Q1 2024 OrthoPediatrics Corp Earnings Call

Operator: Good morning, and welcome to Orthopediatrics Corporation's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Good morning, and welcome to the Ortho Pediatrics Corporation's first quarter 2024 earnings conference call.

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

We will be facilitating a question and answer session towards the end of today's call.

As a reminder, this call is being recorded for replay purposes, I would now like to turn the call over to trip Taylor from Gilmartin group for a few introductory comments.

Philip Taylor: 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 replay purposes. I would now like to turn the call over to Tripp Taylor from Gilmartin Group for a few introductory comments. Thank you for joining us today. With me from the company are David Bailey, President and Chief Executive Officer, and Fred Hite, Chief Operating and Financial Officer. Before we begin today, let me remind you that the company's remarks include forward-looking statements within the meaning of federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Philip Taylor: Thank you for joining today's call with me from the company are David Bailey, President and Chief Executive Officer, and Fred Hite, Chief operating and financial Officer before we begin today, let me remind you that the Companys remarks include forward looking statements within the meaning of federal securities laws, including the Safe Harbor.

Philip Taylor: These forward-looking statements are subject to numerous risks and uncertainties, and the company's actual results may differ materially. For a discussion of risk factors, I encourage you to review the company's most recent annual report on Form 10-K, which was filed with the SEC on March 8, 2024. During the call today, management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance.

Philip Taylor: Provisions of the private Securities Litigation Reform Act of 1995.

Philip Taylor: These forward looking statements are subject to numerous risks and uncertainties and the company's actual results may differ materially for a discussion of risk factors I encourage you to review the company's most recent annual report on Form 10-K, which was filed with the SEC on March eight 2024.

Philip Taylor: The company believes these measures provide useful information for investors evaluating its operations period over period. For each non-GAAP financial measure referenced on this call, the company has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its earnings release. Please note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for orthopediatrics financial results prepared in accordance with GAAP.

During the call today management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance. The company believes these measures provide useful information for investors evaluating its operations period over period.

Philip Taylor: For each non-GAAP financial measure referenced on this call. The company has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its earnings release.

Philip Taylor: Note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for ortho pediatrics financial results prepared in accordance with GAAP.

Philip Taylor: In addition, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, May 7th, 2024. Except as required by law, the company undertakes no obligation to revise or update any statements to reflect events or circumstances taking place after the date of this call. With that, I would like to turn the call over to David Bailey, President and Chief Executive Officer. Thanks, Tripp. Good morning, everyone.

Philip Taylor: In addition, the content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast today may seven 2024, except as required by law. The company undertakes no obligation to revise or update any statements to reflect events or circumstances takes.

Philip Taylor: Place after the date of this call.

Philip Taylor: With that I'd like to turn the call over to David Bailey, President and Chief Executive Officer.

David R. Bailey: Thanks, Tripp and good morning, everyone and thank you for joining us on our first quarter 2024 conference call.

David R. Bailey: And thank you for joining us for our first quarter 2024 conference call. As we start all earnings calls, I'd like to begin by highlighting that we helped a record 27,600 kids in the first quarter of 2020. This remarkable 47% year over year growth is the metric we're most proud of out of all of this stuff we'll share with you today. It embodies our fundamental commitment to helping children and demonstrates our ability to continue to expand our reach and create a more significant impact for children worldwide.

David R. Bailey: As we start all earnings call I'd like to begin by highlighting that we helped a record 27600 kids in the first quarter of 2020.

David R. Bailey: This remarkable 47% year over year growth is the metric. We're most proud of out of all of this stuff will share with you today.

David R. Bailey: It embodies our fundamental commitment to helping children and demonstrates our ability to continue to expand our reach and create a more significant impact for children worldwide.

David R. Bailey: So today we're excited to join you live from just outside of Washington, D.C., at the E-PASNA conference, where PASNA and EPOS are collaborating to host a joint annual meeting. This is the largest pediatric orthopedic conference in the world.

David R. Bailey: So today, we're excited to join you live from just outside of Washington D. C. At the E. Pas conference our partner and <unk> are collaborating to host the joint annual meeting.

David R. Bailey: This is the largest pediatric orthopedic conference in the world and once again ortho pediatrics as the leading sponsor of this event.

David R. Bailey: And once again, Orthopediatrics is the leading sponsor of this event. The shared mission across our three organizations will be advanced through clinical data presentations and educational sessions, highlighting the most cutting-edge pediatric orthopedic treatments and technology. We're looking forward to connecting with our customers and colleagues this week, and there is no better place to deliver our exciting business update. Orthopediatrics is off to a great start in 2024, generating first quarter revenue of $44.7 million, representing growth of 41% compared to the first quarter of 2023. Driven by strong performance across the businesses, we continue to demonstrate robust top-line growth.

David R. Bailey: The shared mission across our three organizations will be advanced through clinical data presentations and the educational sessions, highlighting the most cutting edge pediatric orthopedic treatments and technologies.

David R. Bailey: We're looking forward to connecting with our customers and colleagues. This week and there is no better place to deliver our exciting business update.

David R. Bailey: Although pediatrics is off to a great start in 2024 generating first quarter revenue of $44 $7 million representing growth of 41% compared to the first quarter of 2023 drill.

David R. Bailey: Driven by strong performance across the businesses, we continue to demonstrate robust topline growth.

David R. Bailey: Maintain healthy margins and outperform our adjusted EBITDA expectations. The execution of our business plan is delivering both financial results and progress on our strategic, Looking closer at the quarter, after an initial RSD spike seen in early January, revenue and surgery scheduling quickly bounced back. Children's hospitals have learned to manage RSV waves efficiently and effectively mitigate disruptions previously seen.

David R. Bailey: We maintained healthy margins and.

David R. Bailey: Outperform our adjusted EBITDA expectations, the execution of our business plan is delivering both financial results and progress on our strategic initiatives.

David R. Bailey: Looking closer at the quarter. After an initial RSV vaccine in early January revenue in surgery scheduling quickly bounce back.

David R. Bailey: Children's hospitals have learned to manage RSV waves efficiently and.

David R. Bailey: And effectively mitigate disruptions previously seen.

David R. Bailey: Overall, improvements in the surgical environment are tracking our expectations. Hospitals are now better staffed, and the training of new associates is contributing to improved efficiency. Improvements continue every month, and by our estimations, we're approximately 95% back to normal. Given the seasonality of our business, the improved Children's Hospital's capacity will be tested in these critical summer months. Throughout the next few quarters, we will continue to monitor this progress closely. However, our confidence continues to increase that this headwind will have less and less of an impact moving forward toward a completely normalized state.

David R. Bailey: Overall improvements in the surgical environment are tracking our expectations hospitals are now better staffed and the training of new associates is contributing to improved efficiency.

David R. Bailey: Improvements continue every month and by our estimation were approximately 95% back to normal levels.

David R. Bailey: Given the seasonality of our business the improved children's hospitals capacity will be tested in these critical summer months.

David R. Bailey: Throughout the next few quarters, we will continue to monitor those progress closely however, our confidence continues to increase that this headwind will have less and less of an impact moving forward toward a completely normalized state.

David R. Bailey: We've built a business with a highly diversified portfolio that surrounds our surging customers with high technology products that continue to take market share and drive orthopediatrics growth. During the quarter, Global Trauma and Deformity, International Scoliosis, and our newly formed and rapidly expanding Specialty Bracing Business, or OPSB, were all particularly strong. First quarter global T&D was very strong with 42% year over year growth led by sales of PEGA products, PNP Femur, Orthx, early sales of PNP tibia, and growth within the OPSB franchise, as well as the addition of Boston OMP's T&D product sales. PMP tibia demand continues exceeding expectations, and DF2 revenue has started strong. In addition, the total number of users of xvix increased by 29% in the first quarter, and total accounts increased by 37%.

David R. Bailey: We've built a business with a highly diversified portfolio that surrounds our surgeon customers with high technology products that continue to take market share and drive orthopedic Patrick's growth.

David R. Bailey: During the quarter, the global trauma and deformity <unk>.

David R. Bailey: International Scoliosis, and our newly formed and rapidly expanding specialty <unk> business or <unk>.

David R. Bailey: Were all particularly strong.

First quarter Global PND was very strong with 42% year over year growth led by sales of packet products Pnp FEMA or effects early sales of <unk> and growth within the <unk> franchise as well as the addition of Boston <unk> T&D product sales.

David R. Bailey: <unk> demand demand continues exceeding expectations and <unk> revenue has started strong.

David R. Bailey: In addition, total surgeon users of X six increased by 29% in the first quarter and total accounts increased by 37% we.

David R. Bailey: We believe these numbers imply strong quarters are ahead. Looking at our international business, we reported strong overall growth of 33%, led by a rebound in scoliosis and very strong sales of TND, with XFIX at 59% growth and PEGA at 152% growth. Operations commenced at our recently established German headquarters, which is improving customer service and increasing surgeon access to orthopediatrics products across the country. We're already seeing a return on this investment as the German business group 22%.

David R. Bailey: We believe these numbers imply strong quarters are ahead of us.

David R. Bailey: Looking at our international business, we reported strong overall growth of 33% led by a rebound in scoliosis and very strong sales of T&D with <unk> at 59% growth and peg at 152% growth.

David R. Bailey: Operations commenced at our recently established German headquarters, which is improving customer service and increasing surgeon access to ortho pediatrics products across the country.

David R. Bailey: We are already seeing a return on this investment as the German business grew 22%.

David R. Bailey: We're also seeing very high growth in Canada, where recent product registration and our account conversion strategy have been extremely effective, leading to large share gains in some of the country's largest, most prestigious children's hospitals and global teaching institutions. In addition, the macro environment in Brazil has improved. This momentum internationally is expected to continue throughout 2024. Scoliosis revenue had substantial 44% growth led by domestic apothecaries, international sales in Europe and Latin and South America, along with another quarter of share taking in our fusion franchise, as well as the addition of Boston OMP Scoliosis custom bracing product sales. We expected the OUS scoliosis market to rebound aggressively in 2024 and to act as a tailwind. And this is exactly the trend we're seeing to start the year.

David R. Bailey: We're also seeing very high growth in Canada for our recent product registration and our account conversion strategy have been extremely effective leading to large share gains in some of the country's largest most prestigious children's hospitals and global teaching institutions.

David R. Bailey: In addition, the macro environment in Brazil is improving this momentum internationally is expected to continue throughout 2024.

David R. Bailey: Scoliosis revenue had substantial 44% growth led by domestic Apple fix international sales in Europe, and Latin and South America, along with another quarter of share taking in our fusion franchise as well as the addition of Boston OMB scoliosis customary some product sales.

David R. Bailey: We expected the Oes scoliosis to rebound aggressively in 2024 and to act as a tailwind and this is exactly the trend we're seeing to start the year.

David R. Bailey: OPSB contributed to growth in both the T&D and scoliosis businesses as a result of Boston OMP acquisitions, coupled with increased sales from products unrelated to Boston OMP clinics, such as MDO, DF2, Oramedical, and Rhino. Increasing increases in OPSB sales continue to rise as we hire additional sales staff exclusively focused on this franchise. And we are confident that as we build this business, there is a massive opportunity to capture growth. The various levers driving the next phase of orthopediatrics growth and profitability are becoming more visible, and we remain quite bullish about our prospects for 2024 and beyond. For the remainder of the year, we're focused on continuing legacy product growth, launching several key new organic products, and expanding Pegasail.

David R. Bailey: <unk> contributed to growth in both the T&D and scoliosis businesses as a result of Boston <unk> acquisition, coupled with increased sales from products unrelated to Boston RMB clinics, such as MTO, <unk> or a medical and Rhino.

David R. Bailey: Increasing increases in <unk> sales continue to rise as we hire additional sales staff exclusively focused on this franchise and we are confident that as we build this business. There is a massive opportunity to capture growth.

David R. Bailey: The various levers driving the next phase of ortho pediatrics growth and profitability are becoming more visible and we remain quite bullish about our prospects for 2024 and beyond.

David R. Bailey: For the range for the remainder of the year, we're focused on continuing legacy product growth.

David R. Bailey: Launching several key new organic products.

David R. Bailey: Banding peg a sales.

David R. Bailey: Capitalizing on Normalization in the International Market Publishing positive longer-term apopex data, an execution on OPSB, and an early start in digital healthcare The continued advancement of our strategic initiatives, paired with our strong financial position, will enable us to execute our long-term goals. With a solid start for the year, we are raising our revenue guidance for full year 2024 to $200 to $203 million, representing growth of 34% to 36%. The plethora of growth thrivers outlined have positioned this business to continue growing on the top line while improving profitability on our way to cash flow break even soon.

David R. Bailey: Capitalizing on normalization in international markets.

David R. Bailey: Publishing positive longer term <unk> data and execution on <unk> and.

David R. Bailey: And an early start in digital health care.

David R. Bailey: The continued advancement of our strategic initiatives paired with our strong financial position will enable us to execute our long term goals.

David R. Bailey: With a solid start for the year, we are raising our revenue guidance for full year 2024 to $200 million to $203 million.

David R. Bailey: Representing growth of 34% to 36% the.

David R. Bailey: The plethora of growth drivers outlined and position this business to continue growing on the top line, while improving profitability on our way to cash flow breakeven sooner.

David R. Bailey: Moving to our revenue segment, in the first quarter of 2024, we generated total trauma and deformity revenue of $33.3 million, representing growth of 42% compared to the prior year period. This quarter saw strong performances from Pega Products, Trauma, specifically P&P Tibia, X6, and OPSB, as well as the addition of Boston O&P T&D Products. Our prior investments and set allocations are generating a return and driving meaningful share gains for the T&D business across the entire growth of products, specifically PEGA, which once again grew nearly 50% globally.

David R. Bailey: Moving to our revenue segments.

In the first quarter of 2024, we generated total trauma and deformity revenue of $33 3 million representing growth of 42% compared to the prior year period.

David R. Bailey: This quarter saw strong performances from peg a products trauma, specifically, <unk> <unk> and <unk> as well as the addition of Boston <unk> T&D product sales.

David R. Bailey: Our prior investments and set allocations are generating a return and driving meaningful share gains for the T&D business across the entire breadth of products, specifically turgor, which once again grew nearly 50% globally.

David R. Bailey: Sales of Pegasus continue to be better than we ever expected, as we more deeply penetrate our U.S. accounts with the full-packet product portfolio and we ramp international sales. Now that the distributor and agency transition is complete, OUS, and PEGA will likely continue this trajectory globally in 2024 and for the foreseeable future. Excitingly, the full U.S. market release of P&P Tibia and Gyro is underway, with several sets expected to arrive in accounts in the second quarter and every quarter thereafter for the next several quarters.

David R. Bailey: Sales continue to be better than we ever expected as we more deeply penetrate our U S accounts with a full panel product portfolio and we ramp international sales.

David R. Bailey: Now that the distributor and agency transition is complete O U S. Pegged will likely to continue this trajectory globally in 2024 and for the foreseeable future.

David R. Bailey: Excitingly the full U S market release of <unk> and Giro are underway with several sets expected to arrive at accounts in the second quarter and every quarter thereafter for the next several quarters.

David R. Bailey: The full market release of DF2 is also underway, and there is extremely high demand for this product, which is helping grow OPSB sales. These products are great additions to our portfolio and will create an immediate impact. Product portfolio expansion remains a top priority for the business.

David R. Bailey: The full market release of <unk> is also underway and there is extremely high demand for this product and it is helping grow our <unk> sales.

These products are great additions to our portfolio and will create an immediate impact.

David R. Bailey: Product portfolio expansion remains a top priority for the business, we seek to surround our surgeon customers with everything they need to treat each patient and treat more children.

David R. Bailey: We seek to surround our surgeon customers with everything they need to treat each patient and treat more children. Orthopediatrics is building a dominant share position across our entire T&D portfolio. Each quarter, more customers are using more of our products, driving increased market share. Adding new high technology products like PEGA helps advance the key account conversion strategy. The T&D business is increasingly well-positioned to continue to deliver sustainable growth for the next several years.

David R. Bailey: The pediatrics is building a dominant share position across our entire T&D portfolio.

David R. Bailey: Each quarter more customers are using more of our products driving increased market share.

David R. Bailey: Adding new high technology products like Puglia helps advance the key account conversion strategy.

David R. Bailey: The T&D business is increasingly well positioned to continue to deliver sustainable growth for the next several years.

David R. Bailey: On the R&D side, there are several exciting products within the surgical side of our T&D business. We're making great progress developing our entirely new Pediatric Plating Platform, or P3, which we expect will be world class and spawn further share-taking opportunities for us within our plating franchise. We've also made solid strides on new external fixation devices that will continue the growth trajectory of our X6 franchise. Furthermore, there will be several new CE Mark products that are positioned to launch in the EU market in the coming year to 15 months. The Orthopediatrics Non-Surgical Specialty Bracing Business, or OPSB, is performing extremely well, and we continue to view this franchise as a significant opportunity to help more kids.

David R. Bailey: On the R&D side, there are several exciting products within the surgical side of our T&D business, we're making great progress developing our entirely new pediatric planning platform or <unk>, which.

David R. Bailey: Which we expect will be world class and spawn further share taking opportunities for us within our <unk> franchise. We have also made solid strides on new external fixation devices that will continue the growth trajectory of our X X franchise.

David R. Bailey: Further there will be several new CE mark products that are positioned to launch in the EU market in the coming year to 15 months.

David R. Bailey: The ortho pediatrics non surgical specialty bracing business <unk> is performing extremely well and we continue to view this franchise as a significant opportunity to help more kids.

David R. Bailey: Before diving into some of that progress, I want to reiterate the OPSB Opportunity Briefing. In addition to furthering our strategy to provide pediatric orthopedic surgeons with everything they need to treat children, we see this as another opportunity for market dominance as we scale a historically fragmented market to become the clear-cut leader. 80% of pediatric orthopedic care is delivered outside of the operating room, and we estimate the U.S. non-surgical specialty bracing market is at minimum $775 million in total and conservatively a $500 million opportunity within the top 300 children's hospitals, from a business models perspective. Importantly, these custom-fit devices do not require the upfront capital investment in consigned inventory or instruments.

David R. Bailey: Before diving into some of that progress I want to reiterate that <unk> opportunity briefly.

David R. Bailey: In addition to furthering our strategy to provide pediatric orthopedic surgeons with everything they need to treat children. We see this as another opportunity for market dominance as we scale of historically fragmented market to become the clear cut leader.

David R. Bailey: 80% of pediatric orthopedic Claire is delivered outside of the operating room, and we estimate the U S. Non surgical specialty bracing market is that minimum $775 million in total and conservatively a $500 million opportunity within the top 300 children's hospitals from.

David R. Bailey: From a business model perspective importantly, these custom fit devices do not require the upfront capital investment in consigned inventory our instrument sets.

David R. Bailey: As mentioned on our previous call, we continue to successfully execute a build aggressively strategy in OPS and anticipate it to grow very rapidly in the coming several years. OPSB is in the early innings of what we believe can be a business well in excess of $100 million in the coming years. The planned Salesforce expansion, product development, and the addition of new clinics will scale this business rapidly. Progress such as expanding the sales force and integrating our specialty bracing products with Boston's are already contributing to growth.

David R. Bailey: As mentioned on our previous call. We continue to successfully execute a build aggressively strategy in <unk>.

David R. Bailey: And anticipate it to grow very rapidly in the coming several years.

David R. Bailey: <unk> is in the early inning of what we believe can be a business well in excess of $100 million in the coming years.

David R. Bailey: The planned sales force expansion product development and the addition of new clinics will scale this business rapidly.

David R. Bailey: Progress expanding our sales force and integrating our specialty bracing products with Boston are already contributing to growth our existing R&D pipeline will support launching four to five new products within the <unk> business.

David R. Bailey: Our existing R&D pipeline will support the launch of four to five new products within the OPS business and the OPSB business every year. Lastly, we've identified several new clinic opportunities and expect these to have a major impact as early as next year. Moving on to scoliosis.

David R. Bailey: <unk> business every year.

David R. Bailey: Lastly, we've identified several new clinic opportunities and expect these to have a major impact as early as next year.

David R. Bailey: Moving onto the scoliosis business.

David R. Bailey: In the first quarter of 2024, we generated revenue of $10.2 million, representing global growth of 44% compared to the prior year. This global growth was led by a return to international sales in Latin and South America, new business in Europe, and strong apothecary growth, as well as the addition of Boston O&P Scoliosis custom bracing products. First quarter domestic sales increased by 38%, led by the addition of Boston Brace from the Boston O&P product portfolio. We are proud to add the most studied and utilized scoliosis spray in the world and a product that is considered to be the premier system for non-operative treatment of scoliosis and kyphosis to the OPSB portfolio.

David R. Bailey: In the first quarter of 2024, we generated revenue of $10 $2 million.

David R. Bailey: Representing global growth of 44% compared to the prior year.

David R. Bailey: This global growth was led by a return in international sales in Latin and South America.

David R. Bailey: New business in Europe, and strong athletics growth as well as the addition of Boston LNP Scoliosis custom bracing product sales.

David R. Bailey: First quarter domestic sales increased by 38% led by the addition of Boston varies from the Boston OMB product portfolio.

David R. Bailey: We are proud to add the most studied and utilized scoliosis breaks in the world and a product that is considered to be the premier system for non operative treatment of scoliosis and kyphosis.

