Q1 2024 Orthofix Medical Inc Earnings Call
Operator: Thank you for standing by. My name is JL, and I will be your conference operator today. At this time, I would like to welcome everyone to the Orthofix Q1 2024 earnings call. All lines have been placed on mute to prevent any background noise.
Thank you for standing by my name is Jill and I will be your conference operator today.
Julie B. Andrews: Okay, I'll say revenue from new distributors. I said in the prepared remarks that it nearly doubled. So you can interpret that from the 8% to nearly doubled. And then I don't have same-store sales ready in front of me, but... We will think about release, if we want to release that or not. Yep, fair enough.
At this time I would like to welcome everyone to the ortho fixed Q1 2024 earnings call.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. I would now like to turn the conference over to Louisa Smith. You may begin.
Jill: You've been placed on mute to prevent any background noise. After the Speakers' remarks, there will be a question and answer session.
Jill: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you'd like to withdraw your question simply press Star one again.
Mathew Justin Blackman: Yep, fair enough. Thanks so much.
Jill: I'd now like to turn the conference over to Luisa Smith, you may begin.
Louisa Smith: Good morning, everyone. Welcome to the Orthofix first quarter 2024 earnings call. Joining me on the call today are President and Chief Executive Officer Massimo Calafiore and Chief Financial Officer Julie Andrews. During this call, we will be making forward-looking statements that involve risks and uncertainties. All statements, other than those of historical facts, are forward-looking statements, including any earnings guidance we provide and any statements about our plans, beliefs, strategies, expectations, goals, or objectives.
Operator: Your next question comes from the line of Brian Zimmerman of BTIG. Your line is open.
Louisa Smith: And good morning, everyone welcome to the <unk> first quarter 2024 earnings call joining me on the call today.
Louisa Smith: And Chief Executive Officer.
Louisa Smith: Your line.
Louisa Smith: So our concern jewelry entries.
Unknown Caller: Hi, good morning guys. This is Izzy on for Ryan. So, first off, on the growth margins, it looks like you guys came in in line with our estimates this quarter. We were just wondering what you could see that could drive them higher over time.
Speaker Change: During this call we will be making forward looking statements involve risks and uncertainties.
Julie B. Andrews: So yeah, so over the last I mean, this year, we said that our margins would be 71% in line with last year. I think, as we look into the future, we haven't issued long-range guidance on it. But we do see opportunity in the gross margin line. I think, you know, there's synergies with supplier rationalization, leveraging our footprint, and those types of things that we do.
Speaker Change: Statements other than those of historical facts are forward looking statements, including any earnings guidance, we provide and any statements.
Speaker Change: Beliefs strategies expectations goals or objectives investors are cautioned not to place undue reliance on such forward looking statements and there is no assurance.
Speaker Change: Change in such statements will occur.
Louisa Smith: Investors are cautioned not to place undue reliance on such forward-looking statements. There is no assurance that the matters contained in such statements will occur. The forward-looking statements we will make on today's call are based on our beliefs and expectations as of today, May 7th, 2024.
Unknown Caller: Great, thank you. And then, on the bone stem, it looks like you guys are seeing some pretty strong growth here. Just wondering what you can do to maintain this growth in a market that's maybe not growing as fast?
Speaker Change: The forward looking statements, we will make on today's call are based on our beliefs and expectations as of today may seven 2024.
Louisa Smith: We do not undertake any obligation to revise or update such forward-looking statements. Some factors that could cause actual results to materially differ from the forward-looking statements made by us on the call include the risk factors disclosed under the heading risk factors in our Form 10-Q filed this morning, May 7, 2024, as well as in additional SEC filings we make in the future. In addition, on today's call, we will refer to various non-GAAP financial measures.
Speaker Change: We do not undertake any obligation to revise or update such forward looking statements. Some factors that could cause actual results to materially differ from the forward looking statements made by US on the call include the risk factors disclosed under the heading risk factors in our Form 10-Q filed this morning.
Speaker Change: 2024, as well as an additional SEC filings, we make in the future.
Speaker Change: In addition on today's call, we will refer to various non-GAAP financial measures, we believe that in order to properly understand our short term and long term financial trends.
Louisa Smith: We believe that in order to properly understand our short-term and long-term financial trends, investors may wish to review these matters as a supplement to the financial measures determined in accordance with U.S. GAAP. Please refer to today's press release announcing our first quarter 2024 results for reconciliations of these non-GAAP financial measures to our U.S. GAAP financial results. At this point, I will turn the call over to Massimo.
Speaker Change: You may wish to review these matters as a supplement to the financial measures determined in accordance with U S. GAAP.
Speaker Change: These refer to todays press release announcing our first quarter 2024 results for a reconciliation of these non-GAAP financial measures to our U S GAAP financial results.
Speaker Change: At this point I will turn the call over to Marc to Mt.
Marc: Thank you Luisa thank.
Massimo Calafiore: Thank you, Louise. Thank you everyone for joining us this morning for our first quarter earnings call. I'll spend some time providing insight into our higher-level strategy as well as updates on some key priorities and initiatives before I turn it over to Julie for further details on our quarterly performance and financial results. I'm pleased to report another strong quarter for Orthofix, driven by healthy business fundamentals and the exceptional operating performance of our team.
Massimo Calafiore: Yeah, this is an excellent question. Look, we see great potential for the foreseeable future, just given what we said during, you know, in our remarks about, you know, we are leveraging as much as we can right now all of the new surgeons coming from the c-spine acquisition. So, as I said, it's true that the market grows, our market rates, but if you confine the business in our domain, we see a strong potential asset for the next, you know, for the next few quarters. So, you know, we will try to maximize this potential as much as we can.
Marc: Thank you everyone for joining us this morning for our first quarter earnings call.
Unknown Caller: Great, thanks for taking the question.
Marc: I'll spend some time, providing insight into our higher leverage strategy.
Marc: Updates on some key priorities and initiatives.
Marc: $440.
Marc: For further details on our quarterly performance and financial results.
Massimo Calafiore: We continue to gain momentum and leverage strategic initiatives to grow Orthofix across all our business sectors. Net revenue for the first quarter was $139 million, representing a 7.5% year-over-year increase in cost and current, led primarily by 10% growth across our USA.
Operator: Your next question comes from the line of Jason Wittes of Roth MKM. Your line is open.
