Q4 2024 Axogen Inc Earnings Call

And James Kamp, Chief Marketing Officer, Michael will discuss fourth quarter 2024 financial results and Jens will provide a high level introduction to accidents, new strategic plan.

Near: Near will then provide an analysis of our financial performance and guidance and discuss our outlook for the year, followed by a question and answer session.

Today's call is being broadcast live via webcast, which is available on the investors section of <unk> website. Following the end of the live call a replay will be available in the investors section of the company's website at www dot oxygen in dot com.

Near: Before we get started I'd like to remind you that during the conference call. The company will make projections and forward looking statements forward looking statements, which are usually identified by the use of words such as objective will believe expect estimate should guidance intends projects or other similar free.

Near: <unk> include but are not limited to statements relating to financial guidance, including revenue margins cash flow future profitability expectations for growth estimated total addressable market opportunities timing for future product and application launches marketing opportunities within existing and new markets.

Near: The company's expectations for approval of the biological license application of advanced nerve graft, including the anticipated timing of approval and the assumption that advanced nerve graft will be designated as the reference product for any future biosimilar nerve graft and that such designation will provide marketplace exclusivity.

Near: Forward looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risks and uncertainties, including without limitation, the risks and uncertainties reflected in the company's SEC filings, including its Form 10-K and 10-Q.

Near: Forward looking statements are representative only as of the date that they are made and except as required by applicable law. The company assumes no responsibility to publicly update or revise any forward looking statements. In addition for a reconciliation of non-GAAP measures. Please refer to today's press release and corporate presentation on the investors section of the company's website.

Now I'll turn the call over to Michael.

Michael: Thank you operator, and thank you to everyone who is joining us today as we discuss our 2020 for fourth quarter and full year financial results.

Michael: 2024 was a solid year of key accomplishments for oxygen.

We are pleased with our progress as a team and while we have work ahead of us to realize <unk> full potential we are entering 2025 with increased confidence across all parts of the business on.

Speaker Change: On my first call as CEO last November we established three near term priorities for the business number one successfully complete the submission of our BLA application.

Forward looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risks and uncertainties, including without limitation, the risks and uncertainties reflected in the company's SEC filings, including its Form 10-K and 10-Q.

Speaker Change: Number two meet our established revenue guidance for the year and lastly, develop a new strategic plan for the business engaging all employees and key extra Interstate key external stakeholders in the process.

The forward looking statements are representative only as of the date that they are made and except as required by applicable law. The company assumes no responsibility to publicly update or revise any forward looking statements. In addition for a reconciliation of non-GAAP measures. Please refer to today's press release and the corporate presentation on the investors section of the company's website.

Speaker Change: These were in each case highly relevant commitments, we made to all stakeholders and the successful completion of these commitments explain in part our increased confidence as we enter the new year.

Speaker Change: Regarding future expectations for oxygen I'm excited to introduce our new strategic priorities today and look forward to providing details about our new plans during our March 4th Investor Day event.

Michael: Now I'll turn the call over to Michael.

Speaker Change: The insights and opportunities identified from our strategic planning exercise explain the other part of why we are entering 2025 with increased confidence.

Michael: Thank you operator, and thank you to everyone who is joining us today as we discuss our 2020 for fourth quarter and full year financial results.

Speaker Change: Before I address financial results I would like to provide background for anyone who might be new to our story whenever we referenced accidents nerve repair algorithm, we are referring to a broad product portfolio designed to address the needs of common nerve injuries, including bridging the gap, resulting from transected nerves.

Speaker Change: 2024 was a solid year of key accomplishments for oxygen. We are pleased with our progress as a team.

Speaker Change: We have work ahead of us to realize <unk> full potential we are entering 2025 with increased confidence across all parts of the business on.

Speaker Change: On my first call as CEO last November we established three near term priorities for the business number one successfully complete the submission of our BLA application.

<unk> protection for non transected, but injured nerves.

Speaker Change: Termination of nerves when there is no opportunity for reconnection or reconstruction.

Speaker Change: To meet our established revenue guidance for the year and lastly, develop a new strategic plan for the business engaging all employees and key extra interested key external stakeholders in the process.

