leads in March, and this year, we did not see the lead-in in March. We saw it, actually, as I said in my notes, get pushed into April, which is where we saw the step-up. I'm going to hypothesize here that it had to do with the timing of the Easter holidays, but that's just a guess on my part.
Michael Anthony Sarcone: Yeah.
Karen: As you know, we historically have seen as the as the summer months start a sort of step up in the second quarter and that usually leads in in March and this year, we did not see the lead in in March and.
Karen: We saw it actually as I said in my notes.
Karen: Get pushed into April is where we saw the stuff up.
I'm going to hypothesize here that it had to do with the timing of the Easter holidays, but that's just a you know a hypothesis on my part I'm, we have talked to a number of our hospital systems that are also said they saw a shift in the March timeframe on their elective outpatient procedures that might support that but well.
Karen Zaderej: We have talked to a number of hospital systems that have also said they saw a shift in the March time frame for their elective outpatient procedures that might support that. But what we just saw was a slight difference in timing when we saw that step-up occur. Having said that, we're really pleased to see it.
Karen: What you saw was a little difference in timing of when we saw that step up occur I'm, having said that we're really pleased to see that we saw growth again across products across the applications continuing to build this business with a real focus and I'm building out this core accounts and driving penetration in courthouse.
Karen Zaderej: Got it. Thanks. That's helpful. And just given that you saw the step up in April, rather than March, does that have any implications for quarterly sales cadence through the balance of the year, you know, particularly if it differs from the prior year?
Speaker Change: Got it. Thanks, that's helpful. And then just given that you saw the step up in in April rather than March does that have any implications for.
Speaker Change: The sales cadence through the balance of the year, particularly if it if it differs from from prior year.
Karen Zaderej: I think in the end, we're still going to see the cadence that you see a second quarter step up and a third quarter step up that we've seen in the past. So I think we're not seeing a difference there. It's just a slight difference in the timing of the week that it occurred in.
Speaker Change: I think in the end, we're still going to see the cadence that you see a second quarter step up and a third quarter step up that we've seen in the past. So I think we're not seeing a difference there is just a slight difference in timing of the week that it occurred in.
Karen Zaderej: Got it. Just one last one for me. Can you give us any updates on the CEO search?
Speaker Change: Got it and just one last one for me could you give us any.
Speaker Change: Any updates on the the CEO search.
Karen Zaderej: The CEO search is in process. There's a group of independent directors who are leading the search. They've hired an outside search firm who is sourcing candidates, and they're going through the interview process. Still work in progress. Ultimately, we'll get an announcement as we finalize that selection. They want to be thoughtful in that selection. And then, of course, if you remember, I'll still be available from a consulting standpoint for a period of time to support that transition. Great, thanks for the update.
Speaker Change: Oh, I'm, sorry, I'm CEO searches and process. The there's a group of independent directors, who are leading the search them they've hired an outside search firm, who is sourcing candidates and they're going through the interview process. So I'm still work in process and that's that you know ultimately what.
Speaker Change: Get an announcement as we finalize that they want to be thoughtful in that selection.
Speaker Change: And and then of course, if you remember I'll still be available from a consulting standpoint for a period of time to support that transition.
Michael Anthony Sarcone: Great, thanks for the update, Karen.
Speaker Change: Great. Thanks for the update Karen.
Speaker Change: Sure. Thanks, Mike.
Michael Holden Kratky: Thank you, and the next question comes from Mike Kratky with SAP Securities.
Speaker Change: Thank you.
Speaker Change: Question comes from my question with US S&P Securities.
Michael Holden Kratky: Hi everyone, thanks for taking our questions. Morning! Dope. Can you just give a little bit more color on the decision to remove the schedule versus the emergent breakdown? I mean, was there anything you saw this quarter that was kind of at odds with what you expected or any change to how we should be thinking about the split between those two moving forward?
Speaker Change: Hi, good morning, Thanks for taking my questions.
Karen: Good morning, Doug.
Speaker Change: Okay, and then just give a little bit more color on the decision to remove the scheduled person emergent breakdown I mean was there.
Speaker Change: And then you saw this quarter that was kind of at odds with what you expected or any change to how we should be thinking about the split between those two moving forward.
Nir Naor: Yeah, thank you for the question. As we mentioned, this breakout is based on estimates and provides this qualitative breakdown between those two procedures. And after looking into that, especially with this emphasis on resource allocation that I promoted and talking to several analysts and investors, I came to the conclusion that it doesn't provide the best insights and the best way to look at our business and at our commercial strategy. Our commercial strategy has been to increase our penetration into high-potential accounts, which each span several procedures and applications and surgeon specializations. That is basically the rationale for this.