Marc: Im pleased to report another strong quarter for hours to fix.
Marc: But he went by.
Marc: Fundamentals and exceptional operating performance of our team.
Marc: We continue to gain momentum and is averaging strategic initiatives to grow our perfect set across all our business segments.
Jason Hart Wittes: Hi, thanks for taking the questions. Just on the growth rates we saw this quarter, especially, I mean, you kind of mentioned for global orthopedics, it's gonna vary. The spine growth has been pretty nice. Is that something we should expect to continue for the rest of the year? Could you comment on sort of what the trends are for the remaining other businesses?
Marc: Net revenue for the first quarter was 159 Meteor sandeep.
Marc: Sandeep at seven 5% year over year increase in constant currency.
Marc: Led primarily by 10% growth across our USA businesses.
Massimo Calafiore: The strength in USA performance was driven by 10% growth in BGT, 16% growth in spine fixation, and 23% growth in orthopedics. We are clearly outpacing market growth in all of these sectors. We are delivering innovative products and outstanding service while executing to plan and taking advantage of emerging opportunities. I remain very confident in our future and the prospect of delivering value moving forward. To reiterate some of the 2024 priorities that we laid out in our fourth quarter call, we are diligently focused on one profitable growth. 2.
Marc: The strength in USA performance was driven by 10% growth that can be achieved.
Marc: 10% growth in spine fixation, and 23% growth in orthopedics.
Marc: We're clearly outpacing market growth in all of these segments.
Massimo Calafiore: Yeah, look, we feel pretty confident about the growth rate that we are achieving right now. As we said earlier, we have clearly identified a couple of growth drivers for us. One, we are getting a lot of interest from new distributors and new surgeons. The amount of inbound calls that are coming in has been pretty remarkable for us.
Marc: We are delivering innovative products and outstanding service, while executing to plan and taking advantage of emerging opportunities.
Marc: I remain very confident in our future and the prospect to deliver better value moving forward.
Marc: To reiterate some of the 'twenty 'twenty four priorities that we laid out in our fourth quarter call. We are diligently focused on one profitable growth emphasizing the synergies and balanced approach to our portfolio of platforms increased 30.
Massimo Calafiore: Emphasizing a synergistic and balanced approach to our portfolio platforms and strategic innovation, we remain committed to delivering across all three in the near term and are already seeing pull-through in our results. Our first priority is to grow the business and grow it profitably. Julie will discuss the specific metrics later, but I'm happy to report that in the first quarter, we saw an improvement of more than 200 basis points in our adjusted EBITDA margin as a result of strong top-line growth and the realization of synergies. We will sustain this momentum by expanding existing customers and distributor relationships, optimizing our product portfolio, and improving our working capital. In the first quarter, revenues benefited from continued BGT cross-selling within the spine channel.
Marc: Innovation.
Marc: We remain committed to delivering across all three in the near term.
Marc: <unk> already seen pull through in our results. Our first priority is to grow their business and growing profitably.
Massimo Calafiore: And all of this allows us to really pick and choose the right partner. Because, remember, we are fully focused on profitable growth. And we can achieve this if we get the right partner. And on the same token, with our investment in innovation, we are seeing a further utilization of our product, so a very healthy increase in revenue per case. So all of this to say that we see very strong business fundamentals for the foreseeable future.
Jason Hart Wittes: Okay, thank you. I'm sorry to interrupt.
Marc: Julian will discuss the specific metrics later.
Jason Hart Wittes: And then you mentioned you should go cash flow positive in Q4. I assume that's sustainable and going forward, the quarters will be cash flow positive from there on. We'll seasonally impact that or sort of what's the outlook for cash flow generation.
Unknown Executive: Yeah, we haven't issued formal guidance on that for 2025 yet, but we'll do so later this year.
Julian: I'm happy to report that in the first quarter.
Jason Hart Wittes: I'll jump back in the queue, thank you.
Marc: We slip we saw an improvement of more than 200 basis points in our adjusted EBITDA margin.
Operator: Your next question comes from the line of Jeff Cohen of Lindenburg, Salmon. Your line is open.
Marc: As a result of strong topline growth and differentiation of synergies.
Marc: We will sustain this momentum.
Marc: <unk> existing customers and distributor relationships, optimizing our product portfolio and improving our working capital management.
Geoffrey C. Gillespie: Hi Massimo and Julie, how are you?
Marc: In the first quarter revenues benefited from continued with BGP cross selling with interest by in China.
Massimo Calafiore: Hey Geoff, how are you?
Geoffrey C. Gillespie: Just fine, so I wondered if you could talk about self-stim a bit and fresh frac or fresh fractures and talk a little bit about some of the channels. I did hear you call out the fracture market and some of those channels, some of those docs, and are you still focused on surgeons? Is there some focus that's on pain docs as well? Thank you.
Massimo Calafiore: In the USA spine fixation market, we saw increases in average price per procedure as we broadened the use of Interpadi and Thoracolumbar products across our surgeon-customer base, as well as through significant contribution from new distributor partners. We are penetrating deeper into existing accounts with our procedural solutions while expanding our distribution network. In addition, we are maximizing the robust portfolio of the combined company by focusing on our higher-margin products and rationalizing any overlap.
Marc: In USA spine fixation, we saw increases in average price per procedure.
Marc: As we broaden that they use of Interbody and Sala, Colombia products across several surgeon customer base.
Marc: Through significant contribution from new distributor partnerships.
Marc: We are penetrating deeper into existing accounts with our procedural solutions.
Massimo Calafiore: Right now, I think that we keep leveraging our network on the solution side. So in the end, we have two products that are helping us to address the continuum of care infrastructure, the tax structure, and malunion. So we keep driving our product portfolio using existing distributors, plus trying to find synergies with the distributors that are working on the orthopedic side. So our market is defined right now on the surgery side. Okay, I got it.
Marc: Pending our distribution network.
Marc: In addition, we are maximizing the robust portfolio of the combined company by focusing on our higher margin products and that are centralizing any overlap.
Massimo Calafiore: This product life cycle management will not only reduce costs by simplifying our supply chain, but it will enable us to direct resources and investment towards the expansion of new and innovative product lines. Furthermore, this strategy improves our working capital by lowering the number of products and SKUs we carry.
Marc: This product lifecycle management will not only reduce cost by simplifying our supply chain, but enable us to direct our resources and investment towards the expansion of new and innovative product lines.