David R. Bailey: <unk> portfolio.

David R. Bailey: We're pleased with the rebound in the international scoliosis business, which outpaced our domestic business, generating 114% growth. We expect to see a continuation of strong international growth coupled with a robust summer surgery schedule in the coming quarter. The increased number of total response users over 2023, earnouts on 70 units placed in 2023, continued apothec's growth, improvements in South America, and our European launch, all together keep us bullish on 2024 scoliosis growth.

David R. Bailey: We're pleased with the rebound from international scope from the international Scoliosis business, which outpaced our domestic business generating 114% growth.

David R. Bailey: We expect to see a continuation of strong international growth, coupled with a robust summer surgery schedule in the coming quarters the.

The increased number of total response users over 2023 earn.

David R. Bailey: <unk> 70 units placed in 2023 continued apple fixed growth improvements in South America, and our European launch altogether keep us bullish on 2020 for scoliosis growth.

David R. Bailey: The Scoliosis R&D pipeline is continuously progressing, and the funnel is rich with highly novel technologies that solve major unmet needs for our customers, specifically for patients with early-onset scoliosis, a category in which we have never had products before. In the first quarter, we launched the first of three products in the EOS space. The first surgeries with response rib and pelvic were completed in the first quarter, producing excellent results. We've made great progress with our new growing spine system for EOS, called VertiGlide, and hope to have FDA approval secured in the second half of 2024.

David R. Bailey: The scoliosis R&D pipeline is continuously progressing and the funnel is rich with highly novel technologies that solve major unmet needs for our customers specifically for patients with early onset scoliosis a category in which we have never had products before.

David R. Bailey: In the first quarter, we launched the first of three products in the <unk> space.

David R. Bailey: First surgeries with response ribbon pelvic were completed in the first quarter producing excellent results.

David R. Bailey: We've made great progress with our new growing spine system for Eos called vertical line and hope that FDA approval secured in the second half of 2024.

David R. Bailey: Further, the FDA recently classified our electromechanical growing spine rod, ELE, with the breakthrough device designation, both a major milestone on our way to FDA approval and a strong endorsement of ELE's potential for patients suffering from EOS.

David R. Bailey: Further the FDA recently classified our electromechanical growing spine rod early with the breakthrough device designation, both a major milestone on our way to FDA approval and a strong endorsement of <unk> potential for patients suffering from Eos.

David R. Bailey: Lastly, substantial progress has been made on the development of our next generation fusions. The next 18 to 24 months will be the most prolific period of new product development and launches in OP scoliosis history, transforming the already impressive product portfolio into the most substantial offering available to surgeons treating pediatric scoliosis. Moving on to international growth, overall, international growth improved substantially compared to the prior quarter, generating revenue of $10.4 million, delivering 33% year-over-year growth. This major rebound was supported by a return to normal ordering patterns for scoliosis products in South America.

David R. Bailey: Lastly, substantial progress has been made on the development of our next generation fusion system.

David R. Bailey: The next 18 to 24 months will be the most prolific period of new product development and launches and OPEC scoliosis history.

David R. Bailey: Transforming the already impressive product portfolio into the most substantial offering available to surgeons treating pediatric scoliosis.

David R. Bailey: Moving onto internationally overall.

David R. Bailey: Overall international growth improved substantially compared to the prior quarter generating revenue of $10 4 million delivering 33% year over year growth.

David R. Bailey: This major rebound was supported by a return to normal ordering patterns for scoliosis products in South America.

David R. Bailey: The launch of scoliosis in Europe, PEGA products, and general demand across the entire T&D portfolio. The international growth seen this quarter is very important. As I mentioned earlier, we are seeing meaningful traction within several of our core international markets. The results we've seen in Germany are particularly pleasing as we begin to reap the benefits of our investment in building a direct sales channel and local customer service. As we await the notified body audit to finalize our EU MDR status, we are thrilled about all the progress we've made internationally and that 2024 has started off on such a strong footing.

David R. Bailey: Launch of Scoliosis, and Europe, Peg, a products and general demand across the entire T&D portfolio.

David R. Bailey: The international growth seen this quarter is very encouraging as I mentioned earlier, we are seeing meaningful traction within several of our core international markets. The results. We've seen in Germany are particularly pleasing as we begin to reap the benefits of our investment in building a direct sales channel and local customer service.

David R. Bailey: As we await the notified body audits to finalize our EU MBR status. We are thrilled about all the progress we've made internationally.

David R. Bailey: And 2024 has started off on such a strong footing.

David R. Bailey: We expect completion of our audit in the second half of 2024, enabling the potential launch of several new products in Europe shortly thereafter. Given the general lack of new pediatric orthopedic product launches in Europe over the past four to five years, it is particularly impressive that we've made so much headway and have many more opportunities in front of us. Overall, the international business is set up nicely, and we believe that the first quarter represents a great start to an improved 2024. That brings us to Surgeon Training and Education. Since inception, facilitating educational opportunities for the pediatric orthopedic community has been a foundational component of orthopediatric strategy.

David R. Bailey: We expect completion of our audit and the second half of 2020 for enabling the potential launch of several new products in Europe. Shortly thereafter.

David R. Bailey: Given the general lack of new pediatric orthopedic product launches in Europe over the past four to five years. It is particularly impressive that we've made so much headway and have many more opportunities in front of us.

David R. Bailey: Overall, the international business is set up nicely, we believe that the first quarter represents a great start to an improved 2024.

David R. Bailey: That brings us to surgeon training and education.

David R. Bailey: Since inception, facilitating educational opportunities for the pediatric orthopedic community has been a foundational component of ortho pediatric strategy.

David R. Bailey: That's why we are live from ePASMA today, and we look forward to updating you on how productive and impactful this meeting will be for the pediatric orthopedic community. Back in April, the company was again a lead sponsor of ICSS, a meeting that offers a comprehensive program of lectures given by an outstanding international faculty and didactic cadaver labs focused on the cervical spine. Lumbosacral junction, Neuromonitoring, and various aspects of scoliosis

David R. Bailey: That's why we are live from the E Pas in it today and we look forward to updating you on how productive and impactful this meeting will be for the pediatric orthopedic community.

David R. Bailey: Back in April the company was again a lead sponsor of Ics are meeting that offers a comprehensive program of lectures given by an outstanding International faculty.

David R. Bailey: Didactic cadaver labs focused on the cervical spine.

David R. Bailey: <unk> sacral junction neuro monitoring and various aspects of scoliosis. This interactive forum was a great opportunity for us to engage with pediatric orthopedic virals and attending surgeons and provide training on the latest technologies and surgical techniques. We highlight a response and the new pelvic fixation system at this year's meeting.

David R. Bailey: This interactive forum was a great opportunity for us to engage with pediatric orthopedic fellows and attending surgeons and provide training on the latest technologies and surgical techniques. We highlighted Response and the new pelvic fixation system at this year's meeting. In the quarter, we conducted a total of 46 unique learning experiences, highlighting over 162 different product touches, including labs, workshops, and sawbone stations; we reached over 1,100 health care providers and other staff.

David R. Bailey: In the quarter, we conducted a total of 46 unique learning experiences highlighting over 162 different product touches, including labs workshops and solve one station and we reached over 1100 health care providers and other staff members as we continue advancing our ongoing commitment to <unk>.

David R. Bailey: As we continue advancing our ongoing commitment to training the next generation of pediatric orthopedic surgeons and leading innovation in our subspecialty around the world. Lastly, because of the continued focus on our people and culture building, I want to again highlight that for the eighth time, Orthopediatrics was named one of the best places to work in Indiana.

David R. Bailey: Joining in the next generation of pediatric orthopedic surgeon and leading innovation and our sub specialty around the world.

David R. Bailey: Lastly, because of the continued focus on our people and culture building I want to again highlight that for the eighth time ortho pediatric orthopedic metrics was named as one of the best places to work in Indiana.

David R. Bailey: We are committed to fostering a culture that is positive, engaging, and allows our associates to do their best work. This has become a key aspect of our competitive advantage and continues to expand our ability to help more kids around the world. With that, I'll turn the call over to Fred to provide more detail on our financial results.

David R. Bailey: We are committed to fostering a culture that is positive engaging and allows our associates to do their best work. This has become a key aspect of our competitive advantage and continues to expand our ability to help more kids around the world.

David R. Bailey: With that I'll turn the call over to Fred to provide more detail on our financial results Fred.

Fred L. Hite: Thanks, Dave. Our first quarter 2024 worldwide revenue of $44.7 million increased 41% compared to the first quarter of 2023. Growth in the quarter was driven primarily by strong performance across global trauma and deformity, international scoliosis, and OPSB, as well as the addition of Boston O&P. U.S. revenue was $34.3 million, a 44% increase from the first quarter of 2023. Growth in the quarter was primarily driven by our trauma and deformity product lines.

Fred L. Hite: Thanks, Dave.

Fred L. Hite: Scoliosis, and OPSB, as well as the addition of Boston O&P sales. We generated total international revenue of $10.4 million, representing growth of 33% compared to the first quarter of 2023. Growth in the quarter was primarily driven by trauma and deformity, scoliosis, and OPSD. In the first quarter of 2024, trauma and deformity global revenue of $33.3 million increased 42% compared to the prior year period. Growth was primarily driven by strong growth across numerous product lines, specifically our cannulated screws. PMP FEMUR.

Fred L. Hite: Our first quarter 2024 worldwide revenue of $44 $7 million increased 41% compared to the first quarter of 2023.

Fred L. Hite: Growth in the quarter was driven primarily by strong performance across global trauma and deformity.

Fred L. Hite: International Scoliosis and <unk> B as well as the addition of Boston <unk>.

Fred L. Hite: U S revenue was $34 3, million% to 44% increase from the first quarter of 2023.

Fred L. Hite: Growth in the quarter was primarily driven by our trauma and deformity product lines, scoliosis and <unk> as well as the addition of Boston <unk> sales.

Fred L. Hite: We generated total international revenue of $10 4 million.

Fred L. Hite: Representing growth of 33% compared to the first quarter of 2023.

Fred L. Hite: Growth in the quarter was primarily driven by trauma and deformity.

Fred L. Hite: Scoliosis and <unk>.

Fred L. Hite: In the first quarter of 2020 for trauma and deformity global revenue of $33 $3 million increased 42% compared to the prior year period.

Fred L. Hite: Growth was primarily driven by strong growth across numerous product lines, specifically, our cumulated screws Pnp femur PD.

Fred L. Hite: PD plates, external fixation, and the PEGA system, as well as the addition of Boston O&P Trauma and Deformity Correction product sales. In the first quarter of 2024, scoliosis revenue of $10.2 million increased 44% compared to the prior year period. Growth was primarily driven by increased sales of our Response 5560 and Appy Fix Systems and revenue generated from 7D Technologies, as well as the addition of Boston Olympia Scoliosis custom bracing products there. Finally, sports medicine other revenue in the first quarter of 2024 was $1.2 million compared to $1.1 million in the previous year. Turning to set deployment, $4.3 million of sets were consigned in the first quarter of 2024 compared to $3.0 million in the first quarter of 2023.

Fred L. Hite: <unk> plates.

Fred L. Hite: External fixation in the peg of systems as well as the addition of Boston <unk> trauma and deformity correction product sales.

Fred L. Hite: In the first quarter of 2020 for Scoliosis revenue of 10 point.

Fred L. Hite: $2 million increased 44%.

Fred L. Hite: Compared to the prior year period.

Fred L. Hite: Growth was primarily driven by increased sales of our response 556.

Fred L. Hite: <unk> systems and revenue generated from 70 technologies as well as the addition of Boston, a lumpy scoliosis custom bracing product sales.

Fred L. Hite: Finally sports medicine other revenue in the first quarter of 2024 was $1 2 million compared to $1 1 million in the previous year period.

Fred L. Hite: Turning to set deployment.

Fred L. Hite: $4 $3 million of sets were consigned in the first quarter of 2024 compared to 3.0 or $1 billion in the first quarter of 2023.

Fred L. Hite: The increase was driven by the strategic decision to bring in inventory earlier in the year and deploy a greater percentage of the annual sets prior to our busy summer months. I will touch briefly on a few key metrics. For the first quarter of 2024, gross profit margin was 72% compared to 75% for the first quarter of 2023. The decrease in gross profit margin was driven primarily by increased international set sales in the first quarter of 2024, as well as less purchase price variance released in the first quarter of 2024 compared to 2023. Total operating expenses increased $9.7 million, or 30%, to $41.9 million in the first quarter of 2024. The increase was mainly driven by incremental personnel costs associated with increased headcount.

Fred L. Hite: The increase was driven by the strategic decision to bring in inventory earlier in the year and to play a greater percentage of the annual sets prior to our busy summer months.

Fred L. Hite: Touching briefly on a few key metrics.

Fred L. Hite: For the first quarter of 2024 gross profit margin was 72% compared to 75% for the first quarter of 2023.

Fred L. Hite: The decrease in gross profit margin was driven primarily by increased international set sales in the first quarter of 2024 as well as less purchase price variance released in the first quarter of 2024 compared to 2023.

Fred L. Hite: Total operating expenses increased $9 7 million or 30% to $41 9 million in the first quarter of 2024.

Fred L. Hite: The increase was mainly driven by incremental personnel costs associated with increased head count.

Fred L. Hite: Because of increased commissions and the addition of the Boston O&P Acquisition, sales and marketing expenses increased $1.6 million, or 13%, to $14.2 million in the first quarter of 2024. The increase was primarily driven by increased sales commission expense, with a limited increase coming from the addition of Boston O&P Acquisition. General and administrative expenses increased $7.6 million, or 44%, to $24.7 million in the first quarter of 2024. The increase was driven primarily by the acquisition of Boston O&P, as well as resources to support the continued expansion of our business and increases in non-cash expenses such as stock compensation, depreciation, and amortization.

Fred L. Hite: Increased commissions.

Fred L. Hite: And the addition of the Boston acquisition.

Fred L. Hite: Sales and marketing expenses increased one $6 million or 13%.

Fred L. Hite: <unk> to $14 $2 million in the first quarter of 2024.

Fred L. Hite: The increase was primarily driven by increased sales commission expense with a limited increase coming from the addition of Boston <unk> acquisition.

Fred L. Hite: General and administrative expenses increased $7 6 million or 44% to $24 $7 million in the first quarter of 2024.

Fred L. Hite: The increase was driven primarily by the addition of Boston <unk> acquisition as.

Fred L. Hite: As well as resources to support the continued expansion of our business.

And increases in noncash expenses, such as stock compensation depreciation and amortization.

Fred L. Hite: Research and development expenses increased $0.6 million, or 23%, to $3.0 million in the first quarter of 2024 due to incremental product development and the addition of personnel to support the future growth of the business, as well as the addition of the Boston O&P Acquisition. Total other expense was $0.6 million for the first quarter of 2024 compared to $1.2 million of other income for the same period last year.

Fred L. Hite: Research and development expenses increased zero point $6 million or.

Fred L. Hite: Or 23% to $3.01 million in the first quarter of 2024 due to the incremental product development and the addition of personnel to support the future growth of the business.

Fred L. Hite: As well as the addition of the Boston LNP acquisition.

Fred L. Hite: Total other expense was zero point $6 million for the first quarter of 2024 compared to $1 2 million of other income for the same period last year.

Fred L. Hite: In the first quarter of 2023, we recognized a $0.6 million favorable adjustment to contingent consideration that did not repeat in the first quarter of 2024, as well as increased interest expense from our $10 million dollar mid cap loan. Adjusted EBITDA loss was $1.1 million in the first quarter of 2024, and this compares to a loss of $2.1 million in the first quarter of 2023. We ended the first quarter with $49.7 million in cash, short-term investments, and restricted cash.

Fred L. Hite: In the first quarter of 2023, we recognized a <unk> 6 million favorable adjustment to contingent consideration that did not repeat in the first quarter of 2024.

Fred L. Hite: As well as increased interest expense from our $10 million mid cap loan.

Fred L. Hite: Adjusted EBITDA loss was $1 1 million in the first quarter of 2024, and this compares to a loss of $2 1 million in the first quarter of 2023.

Fred L. Hite: We ended the first quarter with $49 7 million in cash short term investments and restricted cash.

Fred L. Hite: Cash usage in the first quarter of 2024 includes $22 million paid for Boston O&P, increased set deployment, as well as increased inventory to support future set deployment. With our current cash position, as well as our debt facility, we are well capitalized to continue to execute on our long-term strategy, given our strong balance sheet. With positive Annual Adjusted EBITDA, our line of sight to cash flow breakeven, and the addition of Boston O&P, we are in a position of tremendous strength. Turning to Guidance.

Fred L. Hite: Cash usage in the first quarter of 2024 includes $22 million paid for Boston there won't be.

Fred L. Hite: Increased set deployment as well as increased inventory to support future set deployments.

Fred L. Hite: With our current cash position as well as our debt facility, we are well capitalized to continue to execute on our long term strategy.

Fred L. Hite: Given our strong balance sheet positive annual adjusted EBITDA, our line of sight to cash flow breakeven.

Fred L. Hite: And the addition of Boston OMB, we are in a position of tremendous strength.

Fred L. Hite: We are raising our expectation for full-year 2024 revenue from the previously announced $197 to $200 million to between $200 and $203 million, representing year-over-year growth of 34 to 36 percent. Additionally, we continue to expect to generate between $8.0 to $9.0 million of adjusted EBITDA in 2024. Additionally, we continue to expect less than $20 million of new sets deployed in 2024.

Fred L. Hite: Turning to guidance.

Fred L. Hite: We are raising our expectation for full year 2020 for revenue from the previously announced $197 million to $200 million.

Fred L. Hite: Up to $200 million to $203 million, representing year over year growth of 34% to 36%.

Fred L. Hite: We continue to expect to generate between 8.0 to 9.0 million of adjusted EBITDA in 'twenty 'twenty four.

Fred L. Hite: Additionally, we continue to expect less than $20 million of new sets deployed in 2024.

David R. Bailey: This represents our continued focus on driving the business to cash flow break even sooner rather than later. As mentioned, this year we plan to deploy sets earlier in the year compared to prior years. I will now turn the call back over to Dave for closing remarks. Thanks, Fred.

Fred L. Hite: This represents our continued focus on driving the business to cash flow breakeven sooner rather than later.

Fred L. Hite: As mentioned this year, we plan to deploy set earlier in the year compared to prior years.

Fred L. Hite: I will now turn the call back over to Dave for closing remarks.

Dave: Thanks, Brad.

Operator: Looking at the first quarter, we are extremely proud of how we started 2024 and are confident that we will continue this momentum into the remainder of the year and beyond. We continue to capture share across the entire business, record robust top-line growth, maintain healthy margins, and outperform our EBITDA expectations. We will continue to move toward profitability growth and cash flow breakeven as we execute our strategic initiatives to drive value and capitalize on our opportunity.

Dave: Looking at the first quarter, we are extremely proud of how we've started 2024 and are confident that we will continue this momentum into the remainder of the year and beyond.

Dave: We continue to capture share across the entire business.

Dave: Record robust topline growth maintain healthy margins and outperform our EBITDA expectations.

Dave: We will continue to move toward profitability growth and cash flow breakeven as we execute our strategic initiatives to drive value and capitalize on our opportunity.

Operator: 2024 will be a tremendous year for orthopediatrics, and I look forward to updating you again soon. In closing, I'd like to thank our surgical partners, my OP Associates, our investors, and all of the innovators in pediatric health care for standing together to help kids. Operator, let's open the call for Q&A. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Dave: 2024 will be a tremendous year for ortho pediatrics and I look forward to updating you again soon.

Speaker Change: In closing I'd like to thank our surgeon partners Myopia associates, our investors and all of the innovators in pediatric health care freestanding together to help kids.

Speaker Change: Operator, let's open the call for Q&A.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for anything to be announced.

Speaker Change: To withdraw your question. Please press star one again, please stand by we compile the Q&A roster.

Operator: Please stand by while we compile the Q&A roster. Our first question is from the line of Ryan Zimmerman with BTIG. Your line is now open.

Speaker Change: Our first question is from the line of Ryan Zimmerman with <unk>. Your line is now open.

Ryan Benjamin Zimmerman: Good morning and congratulations on a strong start to the year. Two part question here: you beat by about three and a half million, you're raising by three at the midpoint. Just curious if you're seeing anything, kind of a head that you want to be a little cautious about or maybe reserved.

Ryan Benjamin Zimmerman: Good morning, and congrats on a strong start to the year here I wanted to ask about guidance.

Ryan Benjamin Zimmerman: Two part question here.

Ryan Benjamin Zimmerman: You beat by about $3 $5 million, you're raising by <unk> three at the midpoint just curious if youre seeing anything.

Speaker Change: Kind of a head.

Speaker Change: Matt you want to.

Matt: We're a little cautious about or maybe reserving that that incremental half million dollars in the second part is.

Matt: You are passing through that $3 million.

Matt: Adjusted EBITDA guidance is staying the same so just talk to us about kind of that flow through on higher revenue into the business and kind of what you are putting that to work on.

David R. Bailey: The second part is... You are passing through that three million. [inaudible] So just talk to us about kind of that flow through on higher revenue. Yeah, so first of all, we're obviously very excited about 41% growth in the first quarter. It's a great start to the year and sets us up very nicely. We had some RSV in late December and a little bit of it in January.