Speaker Change: Yeah. Thank you for the question. So as we mentioned this breakout is based on estimates and provided this qualitative breakout between those two procedures.
Speaker Change: And after looking into that especially with this emphasis on resource allocation that I promoted and talking to several analysts and investors.
Speaker Change: I got to a conclusion that it doesn't provide the best insights and the best way to look at our business and our commercial strategy. Our commercial strategy has been to increase our penetration into high potential accounts, which each spend several procedures and applications are and surgery specialties.
Speaker Change: So that that is basically the rationale and then in your question again from a color commentary standpoint, we continue to see growth across multiple.
Karen Zaderej: And then, again from a color commentary standpoint, we continue to see growth across multiple applications and products. We're not isolated into one area or one product, frankly. We're excited to continue to see the growth that we see in the protection area. If you remember, protection is both part of trauma and part of our scheduled cases.
Speaker Change: Multiple applications and products were not isolated into one area or all or one product frankly.
Speaker Change: We're excited to continue to see the growth that we see in the protection area. If you remember protection as both part of trauma and part of our scheduled cases and <unk> and so we are pleased to see that we're seeing all of these areas continue to grow and that's one of the shifts again is to say that growth is predominantly happening.
Karen Zaderej: And so we are pleased to see that all of these areas continue to grow. And one of the shifts, again, is to say that growth is predominantly happening in these core accounts. That's where our focus is. So I think that the core account metrics are going to be more indicative of how we're growing our product.
Speaker Change: In these core accounts, that's where our focus is so I'm just thinking that the core account metrics are are are going to be more indicative of how we're growing our business.
Michael Holden Kratky: Got it. Yeah, I really appreciate the helpful color there.
Speaker Change: Got it yeah I really appreciate the helpful color there and then maybe just a quick follow up but you know something about product mix standpoint, I know youre not going to give details on kind of the specifics.
Speaker Change: You know how should we be thinking about the contribution from some of the newer product launches in terms of.
Speaker Change: 24 in the.
The second half of this year.
Speaker Change: I'm sorry, so could you say the question again.
Michael Holden Kratky: And then maybe just a quick follow-up. But, you know, from a product mix standpoint, yeah, I know you're not going to give details on kind of the specifics, but actually thinking about the contribution from some of the newer product launches in terms of 2024 and the second half of this year.
Yeah, just in terms of how we should think about the contribution from some of the newer product launches that you've had for the second half of this year in 2024 in general.
Michael Holden Kratky: I'm sorry, so could you say the question again?
Speaker Change: Okay.
Speaker Change:
Michael Holden Kratky: Yeah, just in terms of how we should think about the contribution from some of the newer product launches that you've had for the second half of this year in 2024, in general.
Speaker Change: Well first we consider them in our guidance. So they were included in the guidance they don't aren't part of our of a.
Karen Zaderej: Okay. Well, first, we considered them in our guidance, so they were included in the guidance. They aren't part of a change in guidance with the launch of the two protection products. Avive Plus will launch here in June, so it will be ramping up. So like all new products, I think in the back half of the year, while surgeons are going to be excited to try it, the revenue impact is still going to be modest because you've got to go through value analysis committees to get it into the accounts.
Speaker Change: Change in guidance with the launch of the two protection products.
Speaker Change: Advised plus will launch here in June so it will be ramping up so like all new products I think the back half of the year, while surgeons are gonna be excited to try it but the revenue impact is still going to be modest because you've gotta go through value analysis committees to get into the account so there.
Karen Zaderej: So there's work that has to happen before it can really start to impact revenue. HA Plus, on the other hand, we've gone through a lot of value analysis submissions, getting it allowed to be either brought into or stocked in hospitals, and we're starting to see good, steady use of the product and reuse of the product. I can't give you an exact contribution, but we are really pleased to see that it is taking its rightful place in some of the surgeons' treatment algorithms and is becoming a product that they regularly use in certain applications.
Speaker Change: There's work that has to happen before it can really start to impact revenue H, a plus on the other hand, we've gone through a lot of that value analysis submissions getting it allowed to be brought either brought into our stocked in hospitals and we're starting to see a good steady use of the product and reuse of the product.
Michael Holden Kratky: I understand. Thanks very much.
Speaker Change: I can't give you a.
Speaker Change: And exact contribution, but we are really pleased to see that it is content that it is taking a its rightful place and some of the surgeons are treatment algorithms.
Speaker Change: And and is becoming a product that they regularly use in certain use applications.
Speaker Change: Understood Thanks very much.
Caitlin Cronin: Thank you. And the next question comes from Caitlin Cronin with Canaccord Genodes.