Marc: Furthermore, this strategy improves our working capital by lowering the number of products and Skus we carry.
Massimo Calafiore: We are efficiently allocating the recent investment in spinal implant instrument sets to our larger, more dedicated distributors, which will improve inventory and instrument utilization. And finally, we see further opportunities to improve cash flow by focusing on DSO efficiencies and accelerating cash collection. As a result of these initiatives, we expect to be cash flow positive in the fourth quarter of 2021.
Geoffrey C. Gillespie: Okay, got it. And then... Could you talk a little bit about the larger, more dedicated distributors as far as aggregate numbers are concerned? Do you anticipate that, over the balance of this year, the actual number of distributors will decrease? And then could you give us a sense of feet on the ground? Thank you.
Marc: We added efficiently allocating that is an investment in the spinal implant piece remains set to our larger more dedicated to stay with us, which will improve inventory and Easter into <unk> and.
Massimo Calafiore: Yeah, I don't think that we give specific details about, you know, like the amount of distributors and so on, in general, what I can tell you is that, on the positive side, we are seeing that all our top distributors are increasing their loyalty to us. So I think that what we're seeing on the It's everything is shifting to have, let's say, given the depth of our portfolios, especially in Spine, our top distributors are becoming exclusive to us.
Marc: And finally, we see further opportunities to improve cash flow by focusing on yet so efficiencies and accelerating cash collection.
Marc: Also these initiatives, we expect to be cash flow positive in the fourth quarter 2024.
Massimo Calafiore: Moving now to our second priority, which is to leverage our technologies and sales channels across all product sectors. Our products work together to create a best-in-class offering, each improving the performance of the other and enabling growth through cross-selling opportunities. We are seeing traction across our commercial infrastructure with increasing interest in what we are building, allowing us the opportunity to be selective in our choice of distribution partners.
Massimo Calafiore: And I think this one is going to keep driving; it's going to help us to drive compliance moving forward and focus on our product. So, as I said, we don't give a specific number, but I can tell you that, directionally, the quality of revenue that we're seeing is pretty high right now.
Marc: Moving now to our second priority, which is to leverage our technologies and sales channels across all product segments.
Geoffrey C. Gillespie: Okay, perfect. Thanks for taking our questions.
Operator: That concludes our Q&A session, and this concludes today's conference call. You may now disconnect. Please wait; the conference will begin shortly.
Marc: Our products work together to create a best in class offerings at each improving the performance of the other and enabling growth through cross selling opportunities.
Marc: We're seeing traction across our commercial infrastructure with increased thinking Tristan what we are building, allowing us the opportunity to be selective in our choice of distribution partners.
Marc: Additionally, the team is aligned on driving pull through revenue upfront spine orthopedics biologics and BGP.
Massimo Calafiore: Additionally, the team is aligned on driving pull-through revenue across spine, orthopedics, biologics, and BGT. We are seeing market share gains in complementary areas of the portfolio, where our offerings are able to support the outcomes of the more complex product lines in orthopedics and spine. For example, we just completed the 100,000th implementation of our strength family of demineralized bone fibers. These strain fibers are designed to enable maximum bond-forming capacity and fusion potential.
Marc: We are seeing market share gains in complementary areas of the portfolio.
Marc: Our offerings are able to support the outcomes.
Marc: The more complex product lines in orthopedics and spine product sample, we just completed.
Marc: This talented team presentation, our friend family, our demineralized bone fibers.
Marc: This trend fibers are designed to enable maximum bond farming capacity and future potential the alignment with BGP, enabling technology of biologic cross selling opportunities highlights the complementary nature of our one offering as a whole.
Massimo Calafiore: The alignment of BGT, enabling technology and biologic cross-selling opportunities, highlights the complementary nature of our offering as a whole. A key part of Orthofix's success and our strong performance to date is the committed employees and leadership team that we have in place. Since beginning my role at the company, we've made a few changes to certain roles, expanded others, and finalized some key hires that will set us up for the future, with an eye towards efficiently managing our product portfolios.
Marc: A key part of <unk> success, and our strong performance to date and they compete with employees and leadership team that we have in place.
Marc: Since beginning my role at the company.
Marc: Made a few changes to tender rolls expanded others and finalize some key hires there would set us up for.
Marc: Future with an eye towards efficiently managing our product portfolios. For example, I would like to highlight that is in promotion of Boston dish to achieve financial and Technology officer.
Massimo Calafiore: For example, I would like to highlight the recent promotion of Dr. Bo Stendish to Chief Enabling Technology Officer. In this expanded role, Bo will oversee strategy development, the implementation of software and corresponding hardware across all of our product portfolios, reinforcing our commitment to drive synergies throughout the business. Enabling technology has been a key differentiator for us.
Marc: In this expanded role Paul will oversee strategy development.
Marc: Amortization of software and corresponding hardware across all our product portfolio.
Marc: Forcing our commitment to drive synergies throughout the business.
Marc: Enabling technology as being a key differentiator for our Sophie <unk> our investments in the seven deep flash medication have established our suffix as the partner of choice for surgeons.
Massimo Calafiore: Our investments in the 7D Flash Navigation have established Orthofix as the partner of choice for surgeons seeking innovative, data-driven, interoperative solutions with improved workflows. With this new role, we will leverage our combined intellectual capital, a comprehensive suite of software and hardware products to support both spine and orthopedic surgeons throughout the continuum of care. This begins with pre-operative planning using our Orthopedics Planning Platform, OrthoNet, continues with real-time operating room navigation and guidance through 7D flash navigation, and is extended to post-operative care with our bone growth stimulator device.
Marc: <unk> innovative <unk>.
Marc: When an <unk> solution with improved workflow.
Marc: With this new role, we will leverage our combined intellectual capital and comprehensive suite of software and hardware products to support both the spine and orthopedic surgeons throughout the continuum of care. This begins with pre operative planning.
Marc: Using our COPD explained.
Marc: Okay.
Marc: Continuous with the old time, operating a global navigation and guidance.
Marc: 70 flash navigation.
Marc: The extent to post operative care with our bone growth stimulator devices.
Massimo Calafiore: Our award-winning patient engagement app, STEAM OnTrack, supports patient compliance and tracks patient reported outcomes... By expanding the capabilities of our existing technology platforms across all our businesses, we will accelerate growth in high-value procedures and drive significant gains in market share.