David R. Bailey: And then I think some of that December got pushed into January, which helped a pretty strong January to start the quarter, which is great to see. The wild card for us, as you know, Ryan, is always the summer months, right? June and July are typically the dramatically larger months for us throughout the year, and how those summer surgery seasons play out is really unknown until we get there. And so I think that's probably where the half a million dollars maybe is on revenue as far as why it didn't flow through for the full year.

Matt: Yes. So first of all we're obviously very excited about 41% growth in the first quarter to a great start to the year and sets us up very nicely. We had some RSV in late December a little bit of it in January and then I think some of that December got pushed into January which helped.

Matt: Pretty strong January to start the quarter, which is great to see.

Matt: The wildcard for US as you know Ryan is always in the summer months right June and July are typically though dramatically larger months for us throughout the year and how those summer.

Matt: Surgery seasons play out is really unknown until we get there and so I think thats, probably where the $5 million maybe is.

Matt: On the revenue as far as why it didn't flow through for the full year and it's the really the only thing that.

David R. Bailey: And it's really the only thing that gives us pause, if you will, on increasing it further and the EBITDA Guide Relative. Are you putting that back in the business? Yeah, the EBITDA number, the range is pretty wide. And again, the summer months are so large, that's when so much of it drops through.

Matt: Gives us pause if you will on increasing that further at this point.

Speaker Change: Okay, and then the EBITDA guide relative to the beat.

Speaker Change: Are you putting that back on the business front.

David R. Bailey: And so, as you saw in the first quarter, negative one, one, basically on or maybe a little better than our expectations, but we want to wait and see what the summer months look like. And then we can increase that as we move throughout. And then just last one for me, you know, Boston O&P looks like it's been a real good contribution and asset to bring. You know, Dave, I'd love to hear kind of your thoughts on clinic development. It's really the longer term plan of what you can do with foster care. Relative to your broader, Yeah, good question.

Speaker Change: Yes, the EBITDA number the range is pretty wide and again the summer months are so large that when so much of a drop through and so as you saw in the first quarter was negative one one.

Speaker Change: Basically on or maybe a little better than our expectation, but we want to wait and see what the summer months look like and then we can increase that as we move throughout the year.

Speaker Change: Got it and then it should go.

Speaker Change: Last one for me.

Speaker Change: Boston looks.

Speaker Change: It looks like it's been.

Speaker Change: A real good contribution and asset to bring in.

Speaker Change: Dave loved to hear kind of your thoughts on clinical development and really it's really the longer term plans of what you can do with Boston would be relative to your broader surgical customer base.

David R. Bailey: You know, we see, I think you've heard me say this before, Ryan, the volume of inbound interest we've gotten from our customers related to that Boston L&P acquisition is probably as great, if not greater, than any other transaction or product we've done up until this point. So there's clearly a serious need out there to have, you know, a company focused exclusively on this bracing space and providing that service that Boston has done so well. And about 15 institutions in the Northeast, and we want to obviously expand that to everywhere in the United States. So it is a huge opportunity to do that.

Dave: Yes, good question.

Speaker Change: We see I think you've heard me say this before Ryan.

Speaker Change: Volume of inbound interest we've gotten from our customers related to the Boston LNP acquisition is probably as great if not greater than any other transaction or product we've done up and at this point. So there is clearly a serious need out there to have a company focused that are focused exclusively in the bracing space and providing that.

Speaker Change: Service, but that Boston has done so well and about 15 institutions in the northeast and we want to obviously expand that to everywhere in the United States. So huge opportunity to do that it's going to take us some time I think by the.

David R. Bailey: You know, it's going to take us some time. I think by the fall this year, we'll probably be able to give some guidance as to what we think the pace is going to look like in terms of clinic expansion. There is no shortage of opportunities for us from a clinic expansion standpoint. We have kind of an outpouring of requests here from a number of locations, and it's just going to take us some time to set some of those things up.

Speaker Change: Fall of this year, we'll probably be able to give some guidance as to what we think the pace is going to look like in terms of out of clinic expansion.

Speaker Change: But.

Speaker Change: There is no shortage of opportunities for us from a clinic expansion standpoint, we have kind of an outpouring of ask here for from a number of locations and it's just going to take us some time to spend some of those things up and it's possible that we'll have some of these deals done and some clinics moving here by year end, but we're.

Speaker Change: Not forecasting that we do have the opening of our first clinic inside children's national.

David R. Bailey: You know, it's possible that we'll have some of these deals done and some clinics moving here by year end, but we're not forecasting that. We do have the opening of our first clinic inside Children's National or Nationwide Children's Hospital in Columbus, which is, I believe, the highest volume children's hospital in the United States. So that should start here in the next few months.

Speaker Change: Our nationwide children's and Columbus, which is I believe the highest volume children's hospital in the United States. So that should start here in the next few months. So really positive in terms of a long term I think what we're really most pleased to see here is the fact that.

David R. Bailey: So really positive in terms of the long term. I think what we were really most pleased to see here is the fact that, you know, as we've added the sales channel and then, you know, we've added a number of products to the MDO portfolio since the acquisition a few years ago, it's great to see all of those products already contributing to revenue growth. You know, not the clinical side of this stuff, but you know, we've talked about a three-part strategy.

Speaker Change: As we've added the sales channel and then you know we've added a number of products to the MTO portfolio since the acquisition a few years ago, it's great to see all of those products already and contributing to revenue growth not the clinic side of this stuff, but we've talked about a three part strategy number one of sales channel and sell.

David R. Bailey: Number one on the sales channel and selling the products we have. Number two, accelerating R&D, which we're definitely doing on pace to do four or five, have four or five new products a year. And then lastly, clinic expansion. And to see the first two of those portions of our strategy already start to contribute. And then to think that, you know, we have this huge TAM expansion opportunity, a really large growth opportunity that should really kick in 2025 when we start to realize the benefit of clinic expansion. It's just really exciting. I think it's given us a reason to be very bullish. Good Thanks for taking the questions.

Speaker Change: The products, we have number two accelerating R&D, which were definitely doing on pace to do four or five had four or five new products a year and then lastly clinic vault clinic expansion and to see the first two of those parts certain portions of our strategy already start to contribute.

Speaker Change: And then to think that we have this huge tam expansion opportunity really large growth opportunity that should really kick in in 2025.

Speaker Change: Can we start to realize the benefit of clinic expansion. It's just really exciting I think it's given US a reason to be very bullish.

Speaker Change: Thanks for taking the questions guys. Thanks.

Speaker Change: Thanks Ryan.

David R. Bailey: Thanks, Ryan. Thank you. Our next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is now open.

Speaker Change: Thank you.

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

Matthew O'brien: Morning. Thanks for taking the question. Just maybe, to start with, morning.

Matthew O'brien: Morning, Thanks for taking the question just maybe just start with good morning.

Matthew O'brien: On the on the Boston LNP contribution.

Matthew O'brien: I know I think you guys had mentioned that being about a $25 million business, roughly historically and I think thats kind of what we were modeling. This year is the increase.

David R. Bailey: On the Boston O&P contribution, you know, I think you guys had mentioned it being about a $25 million business, roughly historically, and I think that's kind of what we were modeling this year is the increase that we're expecting in the guidance for the year, just all Boston O&P related, the extra three million bucks really related to that. So it's more like 28 million. So you're kind of running ahead of schedule, or how do we kind of frame up how well Boston O&P has done so far on a No, I wouldn't assume that at all.

Matthew O'brien: That we're expecting in the guidance for the year, just all Boston LNP related to the extra 3 million Bucks really related to that so it's more like $28 million. So you're kind of running ahead of schedule or how do we better frame up how well Boston one peer has done so far on its own.

David R. Bailey: I think you can assume that it's similar to historical levels. I think, as we've mentioned in the past, about 23% of that $25 million typically falls in the first quarter, 25% in the second, third quarter, and 28% in the fourth quarter. But the extra $3 million is not from Boston. And we are very pleased with the legacy business, if you will. Yeah, Matt. I mean, we see growth across every segment at this stage.

Speaker Change: No I wouldn't assume that at all.

Speaker Change: I think you can assume that.

Speaker Change: Similar to historical levels I think as we've mentioned in the past about 23% of that $25 million typically falls in the first quarter, 25% in the second and third quarter and 28%.

Speaker Change: In the.

Speaker Change: Fourth quarter, but the extra $3 million.

Speaker Change: Is not from Boston.

Speaker Change: I'm very pleased with the or the legacy business. If you will yes, Matt I mean, we see.

Speaker Change: Growth across every segment at this stage I mean, it's just really good to see really positive momentum I do want to specify that we are seeing above average growth in oh, PSB, but we've been doing that for a long time right. I mean, we have taken it ever since we took on the MTO product portfolio on the club foot side, and then added products last year.

David R. Bailey: I mean, it's just really good to see really positive momentum. I do want to specify that we are seeing above average growth in OPSB, but we've been doing that for a long time, right? I mean, we have taken, ever since we took on the MDO product portfolio on the Clubfoot side and then added products last year, that business has been growing in excess of 20% really since the acquisition. And we're seeing more of that.

Speaker Change: That business has been growing in excess of 20% really since the acquisition and were seeing more of that.

David R. Bailey: And so the OPSB, let's say minus the Boston clinics, is performing extremely well, and it's certainly adding all those product lines to the T&D growth. So yeah, from that perspective, let's say the non-Boston component of OPSB, really pleased with what we're seeing there. But listen, this is a growth story that's going across every product line right now. Okay, okay, that's, that's great to hear and super encouraging. Just maybe back to that other point.

Speaker Change: And so they owe PSB, let's say minus the Boston clinics is performing extremely well and it's certainly adding.

Speaker Change: Those product lines to the T&D growth. So yes from that perspective, let's say the non Boston component of <unk> be really pleased for what we're seeing there, but this and this is a growth story, that's going across every product line right now.

David R. Bailey: I'm assuming it's too early to be getting any kind of halo effect from Boston OMP, but the tagging numbers and some commentary about apostates and other areas seem like they're kind of, You know, the momentum there is extremely strong. So I'm just curious about just the core business or the more organic historical business, where some of that growth is coming from and the durability of some of that growth, especially Peg. I mean, I know you're not gonna grow 150% every quarter with that thing, but just some of the durability that you're talking about now in the more traditional orthopediatrics franchises would be helpful.

Speaker Change: Okay, Okay, that's great to hear and Super encouraging.

Speaker Change: Just maybe back to that other point I'm, assuming it's too early to be getting any kind of halo effect from Boston LNP, but the target numbers in some commentary about <unk> and other other areas seemed like they're kind of.

Speaker Change: The momentum that are extremely strong. So I'm just curious about just the core business or the more organic historical business, where some of that growth is coming from the durability of some of that growth, especially <unk> I mean, I know, you're not going to grow 150% every quarter with everything but but.

Speaker Change: Just to some of the durability of that Youre talking about now in the more traditional orthopedic.

Speaker Change: With the pediatrics franchises would be helpful. Thanks.

David R. Bailey: Yeah, I think what we're seeing, you know, first on the implant side of trauma limb deformity. I mean, it's no secret that we've put out a lot of inventory over the course of the last few years. But it's also no secret that some of that inventory utilization has been maybe stifled a little bit just because of pure throughput inside children's hospitals.

Speaker Change: Yes, I think what we're seeing first on the implant side of trauma Linda form any I mean, it's no secret that we've put out a lot of inventory over the course of the last few years. It's also no secret that some of that inventory utilization has been may be stifled, a little bit just because of pure a throughput inside children's hospitals.

David R. Bailey: So I think what we're seeing is a combination of the fact that we've landed a lot of inventory, and we're starting to see a normalization, almost back to normal in terms of the surgical market. And so we're seeing efficiencies in that inventory.

Speaker Change: I think what we're seeing is a combination of the fact that we've landed a lot of inventory.

Speaker Change: And we're starting to see a normalization almost back to normal in terms of the surgical market and so we're seeing efficiencies in that inventory and you see you may assume that we're we're being pretty.

David R. Bailey: And you see, you might assume that we're being pretty aggressive in terms of wanting to pull up some of that product launch into the first half of this year because we're starting to drive real efficiencies and see real growth from the inventory that we put out in 2022 and especially 2023. So it's good to see a lot of that legacy growth come because, you know, obviously, we were betting on that when we put out that volume of inventory.

Speaker Change: Aggressive in terms of wanting to pull up some of that product launch.

Speaker Change: Into the first half of this year, because we're starting to drive real efficiencies and see real growth from the inventory that we put out in 2022, and especially 2023. So it's good to see a lot of that legacy growth come because obviously, we were betting on that when we put out that volume of inventory I would argue that we're obviously.

David R. Bailey: I would argue that, you know, we're obviously seeing, you know, the really first returns on a lot of inventory for Pega. And so still seeing great growth domestically; I think it was about 50% globally. So stronger international, much smaller business for us.

Speaker Change: Seeing the really the first returns of a lot of inventory a packer and.

David R. Bailey: But now that we have PEGA in all of our agencies and converted to all our distributors, I mean, we do expect to see pretty strong growth from PEGA outside of the United States for a long time. And I would also say, you know, PMP tibia is performing better than we had expected. Admittedly, I think we're almost to our annual sales growth number forecast on PMP tibia now through April. Uh, and so that's a pretty strong indicator that that product is going to work for us. And I think it is also driving a bit of a rebirth in the usage profile of PMP Femur, which is our largest trauma product. So those things are really cranking.

Speaker Change: And so still seeing great growth domestically I think it was about 50% globally, so stronger international much smaller business for us, but now that we have pegged in all of our agencies and converted to all our distributors I mean, we do expect to see pretty strong growth from peg outside of the United States for a long time I.

Speaker Change: I would also say <unk> is performing better than we had expected admittedly I think we're almost to our annual sales growth number forecast on <unk> now for April.

Speaker Change: And so that's a pretty strong indicator that that product is going to work for us and I think it is also driving a bit of a rebirth in the usage profile of Pnp femur, which is our largest trauma product. So those things really cranking and then I mean, the numbers don't lie in terms of our ortho.

David R. Bailey: And then, I mean, the numbers don't lie in terms of our ortho fit or Ortho X growth. You know, the X6 portfolio has grown ever since we made that acquisition now, what, three and a half years ago. And to see three and a half years later, that business growing at that rate, and it's still really just starting to catch its stride outside of the United States. You know, we think we're a top two player in children's hospitals, at least in the U.S. in the X6 market. And so, man, all of those things are working for us.

Speaker Change: <unk> X growth.

Speaker Change: Six portfolio has grown ever since we made that acquisition now what three and a half years ago and the C. Three and a half years later that business growing at that rate and it's still really now just starting to catch its stride outside of the United States. We think we're a top two player in children's hospitals at least in the U S and the.

Speaker Change: <unk> market and so all of those things are working for us and that's a good momentum as we think about heading into the balance of the year.

David R. Bailey: And that's good momentum as we think about heading into the balance of the year. Last thing, Apifex, I think we're starting to benefit from some better data. We're going to have longer-term and better data going forward, but Apifex is cranking, and, you know, the halo was Apifex 70 driving response sales. And that's what we've been saying for a long time. And I think the beat continues there.

Speaker Change: Last thing.

Speaker Change: <unk> I think we're starting to benefit from some better data, we're going to have longer term and better data going forward, but asked VIX is cranking and now the Halo was <unk> 70, driving response sales and that's what we've been saying for a long time and I think that continues there and.

Speaker Change: And as surgeons see us making investments in <unk> surgeons see us doing the deal with Boston I think it gives people a sense of permanence for our company. They can trust that we're going to be around a long time. It also it gives people a sense of Wow. These guys are putting their money where their mouth is that they're very serious about continuing to advance the entire field of pediatric or.

David R. Bailey: And as surgeons see us making investments in OPSB, and surgeons see us doing the deal with Boston, I think it gives people a sense of permanence for our company. They can trust that we're going to be around for a long time.

David R. Bailey: It also gives people a sense that these guys are putting their money where their mouth is, that they're very serious about continuing to advance the entire field of pediatric orthopedics. And of course, that creates a big halo across the whole business, not just a few products.

Speaker Change: <unk> and of course that creates a big halo across the whole business not just a few products.

Speaker Change: Got it thanks, so much.

Speaker Change: Thank you.

Rick Wise: Thank you. Our next question comes from the line of Rick Wise with Stifel. Your line is now open. Good morning, gentlemen.

Speaker Change: Our next question comes from the line of Rick Wise with Stifel. Your line is now open.

Rick Wise: A couple things for me. A very exciting quarter, obviously. But getting into the tricky bit, Fred, maybe you can help us talk us through how to think about gross margin progress for the year. Sort of from a quarterly perspective, I heard what you said about some of the gross margin, if you will, mixed pressures in the quarter that took it a little lower than we were thinking, the OUS set sales and the purchase price variances, etc. Can you help us understand how that plays out over the course of the year? Does it step up sequentially?

Rick Wise: Hi, good morning, gentlemen.

Rick Wise: Couple of things for me very exciting quarter obviously.

Rick Wise: But getting into the weeds, a little bit Fred.

Rick Wise: Fred maybe you can help us.

Rick Wise: Talk us through how to think about gross margin.

Rick Wise: Progress for the year.

Rick Wise: Sure.

Fred L. Hite: Quarterly perspective, I heard what you said.

Fred L. Hite: Some of the gross margin.

Fred L. Hite: If you will mix pressures in the quarter.

Fred L. Hite: <unk> took it a little lower than we were thinking.

Fred L. Hite: <unk>.

Speaker Change: <unk> asset sales and the purchase price variances et cetera can you help us understand how that plays out over the course of the year does it step up sequentially or we understand in the second quarter does it step up sequentially in some kind of way.

Fred L. Hite: Are we understanding in the second quarter, does it step up sequentially in some kind of way that sort of gets it back more to the 74%, 5% range? It just helped us, you know, by quarter and the implications for the year now. Yeah, absolutely.

Speaker Change: <unk>.

Speaker Change: So it gets it back more to the 74% 5% range.

Speaker Change: Just help us.

Speaker Change: By quarter end and the implications for the year now.

Speaker Change: Yeah, absolutely so.

Fred L. Hite: So, the gross margin rate really varies a lot based on volume. And so, over the last many, many years, the third quarter is typically the highest gross margin rate. I think it was like 77% last year. The second quarter is typically the second highest quarter. And then with the first and fourth quarter revenues being much smaller, obviously, than those two quarters in the middle, the margin is typically a little lower in those.

Speaker Change: The gross margin rate really.

Speaker Change: Varies a lot based on volume and so over the last many many years. The third quarter is typically the highest gross margin rate I think it was like 77% last year.

Speaker Change: The second quarter is typically the second highest quarter and then with the first and the fourth quarter revenues being much smaller obviously than those two quarters in the middle the margin is typically a little lower in those quarters. So yes, I would expect.

Fred L. Hite: So yeah, I would expect an increase second quarter compared to the first quarter. And then possibly another increase third quarter compared to the second. So still getting to the mid-70s, kind of an area for the year, despite the start, or? Yeah, yeah.

Speaker Change: An increase second quarter compared to first quarter, and then possibly another increased third quarter compared to the second quarter.

Speaker Change: So still getting mid seventies.

Speaker Change: The area for the year, despite the start or.

Speaker Change: Yes, that'll come towards them.

Fred L. Hite: Okay, I think I mentioned 475 on the call last Great. Turning to the pipeline, you know, obviously, Dave, you're talking about a really exciting pipeline. I can tell you're excited about it. Maybe talk to us about a couple things, some of the organic product launches in a little more detail, which ones you'd have us focused on most, and just a little more sense of timing. You highlighted a couple of them, but maybe dig into a little more, And as part of that, why this electromechanical growing rod opportunity is such a big deal, and what the breakthrough designation might mean for launch There is a lot in there, but if you could just break some of that down,

Amit: Okay. Thank you Amit.

Speaker Change: 475 on the call last time.

Amit: Great.

Amit: Turning to the pipeline.

Amit: Obviously.

Amit: Dave Youre talking about.

Dave: Really exciting pipeline I can tell you. We're excited about it maybe talk to us about a couple of things.

Dave: Some of the organic product launches and a little more detail, which ones you would have us.

Dave: Focus on most in just a little a little more sense of timing you highlighted a couple of them, but maybe dig into a little more.

Dave: And as part of that why this electro mechanical growing right opportunity.

Dave: As such a big deal and what the breakthrough designation might mean for launch expectations a lot in there, but if you could just break some of that down.

David R. Bailey: Great. Yep, sure. So I think the near-term opportunity, right, is with products that we just launched here or kind of kicked off in Q3 and Q4. So PMP tibia, as I mentioned earlier, really doing well. I mean, we have, I don't know, Fred, 15% of the sets that we'll have out on PMP tibia. I mean, maybe 10%, maybe 10%.

Speaker Change: Great Yeah sure. So I think the near term opportunity right is with products that we just had launched here or kind of kicked off in Q3 and Q4, So <unk> as I mentioned earlier really doing well.

Dave: Have I don't know if were at 15% of the sets that we'll have out on <unk>.

Speaker Change: Maybe Tim maybe 10% so.

Speaker Change: You see it performing the way, it's performing and with the volume of inventory that hasn't even been launched.

Speaker Change: That's going to be a story for us Giro certainly a story for us <unk> on the <unk> side that was product that we developed for fracture care for patients really under the age of four that has been well received so those products kind of the here and now we've got them in our hands, they're going well started doing first cases with <unk>.