Speaker Change: Thank you and our next question comes from Kevin Cronin with Canaccord Genuity.
Speaker Change: Yes.
George: Hey guys, this is George on behalf of Caitlin. I've just got a couple of questions. First, what was procedural growth like in the quarter? You know, on a percentage basis year over year, and then maybe talk a little bit about, you know, just the general health of the overall market you're seeing at 24.
Kevin Cronin: Hey, guys.
Kevin Cronin: This is george on for Caitlin.
George: Just got a couple of questions [laughter].
George: Yeah. So I just have a couple of questions. Just first you know what was christy's real growth like in the quarter.
George: Hum.
George: On a percentage basis year over year, and then maybe talk a little bit about you know just the general health of the overall market Youre seeing at 24.
George: I'm sorry, again, it was hard to hear the question. If you could repeat it, please.
I'm I'm, sorry, again, it was hard to hear the question if you could repeat the question.
George: Yeah, yeah. Can you hear me now? Yeah. Yeah, so our first question was just understanding how procedural growth was in the quarter on a year-over-year basis and then, you know, just more generally on the health of the overall market that you're seeing in 24.
Speaker Change: Yeah, Yeah can you hear me now yes.
Speaker Change: Yeah. So the first question was just.
Speaker Change: Understanding how procedural gulfport like in the quarter.
Speaker Change: Year over year basis, and then.
Speaker Change: Just more generally on the health of the overall market that you're seeing in 'twenty four.
Speaker Change: Yeah, we think good procedure growth and so.
Karen Zaderej: Yeah. We've seen good procedure growth, and so let me break each of the segments down. So trauma has seasonality, so we saw the seasonality that we would expect in a Q1 with the noted exception of the timing of the step up as people start to get more active. We saw that pushed into April instead of the latter part of March.
Speaker Change: So let me break it in each of the segments. So trauma has seasonality to it so we saw the <unk>.
Speaker Change: Seasonality that we would expect in a Q1 with the noted exception of the timing of the step up as people start to get more active we saw that pushed into April instead of the trail part of <unk> of March.
Karen Zaderej: In terms of some of our scheduled areas, breast neurotization, we continue to see increasing demand from patients with strong interest in getting the re-sensation technique as a part of their reconstruction, whether they have either an implant-based or deep flap-based reconstruction. So we continue to see interest, and as we train surgeons and surgical teams, expansion in breast neurotization and growth in that area. In oral maxillofacial, we continue to see—and oral maxillofacial and pain are two smaller areas—surgeon interest and are seeing procedural growth continue, whether doing neurotization in those procedures or managing the pain with the surgical treatment of the nerves.
Speaker Change: In terms of.
Speaker Change: Some of our scheduled areas Bressler organization, we continue to see increasing demand by patient with strong interest in getting.
Speaker Change: The recent station technique as a part of their reconstruction are whether they have either an implant based or deep Ah Ah flat based reconstruction. So we continue to see interest and as we train surgeons and surgical teams expansion and in breast and organization.
Speaker Change: And and growth in that area and oral maxillofacial, we continue to see and oral maxillofacial on paying our two smaller areas. We continue to see surgeon interest and are seeing procedural growth, continuing where theyre doing north position in those procedures or managing the pain.
Speaker Change: With the surgical treatment of the nurse them. So we saw a good cadence through the quarter are in all of those areas and thinks that again, we're on a trajectory of continuing to see growth in particular in breast as we train more surgeons and and get more surgeon teams engaged.
Karen Zaderej: So we saw a good pace through the quarter in all of those areas and think that, again, we're on a trajectory of continuing to see growth, in particular in breast, as we train more surgeons and get more surgeon teams engaged.
George: Yeah, great, that's very helpful. And then just one last one from us. Do you have any further clarification on the gross margin cadence in 24 as you sell through your old inventory from your previous facility? Yeah, so it's as we mentioned.
Speaker Change: Yeah, Great. That's very helpful. And then just one last one from US do you have any further clarity on the gross.
Speaker Change: Margin cadence in 'twenty four as you sell through your old inventory from your previous facility.
Karen Zaderej: Yeah, so as we mentioned in the last earnings call, the gross margin in the first half of the year is going to be higher than that in the second half of the year, the main reason being that the inventory sold in the first half of the year comes from that produced last year in the previous facility at a bit of a lower cost, whereas the one sold in the second half of the year was produced, or will be produced at our current facility at a bit of That said, again, the guidance we reiterated for the entire year of 76 to 79.
Speaker Change: Yeah. So it's as we mentioned in the last earnings call. The gross margin in the first half of the year is going to be higher than that in the second half of the year, where the main reason is that the inventory sold in the first off of the year come from the one produced last year and the previous fulfill it'd be it a bit.