Marc: Our award winning patient engagement App steam on track supports patient compliance and tracks fashion reported a doubtful bye.
Marc: By expanding the capabilities of our existing technology platforms across all of our businesses, we will accelerate growth in high value procedures and drive significant gains in market share.
Massimo Calafiore: This investment in enabling technologies is also consistent with our third priority, a commitment to Orthofix's innovation aim. We have several promising products in development and are on both pipelines for upcoming launch. We are investing in markets with higher return potential, especially where Orthofix has the opportunity to establish itself as a leading player or where they remain significant and challenging. For example, we are just beginning to expand into the USA orthopedics market, which presents incredible growth opportunities, given our unique and innovative product line.
Marc: This investment in enabling technologies are also consistent with our third priority our commitment to our innovation engine.
Marc: We have several promising products in development and a robust pipeline of upcoming launches.
Marc: We are investing in markets with a high.
Marc: Higher return potential.
Marc: <unk> has the opportunity to establish itself as a leading player always there remains significant untapped needs.
Marc: For example, we are just beginning to expand into the USA orthopedics market, which britt fence incredible growth opportunities given our unique and innovative product lines.
Massimo Calafiore: Our focus in orthopedics, providing highly specialized solutions for underserved markets, is underscored by two recent 510k clearances, for the Rodeo Telescopic Intramedullary Nail and for the Fit Bone On Transport Lengthening. It is the only commercially available nail capable of both transport and length, and the only bone transport nail available in the U.S. We will be launching both of these products through limited US market releases in the coming months.
Marc: Our focus in orthopedics, providing highly specialized solutions for underserved markets is underscored by two recent 10-K clearances.
Marc: The Royal deal telescopic intramedullary nail and further building upon trust.
Marc: Nathan.
Marc: It is the only commercially available remain capable of transport the lengthening and the only bond Trust Bergman.
Marc: Our value both in the U S.
Marc: We will be launching both of these products through an EBITA USA market releases in the coming months. These achievements demonstrate our ability to deliver innovative products in the United States or COPD market.
Massimo Calafiore: These achievements demonstrate our ability to deliver innovative products in the United States or subsidized markets and reflect our current focus on strategic innovation across complex limb reconstruction and deformity correction. In our SPINE portfolio, we are continuing to validate our MIS anterior lateral portfolio, integrating novel access solutions with our differentiated hardware and biology. This is just one of many procedural integrations in the works to advance patient care and improve the surgeon experience with state-of-the-art enabling technology in the 1970s.
Marc: Reflect our current default with some strategic innovation.
Marc: Most complex <unk> construction and deformity correction.
Marc: In our spine portfolio, we are continuing to validate our MIF Peter ladder, our portfolio invigorating Noel access solutions with our differentiated hardware and biologics.
Marc: This is just one mainly procedural integration in the works to advance patient care and improve the surgeon experience with state of Dr. Enabling technology in 70.
Massimo Calafiore: Our goal is to be the trusted partner for surgeons in spine and orthopedics, providing solutions for the most complex cases through our unique complementary product platform. All in all, I'm very pleased with our performance during my first quarter on the job. I remain encouraged by the prospect for Orthofix and inspired by a team that is embracing a relentless focus on execution and innovation. As a result of that confidence, we are narrowing our full year 2024 revenue guidance and raising the bottom end of the range by $5 billion.
Marc: Our goal is to be the trusted partner for surgeons in spine and orthopedics, providing solutions for their most complex cases through our unique complementary product platform.
Speaker Change: Alright, no I am very pleased with our performance during my first quarter on the job.
Speaker Change: I remain encouraged by the prospects for our Citrix and inspired by a team that is embracing that.
Marc: Focus on execution and innovation.
Marc: Okay.
Marc: As a result of that confidence we have in that.
Marc: Our full year 2020 for revenue guidance and raising the bottom end of their range by $5 million.
Massimo Calafiore: We now expect 2024 revenues to be between $790 and $795 million, as compared to the prior guidance of $735 to $795 million and 5% to 7% growth. The emerging thesis and the fundamental strategy across spine orthopedics, biologics, and BGT remain compelling. We are growing the company in a measured and strategic manner to reach profitability, and we are creating value for our customers, patients, and shareholders. I truly believe the best is yet to come. With that, I now turn the call over to Julie to review our first quarter financial results.
Marc: We now expect 2020 for revenues to be between 792 795.
Marc: As compared to the prior guidance of 785 to 795 medium and a 5% to 7% growth that merger thesis and the fundamental strategy across spine orthopedics biologic can be GTE remains compelling.
Marc: We are growing the company and a major strategic manner to reach profitability and we are creating value for our customers patients and shareholders.
Speaker Change: I truly believe the best is yet to come.
Marc: With that I'll turn the call over to lead.
Lead: To review, our first quarter financial results.
Julie B. Andrews: Before I begin, I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including our reconciliation of these results to our GAAP results. Additionally, all revenue percentage changes discussed will be on a constant currency year-over-year basis.
Lead: Before I begin I would like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP rental.
Lead: Additionally, all revenue percentage changes discussed will be on a constant currency year over year basis.
Julie B. Andrews: As of this quarter, we have annualized the impact of the merger and will no longer be referring to pro forma growth. In addition, all results of operations that I refer to in my prepared comments will be on a non-GAAP as-adjusted basis. As Massimo noted, Orthofix had a strong first quarter, delivering 7.5% constant currency, top line growth, and even a margin expansion of approximately 220 basis points. For my commentary, I'll go through each of our business units and review financial results for the quarter, as well as provide an update to our guidance for the full year 2024.
Lead: This quarter, we have annualized the impact of the merger and will no longer be referring to pro forma credit.
Lead: In addition, all results of operations that I referred to in my prepared comments will be on a non-GAAP and adjusted basis.
Lead: As Mark noted orthopedics had a strong first quarter delivering seven 5% constant currency top line growth and EBIT margin.
Lead: We have approximately 220 basis points from my commentary I'll go through each of our business and review financial results on the quarter as well as providing an update to our guidance for the full year 2024.
Julie B. Andrews: Total company net sales were $188.6 million for the first quarter of 2024, up 7.5% over the prior year. Bone Growth Therapy's revenue grew 10% to $52.5 million in Q1 and marks the fifth consecutive quarter of double-digit growth for the BJT franchise. This growth was driven by above-market performance in both the spine and fracture channels. In Inspire Market, where we hold the number one market share position, we continue to take share, with more than 50% of the growth coming from new customer acquisition.