Speaker Change: Pending on the clinical situation, one or many permutations of <unk> nerve algorithm may be necessary to ensure the best possible patient outcome.

Speaker Change: Now to our financial results, our full year 2024 revenue was $187 3 million.

Speaker Change: These were in each case highly relevant commitments, we made to all stakeholders and the successful completion of these commitments explain in part our increased confidence as we enter the new year.

Speaker Change: A 17, 8% increase compared to 2023.

Speaker Change: In 2024, and we saw broad based growth across all of the markets, we serve which comprises extremities oral maxillofacial and head and neck and breast for each market positive performance was driven by improved commercial execution of our growth strategy focused on driving adoption of our nerve repair.

Speaker Change: Regarding future expectations for oxygen I'm excited to introduce our new strategic priorities today and look forward to providing details about our new plans during our March 4th Investor Day event.

Speaker Change: The insights and opportunities identified from our strategic planning exercise explain the other part of why we are entering 2025 with increased confidence.

Speaker Change: With and development of high potential accounts EBITDA was similarly positively impacted by our improved sales productivity and resource allocation.

Speaker Change: Before I address financial results I would like to provide background for anyone who might be new to our story whenever we referenced accidents nerve repair algorithm, we are referring to a broad product portfolio designed to address the needs of common nerve injuries, including bridging the gap, resulting from transected nerves nerve.

Now turning to our fourth quarter results revenue increased to $49 $4 million.

Speaker Change: Up 15, 1% compared to the prior year like the year fourth quarter performance reflected broad based growth driven by adoption of our nerve repair algorithm across all clinical applications.

Speaker Change: Protection for non transected, but injured nerves and termination of nerves. When there is no opportunity for reconnection or reconstruction dips.

Speaker Change: We continued to execute our strategy to focus and deepen our presence in high potential accounts, which are primarily characterized by the following criteria.

Speaker Change: Depending on the clinical situation, one or many permutations of accidents nerve algorithm may be necessary to ensure the best possible patient outcome.

Speaker Change: Larger hospitals, including level, one trauma centers indoor academic affiliated hospitals with a high number of nerve repair procedures and lastly already trained micro surgeons, we aimed to drive growth in these types of accounts through targeted expansion of nerve repair indications by building on the existing experience.

Speaker Change: Now to our financial results our full year 2024 revenue was $187 3 million, a 17, 8% increase compared to 2023.

Speaker Change: In 2024, and we saw broad based growth across all of the markets, we serve which comprises extremities oral maxillofacial and head and neck and breast for each market positive performance was driven by improved commercial execution of our growth strategy focused on driving adoption of our nerve repair.

Speaker Change: Hence in nerve repair and the account the.

Inherent potential of the account to grow based on size and procedure volume and by expanding adoption of our nerve repair algorithm to other surgical specialties.

Speaker Change: We believe our focus on these high potential accounts as a reason for our improvement in sales productivity.

Speaker Change: With and development of high potential accounts EBITDA was similarly positively impacted by our improved sales productivity and resource allocation.

Speaker Change: Next I would like to address the status of the biologics license approval also referred to as BLA for <unk> nerve graft as a reminder.

Speaker Change: Now turning to our fourth quarter results revenue increased to $49 4 million up 15, 1% compared to the prior year like the year fourth quarter performance reflected broad based growth driven by adoption of our nerve repair algorithm across all clinical applications.

Speaker Change: <unk> approval, we will complete the regulatory transition of advanced nerve graft from a $3 61 tissue product to a $3 51 biological product.

Speaker Change: Importantly, we believe advance will be designated as the reference product for potential biosimilars, providing 12 years of market exclusivity we.

Speaker Change: We continued to execute our strategy to focus and deepen our presence in high potential accounts, which are primarily characterized by the following criteria larger hospitals, including level, one trauma centers indoor academic affiliated hospitals with a high number of nerve repair procedures and lastly already.

Speaker Change: We submitted the BLA in the third quarter of 2024 and continue to engage regularly with the FDA as part of the application review process consistent with prior guidance, we expect BLA approval in September.