David R. Bailey: So to see it performing the way it's performing and with a volume of inventory that hasn't even been launched, I think that's going to be a story for us. Gyro, certainly, is a story for us. DF2 on the OPSB side, that was a product that we developed for fracture care for patients really under the age of four, and that has been well received. So those products, kind of the here and now, we've got them in our hands. They're going well. We started doing the first cases with, as I said, our first EOS product line. And you hear us talking a lot about the EOS space. That represents about 15% of all scoliosis procedures.

Speaker Change: I said, our first pass product line and you hear us talking a lot about the Eos space that represents about 15% of scoliosis procedures and up until this point, we've never had a product in that space. So three different products. The first of which we talked about the response ribbon pelvic, but just launched and we have sales going on.

David R. Bailey: And up until this point, we've never had a product in that space. So, you know, three different products, the first of which we talked about, the Response Ribbon Pelvic, that just launched, and we have sales going on and procedures going on with that. Then this Verticalite device, which is another very substantial one, I think will be a strong revenue producer for us. Hopefully, we can get it out in the second half of this year.

Speaker Change: Procedures going on with that then this vertical out device, which is another very substantial I think will be a strong revenue producer for us hopefully we can get it out in Q or in the second half of this year and then la as you mentioned, which is the device that was this electromechanical growing rod just received breakthrough.

David R. Bailey: And then ELE, as you mentioned, which is the device that was this electromechanical growing rod, just received breakthrough device designation. I mean, our strategy in the early onset scoliosis space is not to provide the customer with a single solution. Most of the adult ortho or adult spine companies may have a single product line for early onset scoliosis.

Speaker Change: <unk> designation I mean, our strategy in the early onset scoliosis space is not to provide a single customer with a single solution.

Speaker Change: Most of the kind of adult ortho or adult spine companies may have a single product line for early onset scoliosis again true to form we want to surround the surgeon with everything that could use across that very very complicated complicated.

David R. Bailey: Again, true to form, we want to surround the surgeon with everything they could use across that very, very complicated set of indications. And so, very excited. I think all of that creates, again, a seriousness in our product portfolio that requires the top institutions in the world very seriously because we would be the only company in the world with that type of portfolio for that really difficult set of circumstances. The FDA's breakthrough device designation essentially allows us to have a direct one-on-one with FDA to process the approval of this device.

Speaker Change: Set of indications and so very excited I think all of that creates again, our seriousness in our product portfolio that requires the top institutions in the world very seriously because we will be the only company in the world with that type of portfolio for that really difficult.

Speaker Change: Set of circumstances.

Speaker Change: The FDA breakthrough device designation essentially allows us to have a direct one on one with FDA.

Speaker Change: To process the approval of this device.

David R. Bailey: There's certainly no guarantee, Rick, that it gets approved, but based on our testing and based on, you know, the capacity to have these one-on-one discussions with FDA and get a very clear sense of what FDA wants to see from us to get this device approved, it gives us a lot of confidence that we're going to be able to do that. And I think, you know, it's the first time in our company's history, and maybe that's why I'm personally so excited about this.

Speaker Change: Certainly is no guarantee Rick that it gets approved but based on our testing and based on the capacity to have these one on one discussions with FDA and get a very clear sense of what FDA wants to see from us to get this device approved.

Speaker Change: It gives us a lot of confidence that we're going to be able to do that and I think it's the.

Speaker Change: The first time in our company's history, and maybe that's why I'm personally. So excited about this is the first time in our company's history, where we've ever had a technology that was deemed so significant to the health care of pediatric patients that had got treated this way by the FDA and so I think.

David R. Bailey: It's the first time in our company's history that we've ever had a technology deemed so significant to the health care of pediatric patients that it got treated this way by the FDA. And so I think, you know, I can't imagine a stronger indication of the need profile for a device like this.

Speaker Change: I can't imagine a stronger indication of the need profile for a device like this and for those of us who've been around a while there is a certain.

David R. Bailey: And, you know, for those of us who have been around a while, there's a certain, well, it's just the realization of some of our dreams to be able to get involved in some, not just shaping kids' lives or helping kids improve their lives, but in some of these procedures, you know, these are potentially life-saving surgeries. And that's, again, I just think it's a real accomplishment for the company. And we think within the next year or so, that device could be out and be implanted in children. And that's a real breakthrough for us. That's exciting. Thanks for all the color.

Speaker Change: Well it is just a realization of some of our dreams to be able to get involved in some not just shaping kids' lives are helping kids improve lives, but in some of these procedures and these are potentially life saving surgeries and Thats again, I just think it's a real accomplishment for the company and we think within the next year or so that device can be out and be implanted in children.

Speaker Change: And and.

Speaker Change: And that's that's a real breakthrough for us.

Speaker Change: That's exciting thanks for all the color.

Rick Wise: Thanks, Rick. Thank you. Our next question comes from the line of Mike Matson with Needham & Company. Your line is now open. Yeah, thanks. So I wanted to ask about Europe.

Speaker Change: Thanks, Rick.

Speaker Change: Thank you. Our next question comes from the line of Mike Matson with Needham <unk> Company. Your line is now open.

Michael Stephen Matson: I think there was some commentary that you're expecting some new product clearances there, and you mentioned an audit or something. Can you just provide a little more detail on what's happening there?

Michael Stephen Matson: Yeah. Thanks, So I wanted to ask about Europe, I think there was some commentary that you're expecting some sort of new product clearances, there and you mentioned that audit or something can you just provide a little more detail on what's happening there it sounds like it could be meaningful in terms of.

Michael Stephen Matson: And the number of new products you are expecting.

David R. Bailey: It sounds like it could be meaningful in terms of the number of new products you're expecting. Yeah, a great question, Mike. So basically, you can think about our product portfolio and how it's developed over the course of the last four years and assume that almost none of those products that we've developed, particularly organically, none of those products have hit the European market. And so, you know, if you just look at the slide deck and see how much we have developed and put out into the U.S. market and certain other markets outside of the U.S., most of that hasn't hit Europe yet, and yet we're still growing very rapidly in the European market.

Speaker Change: Yes, great question Mike.

Speaker Change: So basically you can think about our product portfolio and how it's developed over the course of the last four years and assume that almost none of those products that we've developed particularly organically none of those products have hit the European market yet.

Speaker Change: So if you just look at the slide deck and see how much we have developed and put out into the U S market and certain other markets outside of the U S.

Speaker Change: Most of that hasn't hit Europe, Yes, we are still growing very rapidly in the European market. So you can kind of think of this as really a massive opportunity for us to launch.

Speaker Change: Several new brands that are new to Europe here, where at the European the combination meeting between the postal European pediatric Orthopedic Society and the pediatric Society of North America here in D. C. I mean, a lot of these surgeons have seen these products will certainly see them exhibited here, but they haven't had access to those products in markets like Germany U K.

David R. Bailey: So you can kind of think of this as really a massive opportunity for us to launch, you know, several new brands that are new to Europe. You know, here we are at the European, the combined meeting between the EPOS, the European Pediatric Orthopedic Society, and the Pediatric Society of North America here in D.C. I mean, a lot of these surgeons have seen these products. They'll certainly see them exhibited here, but they haven't had access to those products in markets like Germany, the UK, Ireland, Italy, France, and Spain.

Speaker Change: Ireland.

Speaker Change: Italy, France, Spain.

David R. Bailey: And so this is a big deal for us when we can get this approved. We are ready for the EUMDR audit. Our technical files, everything is updated.

Speaker Change: And so this is a big deal for us when we can get this approved.

Speaker Change: We are ready for the <unk> and the audit EU MTR audit our technical files everything is updated we're ready to roll. It's just a question and frankly of getting notified body into our offices, they're backed up with.

David R. Bailey: We're ready to roll. It's just a question, frankly, of getting a notified body into our offices. They're backed up with, you know, all kinds of audits. And so as soon as we get that audit done and we are ready to start launching these products, I'm not certain we can put a date on it. You know, is it November or December or early next year? That's why we've kind of said 12 to 15 months. But when it happens, it's a big deal for us.

Speaker Change: All kinds of these audits and so as soon as we get that audit done and we will be ready to start launching these products I'm not certain we can put a date.

Speaker Change: Remember December early next year, that's why we've kind of said 12 to 15 months, but when it happens it's a big deal for us and I think it represents the launch of almost four five years of U S products.

Michael Stephen Matson: And I think it represents, you know, the launch of almost four or five years of U.S. products into the European market. Okay, thanks. And then I know that you don't really disclose your sort of organic growth, but you know, if we assume that Boston O&P was sort of like five and a half million, it implies about 24% growth for the non-O&P business. So, you know, it seems like it's safe to assume your organic growth was probably over 20%. I mean, is that reasonable?

Speaker Change: The European market.

Speaker Change: Okay. Thanks, and then I noted that you don't really disclose your sort of organic growth.

Speaker Change: If we assume that Boston <unk>.

Speaker Change: Like $5 5 million it implies about 24% growth for the OSP business. So.

Speaker Change: It seems like it's safe to assume your organic growth was probably over 20%.

Speaker Change: Reasonable.

David R. Bailey: I'd say that's an extremely reasonable assessment, Mike. Yeah. Okay. All right.

Speaker Change: I'd say, that's an extremely reasonable assessment.

Speaker Change: Okay. Thank you.

Speaker Change: Yes.

Michael Stephen Matson: Our next question comes from the line of Dave Turkaly with Citizens JMP. Your line is now open. Hey, good morning, guys. Sorry, I've been bouncing around a little.

Speaker Change: Okay.

Speaker Change: Thank you.

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

David Louis Turkaly: So I hope I asked something that hasn't been asked. But, um, you mentioned that you're going to hire some staff for Boston. And I was just curious, could you just refresh our memory in terms of the footprint that you have today? And then, and I think you even said that you think that you could build that to $100 million. Like, what kind of headcount came with them? And how many people do you need to add? And how quickly can you do that?

Dave: Hey, good morning, guys.

Dave: Currently around a little so.

Dave: <unk> been it hasnt been asked but.

Dave: You mentioned I think that youre going to hire some staff for.

Dave: Boston and I was just curious could you just refresh our memory in terms of the footprint that you have today and then.

Dave: Thank you even said that you think that you could still get to a $100 million.

Dave: What kind of headcount came with them and how many people do you need to add and how quickly can you do that.

Dave: Yeah.

David R. Bailey: Yeah. So what we've been talking about, Dave, is just the scaling of the sales force. So when we came in, when we acquired Boston and MD Orthopedics, you know, we literally had no direct sales staff. We had a couple of people that were kind of sales managers.

Speaker Change: So what we've been talking about David is just the scaling of the Salesforce. So when we came when we acquired Boston and MD orthopedics.

Dave: Really there was no direct sales staff, we had a couple of people that were kind of sales managers and we have some really great folks that have been helpful kind of one person teams really leading in the United States and in a few people outside of the United States that have done great for Boston and for particularly MTO.

David R. Bailey: And we have some really great folks that have been helpful, you know, kind of one-person teams really leading in the United States and then a few people outside of the United States that have done great for Boston and for particularly MDO. And, you know, now we're trying to get those people and others some actual sales force. And so the aspiration here in 2024 was to have about 20 people added to the sales channel, and we want to partner those people with our current U.S. and international distributors. We don't want these people to be entirely separate. So they show up on the doorstep of a customer who they don't know.

Dave: And now we're trying to get those people and others some.

Dave: And actual sales force and so the aspiration here in 2024 was to have about 20 people added within the sales channel and we want to partner those people with our current U S and international distributors. We don't want these people to be entirely separate so they'd show up on the doorstep of a customer who they don't know obviously, we have very close.

David R. Bailey: Obviously, we have very close relationships with really every pediatric orthopedic surgeon around the world. And so we want to be able to leverage, you know, our relationship and the fact that they know orthopediatrics and then bring some people into the sales channel that focus exclusively on the non-operative side, you know, that aren't obligated to stand in the operating room and work with surgeons all day long but can certainly work in their clinics. And so that's what we're really talking about. We have added, I would say, I don't know for sure, but I think we've probably added the majority of those sales people already.

Dave: Relationships with really every pediatric orthopedic surgeons around the world and so we want to be able to leverage.

Dave: Our relationship and the fact that they know ortho pediatrics and then bring some people.

Dave: Into the sales channel that focused exclusively on the non operative side.

Dave: That arent obligated to stand in the operating room and work with Surgeons all day long, but certainly can work in their clinics and so that's what we're really talking about we have added I would say I don't know for sure, but I think we've probably added the majority of those salespeople already.

David R. Bailey: And so those costs have started to figure into our P&L already, and obviously, we've got that forecasted for the balance of the year. And, you know, as that portfolio expands and clinics expand, and maybe even our business expands further internationally, you could assume that we will want to continue to scale the sales channel. And, you know, we've talked about building a hundred million dollar business here. I think you heard me say on the call that it's a business well over 100 million.

Dave: So those costs are starting to figure into our P&L already and obviously, we've got that forecasted for the balance of the year and as that portfolio expands and clinics expand and maybe even our business expands further internationally you could assume that we will want to continue to scale the sales channel and.

Dave: We've talked about building $100 million business here I think you heard me say in the call our business well over $100 million I don't want to put a number on that right now but.

David R. Bailey: I don't want to put a number on that right now, but all systems are go here for us to build a very, very large business in this space. And, you know, we love the financial metrics associated with it, and we see very little resistance to us continuing to do that over the course of the next several years. And it's just this is a big new time with a big new growth opportunity all the way around that should drive really strong top-line growth for us for the next several years. Great, thank you.

Dave: All systems are go here for us to build a very very large business in this space and we love the financial metrics associated with it and we see very little resistance to us continuing to do that over the course of the next several years and it's just this is a big new Tam with the big new growth opportunity all the way around that should drive really.

Dave: Strong top line growth for us for the next several years.

Speaker Change: Great. Thank you.

Dave: Okay.

Speaker Change: Thank you.

David Louis Turkaly: Thank you. Our next question comes from the line of Sam Brodovsky with Truist Securities. Your line is now open. Hey, guys, can you hear me OK?

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

Sam: Hey, guys can you hear me okay.

Samuel E. Brodovsky: Loud and clear, Sam. Great, thanks for taking the questions and congrats on a solid start to the year. I just want to start off a higher level question and appreciate the commentary on where system capacity is back at. Can you just remind us what's contemplated in guidance as it relates to capacity coming back online? And if there's any sort of backlog component in your estimation out there in the market that could potentially come into the volume, Yeah, I don't think we tried to anticipate dramatic increases in capacity in our guide. So it's pretty much what we see today is what we try to forecast and include in the guide, and we honestly, other than a little bit of carryover from RSV in December into January.

Sam: I'm clear Sam great.

Sam: Great. Thanks for taking the question and congrats on a solid start to the year I just want to start off at a higher level question and then I appreciate the commentary on <unk>.

Sam: Where where system capacity is back on can you just remind us what's contemplated in guidance as it relates to capacity coming back online and if theres any any sort of backlog component in your estimation out there in the market that could potentially come in.

Sam: To the volumes this year.

Speaker Change: Yes, I don't think we tried to anticipate dramatic increases in capacity.

Sam: In our guidance so it's pretty much what we see today is what we try to use to forecast and include in the guidance.

Sam: And we honestly other than a little bit of carryover from RSV.

Sam: December into January.

David R. Bailey: Don't feel that there's some huge pent-up demand that's going to flow through the system in our guide. And then, switching to EOS, just as we think about that opportunity, how quickly do you think the new products could see uptake there? Is it going to be similar to what we saw with App Effects where data needs to mature a little bit before you can see broader adoption, or do you think there's room for that to potentially grow?

Sam: Don't feel that there is some huge pent up demand that's going to flow through the system in our guidance either.

Speaker Change: Great and then switching to CEO as just as we think about that opportunity. How quickly do you think the new products could could see uptake. There is it is it going to be similar to what we saw with apathy where data needs to mature a little bit before you can see broader adoption or do you think there's room for that to potentially adopt even more quickly.

David R. Bailey: Yeah, that's a really good question. So, I think with EOS, what's different about EOS than Apafix is that, you know, the Apafix surgery, this non-fusion spine surgery is a procedure that, you know, not every surgeon does. This is not, this is asking surgeons to do something different within their practice than they currently do. The fact remains is that a child with early onset scoliosis, a young kid that has, you know, Substantial Difficulties, there really isn't a non-surgical treatment option available.

Speaker Change: Yeah, that's a really good question.

Sam: So.

Sam: I think with the Eos, what's different about Eos, then <unk> is that the <unk> surgery. This non fusion spine surgery is a procedure that not every surgeon does.

Sam: This is not this is asking surgeons to do something different within their practice that they currently do the fact remains is that a child with early onset scoliosis young kid that having.

Sam: A substantial difficulties there really isn't a non surgical treatment option available. These are procedures that are happening and surgeons are struggling right now to find adequate technologies to do those procedures perform those procedures. So I think technology wins in this space. There is a great hunger from that.

David R. Bailey: These are procedures that are happening, and surgeons are struggling right now to find adequate technologies to do those procedures, perform those procedures. So I think technology wins in this space. There's a great hunger from the pediatric orthopedic community to have technologies that can benefit these kids. And a lot of times, surgeons are forced to use types of last resort products.

Sam: <unk> community to have technologies that can benefit these kids.

Sam: And a lot of times surgeons are forced to use kind of last resort types of products. So these procedures are happening.

David R. Bailey: So these procedures are happening. And so I think if we have better technology, which we believe we will, and then we can round that technology out with three different products, we think really the three products you would need to take care of this very tough set of indications give us a real distinct competitive advantage. And we do think that the uptick can be really strong with these product lines. And again, I think as much as the uptick in EOS revenue, it also places the company in, I believe, a fairly prestigious spot in the minds of our customers that say, we're willing to take on the extremely difficult things that the majority of ortho is just not taking on. I mean, these are pretty fairly rare conditions, but they're very complicated.

Sam: And so I think if we have a better technology, which we believe we will and then we can around that technology out with three different products. We think really the three products you would need to take care of this very tough set of indications.

Sam: It gives us a real distinct competitive advantage and we do think that the uptick can be really strong with these product lines and again I think as much as the uptick in the Eos revenue. It also places the company and I believe a fairly prestigious spot in the minds of our customers that say, we're willing to take on the extremely.

Sam: Difficult things that the majority of ortho is just not taking on I mean, these are pretty fairly rare conditions, but they are very complicated and surgeons haven't historically had great partnerships to take care of these kids. So we think that kind of creates again another halo around the business gives us an opportunity to help more kids, but also will probably drive usage.

David R. Bailey: And surgeons haven't historically had great partnerships to take care of these kids. So we think that kind of creates, again, another halo around the business, gives us an opportunity to help more kids, but also will probably drive usage patterns of the balance of our other products. Thank you. And I'm currently showing no further questions at this time.

Sam: Profile of the balance of our other products.

Speaker Change: Thank you.

Operator: I'd like to hand the call back over to David Bailey for his closing remarks. Thank you. Well, I'd like to thank everybody for joining us today. We've got an exciting week here at ePASNA. I think this will be the largest meeting of the pediatric orthopedic community in history. And so we're excited to get out there and meet with customers, show off what we've done, and it's just no better place to talk about, you know, a fantastic quarter for us and all the momentum we have heading into the balance of 2024. So I appreciate everybody being on the call. Great questions, and we'll look forward to reporting on how things go as we progress. Take care.

Sam: And I'm currently showing no further questions at this time I would like to hand, the call back over to David Bailey for closing remarks.

David R. Bailey: Thank you well I'd like to thank everybody for joining US today, we've got an exciting week here at <unk> I think this will be the largest meeting of the.

David R. Bailey: Pediatric orthopedic community in history.

David R. Bailey: So we're excited to get out there and meet with customers show off what we've done and just no better place to talk about.

David R. Bailey: A fantastic quarter for us and all the momentum we have heading into the balance of 2024. So I appreciate everybody being on the call great questions and we'll look forward to reporting on how things go as we progress take care.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Copyright © 2020, New Thinking Allowed Foundation ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning, and welcome to Orthopediatrics Corporation's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Yes.

David R. Bailey: [music].

David R. Bailey: Hum.

David R. Bailey: Sure.

David R. Bailey: Okay.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Sure.

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Sure.

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Yeah.

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Yes.

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: Yes.

David R. Bailey: Yeah.

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Sure.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: [music].

David R. Bailey: Thanks.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Yeah.

David R. Bailey: Yes.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: [music].

David R. Bailey: [music].

David R. Bailey: Sure.

David R. Bailey: Sure.

David R. Bailey: [music].

David R. Bailey: Yes.

David R. Bailey: Yes.

David R. Bailey: Sure.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Sure.

David R. Bailey: Yes.

David R. Bailey: Okay.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Sure.

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Yes.

David R. Bailey: Yes.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: [music].

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Yes.

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: <unk>.

David R. Bailey: Yes.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Sure.

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Sure.

David R. Bailey: Okay.

David R. Bailey: Sure.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: Yes.

David R. Bailey: Okay.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: [music].

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Yes.

David R. Bailey: Sure.

David R. Bailey: Okay.

David R. Bailey: Okay.

David R. Bailey: Yeah.

David R. Bailey: [music].

David R. Bailey: Yeah.