Lead: Total company net sales were $188 6 million in the first quarter of 2024 of seven 5% over prior year.
Lead: Bone growth therapies revenue grew 10% to $52 5 million in Q1 and marks the fifth consecutive quarter of double digit growth to the BTG franchise.
Lead: This growth was driven by above market performance in both the spine and fracture team.
Lead: And in spine market, where we hold the number one market share position, we continue to take share with more than 50% of the growth coming from new customer acquisition.
Julie B. Andrews: In addition, investments in the fracture market sales channel drove 16.8% growth in fracture, with Excel STEM continuing to outperform the market. As a reminder, the fracture market represents an opportunity of more than $200 million, and we are just beginning to scratch the surface of our potential in that market.
Julie B. Andrews: In addition investments in the fracture market sales channel drove 16, 8% growth in fracture with excel stem continuing to outperform the market.
Julie B. Andrews: As a reminder, the fracture market represents an opportunity of more than $200 million.
Julie B. Andrews: And we are just beginning to scratch the surface of our potential in that market global final implant biologics and enabling technologies fourth quarter revenue was $108 8 million with year over year growth of seven 2%.
Julie B. Andrews: Global spinal implants, Biologics, and Enabling Technology's first quarter revenue was $108.8 million, with year-over-year growth of 7.2%. U.S. fine fixation revenue grew 16.1 percent, well above market growth rates driven by contributions from new distributor partners where we saw revenue nearly double from Q4 2023 and deeper penetration of existing accounts with increases to the average revenue per procedure. Additionally, in the biologic business, we saw a positive impact of new distributor partnerships as well as cross-selling initiatives which drove growth in line with the overall market. The global orthopedics business grew 3.8% in the first quarter, led by 22.9% growth in the U.S., as a result of strong performance across our portfolio, as well as distributor expansion and sales channel investment.
Lead: U S spinal fixation revenue.
Julie B. Andrews: 16, 1% well above market growth rate driven by contributions from new distributor partners, where we saw revenue nearly doubled from Q4 2023 and deeper penetration of existing accounts with increases to the average revenue per procedure.
Julie B. Andrews: Additionally, in the biologics business, we saw a positive impact of new distributor partnerships as well as cross selling initiatives, which drove growth in line with the overall market.
Julie B. Andrews: The global Orthopedics business grew three 8% in the first quarter led by 22, 9% growth in the U S. As a result of strong performance across our portfolio as well as distributor expansion and sales channel investments.
Julie B. Andrews: The international business declined 2.7% versus the prior year due to timing of orders from our stocking distribution. Due to the nature of this business, we expect to see variability from quarter to quarter in the growth rate. Moving on to some details below the sales line, starting with our Q1 non-GAAP adjusted gross margins, we achieved a 70.3% rate for the quarter, a decrease of approximately 40 basis points compared to Q1 2023. This reduction is primarily due to an overlap in vendors as we phase out a legacy partner and move to a new vendor that will result in cost savings starting in Q2. Non-GAAP sales and marketing expenses were 51.8% of net sales for the first quarter compared to 52.3% of net sales for Q1 2023.
Julie B. Andrews: The international business declined two 7% versus prior year due to timing of orders from our stocking distributors.
Julie B. Andrews: The nature of this business, we expect to see variability from quarter to quarter and the growth rates.
Julie B. Andrews: The decrease as a percent of sales was primarily driven by the realization of cost synergies and a lower effective commission rate due to product. Non-GAAP general and administrative expenses were 13.7 percent of net sales for Q1 2024, down from 17.8 percent in the same quarter the previous year. The decrease as a percent of sales was primarily driven by the impact of cost synergies and a reduction in stock-based compensation. Non-GAF R&D expenses were 10.2% for the quarter compared to 10.5% for the prior year quarter.
Julie B. Andrews: Moving on to some detail below the sales line.
Julie B. Andrews: The decrease as a percent of sales was driven by a reduction in product development spend due to project rationalization, partially offset by increased chemical spending related to EU MDR costs, which are no longer adjusted from operating results, and the M6 two-level study.
Julie B. Andrews: Starting with our Q1 non-GAAP adjusted gross margin, we achieved 73% rate for the quarter, a decrease of approximately 40 basis points compared to Q1 2023.
Julie B. Andrews: This reduction is primarily due to an overlapping vendor as we phase out of legacy partner and then to a new vendor that will result in cost savings starting in Q2.
Julie B. Andrews: non-GAAP sales and marketing expenses were 51, 8% of net sales for the first quarter compared to 52, 3% of net sales for Q1 2023. The decrease as a percent of sales was primarily driven by the realization of cost synergies and a lower effective commission rate.
Julie B. Andrews: Product mix.
Julie B. Andrews: non-GAAP General and administrative expenses were 13, 7% net sales for Q1 2024 down from 17, 8% in the same quarter prior year.
Julie B. Andrews: The decrease as a percent of sales was primarily driven by the impact of cost synergies and a reduction in stock based compensation non.
Julie B. Andrews: non-GAAP R&D expenses were 10, 2% for the quarter compared to 10, 5% for the prior year quarter.
Julie B. Andrews: The decrease as a percent of sales was driven by a reduction in product development spend due to project rationalization, partially offset by increased clinical spending related to EU MBR costs, which are no longer adjusting from operating result, and the Mpeg two level study below the operating income line interest.
Julie B. Andrews: Below the operating income line, interest expense and other was $4.5 million for the quarter. Altogether, this resulted in non-GAAP-adjusted EBITDA of $7.7 million, or 4.1% of net sales for the quarter, a 220 basis point expansion over Q1 2023 due to the capture of merger-related synergies and driving leverage on sales growth. This represented a 34% drop through on incremental revenue dollars.
Julie B. Andrews: And other was $4 5 million.
Julie B. Andrews: For the quarter altogether. This resulted in non-GAAP adjusted EBITDA.
Julie B. Andrews: One 7 million or four 1% of net sales for the quarter and 220 basis point expansion over Q1 2023 due to the capture of merger related synergies and driving leverage on sales growth.
Julie B. Andrews: This represented a 34% drop through on incremental revenue dollars. We remain encouraged by these results and we are seeing the impact of <unk>.