Speaker Change: I would now like to turn it over to our Chief marketing officer, and Kevin So that he can share and highlight key insights and priorities, resulting from our strategic planning exercise our investments in market development priorities over the next four years will be guided by this plan and the oxygen team is excited about our opportunities.

Range micro surgeons, we aim to drive growth in these types of accounts through targeted expansion of nerve repair indications by building on the existing experience in nerve repair and the account the inherent.

Speaker Change: Potential of the account to grow based on size and procedure volume and by expanding adoption of our nerve repair algorithm to other surgical specialties.

Speaker Change: As mentioned, we will discuss the plan in detail during our Investor day on March 4th.

Speaker Change: We believe our focus on these high potential accounts as a reason for our improvement in sales productivity.

Kevin So: Thank you Mike.

Kevin So: To start we believe accidents planned peripheral nerve repair market development priorities represents a $5 billion U S Tam opportunity with significant potential to improve patient health and quality of life based on our superior benefit to risk value proposition.

Speaker Change: Next I would like to address the status of the biologics license approval also referred to as BLA for <unk> nerve graft as a reminder, a BLA approval, we will complete the regulatory transition of advanced nerve graft from a $3 61 tissue product to a 351 biological product imports.

Kevin So: We believe accidents nerve repair product portfolio and expertise remains significant advantages, which we can build upon over the next four years.

Speaker Change: We believe and Vance will be designated as the reference product for potential biosimilars, providing 12 years of market exclusivity.

Kevin So: <unk> International presence is limited today, but we believe the market opportunity for nerve care outside the U S is just the thoughts on attractive and we look forward to taking concrete steps towards developing these markets in the coming years.

Speaker Change: We submitted the BLA in the third quarter of 2024 and continue to engage regularly with the FDA as part of the application review process consistent with prior guidance, we expect B L. A approval in September.

Our objective for the full year planning period will be to achieve a CAGR of 15% to 20% by executing on the following strategic priorities which include <unk>.

Speaker Change: I would now like to turn it over to our Chief marketing Officer Yung, Kim So that he can share and highlight key insights and priorities, resulting from our strategic planning exercise our investments in market development priorities over the next four years will be guided by this plan and the accident team is excited about our opportunities.

Kevin So: Number one we.

Kevin So: We will prioritize investments towards markets with elective and planned procedures, which are characterized by a more efficient market development and customer creation process, resulting in more predictable and consistent revenue growth.

Kevin So: Number two.

Speaker Change: As mentioned, we will discuss the plan in detail during our Investor day on March 4th.

We will advance the accident and algorithm towards standard of care and extremities.

Kevin So: Our extremities business, which consists of traumatic and chronic nerve injuries in the upper and lower extremities represents more than half of our business today.

Thank you Mike.

Speaker Change: To start we believe accidents planned peripheral nerve repair market development priorities represents a 5 billion U S Tam opportunity with significant potential to improve patient health and quality of life based on our superior benefit to risk value proposition.

Kevin So: Have a large customer base.

Kevin So: Level, one clinical evidence and strong <unk> and societal relationships.

Growth in this market has been impacted by commercial payer coverage policies.

Speaker Change: We believe accidents nerve repair product portfolio and expertise remains significant advantages, which we can build upon over the next four years.

Kevin So: A challenging customer creation process and a complex patient journey.

Kevin So: To address these challenges and accelerate growth, we will execute on the following strategies which include.

Speaker Change: Accidents International presence is limited today, but we believe the market opportunity for Nerf care outside the U S is just the starts and attractive and we look forward to taking concrete steps towards developing these markets in the coming years.

Kevin So: We will continue to drive efficacy for advanced nerve graft as a standard of care option and extremity nerve reconstruction and work to expand coverage by leveraging the BLA approval level, one clinical evidence and societal support.

Speaker Change: Our objective for the full year planning period will be to achieve a CAGR of 15% to 20% by executing on the following strategic priorities which include.

Kevin So: Next we will optimize the patient journey through education and therapy awareness of the referral base to drive more patients to a nerve surgeon customers.

Speaker Change: Number one we.

Speaker Change: We will prioritize investments towards markets with elective and <unk> procedures, which are characterized by a more efficient market development and customer creation process, resulting in more predictable and consistent revenue growth.