Philip Taylor: 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 replay purposes. I'd now like to turn the call over to Tripp Taylor from Gilmartin Group for a few introductory comments. Thank you for joining us today. With me from the company are David Bailey, President and Chief Executive Officer, and Fred Hite, Chief Operating and Financial Officer. Before we begin today, let me remind you that the company's remarks include forward-looking statements within the meaning of federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker Change: Good morning, and welcome to Arthur Pediatrics Corporation's first quarter 2024 earnings Conference call.

David R. Bailey: At this time all participants are in a listen only mode.

David R. Bailey: We will be facilitating a question and answer session towards the end of today's call.

David R. Bailey: As a reminder, this call is being recorded for replay purposes, I would now like to turn the call over to trip Taylor from Gilmartin group for a few introductory comments.

Philip Taylor: Thank you for joining today's call with me from the company are David Bailey, President and Chief Executive Officer, and Fred Hite, Chief operating and financial Officer before we begin today, let me remind you that the Companys remarks include forward looking statements within the meaning of federal securities laws, including the Safe Harbor.

Philip Taylor: These forward-looking statements are subject to numerous risks and uncertainties, and the company's actual results may differ materially. For a discussion of risk factors, I encourage you to review the company's most recent annual report on Form 10-K, which was filed with the SEC on March 8, 2024. During the call today, management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance. The company believes these measures provide useful information for investors evaluating its operations period over period.

David R. Bailey: Provisions of the private Securities Litigation Reform Act of $19 95.

David R. Bailey: These forward looking statements are subject to numerous risks and uncertainties and the company's actual results may differ materially for a discussion of risk factors I encourage you to review the company's most recent annual report on Form 10-K, which was filed with the SEC on March eight 2024.

David R. Bailey: During the call today management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance. The company believes these measures provide useful information for investors evaluating its operations period over period.

Philip Taylor: For each non-GAAP financial measure referenced on this call, the company has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its earnings release. Please note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for orthopediatrics financial results prepared in accordance with GAAP.

David R. Bailey: For each non-GAAP financial measure referenced on this call. The company has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its earnings release.

David R. Bailey: Please note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for ortho pediatrics financial results prepared in accordance with GAAP.

Philip Taylor: In addition, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, May 7th, 2024. Except as required by law, the company undertakes no obligation to revise or update any statements to reflect events or circumstances taking place after the date of this call. With that, I would like to turn the call over to David Bailey, President and Chief Executive Officer. Thanks, Tripp. Good morning, everyone.

David R. Bailey: In addition, the content of this conference call contains time sensitive information that is accurate only as of the date of this live broadcast today may seven 2024, except as required by law. The company undertakes no obligation to revise or update any statements to reflect events or circumstances.

David R. Bailey: Place after the date of this call.

David R. Bailey: With that I'd like to turn the call over to David Bailey, President and Chief Executive Officer.

David R. Bailey: Thanks, Tripp and good morning, everyone and thank you for joining us on our first quarter 2024 conference call as we start all earnings call I'd like to begin by highlighting that we helped a record 27600 kids in the first quarter of 2024.

David R. Bailey: And thank you for joining us for our first quarter 2024 conference call. As we start all earnings calls, I'd like to begin by highlighting that we helped a record 27,600 kids in the first quarter of 2020. This remarkable 47% year-over-year growth is the metric we're most proud of out of all of the stuff we'll share with you today. It embodies our fundamental commitment to helping children and demonstrates our ability to continue to expand our reach and create a more significant impact for children worldwide.

This remarkable 47% year over year growth is the metric. We're most proud of out of all of this stuff will share with you today.

David R. Bailey: It embodies our fundamental commitment to helping children and <unk>.

David R. Bailey: Demonstrates our ability to continue to expand our reach and create a more significant impact for children worldwide.

David R. Bailey: So today we're excited to join you live from just outside of Washington, D.C., at the E-PASNA conference, where PASNA and EPOS are collaborating to host a joint annual meeting. This is the largest pediatric orthopedic conference in the world.

David R. Bailey: So today, we're excited to join you live from just outside of Washington D. C. At the E. Pas conference our partner and <unk> are collaborating to host the joint annual meeting.

David R. Bailey: This is the largest pediatric orthopedic conference in the world and once again ortho pediatrics as the leading sponsor of this event the.

David R. Bailey: And once again, Orthopediatrics is the leading sponsor of this event. The shared mission across our three organizations will be advanced through clinical data presentations and educational sessions, highlighting the most cutting-edge pediatric orthopedic treatments and technology. We're looking forward to connecting with our customers and colleagues this week, and there is no better place to deliver our exciting business updates. Orthopediatrics is off to a great start in 2024, generating first quarter revenue of $44.7 million, representing growth of 41% compared to the first quarter of 2023. Driven by strong performance across the businesses, we continue to demonstrate robust top-line growth.

David R. Bailey: The shared mission across our three organizations will be advanced through clinical data presentations and the educational sessions, highlighting the most cutting edge pediatric orthopedic treatments and technologies.

David R. Bailey: We're looking forward to connecting with our customers and colleagues. This week and there is no better place to deliver our exciting business update.

David R. Bailey: Although pediatrics is off to a great start in 2024 generating first quarter revenue of $44 $7 million representing growth of 41% compared to the first quarter of 2023.

David R. Bailey: Driven by strong performance across the businesses, we continue to demonstrate robust topline growth.

David R. Bailey: Maintain healthy margins and outperform our adjusted EBITDA expectations. The execution of our business plan is delivering both financial results and progress on our strategic goals. Looking closer at the quarter, after an initial RSV spike seen in early January, revenue and surgery scheduling quickly bounced back. Children's hospitals have learned to manage RSV waves efficiently and effectively mitigate disruptions previously seen.

David R. Bailey: We maintained healthy margins and outperform our adjusted EBITDA expectations. The execution of our business plan is delivering both financial results and progress on our strategic initiatives.

David R. Bailey: Looking closer at the quarter. After an initial RSV vaccine in early January revenue in surgery scheduling quickly bounce back.

David R. Bailey: Children's hospitals have learned to manage RSV waves efficiently and.

David R. Bailey: And effectively mitigate disruptions previously seen.

David R. Bailey: Overall, improvements in the surgical environment are tracking our expectations. Hospitals are now better staffed, and the training of new associates is contributing to improved efficiency. Improvements continue every month, and by our estimations, we're approximately 95% back to normal. Given the seasonality of our business, the improved Children's Hospital's capacity will be tested in these critical summer months. Throughout the next few quarters, we will continue to monitor this progress closely. However, our confidence continues to increase that this headwind will have less and less of an impact moving forward toward a completely normalized state.

David R. Bailey: Overall improvements in the surgical environment are tracking our expectations hospitals are now better staffed and the training of new associates is contributing to improved efficiency.

David R. Bailey: Improvements continue every month and by our estimation were approximately 95% back to normal levels.

David R. Bailey: Given the seasonality of our business to improve children's hospitals capacity will be tested in these critical summer months.

David R. Bailey: Throughout the next few quarters, we will continue to monitor those progress closely however, our confidence continues to increase that this headwind will have less and less of an impact moving forward toward a completely normalized state.

David R. Bailey: We've built a business with a highly diversified portfolio that surrounds our surging customers with high technology products that continue to take market share and drive orthopediatrics growth. During the quarter, the global trauma and deformity, international scoliosis, and our newly formed and rapidly expanding specialty bracing business, or OPSB, were all particularly strong. First quarter global T&D was very strong, with 42% year over year growth led by sales of PEGA products.

David R. Bailey: We've built a business with a highly diversified portfolio that surrounds our surgeon customers with high technology products that continue to take market share and drive ortho pediatrics growth.

David R. Bailey: During the quarter, the global trauma and deformity.

David R. Bailey: International Scoliosis, and our newly formed and rapidly expanding specialty bracing business or <unk>.

David R. Bailey: Were all particularly strong.

David R. Bailey: First quarter Global T&D was very strong with 42% year over year growth led by sales of peg, a product's pnp FEMA or effects early sales of <unk> and growth within the <unk> franchise as well as the addition of Boston <unk> T&D product sales.

David R. Bailey: PNP Femur, Orthx, early sales of PNP tibia, and growth within the OPSB franchise, as well as the addition of Boston OMP's T&D product sales. PMP tibia demand continues to exceed expectations, and DF2 revenue has started strong. In addition, total surgeon users of XX increased by 29% in the first quarter, and total accounts increased by 37%.

David R. Bailey: <unk> demand demand continues exceeding expectations and <unk> revenue has started strong.

David R. Bailey: In addition, total surgeon users of <unk> increased by 29% in the first quarter.

David R. Bailey: Total accounts increased by 37%. We believe these numbers imply strong quarters are ahead of us.

David R. Bailey: We believe these numbers imply strong quarters are ahead. Looking at our international business, we reported strong overall growth of 33%, led by a rebound in scoliosis and very strong sales of TND, with XFIX at 59% growth and PEGA at 152% growth. Operations commenced at our recently established German headquarters, which is improving customer service and increasing surgeon access to orthopediatrics products across the country. We are already seeing a return on this investment as the German business grew 22%.

David R. Bailey: Looking at our international business, we reported strong overall growth of 33% led by a rebound in scoliosis and very strong sales of T&D with <unk> at 59% growth and peg at 152% growth.

David R. Bailey: Operations commenced at our recently established German headquarters, which is improving customer service and increasing surgeon access to ortho pediatrics products across the country.

David R. Bailey: We are already seeing a return on this investment as the German business grew 22%.

David R. Bailey: We're also seeing very high growth in Canada, where recent product registration and our account conversion strategy have been extremely effective, leading to large share gains in some of the country's largest, most prestigious children's hospitals and global teaching institutions. In addition, the macro environment in Brazil has improved. This momentum internationally is expected to continue throughout 2024. Scoliosis revenue had substantial, 44% growth, led by domestic apothecaries, international sales in Europe and Latin and South America, along with another quarter of share taking in our Fusion franchise, as well as the addition of Boston OMP Scoliosis custom bracing product sales. We expected the OUS scoliosis market to rebound aggressively in 2024 and to act as a tailwind. And this is exactly the trend we're seeing to start the year.

David R. Bailey: We're also seeing very high growth in Canada for recent product registration and our account conversion strategy has been extremely effective leading to large share gains in some of the country's largest most prestigious children's hospitals and global teaching institutions.

David R. Bailey: In addition, the macro environment in Brazil is improving this momentum internationally is expected to continue throughout 2024.

David R. Bailey: Scoliosis revenue had substantial 44% growth led by domestic Apple six international sales in Europe, and Latin and South America, along with another quarter of share taking in our fusion franchise as well as the addition of Boston <unk> Scoliosis custom bracing product sales.

David R. Bailey: We expected the Oes scoliosis to rebound aggressively in 2024 and to act as a tailwind and this is exactly the trend we're seeing to start the year.

David R. Bailey: OPSB contributed to growth in both the T&D and scoliosis businesses as a result of the Boston O&P acquisition, coupled with increased sales from products unrelated to Boston O&P clinics, such as MDO, DF2, Oramedical, and Rhino. Increasing increases in OPSB sales continue to rise as we hire additional sales staff exclusively focused on this franchise. And we are confident that as we build this business, there is a massive opportunity to capture growth. The various levers driving the next phase of orthopediatrics growth and profitability are becoming more visible, and we remain quite bullish about our prospects for 2024 and beyond. For the remainder of the year, we're focused on continuing legacy product growth, launching several key new organic products, and expanding Pegasail.

David R. Bailey: <unk> contributed to growth in both the T&D and scoliosis businesses as a result of Boston <unk> acquisition, coupled with increased sales from products unrelated to Boston LNP clinics, such as MTO, DF too or a medical and Rhino.

David R. Bailey: Increasing increases in <unk> sales continue to rise as we hire additional sales staff exclusively focused on this franchise and we are confident that as we build this business. There is a massive opportunity to capture growth.

David R. Bailey: The various levers driving the next phase of ortho pediatrics growth and profitability are becoming more visible and we remain quite bullish about our prospects for 2024 and beyond.

David R. Bailey: For the range for the remainder of the year, we're focused on continuing legacy product growth.

David R. Bailey: Launching several key new organic products.

David R. Bailey: Spanning peg a sales <unk>.

David R. Bailey: Capitalizing on Normalization in the International Market Publishing positive longer-term apopex data, an execution on OPSB, and an early start in digital healthcare The continued advancement of our strategic initiatives paired with our strong financial position will enable us to execute our long-term goals. With a solid start for the year, we are raising our revenue guidance for full year 2024 to $200 to $203 million, representing growth of 34% to 36%. The plethora of growth thrivers outlined have positioned this business to continue growing on the top line while improving profitability on our way to cash flow break even soon.

David R. Bailey: Capitalizing on normalization in international markets.

David R. Bailey: Publishing positive longer term <unk> data and execution on <unk>.

David R. Bailey: And an early start in digital health care.

David R. Bailey: The continued advancement of our strategic initiatives paired with our strong financial position will enable us to execute our long term goals.

David R. Bailey: With a solid start for the year, we are raising our revenue guidance for full year 2024 to $200 million to $203 million representing growth of 34% to 36%.

David R. Bailey: <unk> of growth drivers outlined have positioned this business to continue growing on the top line.

David R. Bailey: While improving profitability on our way to cash flow breakeven sooner.

David R. Bailey: Moving to our revenue segment, in the first quarter of 2024, we generated total trauma and deformity revenue of $33.3 million, representing growth of 42% compared to the prior year period. This quarter saw strong performances from Pega Products, Trauma, specifically P&P Tibia, X6, and OPSB, as well as the addition of Boston O&P T&D Products. Our prior investments and set allocations are generating a return and driving meaningful share gains for the T&D business across the entire growth of products, specifically PEGA, which once again grew nearly 50% globally.

David R. Bailey: Moving to our revenue segments.

David R. Bailey: In the first quarter of 2024, we generated total trauma and deformity revenue of $33 3 million representing growth of 42% compared to the prior year period.

David R. Bailey: This quarter saw strong performances from peg products trauma, specifically, <unk> <unk> and <unk> as well as the addition of Boston <unk> T&D product sales.

David R. Bailey: Our prior investments in certain applications are generating a return and driving meaningful share gains for the T&D business across the entire breadth of products.

David R. Bailey: Specifically, <unk>, which once again grew nearly 50% globally.

David R. Bailey: Sales of Pegas continue to be better than we ever expected, as we more deeply penetrate our U.S. accounts with the full pedigree product portfolio and we ramp international sales. Now that the distributor and agency transition is complete, OUS, PEGA will likely continue this trajectory globally in 2024 and for the foreseeable future. Excitingly, the full U.S. market release of PMP Tibia and Gyro is underway, with several sets expected to arrive at accounts in the second quarter and every quarter thereafter for the next several quarters.

David R. Bailey: Sales continue to be better than we ever expected as we more deeply penetrate our U S accounts with a full panel product portfolio and we ramp international sales.

David R. Bailey: Now that the distributor and agency transition is complete.

David R. Bailey: Peggy will likely to continue this trajectory globally in 2024 and for the foreseeable future.

David R. Bailey: Excitingly the full U S market release of <unk> and Giro are underway with several sets expected to arrive at accounts in the second quarter and every quarter thereafter for the next several quarters the.

David R. Bailey: The full market release of DF2 is also underway, and there is extremely high demand for this product, which is helping grow OPSB sales. These products are great additions to our portfolio and will create an immediate impact. Product portfolio expansion remains a top priority for the business.

David R. Bailey: The full market release of <unk> is also underway and there is extremely high demand for this product and it is helping grow our <unk> sales. These.

David R. Bailey: These products are great additions to our portfolio and will create an immediate impact.

David R. Bailey: Product portfolio expansion remains a top priority for the business, we seek to surround our surgeon customers with everything they need to treat each patient and treat more children.

David R. Bailey: We seek to surround our surgeon customers with everything they need to treat each patient and treat more children. Orthopediatrics is building a dominant share position across our entire T&D portfolio. Each quarter, more customers are using more of our products, driving increased market share. Adding new high technology products like PEGA helps advance the key account conversion strategy. The T&D business is increasingly well-positioned to continue to deliver sustainable growth for the next several years.

David R. Bailey: The pediatrics is building a dominant share position across our entire T&D portfolio.

David R. Bailey: Each quarter more customers are using more of our products driving increased market share.

David R. Bailey: Adding new high technology products like Puglia helps advance the key account conversion strategy.

David R. Bailey: The T&D business is increasingly well positioned to continue to deliver sustainable growth for the next several years.

David R. Bailey: On the R&D side, there are several exciting products within the surgical side of our T&D business. We're making great progress developing our entirely new Pediatric Plating Platform, or P3, which we expect will be world-class and spawn further share-taking opportunities for us within our plating franchise. We've also made solid strides on new external fixation devices that will continue the growth trajectory of our XFIX franchise. Furthermore, there will be several new CE Mark products that are positioned to launch in the EU market in the coming year to 15 months. The Orthopediatrics Non-Surgical Specialty Bracing Business, or OPSB, is performing extremely well, and we continue to view this franchise as a significant opportunity to help more kids.

David R. Bailey: On the R&D side, there are several exciting products within the surgical side of our T&D business, we're making great progress developing our entirely new pediatric planning platform or <unk>.

David R. Bailey: Which we expect will be world class and spawn further share taking opportunities for us within our <unk> franchise. We have also made solid strides on new external fixation devices that will continue the growth trajectory of our X six franchise.

David R. Bailey: Further there will be several new CE mark products that are positioned to launch in the EU market in the coming year to 15 months.

David R. Bailey: The ortho pediatrics non surgical specialty bracing business <unk> is performing extremely well and we continue to view this franchise as a significant opportunity to help more kids.

David R. Bailey: Before diving into some of that progress, I want to reiterate the OPSB Opportunity Briefing. In addition to furthering our strategy to provide pediatric orthopedic surgeons with everything they need to treat children, we see this as another opportunity for market dominance as we scale a historically fragmented market to become the clear-cut leader. 80% of pediatric orthopedic care is delivered outside of the operating room, and we estimate the U.S. non-surgical specialty bracing market is at minimum $775 million in total and conservatively a $500 million opportunity within the top 300 children's hospitals, from a business model perspective. Importantly, these custom fit devices do not require the upfront capital investment in consigned inventory or instruments.

David R. Bailey: Before diving into some of that progress I want to reiterate that <unk> opportunity briefly.

David R. Bailey: In addition to furthering our strategy to provide pediatric orthopedic surgeons with everything they need to treat children. We see this as another opportunity for market dominance as we scale, our historically fragmented market to become the clear cut leader.

David R. Bailey: 80% of pediatric orthopedic care is delivered outside of the operating room, and we estimate the U S. Non surgical specialty bracing market is that minimum $775 million in total and conservatively a $500 million opportunity within the top 300 children's hospitals.

David R. Bailey: From a business model perspective importantly, these custom fit devices do not require the upfront capital investment in consigned inventory our instrument sets.

David R. Bailey: As mentioned on our previous call, we continue to successfully execute a build aggressively strategy in OPS and anticipate it to grow very rapidly in the coming several years. OPSB is in the early innings of what we believe can be a business well in excess of $100 million in the coming years. The planned Salesforce expansion, product development, and the addition of new clinics will scale this business rapidly. Progress such as expanding the sales force and integrating our specialty bracing products with Boston's are already contributing to growth.

David R. Bailey: As mentioned on our previous call. We continue to successfully execute a build aggressively strategy in <unk> and anticipate it to grow very rapidly in the coming several years.

David R. Bailey: Oh PSB is in the early inning of what we believe can be a business well in excess of $100 million in the coming years.

David R. Bailey: The planned sales force expansion product development and the addition of new clinics will scale this business rapidly.

David R. Bailey: Progress expanding our sales force and integrating our specialty bracing products with Boston are already contributing to growth our existing R&D pipeline will support launching four to five new products within the <unk> business. The <unk> business every year.

David R. Bailey: Our existing R&D pipeline will support the launch of four to five new products within the OPS business and the OPSB business every year. Lastly, we've identified several new clinic opportunities and expect these to have a major impact as early as next year. Moving on to scoliosis.

David R. Bailey: Lastly, we've identified several new clinic opportunities and expect these to have a major impact as early as next year.

David R. Bailey: Moving onto the scoliosis business.

David R. Bailey: In the first quarter of 2024, we generated revenue of $10.2 million, representing global growth of 44% compared to the prior year. This global growth was led by a return to international sales in Latin and South America, new business in Europe, and strong apothecary growth, as well as the addition of Boston O&P Scoliosis custom bracing products. First quarter domestic sales increased by 38%, led by the addition of Boston Brace from the Boston O&P product portfolio. We are proud to add the most studied and utilized scoliosis spray in the world and a product that is considered to be the premier system for non-operative treatment of scoliosis and kyphosis to the OPSB portfolio.

David R. Bailey: In the first quarter of 2024, we generated revenue of $10 $2 million, representing global growth of 44% compared to the prior year.

David R. Bailey: This global growth was led by a return in international sales in Latin and South America.

David R. Bailey: New business in Europe, and strong <unk> growth as well as the addition of Boston LNP Scoliosis custom bracing product sales.

David R. Bailey: First quarter domestic sales increased by 38% led by the addition of Boston varies from the Boston OMB product portfolio.

David R. Bailey: We are proud to add the most studied and utilize scoliosis brace in the world and a product that is considered to be the premier system for non operative treatment of scoliosis and kyphosis did <unk> portfolio.