Julie B. Andrews: We remain encouraged by these results, and we are seeing the impact of merger-related synergies and our ability to drive leverage on sales growth materialize. From a cash standpoint, our total cash balance, including restricted cash, at the end of Q1 was approximately $29 million. During the first quarter of 2024, we exercised our borrowing rights under our four-year $150 million financing arrangement on the delayed term loan of $25 million, which had an expiration date of end of March 2024, and repaid the outstanding revolver of $15 million. This brings the total borrowing to $125 million.
Julie B. Andrews: Merger related synergies and our ability to drive leverage on sales growth materialize.
Julie B. Andrews: From a cash standpoint, our total cash balance including restricted cash at the end of Q1, the approximately $29 million during the first quarter 2024, we exercised our borrowing rate under our four year $150 million financing arrangement to the delayed draw term loan 20.
Julie B. Andrews: $5 million, which had an end of March 2024 exploration date, and repay the outstanding revolver of $15 million. This brings the total borrowings to $125 million, our free cash flow usage was $29 million in the quarter, primarily as a result of the annual incentive and one time merger related retention payments.
Julie B. Andrews: Our free cash flow usage was $29 million in the quarter, primarily as a result of annual incentive and one-time merger-related retention payments. Q1 will be the highest quarter of cash burn for the year. As Massimo mentioned, we are focusing on improving our working capital management, specifically our inventory and instrument utilization and DSO efficiency. With these efforts, as well as the continued execution of merger-related cost synergies, we expect to be cash flow positive in Q4 2024.
Julie B. Andrews: Q1 will be the highest quarter of cash burn for the year.
Julie B. Andrews: As Massimo mentioned, we are focusing on improving our working capital management, specifically, our inventory and instrument utilization and DSO was efficiency with these efforts as well as continued execution of merger related cost synergies, we expect to be cash flow positive in Q4 2024.
Julie B. Andrews: Overall, we are pleased with our first quarter results, and we continue to be confident in our ability to drive profitable revenue growth moving forward. Moving on to our 2024 full-year guidance. As Massimo stated, we are narrowing our guidance for full-year net sales to range between $790 and $795 million, representing implied growth of 67% year-over-year on a constant currency basis. This is in comparison to the guidance issued during our fourth quarter call of 785 to 795 million, of 5 to 7% growth.
Julie B. Andrews: Overall, we are pleased with our first quarter results and we continue to be confident in our ability to drive profitable revenue growth moving forward.
Julie B. Andrews: Moving on to 2020 for full year guidance as Mark stated, we are narrowing our guidance for full year net sales to range between 790 $795 million, representing implied growth of 67% year over year on a constant currency basis. This is in comparison to the.
Julie B. Andrews: <unk> issued during our fourth quarter call and that $185 million to $795 million.
Julie B. Andrews: Two 7% growth.
Julie B. Andrews: Please note that our expectations are based on current foreign exchange rates and do not account for rate changes that may occur throughout 2024. Our outlook for full year 2024 non-GAAP adjusted EBITDA remains at $62 to $67 million, and we expect to be cash flow positive in the fourth quarter of 2024. While we do not provide quarterly guidance, I will give some directional commentary on the expected cadence of our business to assist you in modeling our quarterly performance.
Julie B. Andrews: Please note our expectations are based on current foreign exchange rate.
Julie B. Andrews: Not account for rate changes that may occur throughout 2024.
Julie B. Andrews: Our outlook for full year 2024, non-GAAP adjusted EBITDA remains at $62 million to $67 million and finally, we expect to be cash flow positive in the fourth quarter of 2024.
Julie B. Andrews: While we do not provide quarterly guidance I will give some directional commentary on the expected cadence of our business.
Julie B. Andrews: You in modeling our quarterly performance.
Julie B. Andrews: These comments remain in line with the directional remarks provided on our fourth quarter call in March. We expect Q2 revenue to be slightly below our full year growth guidance range due to the timing of stocking orders in 2023. Additionally, we expect Q3 to reflect the highest year-over-year growth due to the disruption in the prior year as we close the quarter and the impact of one additional selling day in 2024 versus 2023. This extra day results in approximately 1.5 percent additional growth for the quarter.
Julie B. Andrews: These comments remain in line with the directional remarks provided on our fourth quarter call in March.
Julie B. Andrews: We expect Q2 revenue to be slightly below our full year growth guidance range due to the timing of time Warner is in 2023. Additionally.
Julie B. Andrews: Additionally, we expect Q3 to reflect the highest year over year growth due to disruption in the prior year as we closed the quarter and the impact of one additional selling day in 2024 versus 2023.
Julie B. Andrews: This extra day result in approximately one 5% of additional growth for the quarter.
Julie B. Andrews: For gross margins, we continue to expect 2024 full-year gross margins to be in the 71% range in line with 2023. We also expect operating expenses to decrease approximately 200 to 300 basis points through leverage on incremental sales and additional cost centers. To assist you with modeling EBITDA, we reiterate our outlook for depreciation expense, which for the full year 2024 is in the range of approximately $36 million to $37 million as compared to $33 million in 2023.
Julie B. Andrews: For gross margin, we continue to expect 2020 for full year gross margin to be in the 71% range in line with 2023.
Julie B. Andrews: We also expect operating expenses to decrease approximately 200 to 300 basis points or leverage on incremental sales and additional cost synergy.
Julie B. Andrews: To assist you with modeling EBITDA, we reiterate our outlook for depreciation expense, which for the full year 2024 in the range of approximately 36 million to $37 million as compared to $33 million in 2023 stock based compensation expense is expected to be in the range of 30 million to 30.
Julie B. Andrews: Stock-based compensation expense is expected to be in the range of $30 million to $32 million. Below the operating income line, our expectation for interest in other is approximately $5 million per quarter. We expect Adjusted Evenum Margin Improvement of 200 basis points for the full year to be fairly consistent over the course of the year, with margin expansion in the first half of the year to be slightly higher over the prior year as we annualize centers.
Julie B. Andrews: Two months.
Julie B. Andrews: Although the operating income line, our expectation for interest and other is approximately $5 million per quarter.
Julie B. Andrews: We expect adjusted EBITDA margin improvement of 200 basis points for the full year to be fairly consistent over the course of the year with margin expansion in the first half of the year to be slightly higher over prior year as we annualize the <unk> and.