Speaker Change: Have a lower cost.
Speaker Change: Whereas the ones sold in the second half of the year as sole is a purdue once produced will be produced at our current facility had a bit of a higher cost.
Speaker Change: But that said again the guidance, we read you reiterated for the entire year of 76% to 79%.
Speaker Change: Yeah.
Speaker Change: Okay.
Ross Everett Osborn: Thank you. The next question comes from Ross Osborn with Cantor Fitzgerald.
Speaker Change: Thank you and the next question comes from Ross Osborne with Cantor Fitzgerald.
Ross Everett Osborn: Hi, good morning. Thanks for taking our questions. Starting off and giving a focus on core accounts, would you discuss what the site of service mix looks like for core accounts and your penetration level in hospital outpatients?
Ross Everett Osborn: Hi, Good morning, Todd Thanks for taking the questions so starting off and given our focus on core accounts would you discuss what the side of service mix looks like for courthouse.
Ross Everett Osborn: Our penetration level and hospital outpatient.
Ross Everett Osborn: Again, it must be our speaker, but if you could repeat the question, it was hard to hear.
Speaker Change: Again must be our speaker about where if you could repeat the question it was hard to hear.
Ross Everett Osborn: Sure, I was just asking what the site of service mix looks like for your core accounts and then the penetration level and hospital allocation. Yeah, no, thank you.
Ross Osborne: Sure.
Speaker Change: Asking what the site of service mix looks like for your core accounts.
Ross Osborne: We look at an attrition level in hospital outpatient.
Karen Zaderej: Yeah, no, thank you. So our site of care, we, in our core accounts, we tend to be level one, level two, or level three trauma centers as the majority, and then some specialty hospitals where you may see, it may be driven in that case by a breast center, or it might be a military center that does nerve repair. So those are typically the best targets for us, as well as obviously academic teaching hospitals. There are, however, in our core accounts, some freestanding ambulatory surgery centers, and that really is an artifact of the fact that the threshold is $100,000. That could be one active surgeon who's doing nerve repair.
Speaker Change: Yeah no. Thank you so our site of care, we in our core accounts, we tend to be level, one level, two or level three trauma centers.
Ross Osborne: As the majority and then some specialty hospitals.
Ross Osborne: Where you may see it may be driven in that case by a breast center or it might be a military center that does a nerve repair them showed that those are typically the best targets for us as well as obviously academic teaching hospitals.
Ross Osborne: There are however in our core accounts some of them are freestanding ambulatory surgery centers and that really is an artifact of the fact that the threshold is $100000 that could be one active surgeon who's doing nerve repair and obviously if it is a freestanding ambulatory surgery center it doesn't.
Karen Zaderej: Obviously, if it is a freestanding ambulatory surgery center, it doesn't have the same potential as a large academic center. So when I say our biggest centers are over $1 million today, that's not going to be an ambulatory surgery center. That's going to be a level one, level two, level three trauma center, hospital, or academic center. So our focus, again, is continuing to build those high-potential accounts, building out the core accounts, and continuing to drive that business.
Ross Osborne: Have the same potential as a large academic centers, who when I say you know our biggest centers are over a million dollars today, that's not going to be the ambulatory surgery center, that's going to be you know a level one level two level, three trauma center hospital or or academic center and so our focus again is.
Ross Osborne: <unk> to build this high potential accounts building out the core accounts and and continuing to drive that business.
Karen Zaderej: Now, when I talk about, say, a level one trauma center, that's gonna be a mix of inpatient and outpatient procedures. So we do see that actually, a fair amount of the surgery that's done in trauma is an outpatient procedure. You know, where that's possible, they're gonna try and move that patient through the hospital in under 24 hours, and technically classified as an outpatient procedure. The ambulatory surgery centers are the ones that we have not typically been as focused on, and as I said, we have some, but we've not typically been as focused on that.
Ross Osborne: Now when I talk about them.
Ross Osborne: I'll say a level one trauma center, that's going to be a mix of inpatient and outpatient procedures. So we do see a actually a fair amount of the surgery. That's done and trauma is an outpatient procedure you know weird that's possible they're going to try.
Ross Osborne: I move that patient through the hospital in under 24 hours and tactically be classified as an outpatient procedure.
Ross Osborne: The ambulatory surgery centers are the ones that we have not typically been as focused on and as I said, we have some but we've not typically been as focused on that having said.