David R. Bailey: We're pleased with the rebound in the international scoliosis business, which outpaced our domestic business, generating 114% growth. We expect to see a continuation of strong international growth coupled with a robust summer surgery schedule in the coming quarter. The increased number of total response users over 2023, earnouts on 70 units placed in 2023, continued apothec's growth, improvements in South America, and our European launch, all together keep us bullish on 2024 scoliosis growth.

David R. Bailey: We're pleased with the rebound from international scope from the international Scoliosis business, which outpaced our domestic business generating 114% growth.

David R. Bailey: We expect to see a continuation of strong international growth, coupled with a robust summer surgery schedule in the coming quarters the.

David R. Bailey: The increased number of total response users over 2023 earn.

David R. Bailey: Earn outs on 70 units placed in 2023 continued athletics growth improvements in South America, and our European launch altogether keep us bullish on 2020 for scoliosis growth.

David R. Bailey: The Scoliosis R&D pipeline is continuously progressing, and the funnel is rich with highly novel technologies that solve major unmet needs for our customers, specifically for patients with early-onset scoliosis, a category in which we have never had products before. In the first quarter, we launched the first of three products in the EOS space. The first surgeries with response rib and pelvic were completed in the first quarter, producing excellent results. We've made great progress with our new growing spine system for EOS, called VertiGlide, and hope to have FDA approval secured in the second half of 2024.

David R. Bailey: The scoliosis R&D pipeline is continuously progressing and the funnel is rich with highly novel technologies that solve major unmet needs for our customers specifically for patients with early onset scoliosis a category in which we have never had products before.

David R. Bailey: In the first quarter, we launched the first of three products in the space.

David R. Bailey: The first surgeries with response ribbon pelvic were completed in the first quarter producing excellent results. We've made great progress with our new growing spine system for Eos called vertical line and hope to have FDA approval secured in the second half of 2024.

David R. Bailey: Further, the FDA recently classified our electromechanical growing spine rod, ELE, with the breakthrough device designation, both a major milestone on our way to FDA approval and a strong endorsement of ELE's potential for patients suffering from EOS.

David R. Bailey: Further the FDA recently classified our electromechanical growing spine Rod Ellie.

David R. Bailey: With the breakthrough device designation, both a major milestone on our way to FDA approval and a strong endorsement of <unk> potential for patients suffering from Eos <unk>.

David R. Bailey: Lastly, substantial progress has been made on the development of our next generation fusion system. The next 18 to 24 months will be the most prolific period of new product development and launches in OP scoliosis history, transforming the already impressive product portfolio into the most substantial offering available to surgeons treating pediatric scoliosis. Moving on to the Internet.

David R. Bailey: Lastly, substantial progress has been made on the development of our next generation fusion system.

David R. Bailey: The next 18 to 24 months will be the most prolific period of new product development and launches and Ob Scoliosis history.

David R. Bailey: Transforming the already impressive product portfolio into the most substantial offering available to surgeons treating pediatric scoliosis.

David R. Bailey: Moving on to international.

David R. Bailey: Overall, international growth improved substantially compared to the prior quarter, generating revenue of $10.4 million, delivering 33% year-over-year growth. This major rebound was supported by a return to normal ordering patterns for scoliosis products in South America. The launch of scoliosis in Europe, PEGA products, and general demand across the entire T&D portfolio. The international growth seen this quarter is very strong. As I mentioned earlier, we are seeing meaningful traction within several of our core international markets.

David R. Bailey: Overall international growth improved substantially compared to the prior quarter generating revenue of $10 $4 million delivering 33% year over year growth.

David R. Bailey: This major rebound was supported by a return to normal ordering patterns with scoliosis products in South America.

David R. Bailey: Launch of Scoliosis, and Europe, Peg, a products and general demand across the entire T&D portfolio.

David R. Bailey: The international growth seen this quarter is very encouraging as I mentioned earlier, we are seeing meaningful traction within several of our core international markets. The results. We've seen in Germany are particularly pleasing as we begin to reap the benefits of our investment in building a direct sales channel and local customer service.

David R. Bailey: The results we've seen in Germany are particularly pleasing as we begin to reap the benefits of our investment in building a direct sales channel and local customer service. As we await the notified body audit to finalize our EU MDR status, we are thrilled about all the progress we've made internationally and that 2024 has started off on such a strong footing. We expect completion of our audit in the second half of 2024, enabling the potential launch of several new products in Europe shortly thereafter.

David R. Bailey: As we await the notified body audits to finalize our EU MTR status. We are thrilled about all the progress we've made internationally and that 2024, who started off on such a strong footing.

David R. Bailey: We expect completion of our audit and the second half of 2020 for enabling the potential launch of several new products in Europe. Shortly thereafter.

David R. Bailey: Given the general lack of new pediatric orthopedic product launches in Europe over the past four to five years, it is particularly impressive that we've made so much headway and have many more opportunities in front of us. Overall, the international business is set up nicely. We believe that the first quarter represents a great start to an improved 2024. Since inception, facilitating educational opportunities for the pediatric orthopedic community has been a foundational component of orthopediatric strategy.

David R. Bailey: Given the general lack of new pediatric orthopedic product launches in Europe over the past four to five years. It is particularly impressive that we've made so much headway and have many more opportunities in front of us.

David R. Bailey: Overall, the international business is set up nicely, we believe that the first quarter represents a great start to an improved 2024.

David R. Bailey: That brings us to surgeon training and education.

David R. Bailey: Since inception, facilitating educational opportunities for the pediatric orthopedic community has been a foundational component of ortho pediatric strategy. That's why we are live from the E. Pas in it today and we look forward to updating you on how productive and impactful this meeting will be for the pediatric orthopedic community.

David R. Bailey: That's why we are live from ePASMA today, and we look forward to updating you on how productive and impactful this meeting will be for the pediatric orthopedic community. Back in April, the company was again a lead sponsor of ICSS, a meeting that offers a comprehensive program of lectures given by an outstanding international faculty and didactic cadaver labs focused on the cervical spine. Lumbosacral junction, Neuromonitoring, and various aspects of scoliosis

David R. Bailey: Back in April the company was again a lead sponsor of Ics are meeting that offers a comprehensive program of lectures given by an outstanding International faculty.

David R. Bailey: Didactic cadaver labs focused on the cervical spine.

David R. Bailey: <unk> sacral junction neuro monitoring and various aspects of scoliosis. This interactive forum was a great opportunity for us to engage with pediatric orthopedic fellows and attending surgeons and provide training on the latest technologies and surgical techniques. We highlight a response and the new pelvic fixation system at this year's meeting.

David R. Bailey: This interactive forum was a great opportunity for us to engage with pediatric orthopedic fellows and attending surgeons and provide training on the latest technologies and surgical techniques. We highlighted Response and the new pelvic fixation system at this year's meeting. In the quarter, we conducted a total of 46 unique learning experiences, highlighting over 162 different product touches, including labs, workshops, and sawbone stations; we reached over 1,100 health care providers and other staff members.

David R. Bailey: In the quarter, we conducted a total of 46 unique learning experiences highlighting over 162 different product touches, including labs workshops and solve one station and we reached over 1100 health care providers and other staff members as we continue advancing our ongoing commitment to <unk>.

David R. Bailey: As we continue advancing our ongoing commitment to training the next generation of pediatric orthopedic surgeons and leading innovation in our subspecialty around the world. Lastly, because of the continued focus on our people and culture building, I want to again highlight that for the eighth time, Orthopediatrics was named as one of the best places to work in Indiana.

David R. Bailey: Training the next generation of pediatric orthopedic surgeon, and leading innovation and our sub specialty around the world.

David R. Bailey: Lastly, because of the continued focus on our people and culture building I want to again highlight that for the eighth time ortho pediatric <unk> pediatric was named as one of the best places to work in Indiana.

David R. Bailey: We are committed to fostering a culture that is positive, engaging, and allows our associates to do their best work. This has become a key aspect of our competitive advantage and continues to expand our ability to help more kids around the world. With that, I'll turn the call over to Fred to provide more detail on our financial results.

David R. Bailey: We are committed to fostering a culture that is positive engaging and allows our associates to do their best work. This has become a key aspect of our competitive advantage and continues to expand our ability to help more kids around the world.

David R. Bailey: With that I'll turn the call over to Fred to provide more detail on our financial results Fred.

Fred L. Hite: Thanks, Dave. Our first quarter 2024 worldwide revenue of $44.7 million increased 41% compared to the first quarter of 2023. Growth in the quarter was driven primarily by strong performance across global trauma and deformity, international scoliosis, and OPSB, as well as the addition of Boston O&P. U.S. revenue was $34.3 million, a 44% increase from the first quarter of 2023. Growth in the quarter was primarily driven by our trauma and deformity product lines.

Fred: Thanks, Dave.

Fred L. Hite: Scoliosis, and OPSB, as well as the addition of Boston O&P sales. We generated total international revenue of $10.4 million, representing growth of 33% compared to the first quarter of 2023. Growth in the quarter was primarily driven by trauma and deformity. Scoliosis, and OPSB. In the first quarter of 2024, trauma and deformity global revenue of $33.3 million increased 42% compared to the prior year period. Growth was primarily driven by strong growth across numerous product lines, specifically our canulated screws, PMP FEMUR, PD plates, external fixation, and the PEGA system, as well as the addition of Boston O&P Trauma and Deformity Correction product sales.

Fred: Our first quarter 2024 worldwide revenue of $44 $7 million increased 41% compared to the first quarter of 2023.

Fred L. Hite: Both in the quarter was driven primarily by strong performance across global trauma and deformity.

Fred L. Hite: International Scoliosis and <unk> as well as the addition of Boston <unk>.

Fred L. Hite: U S revenue was $34 3, million% to 44% increase from the first quarter of 2023.

Fred L. Hite: Growth in the quarter was primarily driven by our trauma and deformity product lines, scoliosis and <unk> as well as the addition of Boston <unk> sales.

Fred L. Hite: We generated total international revenue of $10 4 million.

Fred L. Hite: Representing growth of 33% compared to the first quarter of 2023.

Fred L. Hite: Growth in the quarter was primarily driven by trauma and deformity skull.

Fred L. Hite: Scoliosis and <unk>.

Fred L. Hite: In the first quarter of 2020 for trauma and deformity global revenue of $33 $3 million increased 42% compared to the prior year period.

Fred L. Hite: Growth was primarily driven by strong growth across numerous product lines, specifically, our cumulated screws Pnp femur PD plates external fixation in the peg of systems as well as the addition of Boston <unk> trauma and deformity correction product sale.

Fred L. Hite: Yes.

Fred L. Hite: In the first quarter of 2024, scoliosis revenue of $10.2 million increased 44% compared to the prior year period. Growth was primarily driven by increased sales of our Response 5560. Appy Fix Systems, and revenue generated from 7D Technologies, as well as the addition of Boston O&P Scoliosis custom bracing product sales. Finally, sports medicine other revenue in the first quarter of 2024 was $1.2 million compared to $1.1 million in the previous year. Turning to Set Deployment.

Fred L. Hite: In the first quarter of 2020 for Scoliosis revenue of 10 point.

Fred L. Hite: $2 million increased 44% compared to the prior year period.

Fred L. Hite: Growth was primarily driven by increased sales of our response to <unk>.

Fred L. Hite: <unk> systems and revenue generated from 70 technologies as well as the addition of Boston, a lumpy scoliosis custom bracing product sales.

Fred L. Hite: Finally sports medicine other revenue in the first quarter of 2024 was $1 2 million.

Fred L. Hite: Compared to $1 1 million in the previous year period.

Fred L. Hite: Turning to set deployment.

Fred L. Hite: $4.3 million of sets were consigned in the first quarter of 2024 compared to $3.0 million in the first quarter of 2023. The increase was driven by the strategic decision to bring in inventory earlier in the year and deploy a greater percentage of the annual inventory prior to our busy summer months. Touching briefly on a few key metrics, for the first quarter of 2024, the gross profit margin was 72% compared to 75% for the first quarter of 2023.

Fred L. Hite: $4 $3 million of sets were consigned in the first quarter of 2024 compared to $3.01 billion in the first quarter of 2023.

Fred L. Hite: The increase was driven by the strategic decision to bring in inventory earlier in the year and to play a greater percentage of the annual sets prior to our busy summer months.

Fred L. Hite: Touching briefly on a few key metrics.

Fred L. Hite: For the first quarter of 2024 gross profit margin was 72% compared to 75% for the first quarter of 2023.

Fred L. Hite: The decrease in gross profit margin was driven primarily by increased international set sales in the first quarter of 2024, as well as a less purchase price variance released in the first quarter of 2024 compared to 2023. Total operating expenses increased $9.7 million, or 30%, to $41.9 million in the first quarter of 2024. The increase was mainly driven by incremental personnel costs associated with increased headcount.

Fred L. Hite: The decrease in gross profit margin was driven primarily by increased international set sales in the first quarter of 2024 as well as less purchase price variance released in the first quarter of 2024 compared to 2023.

Fred L. Hite: Increased commissions and the addition of the Boston O&P Acquisition. Sales and marketing expenses increased $1.6 million, or 13%, to $14.2 million in the first quarter of 2024. The increase was primarily driven by increased sales commission expense, with a limited increase coming from the addition of Boston O&P. General and administrative expenses increased $7.6 million, or 44%, to $24.7 million in the first quarter of 2024.

Fred L. Hite: Total operating expenses increased $9 7 million or 30% to $41 $9 million in the first quarter of 2024.

Fred L. Hite: The increase was mainly driven by incremental personnel costs associated with increased head count.

Fred L. Hite: Increased commissions and.

Fred L. Hite: And the addition of the Boston <unk> acquisition.

Fred L. Hite: Sales and marketing expenses increased one $6 million or 13% to.

Fred L. Hite: <unk> to $14 $2 million in the first quarter of 2024.

Fred L. Hite: The increase was primarily driven by increased sales commission expense with a limited increase coming from the addition of Boston <unk> acquisition.

Fred L. Hite: General and administrative expenses increased $7 6 million or 44% to $24 $7 million in the first quarter of 2024.

Fred L. Hite: The increase was driven primarily by the addition of Boston O&P acquisitions, as well as resources to support the continued expansion of our business and increases in non-cash expenses such as stock compensation, depreciation, and amortization. Research and development expenses increased $0.6 million, or 23%, to $3.0 million in the first quarter of 2024 due to incremental product development and the addition of personnel to support the future growth of the business, as well as the Boston O&P Acquisition. Total other expense was $0.6 million for the first quarter of 2024, compared to $1.2 million of other income for the same period last year.

Fred L. Hite: The increase was driven primarily by the addition of Boston <unk> acquisition as.

Fred L. Hite: As well as resources to support the continued expansion of our business.

Fred L. Hite: And increases in noncash expenses, such as stock compensation depreciation and amortization.

Fred L. Hite: Research and development expenses increased zero point $6 million or 23% to 3.0 or $1 million in the first quarter of 2024 due to the incremental product development and the addition of personnel to support the future growth of the business.

Fred L. Hite: As well as the addition of the Boston <unk> acquisition.

Fred L. Hite: Total other expense was zero point $6 million for the first quarter of 2024 compared to $1 2 million of other income for the same period last year.

Fred L. Hite: In the first quarter of 2023, we recognized a $0.6 million favorable adjustment to contingent consideration that did not repeat in the first quarter of 2024, as well as increased interest expense from our $10 million dollar mid cap loan. Adjusted EBITDA loss was $1.1 million in the first quarter of 2024, and this compares to a loss of $2.1 million in the first quarter of 2023. We ended the first quarter with $49.7 million in cash, short-term investments, and restricted cash.

Fred L. Hite: In the first quarter of 2023, we recognized a 0.6 million favorable adjustment to contingent consideration that did not repeat in the first quarter of 2024 as well as increased interest expense from our $10 million Midcap loan.

Fred L. Hite: Adjusted EBITDA loss was $1 1 million in the first quarter of 2024, and this compares to a loss of $2 1 million in the first quarter of 2023.

Fred L. Hite: We ended the first quarter with $49 7 million in cash short term investments and restricted cash.

Fred L. Hite: Cash usage in the first quarter of 2024 includes $22 million paid for Boston O&P, increased set deployment, as well as increased inventory to support future set deployment. With our current cash position, as well as our debt facility, we are well capitalized to continue to execute on our long-term strategy, given our strong balance sheet. With positive Annual Adjusted EBITDA, our line of sight to cash flow breakeven, and the addition of Boston O&P, we are in a position of tremendous strength. Turning to guidance.

Fred L. Hite: Cash usage in the first quarter of 2024 includes $22 million paid for Boston LNP.

Fred L. Hite: Increased set deployment as well as increased inventory to support future set deployments.

Fred L. Hite: With our current cash position as well as our debt facility, we are well capitalized to continue to execute on our long term strategy.

Fred L. Hite: Given our strong balance sheet positive annual adjusted EBITDA, our line of sight to cash flow breakeven.

Fred L. Hite: And the addition of Boston OMB, we are in a position of tremendous strength.

Fred L. Hite: We are raising our expectation for full-year 2024 revenue from the previously announced $197 to $200 million to between $200 and $203 million, representing year-over-year growth of 34 to 36 percent. Additionally, we continue to expect to generate between $8.0 to $9.0 million of adjusted EBITDA in 2024. Additionally, we continue to expect less than $20 million of new sets deployed in 2024.

Fred L. Hite: Turning to guidance.

Fred L. Hite: We are raising our expectation for full year 2020 for revenue from the previously announced $197 million to $200 million.

Fred L. Hite: Up to $200 million to $203 million, representing year over year growth of 34% to 36%.

Fred L. Hite: We continue to expect to generate between $8.0 million to $9.0 million of adjusted EBITDA in 2024.

Fred L. Hite: Additionally, we continue to expect less than $20 million of new sets deployed in 2024.

Fred L. Hite: This represents our continued focus on driving the business to cash flow break even sooner rather than later. As mentioned, this year we plan to deploy sets earlier in the year compared to prior years. I will now turn the call back over to Dave for closing remarks. Thanks, Fred.

Fred L. Hite: This represents our continued focus on driving the business to cash flow breakeven sooner rather than later.

Fred L. Hite: As mentioned this year, we plan to deploy sets earlier in the year compared to prior years.

Fred L. Hite: I will now turn the call back over to Dave for closing remarks.

David R. Bailey: Looking at the first quarter, we are extremely proud of how we started 2024 and are confident that we will continue this momentum into the remainder of the year and beyond. We continue to capture share across the entire business, record robust top-line growth, maintain healthy margins, and outperform our EBITDA expectations. We will continue to move toward profitability growth and cash flow breakeven as we execute our strategic initiatives to drive value and capitalize on our opportunity.

Dave: Thanks, Brad looking at the first quarter, we are extremely proud of how we've started 2024 and are confident that we will continue this momentum into the remainder of the year and beyond.

David R. Bailey: We continue to capture share across the entire business.

David R. Bailey: Record robust topline growth maintain healthy margins and outperform our EBITDA expectations.

David R. Bailey: We will continue to move toward profitability growth and cash flow breakeven as we execute our strategic initiatives to drive value and capitalize on our opportunity.

David R. Bailey: 2024 will be a tremendous year for orthopediatrics, and I look forward to updating you again soon. In closing, I'd like to thank our surgeon partners, my OPS associates, our investors, and all of the innovators in pediatric health care for standing together to help kids. Operator, let's open the call for Q&A. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

David R. Bailey: 24 will be a tremendous year for Oracle pediatrics and I look forward to updating you again soon.

David R. Bailey: In closing I'd like to thank our surgeon partners.

David R. Bailey: <unk> associates, our investors and all of the innovators in pediatric health care or standing together to help kids.

David R. Bailey: Operator, let's open the call for Q&A.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

David R. Bailey: To withdraw your question. Please press star one again, please stand by while we compile the Q&A roster.

Operator: Please stand by while we compile the Q&A roster. Our first question is from the line of Ryan Zimmerman with BTIG. Your line is now open.

Operator: Our first question is from the line of Ryan Zimmerman with <unk>. Your line is now open.

Ryan Benjamin Zimmerman: Good morning and congratulations. A strong start to the year. I want to ask about guidance. Two part question here: you beat by about three and a half million, you're raising by three at the midpoint, just curious if you're seeing anything, kind of a head that you want to be a little cautious about or maybe reserved. Unmanned Aerial Vehicle.

Ryan Benjamin Zimmerman: Good morning, and congrats on a strong start to the year here I wanted to ask about guidance.

Ryan Benjamin Zimmerman: Two part question here.

Ryan Benjamin Zimmerman: You beat by about three $5 million, you're raising by <unk> three at the midpoint just curious if youre seeing anything.

Ryan Benjamin Zimmerman: Kind of a head.

Matt: Matt you want to.

Ryan Benjamin Zimmerman: You're a little cautious about or maybe reserving that that incremental $5 million in the second part is.

Ryan Benjamin Zimmerman: You are passing through that $3 million.

Ryan Benjamin Zimmerman: Adjusted EBITDA guidance is staying the same so just talk to us about kind of that flow through on higher revenue into the business and kind of what you are putting that to work on.

David R. Bailey: The second part is... You are passing through that three million. [inaudible] So just talk to us about kind of that flow through on higher revenue. Yeah, so first of all, we're obviously very excited about 41% growth in the first quarter. It's a great start to the year and sets us up very nicely. We had some RSV in late December and a little bit of it in January.