Julie B. Andrews: And finally, for cash, we still anticipate an improvement in net cash outflows in Q2 relative to Q1 due to the payment of the annual bonus and merger-related costs that occurred in the first quarter. The second half of the year will progress toward break-even with positive cash flow for the fourth quarter as we ramp up revenue, leverage our fixed expense base, and improve inventory and DSO efficiency. I'll now turn the call over to Massimo for some closing comments.
Julie B. Andrews: And finally for cash we still anticipate an improvement in net cash outflows in Q2 relative to Q1 due to the payment of the annual bonus and merger related costs that occurred in the first quarter. The second half of the year will progress toward breakeven with positive cash flow for the fourth quarter as we ramp up revenue.
Massimo Calafiore: Leverage our fixed expense base and improved inventory efficiencies I'll now turn the call over to Mark now for some closing comments.
Massimo Calafiore: I'll close today's call by emphasizing my confidence in the business and reiterating my enthusiasm to be part of the Orthofix community. We have solid fundamentals, exceptional employees, and a best-in-class portfolio that is driving a boom market performance. Throughout 2024, we will keep delivering on our commitments to patients, customers, and shareholders, driving the company to new heights. Before we sign off, I would also like to thank all of our employees worldwide for their dedication to Orthofix and its mission. I'm very excited for the next chapter ahead of us. At this point, we will open the line for questions.
Massimo Calafiore: I'll close today's call by emphasizing my confidence in the business at rates that are raising my intuitive to be part of the <unk> team.
Massimo Calafiore: We have solid fundamentals exceptional employees.
Massimo Calafiore: And our best in class portfolio that is driving a bull market for four months.
Massimo Calafiore: Throughout 2024, we keep delivering on our commitments to patients.
Massimo Calafiore: Boomers and shared all of this driving the company to new Heights.
Massimo Calafiore: Before we sign off.
Massimo Calafiore: So I'd like to thank all of our employees worldwide.
Massimo Calafiore: Our dedication to our Pacific segment's mission.
Massimo Calafiore: Various sizes photonics shop.
Massimo Calafiore: <unk>.
Massimo Calafiore: At this point, we will open the line for questions.
Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset to ensure that your phone is not on mute mode when asking your question. Your first question comes from the line of Matthew Blackman of Stiefel. Your line is open.
Speaker Change: Thank you the floor is now open for questions. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you will.
Mathew Justin Blackman: I'd like to Australia, a question simply press Star one again.
Operator: Called upon to ask a question and are listening via loud speaker on your device. Please pickup your handset to ensure that your phone is not on mute mode. When asking your question.
Mathew Justin Blackman: Your first question comes from the line of Mathew Blackman of Stifel. Your line is open.
Mathew Justin Blackman: Good morning, everybody. Can you hear me OK?
Mathew Justin Blackman: Good morning, everybody can you hear me okay.
Unknown Executive: Yeah, I'm back. Great.
Mathew Justin Blackman: And that rate Hello.
Unknown Executive: Hello, Um...
Unknown Executive: I'm back. All right. Thank you so much for coming.
Mathew Justin Blackman: Maybe the first question and I hate to nitpick here, but.
Mathew Justin Blackman: Thank you. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Maybe the first question, and I hate to pick on this, but guidance for the year is up about 2 to 3 million midpoint to midpoint versus the 4 to 5 million dollar 1QP. I appreciate it's early in the year, and I sense conservatism, but I just want to make sure you're not seeing anything different here in 2Q than maybe it's temperature momentum.
Mathew Justin Blackman: <unk> for the year was up about $2 million to $3 million midpoint to midpoint versus the $4 million to $5 million. Once you Pete I. Appreciate it's early in the year I sense conservatism I just want to make sure youre not seeing anything different here in <unk> and maybe its temperature momentum.
Unknown Executive: Yeah, no, we wouldn't, we're not seeing anything that would temper our momentum. We're, you know, again, it's early in the year. We want a new management team in place, and we are confident in what we're delivering, but nothing that's tempering our enthusiasm.
Mathew Justin Blackman: Yes.
Speaker Change: We're not seeing anything that would environment and work.
Speaker Change: Again, it's early in the year.
Speaker Change: New management team in place.
Speaker Change: We are confident in what we're delivering but nothing that temporary here.
Mathew Justin Blackman: Great, that's what I figured. And then, just maybe, a housekeeping question.
Unknown Executive: Yes.
Speaker Change: Great that's what I figured.
Mathew Justin Blackman: And then just maybe a housekeeping question did you have one fewer day selling day in the first quarter versus 2023. Some of your peers have so I'm just curious.
Mathew Justin Blackman: Calendar no okay.
Mathew Justin Blackman: Yeah.
Speaker Change: Okay, and then I guess my my last question and Julie you sort of alluded to it I was hoping maybe to get some firmer numbers, but you gave a great metric in the fourth quarter that 8% of sales are from new distributors you mentioned that continued.
Mathew Justin Blackman: Andrew can can update that number similar to last quarter higher.
Speaker Change: I appreciate you may not have this at hand, but also is there any way to give us any sort of same store sales growth number for your accounts and I'll leave it at that thank you.
Mathew Justin Blackman: Okay.
Mathew Justin Blackman: Say in the revenue from new distributors I said in the prepared.
Speaker Change: Prepared remarks.
Mathew Justin Blackman: Nearly doubled.
Mathew Justin Blackman: So you can interpret that from the 8% nearly doubling.
Mathew Justin Blackman: And then I don't know if same store sales.
Speaker Change: As already in front of me, but.
Speaker Change: We will think about if we weren't him release there. Thank you.
Speaker Change: Yes fair enough. Thanks, so much.
Speaker Change: Your next question comes from the line of Brian Zimmerman of BTG. Your line is open.
Speaker Change: Hi, Good morning, guys. This is <unk> on for Ryan.
Speaker Change: First off on the gross margins. It looks like you guys came in in line with our estimates this quarter. We're just wondering what you could see that could drive them higher over time.
Speaker Change: Yes, so over I mean, this year, we said that our margins would be 71% in.
Mathew Justin Blackman: In line with last year, I think as we look into the future we haven't issued long range guidance on it but we.
Mathew Justin Blackman: We do see opportunity in the gross margin line I think there.
Mathew Justin Blackman: There are synergies with supplier rationalization.