Karen Zaderej: Having said that, we have done quite a bit of reimbursement work. It's been an economic challenge for ambulatory surgery centers, predominantly. We've done a lot of reimbursement work to make sure that there is a new structure where it makes sense for them to do nerve repair in these freestanding centers. And so, under the new coding and payment structure that CMS has set up, it is now economically viable and certainly an attractive overall healthcare alternative to move these procedures into these ambulatory surgery centers.
Ross Osborne: Having said that we have done quite a bit of reimbursement work. It's been an economic challenge for ambulatory surgery centers predominantly we've done a lot of reimbursement work to make sure that there is a new structure, where they can economically have it makes sense for them to do nerve repair and these freestanding centers and so under the new.
Ross Osborne: Coding and payment structure that CMS is set up it is now economically viable and are certainly an attractive overall health care alternative to move these procedures and these ambulatory surgery centers and we are starting to see some of that migration happen and it has been.
Karen Zaderej: And we are starting to see some of that migration happen. It has been a migration, not a revolution, but quarter over quarter, we continue to see growth of the procedures that are done in these ambulatory surgery centers, and we do expect in the future that that will continue.
Ross Osborne: Our migration not a revolution, but we see quarter over quarter, we continue to see growth of the procedures that are done in these ambulatory surgery centers and we do expect for the future that that will continue.
Ross Everett Osborn: Great, thank you. That's very helpful. And then, lastly for us, would you just want to say how your conversations have gone with the counts for budding and five soft tissues, maybe relative to entering the year? Sure, well.
Speaker Change: Great. Thank you that's very helpful. And then last one for US would you just walk through how your conversations have gone with the counterparty to buy soft tissue maybe.
Speaker Change: Maybe relative to New York.
Karen Zaderej: Sure. Well, we've done a limited market release, so it's not broadly available, but with some leading surgeons who are very anxious to get this product back into their treatment algorithms, we've provided it up front. The feedback that we've gotten to date has been extremely positive. Surgeons are very happy to have this alternative for nerve protection. Again, meeting the need where there is a short-term, resorbable protection need, predominantly in acute trauma, although also sometimes in pain, surgical treatment of pain.
Speaker Change: Sure.
Speaker Change: Well, we've done a limited market release them. So so it's not broadly available, but with some leading surgeons who are very anxious to get this product back into their into their treatment algorithm. We've provided it upfront a feedback that we've gotten to date has been extremely positive surgeons are very high.
Speaker Change: To have this alternative for Nerf protection again meeting the need where there's a short term resorbable protection need predominantly in acute trauma. Although also sometimes in pain surgical treatment of pain and and so we are excited to have this as a as an opportunity to provide them.
Karen Zaderej: And so we are excited to have this as an opportunity to provide them with this added solution in their nerve treatment. Surgeon feedback has been very favorable, in fact, even more positive. If you remember, we had a product called VIVE that we voluntarily withdrew from the market a number of years ago because of changes the FDA did in regulatory classifications of birth tissue products. And ultimately, we decided that we would withdraw that product.
Speaker Change: This added solution and their nerve treatment.
Speaker Change: Surgeon feedback has been very favorable and in fact more positive. If you remember we had a product called the lives that we are voluntarily withdrew from the market a number of years ago, because it changes the F. D. I did and regulatory classifications of birth tissue products and and ultimately decided that we would withdraw that product.
Speaker Change: Surgeons liked that product they like this product better in terms of the handling and and the characteristics of the product that they're using intra operatively and so we're really pleased to get it out there and excited to get in the hands of our all of our sales reps and <unk> and their customers to be able to use on these patients.
Karen Zaderej: Surgeons liked that product. They liked this product better in terms of the handling and the characteristics of the product that they're using intraoperatively. And so we're really pleased to get it out there and excited to get it in the hands of all of our sales reps and our customers to be able to use on these.
Karen Zaderej: Thank you, and there are no further questions at this time, so I would like to turn the call back over to Karen Zaderej for any closing comments.
Speaker Change: Thank you and there are no further questions at this time, so I would like to turn the floor back over it turns out for any closing comments.
Karen Zaderej: Well, as we wrap up today's earnings call, I want to extend a thank you to our team here at AxoGen for their outstanding work and to everyone who participated in this call for their engagement and input. The commitment of our employees has been crucial in reaching the achievements we talked about today as we continue to change the lives of patients with peripheral nerve injuries. Thank you.
Speaker Change: Well, thank you Keith well as we wrap up today's earnings call I want to extend a thank you to our team here at Axa Gen for their outstanding work and to everyone who participated in this call for their engagement and input.
Keith: The commitment of our employees has been crucial in reaching the achievement. We've talked about today as we continue to change the lives of patients with peripheral nerve injuries. Thank you.
Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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Speaker Change: Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
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