Speaker Change: Yes. So first of all we're obviously very excited about 41% growth in the first quarter to a great start to the year and sets us up very nicely. We had some RSV in late December.

David R. Bailey: Timber a little bit of it in January and then I think some of that December got pushed into January which helped pretty strong January to start the quarter, which is great to see the.

David R. Bailey: And then I think some of that December got pushed into January, which helped a pretty strong January to start the quarter, which is great to see. The wildcard for us, as you know, Ryan, is always the summer months, right? June and July are typically those, dramatically larger months for us throughout the year.

David R. Bailey: The wildcard for US as you know Ryan is always the summer months right June and July are typically.

David R. Bailey: Dramatically larger months for us throughout the year and how those summer.

David R. Bailey: And how those summer surgery seasons play out is really unknown until we get there. And so I think that's probably where the half a million dollars maybe is on revenue as far as why it didn't flow through for the full year. And it's really the only thing that gives us pause, if you will, on increasing it further and the EBITDA Guide Relative. Are you putting that back into the business? Yeah, the EBITDA number, the range is pretty wide. And again, the summer months are so large; that's when so much of it drops through.

David R. Bailey: Surgery seasons play out is really unknown until we get there and so I think that's probably where the $5 million maybe is.

David R. Bailey: On the revenue as far as why it didn't flow through for the full year and it's the really the only thing that.

David R. Bailey: Gives us pause if you will on increased net further at this point.

David R. Bailey: Okay, and the EBITDA guide relative to the beat.

David R. Bailey: Or are you putting that back into the business fronts.

David R. Bailey: And so, as you saw in the first quarter, negative one, one, basically on or maybe a little better than our expectations, but we want to wait and see what the summer months look like. And then we can increase that as we move throughout. And then just last one for me, you know, Boston O&P looks like it's been... A real good contribution and asset to bring. You know, Dave, I'd love to hear kind of your thoughts on clinic development. It's really the longer term plans of what you can do with Boston. Relative to your broader, Yeah, good question.

David R. Bailey: Yes, the EBITDA number the range is pretty wide and again the summer months are so large that when so much of it drops through and so as you saw in the first quarter was negative one one.

David R. Bailey: Basically on or maybe a little better than our expectation, but we want to wait and see what the summer months look like and then we can increase that as we move throughout the year.

Speaker Change: Got it and then just.

Speaker Change: Last one for me.

David R. Bailey: Boston looks.

David R. Bailey: It looks like it's been.

Dave: Real good contribution and asset to bring in.

Dave: Love to hear kind of your thoughts on clinic development.

Dave: And really it's really the longer term plans of what you can do with Boston won't be relative to your broader surgical customer base.

David R. Bailey: Um, you know, we see, I think you've heard me say this before, Ryan, the volume of inbound interest we've gotten from our customers related to that Boston L&P acquisition is probably as great, if not greater, than any other transaction or product we've done up until this point. So there's clearly a serious need out there to have, you know, a company focused exclusively on this bracing space and providing that service that Boston has done so well. We have about 15 institutions in the Northeast, and we want to obviously expand that to everywhere in the United States.

Speaker Change: Yes, good question.

Speaker Change: We see I think you've heard me say this before Ryan the volume of inbound interest we've gotten from our customers related to the Boston LNP acquisition is probably as great if not greater than any other transaction or a product we've done up to this point. So there is clearly a serious need out there to have a company for.

David R. Bailey: <unk> that are focused exclusively in this pricing space and providing that service, but that Boston has done so well and about 15 institutions in the northeast and we want to obviously expand that to everywhere in the United States. So huge opportunity to do that it's going to take us some time I think by the.

David R. Bailey: So, a huge opportunity to do that. You know, it's going to take us some time. I think by the, you know, fall this year, we'll probably be able to give some guidance as to what we think the pace is going to look like in terms of clinic expansion. There is no shortage of opportunities for us from a clinic expansion standpoint. We have kind of an outpouring of requests here from a number of locations, and it's just going to take us some time to spin some of those things up.

David R. Bailey: Fall of this year, we'll probably be able to give some guidance as to what we think the pace is going to look like in terms of out of clinic expansion.

David R. Bailey: But.

David R. Bailey: There is no shortage of opportunities for us from a clinic expansion standpoint, we have kind of an outpouring of ask here for from a number of locations and it's just going to take us some time to spend some of those things up and it's possible that we'll have some of these deals done and some clinics moving here by year end, but we're.

David R. Bailey: You know, it's possible that we'll have some of these deals done and some clinics moving here by year end, but we're not forecasting that. We do have the opening of our first clinic inside Children's National or Nationwide Children's Hospital in Columbus, which is, I believe, the highest volume children's hospital in the United States.

David R. Bailey: Not forecasting that we do have the opening of our first clinic inside children's national.

David R. Bailey: Our nationwide children's and Columbus, which is I believe the highest volume children's hospital in the United States. So that should start here in the next few months. So really positive in terms of the long term I think what we're really most pleased to see here is the fact that.

David R. Bailey: So that should start here in the next few months. So really positive in terms of the long term. I think what we were really most pleased to see here is the fact that, you know, as we've added the sales channel and then, you know, we've added a number of products to the MDO portfolio since the acquisition a few years ago, it's great to see all of those products already contributing to revenue growth. You know, not the clinic side of this stuff, but, you know, we've talked about a three-part strategy. Number one on the sales channel and selling the products we have.

David R. Bailey: As we've added the sales channel and then you know we've added a number.

David R. Bailey: Number of products to the MTO portfolio since the acquisition a few years ago, it's great to see all of those products already and contributing to revenue growth not the clinic side of this stuff, but we've talked about a three part strategy number one of sales channel and selling the products. We have number two accelerating R&D, which we are.

David R. Bailey: Number two, accelerating R&D, which we're definitely doing on pace to do four or five new products a year. And then lastly, clinic expansion, and to see the first two of those portions of our strategy already start to contribute. And then to think that, you know, we have this huge TAM expansion opportunity, a really large growth opportunity that should really kick in 2025 when we start to realize the benefit of clinic expansion. It's just really exciting. I think it's given us a reason to be very bullish. Thanks for taking the questions, guys. Thanks, Ryan.

David R. Bailey: Definitely doing on pace to do four or five had four or five new products a year and then lastly clinic vault clinic expansion and to see the first two of those parts portions of our strategy already start to contribute and then to think that you know we have this huge tam expansion opportunity really large growth opportunity that should really kick in in 2000.

David R. Bailey: 25.

David R. Bailey: When we start to realize the benefit of clinic expansion. It's just really exciting I think it's given us a reason.

David R. Bailey: The reason to be very bullish.

Speaker Change: Sounds good thanks for taking the questions guys.

Speaker Change: Thanks, Ron.

Matthew O'brien: Thank you. Our next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is now open.

Speaker Change: Thank you.

David R. Bailey: Our next question comes from the line of Matthew O'brien with Piper Sandler Your line is now open.

Matthew O'brien: Morning. Thanks for taking the question. Just maybe, to start with, morning.

Matthew O'brien: Good morning, Thanks for taking the question just maybe to start with.

Matthew O'brien: Morning.

Matthew O'brien: On the on the Boston LNP contribution.

Matthew O'brien: I know I think you guys had mentioned that being about $25 million business, roughly historically and I think that's kind of what we were modeling. This year is the increase.

David R. Bailey: On the Boston O&P contribution, you know, I think you guys had mentioned it being about a $25 million business, roughly historically, and I think that's kind of what we were modeling this year is the increase that we're expecting in the guidance for the year, just all Boston O&P related, the extra $3 million really related to that. So it's more like $28 million. So you're kind of running ahead of schedule, or how do we kind of frame up how well Boston O&P has done so far? No, I wouldn't assume that at all.

Matthew O'brien: That we're expecting in the guidance for the year, just all Boston LNP related to extra 3 million Bucks really related to that so it's more like $28 million Youre kind of running ahead of schedule or how do we better frame up how well Boston has done so far on its own.

David R. Bailey: I think you can assume that it's similar to historical levels. I think, as we've mentioned in the past, about 23% of that $25 million typically falls in the first quarter, 25% in the second, third quarter, and 28% in the fourth quarter, but the extra $3 million is not from Boston. Very pleased with the legacy business, if you will. Yeah, Matt, I mean, we see growth across every segment at this stage.

Speaker Change: No I wouldn't assume that at all.

David R. Bailey: Thank you can assume that Sim.

David R. Bailey: Similar to historical levels I think as we've mentioned in the past about 23% of that $25 million typically falls in the first quarter, 25% in the second and third quarter and 28% in the.

David R. Bailey: Fourth quarter, but the extra $3 million.

David R. Bailey: Is not from Boston.

David R. Bailey: And very pleased with the for the legacy business. If you will yes, Matt I mean, we see.

David R. Bailey: Growth across every segment at this stage I mean, it's just really good to see really positive momentum I do want to specify that we are seeing above average growth in oh, PSB, but we've been doing that for a long time right. I mean, we have taken it ever since we took on the MTO product portfolio on the club foot side, and then added products last year.

David R. Bailey: I mean, it's just really good to see really positive momentum. I do wanna specify that we are seeing above average growth in OPSB, but we've been doing that for a long time, right? I mean, we have taken, ever since we took on the MDO product portfolio on the Clubfoot side and then added products last year, that business has been growing in excess of 20% really since the acquisition. And we're seeing more of that.

David R. Bailey: That business has been growing in excess of 20% really since the acquisition.

David R. Bailey: And so the OPSB, let's say minus the Boston clinics, is performing extremely well, and it's certainly adding all those product lines to the T&D growth. So yeah, from that perspective, let's say the non-Boston component of OPSB, really pleased with what we're seeing there. But listen, this is a growth story that's going across every product line right now. Okay, okay, that's, that's great to hear and super encouraging. Just maybe back to that other point.

David R. Bailey: Seeing more of that.

David R. Bailey: And so they owe PSB, let's say minus the Boston clinics is performing extremely well and it's certainly adding.

David R. Bailey: All of those product lines to the T&D growth so from that perspective, let's say the non Boston component of <unk> be really pleased for what we're seeing there, but this and this is a growth story, that's going across every product line right now.

David R. Bailey: I'm assuming it's too early to be getting any kind of halo effect from Boston OMP, but the PEGA numbers and some commentary about Appistix and other areas seem like they're kind of, You know, the momentum there is extremely strong. So I'm just curious about just the core business or the more organic historical business, where some of that growth is coming from and the durability of some of that growth, especially PEG. I mean, I know you're not gonna grow 150% every quarter with that thing, but just some of the durability that you're talking about now in the more traditional orthopediatrics franchises would be helpful.

Speaker Change: Okay, Okay, that's great to hear and Super encouraging.

Speaker Change: Maybe back to that other point.

David R. Bailey: I'm, assuming it's too early to be getting any kind of a halo effect from Boston LNP, but the target numbers in some commentary about <unk> and other other areas seemed like they're kind of.

David R. Bailey: The momentum that are extremely strong. So I'm just curious about just the core business or the more organic historical business.

David R. Bailey: Some of that growth is coming from and the durability of some of that growth, especially in <unk> I mean, I know, you're not going to grow 150% every quarter of that thing, but but.

David R. Bailey: Just to some of the durability of that Youre talking about now and the more traditional.

David R. Bailey: The pediatrics franchises would be helpful. Thanks.

David R. Bailey: Yeah, I think what we're seeing, you know, first on the implant side of trauma limb deformity. I mean, it's no secret that we've put out a lot of inventory over the course of the last few years. But it's also no secret that some of that inventory utilization has been maybe stifled a little bit just because of pure throughput inside children's hospitals. So I think what we're seeing is a combination of the fact that we've landed a lot of inventory, and we're starting to see a normalization, almost back to normal, in terms of the surgical market. And so we're seeing efficiencies in that inventory.

David R. Bailey: I think what we're seeing first on the implant side of trauma and deformity I mean, it's no secret that we've put out a lot of inventory over the course of the last few years. It's also no secret that some of that inventory utilization has been may be stifled, a little bit just because of pure a throughput inside children's hospitals and so on.

David R. Bailey: I think what we're seeing is a combination of the fact that we've landed a lot of inventory.

David R. Bailey: And we're starting to see a normalization almost back to normal in terms of the surgical market and so we're seeing efficiencies in that inventory and you see you may assume that we're we're being pretty.

David R. Bailey: And you see, we're being pretty aggressive in terms of wanting to pull up some of that product launch into the first half of this year because we're starting to drive real efficiencies and see real growth from the inventory that we put out in 2022 and especially 2023. So it's good to see a lot of that legacy growth come. Because, you know, obviously, we were betting on that when we put out that volume of inventory, I would argue that, you know, we're obviously seeing the first returns on a lot of inventory for Pega, and so still seeing great growth domestically. I think it was about 50% globally.

David R. Bailey: Aggressive in terms of wanting to pull up some of that product launch.

David R. Bailey: Into the first half of this year, because we're starting to drive real efficiencies and see real growth from the inventory that we put out in 2022, and especially 2023. So it's good to see a lot of that legacy growth come because obviously, we were betting on that when we put out that volume of inventory I would argue that we're obviously.

David R. Bailey: Seeing the really the first returns of a lot of inventory of Purger.

David R. Bailey: So stronger international business is a much smaller business for us. But now that we have PEGA in all of our agencies and converted to all our distributors, I mean, we do expect to see pretty strong growth from PEGA outside of the United States for a long time. I would also say, you know, PMP tibia is performing better than we had expected.

David R. Bailey: And so still seeing great growth domestically I think there was about 50% globally, so stronger international much smaller business for us, but now that we have pegged in all of our agencies and converted to all our distributors I mean, we do expect to see pretty strong growth from peg outside of the United States for a long time I.

David R. Bailey: I would also say <unk> is performing better than we had expected admittedly I think we're almost to our annual sales growth number forecast on <unk> now for April.

David R. Bailey: Admittedly, I think we're almost to our annual sales growth number forecast on PMP tibia now through April. Uh, and so that's a pretty strong indicator that that product is going to work for us. And I think it is also driving a bit of a rebirth in the usage profile of PMP Femur, which is our largest trauma product. So those things are really cranking. And then, I mean, the numbers don't lie in terms of our ortho fit or the ortho X growth. You know, the X six portfolio has grown ever since we made that acquisition now, what three and a half years ago, and to see three and a half years later, that business growing at that rate. And it's still really just starting to catch its stride outside of the United States.

David R. Bailey: And so that's a pretty strong indicator that that product is going to work for us and I think it is also driving a bit of a rebirth in the usage profile of Pnp femur, which is our largest trauma product. So those things really cranking and then I mean, the numbers don't lie in terms of our ortho.

David R. Bailey: <unk> X growth.

David R. Bailey: <unk> portfolio has grown ever since we made that acquisition now at three and a half years ago and the C. Three and a half years later that business growing at that rate and it's still really now just starting to catch hit stride outside of the United States. We think we're a top two player in children's hospitals at least in the U S and the.

David R. Bailey: You know, we think we're a top two player in children's hospitals, at least in the U S in the X six market. And so, man, all of those things are working for us. And that's good momentum as we think about heading into the balance of the year. Last thing, Apifex, I think we're starting to benefit from some better data. We're going to have longer-term and better data going forward, but Apifex is cranking, and, you know, the halo was Apifex 70 driving response sales. And that's what we've been saying for a long time. And I think the beat continues there.

David R. Bailey: <unk> market and so on.

David R. Bailey: All of those things are working for us and that's a good momentum as we think about heading into the balance of the year last thing.

David R. Bailey: <unk> I think we're starting to benefit from some better data, we're going to have longer term and better data going forward, but asked VIX is cranking and now the Halo was <unk> 70, driving response sales and that's what we've been saying for a long time and I think the beat continues there and.

David R. Bailey: And as Surgeon CS makes investments in OPSB, and Surgeon CS does the deal with Boston, I think it gives people a sense of permanence for our company. They can trust that we're going to be around for a long time. It also gives people a sense that these guys are putting their money where their mouth is, that they're very serious about continuing to advance the entire field of pediatric orthopedics. And, of course, that creates a big halo across the whole business, not just a few products. Got it. Thanks so much.

David R. Bailey: And as surgeons see us, making investments in <unk> B surgeons see us doing the deal with Boston I think it gives people a sense of permanence for our company. They can trust that we're going to be around a long time. It also gives people a sense of Wow. These guys are putting their money where their mouth is that they're very serious about continuing to advance the entire field of pediatric or.

David R. Bailey: <unk> and of course that creates a big halo across the whole business not just a few products.

David R. Bailey: Got it thanks, so much.

Speaker Change: Thank you.

Rick Wise: Thank you. Our next question comes from the line of Rick Wise with Stiefel. Your line is now open. Good morning, gentlemen.

David R. Bailey: Our next question comes from the line of Rick Wise with Stifel. Your line is now open.

Rick Wise: A couple things for me. A very exciting quarter, obviously. But getting into the weeds a little bit, Fred, maybe you can help us talk us through how to think about gross margin progress for the year. Sort of from a quarterly perspective, I heard what you said about some of the gross margin, if you will, mixed pressures in the quarter that took it a little lower than we were thinking. The OUS sets sales and purchase price variances, etc. Can you help us understand how that plays out over the course of the year? Does it step up sequentially?

Rick Wise: Good morning, gentlemen.

Rick Wise: A couple of things for me very exciting quarter obviously.

Rick Wise: But getting into the weeds, a little bit Fred.

Fred: <unk>, maybe you can help us.

Rick Wise: Talk us through how to think about gross margin.

Rick Wise: Progress for the year.

Rick Wise: Sure.

Rick Wise: Quarterly perspective, I heard what you said.

Rick Wise: Some of the gross margin.

Rick Wise: If you will mix pressures in the quarter.

Rick Wise: <unk> took it a little lower than we were thinking.

Fred L. Hite: Are we understanding in the second quarter, does it step up sequentially in some kind of way that sort of gets it back more to the 74%, 5% range? It would just help us, you know, by quarter and the implications for the year. Yeah, absolutely. The gross margin rate really varies a lot based on volume. And so, over the last many, many years, the third quarter is typically the highest gross margin rate. I think it was like 77% last year.

Rick Wise: <unk>.

Rick Wise: Asset sales and the purchase price variances et cetera can you help us understand how that plays out over the course of the year does it step up sequentially.

Speaker Change: We understand.

Fred L. Hite: In the second quarter does it step up sequentially in some kind of way that.

Fred L. Hite: So it gets it back more to the 74% 5% range.

Speaker Change: Just help us.

Fred L. Hite: By quarter end and the implications for the year now.

Speaker Change: Yeah, absolutely so.

Fred L. Hite: The gross margin rate really.

Fred L. Hite: Varies a lot based on volume and so over the last many many years. The third quarter is typically the highest gross margin rate I think it was like 77% last year.

Fred L. Hite: The second quarter is typically the second highest quarter. And then, with the first and the fourth quarter revenues being much smaller, obviously, than those two quarters in the middle, the margin is typically a little lower in those. So, yeah, I would expect an increase in the second quarter compared to the first quarter, and then possibly another increase in the third quarter compared to the second. So still getting to the mid-70s. I think I mentioned 475 on the call last time.

Fred L. Hite: The second quarter is typically the second highest quarter and then with the first and the fourth quarter revenues being much smaller obviously than those two quarters in the middle the margin is typically a little lower in those quarters. So yes, I would expect in.

Fred L. Hite: An increase second quarter compared to first quarter, and then possibly another increase third quarter compared to the second quarter.

Fred L. Hite: So still getting mid seventies.

Fred L. Hite: The area for the year, despite the start or.

Fred L. Hite: Yes.

Speaker Change: Got it okay. Thanks, guys.

Fred L. Hite: 475 on the call last time.

Fred L. Hite: Great. Turning to the pipeline, you know, obviously, Dave, you're talking about it. It's a really exciting pipeline. I can tell you're excited about it. Maybe talk to us about a couple things, some of the organic product launches in a little more detail, which ones you'd have us focused on most and just a little more sense of timing. You highlighted a couple of them, but maybe we could dig into a

Fred L. Hite: Great.

Speaker Change: Turning to the pipeline.

Fred L. Hite: Obviously.

Fred L. Hite: Dave Youre talking about.

Fred L. Hite: Really exciting pipeline I can tell you. We're excited about it maybe talk to us about a couple of things.

Fred L. Hite: Some of the organic product launches and a little more detail, which ones you would have us.

Fred L. Hite: Focus on most in just a little a little more sense of timing you highlighted a couple of them, but maybe dig into a more.

David R. Bailey: And as part of that, why this electromechanical growing rod opportunity is such a big deal, and what the breakthrough designation might mean for launch expectations. There is a lot in there, but if you could just break some of that down. Great. Yeah, sure. So I think the near-term opportunity, right, is with products that we just launched here or kind of kicked off in Q3 and Q4. So PMP tibia, as I mentioned earlier, is really doing well.

Fred L. Hite: And as part of that why this electro mechanical growing rod opportunity.

David R. Bailey: As such a big deal and what the breakthrough designation might mean for launch expectations a lot in there, but if you could just break some of that down.

David R. Bailey: I mean, we have, I don't know, Fred, 15% of the sets that we'll have out on PMP tibia. I mean, maybe 10%, maybe 10%. So to see it performing the way it's performing and with a volume of inventory that hasn't even been launched, I think that's going to be a story for us. Gyro, certainly a story for us.