Mathew Justin Blackman: Leveraging our footprint and those types of things that we're looking at.
Speaker Change: Great. Thank you and then next on the bone Stim. It looks like you guys are seeing some pretty strong growth here. Just wondering what you can do to maintain this growth in a market, that's maybe growing not as fast.
Speaker Change: Yes, it's an excellent question we see.
Mathew Justin Blackman: The foreseeable future.
Mathew Justin Blackman: Potential with just given best from what we said.
Mathew Justin Blackman: In our remarks setbacks, we are leveraging that as much as we can right now all of the tools. So John coming from the <unk> acquisition. So all I've said is true that the market growth and market rates.
Mathew Justin Blackman: If you combine that.
Mathew Justin Blackman: On the business.
Mathew Justin Blackman: We see strong potential that said for the next.
Mathew Justin Blackman: <unk>.
Mathew Justin Blackman: Few quarters so.
Mathew Justin Blackman: We will try to maximize its potential as much as we can.
Speaker Change: Great. Thanks for taking the question.
Mathew Justin Blackman: Your next question comes from the line of Jason <unk> of <unk>. Your line is open hi, thanks for taking the questions just on the growth rates. We saw this quarter, especially I mean, you've kind of mentioned for global orthopedics, it's going to vary.
Mathew Justin Blackman: The spine growth has been.
Mathew Justin Blackman: Spine growth spin.
Mathew Justin Blackman: Pretty nice is that something we should expect to continue for the rest of the year could you comment on sort of what the trends are for those remaining other businesses.
Speaker Change: Yes look.
Mathew Justin Blackman: We feel pretty confident about the growth Tonight.
Mathew Justin Blackman: <unk> right now.
Mathew Justin Blackman: As we said earlier.
Mathew Justin Blackman: We have identified all of the growth.
Speaker Change: Growth drivers for us.
Mathew Justin Blackman: We are getting a lot of interest trauma.
Mathew Justin Blackman: With our new surgeons the.
Mathew Justin Blackman: The amount of inbound calls that being good.
Mathew Justin Blackman: As being the pendulum optimal for us and all of these allow us to really pick and choose that I talked about because of the member.
Mathew Justin Blackman: Fully focus on the profitable growth so.
Mathew Justin Blackman: And we can achieve these if we get the right partners.
Mathew Justin Blackman: On the same token with our investment in innovation that we are seeing a far better utilization of our product saw a very healthy increase on the revenue per case.
Mathew Justin Blackman: Almost all of this to say that we see we see a very strong business fundamental for the foreseeable future.
Speaker Change: Okay. Thank you. Thank you.
Speaker Change: I'm sorry to interrupt.
Mathew Justin Blackman: And then you mentioned you're big.
Speaker Change: You should go cash flow positive in Q4, I assume that's sustainable going forward.
Mathew Justin Blackman: Quarters will be cash flow positive from their honor.
Mathew Justin Blackman: Seasonality impact that or sort of what's the outlook for cash flow generation.
Mathew Justin Blackman: Yes.
Mathew Justin Blackman: Formal guidance on that for 2025.
Mathew Justin Blackman: And we'll do so later this year, but.
Mathew Justin Blackman: Yes.
Mathew Justin Blackman: Okay.
Speaker Change: I'll jump back in queue. Thank you.
Speaker Change: Sure. Thanks, Steve.
Mathew Justin Blackman: Your next question comes from the line of Jeff Cohen of Ladenburg Thalmann. Your line is open.
Mathew Justin Blackman: National insurers.
Speaker Change: Hey, Jeff how are you.
Mathew Justin Blackman: Sean So I wondered if you could.
Mathew Justin Blackman: Talk about Charleston, and fresh Frac to first ventures, and talk a little bit about some of the channels.
Mathew Justin Blackman: Tahira you call LP fracture market and some of those channels some of those step function.
Mathew Justin Blackman: Are you still focused on.
Mathew Justin Blackman: Surgeons is there some focus.
Speaker Change: <unk>. Thank you.
Mathew Justin Blackman: And right now I think that we are leveraging our network.
Mathew Justin Blackman: Paul.
Mathew Justin Blackman: On the silicon side, so at the end.
Mathew Justin Blackman: We have two product.
Mathew Justin Blackman: <unk>.
Mathew Justin Blackman: Helping us to address the continuum mcadams fracture structure among union. So we keep that driving our product portfolio using existing distributors velocity and I'll try to find synergies with that without with a distributor at the <unk> site.
Mathew Justin Blackman: Our market is defined right now on the search on decision piece.
Speaker Change: Okay got it and then.
Mathew Justin Blackman: Could you talk a little bit about the all together the larger more dedicated distributors as far as the aggregate numbers do you anticipate over the balance of this year that the actual number of distributors will decrease and then if you could give us a sense of feet on the ground. Thank you.
Speaker Change: Yes, I don't think that we gave the specific detail about do not.
Mathew Justin Blackman: Among distributor.
Mathew Justin Blackman: And in general what I can tell you is that on the positive side, we are seeing that thought out.
Mathew Justin Blackman: Top distributors.
Speaker Change: But increasing their loyalty to us so I'm going to do more with that.
Mathew Justin Blackman: On the issue.
Mathew Justin Blackman: Everything is shifting to have but let's say given the depth of our portfolio, especially in spine. Our adult distributor are becoming exclusive to us So and I think this one is going to keep driving is going to help us to drive compliance moving forward and focused with our product.
Mathew Justin Blackman: I've said, we don't give a specific number but what I can tell you that directionally. The quantity of revenue that we are seeing is pretty high right now.
Speaker Change: Okay perfect. Thanks for taking my questions.
Speaker Change: That concludes our Q&A session and this concludes today's conference call you may now disconnect.
Unknown Executive: Did you have one fewer selling day in the first quarter versus 2023? Some of your peers have. Curious about your calendar?
Speaker Change: Please wait the conference will begin shortly.
Unknown Executive: No, not at all. No, okay. Okay, and then I guess my last question, and Julie, you sort of alluded to it, I was hoping maybe to get some firmer numbers, but you gave a great metric in the fourth quarter that 8% of sales were from new distributors. You mentioned that it continued. Any chance you can update that number similar to last quarter higher? And I appreciate you may not have this at hand, but also, is there any way to give us any sort of same store sales kind of growth number for your accounts? And I'll leave it at that. Thank you.
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