Speaker Change: Great Yeah sure. So I think the near term opportunity right is with products that we just had launched here or kind of kicked off in Q3 and Q4. So <unk> as I mentioned earlier really doing well I mean, we have I don't know if were at 15% of the sets that we will have out on <unk>.

David R. Bailey: Maybe Tim maybe 10% so.

David R. Bailey: See it performing the way, it's performing and with the volume of inventory that Hasnt, even been launched.

David R. Bailey: That's going to be a story for us Giro certainly.

David R. Bailey: DF2 on the OPSB side, that was a product that we developed for fracture care for patients really under the age of four, that has been well received. So those products are kind of the here and now. We've got them in our hands. They're going well. We started doing the first cases with, as I said, our first EOS product line. And you hear us talking a lot about the EOS space. That represents about 15% of all scoliosis procedures.

David R. Bailey: <unk> on the <unk> side that was product that we developed for fracture care for patients really under the age of four that has been well received so those products kind of the here and now we've got them in our hands, they're going well started doing first cases with <unk> as I said, our first pass product line and you hear us.

David R. Bailey: Talking a lot about the Eos space that represents about 15% of scoliosis procedures and up until this point, we've never had a product in that space. So three different products. The first of which we talked about the response ribbon pelvic, but just launched and we have sales going on and procedures going on with that then this vertical out device.

David R. Bailey: And up until this point, we've never had a product in that space. So, you know, three different products. The first of which we talked about the Response Ribbon pelvic that just launched, and we have sales going on and procedures going on with that. Then this VerticLight device, which is another very substantial device, I think will be a strong revenue producer for us. Hopefully, we can get it out in the second half of this year.

David R. Bailey: Which is another very substantial I think will be a strong revenue producer for us hopefully we can get it out in Q or in the second half of this year and then la as you mentioned, which is the device that was this electromechanical growing rod just received breakthrough device designation I mean, our strategy in the early onset skull.

David R. Bailey: And then ELE, as you mentioned, which is the device that was this electromechanical growing rod, just received breakthrough device designation. I mean, our strategy in the early onset scoliosis space is not to provide a single customer with a single solution. Most of the adult ortho or adult spine companies may have a single product line for early onset scoliosis.

David R. Bailey: <unk> space is not to provide a single customer with a single solution.

David R. Bailey: Most of the kind of adult ortho or adult spine companies may have a single product line for early onset scoliosis again true to form we want to surround the surgeon with everything that could use across that very very complicated complicated set of indications and so very excited I think all of that creates.

David R. Bailey: Again, true to form, we want to surround the surgeon with everything they could use across that very, very complicated set of indications. And so, very excited. I think all of that creates, again, a seriousness in our product portfolio that requires the top institutions in the world very seriously because we will be the only company in the world with that type of portfolio for that really difficult set of circumstances. The FDA's breakthrough device designation essentially allows us to have a direct one-on-one with FDA to process the approval of this device.

David R. Bailey: Again, our seriousness in our product portfolio that requires the top institutions in the world very seriously because we will be the only company in the world with that type of portfolio for that really difficult.

David R. Bailey: Set of circumstances.

David R. Bailey: The FDA breakthrough device designation essentially allows us to have a direct one on one with FDA.

David R. Bailey: To process the approval of this device.

David R. Bailey: There's certainly no guarantee, Rick, that it gets approved, but based on our testing and based on, you know, the capacity to have these one-on-one discussions with FDA and get a very clear sense of what FDA wants to see from us to get this device approved, it gives us a lot of confidence that we're going to be able to do that. And I think, you know, it's the first time in our company's history, and maybe that's why I'm personally so excited about this.

Speaker Change: Certainly is no guarantee Rick that it gets approved but based on our testing and based on the capacity to have these one on one discussions with FDA and get a very clear sense of what FDA wants to see from us to get this device approved.

David R. Bailey: It gives us a lot of confidence that we're going to be able to do that and I think it is.

David R. Bailey: The first time in our company's history, and maybe that's why I'm personally. So excited about this is the first time in our company's history, where we've ever had a technology that was deemed so significant to the health care of pediatric patients that had got treated this way by the FDA and so I think.

David R. Bailey: It's the first time in our company's history that we've ever had a technology that was deemed so significant to the healthcare of pediatric patients that it got treated this way by the FDA. And so I think, you know, I can't imagine a stronger indication of the need profile for a device like this. And, you know, for those of us who have been around a while, there's a certain, well, it's just the realization of some of our dreams to be able to get involved in some, not just shaping kids' lives or helping kids improve their lives, but in some of these procedures, you know, these are potentially life-saving surgeries.

David R. Bailey: I can't imagine a stronger indication of the need profile for a device like this and for those of us who've been around a while there is a certain.

David R. Bailey: Well, it's just a realization of some of our dreams to be able to get involved in some not just shaping kids' lives are helping kids improved life, but in some of these procedures and these are potentially life saving surgeries and Thats again, I just think it's a real accomplishment for the company and we think within the next year or so that device can be out and be implanted in children.

David R. Bailey: And that's, again, I just think it's a real accomplishment for the company. And we think within the next year or so, that device can be out and be implanted in children. And that's a real breakthrough for us. That's exciting. Thanks for all the color.

David R. Bailey: And.

David R. Bailey: And that's that's a real breakthrough for us.

David R. Bailey: That's exciting thanks for all the color.

Speaker Change: Thanks, Rick.

Rick Wise: Thanks, Rick. Thank you. Our next question comes from the line of Mike Matson with Needham & Company. Your line is now open. Yeah, thanks. So I wanted to ask about Europe.

David R. Bailey: Thank you. Our next question comes from the line of Mike Matson with Needham <unk> Company. Your line is now open.

Michael Stephen Matson: I think there was some commentary that you're expecting some new product clearances there, and you mentioned an audit or something. Can you just provide a little more detail on what's happening there?

Michael Stephen Matson: Yeah. Thanks, So I wanted to ask about Europe, I think there was some commentary that you're expecting from some new product clearances, there and.

Michael Stephen Matson: You mentioned that audit or something can you just provide a little more detail on what's happening there it sounds like it could be meaningful in terms of.

Michael Stephen Matson: With a number of new products are expected.

David R. Bailey: It sounds like it could be meaningful in terms of the number of new products you're expecting. Yeah, a great question, Mike. So basically, you can think about our product portfolio and how it's developed over the course of the last four years and assume that almost none of those products that we've developed, particularly organically, none of those products have hit the European market. And so, you know, if you just look at the slide deck and see how much we have developed and put out into the U.S. market and certain other markets outside of the U.S., most of that hasn't hit Europe yet, and yet we're still growing very rapidly in the European market.

Michael Stephen Matson: Yeah, Great question Mike.

David R. Bailey: So basically you can think about our product portfolio and how it's developed over the course of the last four years and assume that almost none of those products that we've developed particularly organically none of those products have hit the European market yet.

David R. Bailey: So if you just look at the slide deck and see how much we have developed and put out into the U S market and certain other markets outside of the U S.

David R. Bailey: Most of that hasn't hit Europe, Yes, we are still growing very rapidly in the European market. So you can kind of think of this as really a massive opportunity for us to launch.

David R. Bailey: Several new brands that are new to Europe here, where at the European the combination meeting between the <unk> European pediatric Orthopedic Society and the pediatric Society of North America here in D. C. I mean, a lot of these surgeons have seen these products will certainly see them exhibited here, but they haven't had access to those products in markets like Germany U K.

David R. Bailey: So you can kind of think of this as really a massive opportunity for us to launch, you know, several new brands that are new to Europe. You know, here we are at the European, the combined meeting between the EPOS, the European Pediatric Orthopedic Society, and the Pediatric Society of North America here in D.C. I mean, a lot of these surgeons have seen these products. They'll certainly see them exhibited here, but they haven't had access to those products in markets like Germany, the UK, Ireland, Italy, France, and Spain.

David R. Bailey: Ireland.

David R. Bailey: Italy, France, Spain.

David R. Bailey: And so, this is a big deal for us when we can get this approved. We are ready for the EUMDR audit. Our technical files, everything is updated.

David R. Bailey: And so this is a big deal for us when we can get this approved.

David R. Bailey: We are ready for the EU and the audit EU MTR audit our technical files everything is updated we're ready to roll. It's just a question and frankly of getting notified body into our offices, they're backed up with.

David R. Bailey: We're ready to roll. It's just a question, frankly, of getting a notified body into our offices. They're backed up with, you know, all kinds of audits. And so, as soon as we get that audit done, and we are ready to start launching these products, I'm not certain we can put a date on it. You know, is it November or December or early next year? That's why we've kind of said 12 to 15 months. But when it happens, it's a big deal for us.

David R. Bailey: All kinds of these audits and so as soon as we get that audit done and we will be ready to start launching these products I'm not certain we can put a date.

David R. Bailey: Remember December early next year, that's why we've kind of said 12 to 15 months, but when it happens it's a big deal for us and I think it represents the launch of almost four five years of use products.

David R. Bailey: And I think it represents, you know, the launch of almost four or five years of U.S. products into the European market. Okay, thanks. And then I know that you don't really disclose your sort of organic growth. But, you know, if we assume that Boston O&P was sort of like five and a half million, it implies about 24% growth for the non-O&P business. So, you know, it seems like it's safe to assume your organic growth was probably over 20%. But, is that reasonable?

David R. Bailey: Into the European market.

Speaker Change: Okay. Thanks, and then I know that you don't really disclose your sort of organic growth but.

David R. Bailey: If we assume that Boston <unk> is sort of like five 5 billion implies about 24% growth for the OSP business. So.

David R. Bailey: It seems like it's safe to assume Europe organic growth was probably over 20%.

David R. Bailey: Reasonable.

Michael Stephen Matson: I'd say that's an extremely reasonable assessment, Mike. Yeah. Okay. All right.

Speaker Change: I'd say, that's an extremely reasonable assessment like yes, okay alright. Thank you.

Michael Stephen Matson: Our next question comes from the line of Dave Turkaly with Citizens JMP. Your line is now open. Hey, good morning, guys. Sorry, I've been bouncing around a little.

Michael Stephen Matson: Okay.

Speaker Change: Thank you.

Michael Stephen Matson: Our next question comes from the line of Dave <unk> with citizens JMP. Your line is now open.

David Louis Turkaly: So I hope I asked something that hasn't been asked. But you mentioned, I think, that you're going to hire some staff for Boston. And I was just curious, could you just refresh our memory in terms of the footprint that you have today? And then, and I think you even said that you think that you could build that to $100 million. Like, what kind of headcount came with them? And how many people do you need to add? And how quickly can you do that?

David Louis Turkaly: Hey, good morning, guys.

David Louis Turkaly: Moving around a little soft.

David Louis Turkaly: <unk> been it hasnt been asked but.

David Louis Turkaly: You mentioned I think that youre going to hire some staff for Boston and I was just curious could you just refresh our memory in terms of the footprint that you have today and then.

David Louis Turkaly: Think you even said that you think that you could still get to a $100 million.

David Louis Turkaly: What kind of head count came with them and how many people do you need to add and how quickly can you do that.

David R. Bailey: Yeah. So what we've been talking about, Dave, is just the scaling of the sales force. So when we came, when we acquired Boston and MD Orthopedics, um, you know, we literally had no direct sales staff. We had a couple of people that were kind of sales managers, and we have some really great folks that have been helpful, you know, kind of one-person teams really leading in the United States. And then there are a few people outside of the United States that have done great things for Boston and, particularly, MDO.

David Louis Turkaly: Yes.

David Louis Turkaly: So what we've been talking about David is just the scaling and the Salesforce. So when we came when we acquired Boston and MD orthopedics.

David R. Bailey: And, you know, now we're trying to get those people and others, some, uh, some, an actual sales force. And so the aspiration here in 2024 was to have about 20 people added to the sales channel. And we want to partner those people with our current US and international distributors. We don't want these people to be entirely separate. So they'd show up on the doorstep of a customer who they don't know.

David R. Bailey: We're literally there was no direct sales staff at a couple of people that were kind of sales managers and we have some really great folks that have been helpful kind of one person teams really leading in the United States and in a few people outside of the United States that have done great for Boston and for particularly M. D O S.

David R. Bailey: And now we're trying to get those people in other some awesome and actual sales force and so the aspiration here in 2024 was to have about 20 people added within the sales channel and we want to partner those people with our current U S and international distributors. We don't want these people to be entirely separate so they'd show up on the doorstep of.

David R. Bailey: A customer who they don't know obviously, we have very close relationships with really every pediatric orthopedic surgeons around the world and so we want to be able to leverage our.

David R. Bailey: Obviously, we have very close relationships with really every pediatric orthopedic surgeon around the world. And so we want to be able to leverage, uh, you know, our relationship and the fact that they know orthopediatrics and then bring some people into the sales channel that focus exclusively on the non-operative side, uh, you know, that aren't, uh, you know, obligated to stand in the operating room and work with surgeons all day long but certainly can work in their clinics. And so that's what we're really talking about. We have added, I would say, I don't know for sure, but I think we've probably added the majority of those sales people already.

David R. Bailey: Our relationship and the fact that they know orthopedic matrix and then bring some people.

David R. Bailey: Into the sales channel that focused exclusively on the non operative side.

David R. Bailey: Aren't you know obligated to stand in the operating room and work with Surgeons all day long, but certainly can work in their clinics and so that's what we're really talking about we have added I would say I don't know for sure, but I think we've probably added the majority of those salespeople already.

David R. Bailey: Uh, and so those costs have already started to factor into our PNL already. And, you know, obviously, we've got that forecasted for the balance of the year. And, you know, as that portfolio expands and clinics expand, and maybe even our business expands further internationally, you could assume that we will want to continue to scale the sales channel. And, you know, we've talked about building a hundred million dollar business here. I think you said, or heard me say on the call, a business well over 100 million.

David R. Bailey: So those costs have started to figure into our P&L already and obviously, we've got that forecasted for the balance of the year and as that portfolio expands and clinics expand and maybe even our business expands further internationally you could assume that we will want to continue to scale the sales channel and.

David R. Bailey: We've talked about building $100 million business here I think you said heard me say in the call our business well over $100 million I don't want to put a number on that right now but.

David R. Bailey: I don't want to put a number on that right now, but all systems are go here for us to build a very, very large business in this space. And, um, you know, we love the financial metrics associated with it.

David R. Bailey: All systems are go here for us to build a very very large business in this space and.

David R. Bailey: We love the financial metrics associated with it and we see very little resistance to us continuing to do that over the course of the next several years and it's just this is a big new Tam or the big new growth opportunity all the way around that should drive really strong top line growth for us for the next several years.

David R. Bailey: And we see very little resistance to us continuing to do that over the course of the next several years. And it's just, this is a big new tan with a big new growth opportunity all the way around that should drive really strong top-line growth for us for the next several years. Great, thank you.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Samuel E. Brodovsky: Thank you. Our next question comes from the line of Sam Brodovsky with Truist Securities. Your line is now open. Hey, guys, can you hear me OK?

David R. Bailey: Our next question comes from the line of Sam <unk> with <unk> Securities. Your line is now open.

Samuel E. Brodovsky: Hey, guys can you hear me okay.

Samuel E. Brodovsky: Loud and clear, Sam. Great, thanks for taking the questions and congrats on a solid start to the year. I just want to start off a higher level question and appreciate the commentary on where system capacity is back at. Can you just remind us what's contemplated in guidance as it relates to capacity coming back online? And if there's any sort of backlog component in your estimation out there in the market that could potentially come into the volume? Yeah, I don't think we tried to anticipate dramatic increases in capacity in our guide. So pretty much what we see today is what we try to use to forecast and include in the guide.

Samuel E. Brodovsky: Bob unclear Sam.

Samuel E. Brodovsky: Thanks for taking the question and congrats on a solid start to the year I just want to start off at a higher level question and then I appreciate the commentary on.

David R. Bailey: And we honestly, other than a little bit of carryover from RSV, um, December into January, don't feel that there's some huge pent-up demand that's going to flow through the system in our guide. And then switching to EOS, just as we think about that opportunity, how quickly do you think the new products could see uptake there? Is it going to be similar to what we saw with Appifix, where data needs to mature a little bit before you can see broader adoption?

David R. Bailey: Youre aware where system capacity is back on can you just remind us what's contemplated in guidance as it relates to capacity coming back online and if theres any any sort of backlog component in your estimation out there in the market that could potentially come in to.

David R. Bailey: To the volumes this year.

Speaker Change: Yes, I don't think we tried to anticipate dramatic increases in capacity.

David R. Bailey: Our guidance so it's pretty much what we see today is what we try to use to forecast and included in the guidance.

David R. Bailey: And we honestly other than a little bit of carryover from RSV.

David R. Bailey: December into January.

David R. Bailey: Don't feel that there's some huge pent up demand that's going to flow through the system in our guidance either.

David R. Bailey: Or do you think there's room for that to potentially adopt? Yeah, that's a really good question. So, I think with EOS, what's different about EOS than Apafix is that, you know, the Apafix surgery, this non-fusion spine surgery is a procedure that, you know, not every surgeon does. This is not, this is asking surgeons to do something different within their practice than they currently do. The fact remains is that a child with early onset scoliosis, a young kid that has, you know, Substantial Difficulties, there really isn't a non-surgical treatment option available.

David R. Bailey: Great and then switching to Eos just as we think about that opportunity. How quickly do you think the new products could could see uptake. There is it is it going to be similar to what we thought would happen, thanks, where data needs to mature a little bit before you can see broader adoption or do you think there's room for that to potentially adopt even more quickly.

Speaker Change: Yeah, that's a really good question.

David R. Bailey: No.

David R. Bailey: I think what the Eos and what's different about Eos than <unk> is that the apathy surgery. This non fusion spine surgery is a procedure that not every surgeon does.

David R. Bailey: This is not this is asking surgeons to do something different within their practice that they currently do the fact remains is that a child with early onset scoliosis young kid that having.

David R. Bailey: A substantial difficulties there really isn't a non surgical treatment option available. These are procedures that are happening and surgeons are struggling right now to find adequate technologies to do those procedures perform those procedures. So I think technology wins in this space. There is a great hunger from the pediatric.

David R. Bailey: These are procedures that are happening, and surgeons are struggling right now to find adequate technologies to do those procedures, perform those procedures. So I think technology wins in this space. There's a great hunger from the pediatric orthopedic community to have technologies that can benefit these kids. And a lot of times, surgeons are forced to use types of last resort products.

David R. Bailey: Or would that be a community to have technologies that can benefit these kids.

David R. Bailey: And a lot of times surgeons are forced to use kind of last resort types of products. So these procedures are happening.

David R. Bailey: So these procedures are happening. And so I think if we have better technology, which we believe we will, and then we can round that technology out with three different products, we think really the three products you would need to take care of this very tough set of indications give us a real distinct competitive advantage. And we do think that the uptick can be really strong with these product lines. And again, I think as much as the uptick in EOS revenue, it also places the company in, I believe, a fairly prestigious spot in the minds of our customers, who say, we're willing to take on the extremely difficult things that the majority of ortho is just not taking on. I mean, these are pretty fairly rare conditions, but they're very complicated.

David R. Bailey: And so I think if we have better technology, which we believe we will and then we can around that technology out with three different products. We think really the three products you would need to take care of this very tough set of indications.

David R. Bailey: It gives us a real distinct competitive advantage and we do think that the uptick can be really strong with these product lines and again I think it as much as the uptick in the POS revenue. It also places the company and I believe a fairly prestigious spot in the minds of our customers that say, we're willing to take on the extremely.

David R. Bailey: Difficult things that the majority of ortho is just not taking on I mean, these are pretty fairly rare conditions, but they are very complicated and surgeons haven't historically had great partnerships to take care of these kids. So we think that kind of creates again another halo around the business gives us an opportunity to help more kids, but also probably drive usage.

David R. Bailey: And surgeons haven't historically had great partnerships to take care of these kids. So we think that kind of creates, again, another halo around the business, gives us an opportunity to help more kids, but also will probably drive the usage profile of the balance of our other products. Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call back over to David Bailey for his closing remarks. Thank you. Well, I'd like to thank everybody for joining us today. We've got an exciting week here at ePASNA. I think this will be the largest meeting of the pediatric orthopedic community in history.

David R. Bailey: Profile of the balance of our other products.

David R. Bailey: Thank you.

David R. Bailey: And I'm currently showing no further questions at this time I'd like to hand, the call back over to David Bailey for closing remarks.

David R. Bailey: Thank you well I'd like to thank everybody for joining US today, we've got an exciting week here at <unk> I think this will be the largest meeting of the pediatric orthopedic community in history and so we're excited to get out there and meet with customers show off what we've done and just no better place to talk about.

David R. Bailey: And so we're excited to get out there and meet customers, show off what we've done, and it's just no better place to talk about, you know, a fantastic quarter for us and all the momentum we have heading into the balance of 2024. So I appreciate everybody being on the call. Great questions, and we'll look forward to reporting on how things go as we progress. Take care. This concludes today's conference call. Thank you for your participation. You may now disconnect.

David R. Bailey: A fantastic quarter for us and all the momentum we have heading into the balance of 2024. So I appreciate everybody being on the call great questions and we'll look forward to reporting on how things go as we progress take care.

David R. Bailey: This concludes today's conference call. Thank you for your participation you may now disconnect.