Kevin So: We'll continue to develop the market from a protection and expand our market development efforts to lower extremities.

Kevin So: And finally, we will continue to drive commercial excellence with higher sales productivity by execution of our high potential account strategy with a dedicated sales organization to drive focus and adoption of the oxygen nerve repair algorithm.

Speaker Change: Number two.

Speaker Change: We will advance the accident and algorithm towards standard of care in extremities.

Speaker Change: Our extremities business, which consist of traumatic and chronic nerve injuries in the upper and lower extremities represents more than half of our business today.

Kevin So: Number three.

Kevin So: We will establish leadership in the press notice station market and drive our recent station technique towards standard of care.

Speaker Change: We have a large customer base level.

Speaker Change: Level, one clinical evidence and strong farewell and societal relationships.

Kevin So: In breast reconstruction procedures.

Kevin So: <unk> surgical technique is designed to address post mastectomy numbers, a significant consequence of breast cancer surgery by restoring sensation to the breast as part of our reconstructive surgery.

Growth in this market has been impacted by commercial payer coverage policies or.

Speaker Change: Challenging customer creation process and a complex patient journey.

Speaker Change: To address these challenges and accelerate growth, we will execute on falling strategies, which include.

Kevin So: <unk> represents a significant market opportunity.

Kevin So: And as <unk> fastest growing business with a consistent predictable and scalable business model.

Speaker Change: We will continue to drive efficacy for advanced nerve graft as a standard of care option and extremity nerve reconstruction and worked to expand coverage by leveraging the BLA approval level, one clinical evidence and societal support.

Kevin So: To accelerate growth, we will focus on following on the following strategies, including significantly increasing investments in our breast commercial infrastructure to support growth.

Speaker Change: Next well optimize the patient journey through education and therapy awareness of their referral base to drive more patients to our nerve surgeon customers.

Kevin So: This includes growing our dedicated sales and marketing organization as well as expanding our professional education capacity.

Speaker Change: We will continue to develop the market for Nerf protection and expand our market development efforts to lower extremities.

Kevin So: We will expand surgeon education and training programs to increase search and activation and recent station procedure adoption.

Speaker Change: And finally, we will continue to drive commercial excellence with higher sales productivity by execution of our high potential account strategy with a dedicated sales organization to drive focus and adoption of the accident nerve repair algorithm.

We will accelerate patient awareness and activation by increasing the quantity and reach of our campaigns, while growing relationships with advocacy groups and health care providers.

Kevin So: And finally, we will advance level, one clinical evidence generation to expand coverage and drive societal support for standard of care.

Speaker Change: Number three.

Speaker Change: We will establish leadership in the press notice Asian market and drive our recent station technique towards standard of care.

Kevin So: Number four.

Speaker Change: Are all of Maxim facial and head and neck business represents a large and attractive market opportunity for oxygen with high procedural concentration and about 900 hospitals with strong overlap with our extremities high potential accounts.

In breast reconstruction procedures.

Actually since we sensation surgical technique is designed to address post mastectomy. None this a significant consequence of breast cancer surgery by restoring sensation to depressed as part of the reconstructive surgery.

Speaker Change: Isogenic nerve injuries are common and <unk> had an X surgical procedures, but are often not treated due to lack of surgeon education on available nerve repair options as well as awareness of the quality of life impact for patients.

Speaker Change: <unk> represents a significant market opportunity and as accidents fastest growing business with a consistent predictable and scalable business model.

To accelerate growth, we will focus on following on the following strategies, including significantly increasing investments in our breast commercial infrastructure to support growth.

Speaker Change: So accelerated adoption of the oxygen nerve repair algorithm and <unk> head and neck and drive towards standard of care, we will execute on the following strategies.

Speaker Change: Expand surgeon education and training programs to grow the number of trained surgeons and care sites that incorporate accidents nerve repair algorithm and targeted <unk> in head and neck procedures.

Speaker Change: This includes growing our dedicated sales and marketing organization as well as expanding our professional education capacity.

Speaker Change: We will expand surgeon education and training programs to increase search and activation and recent station procedure adoption.

Speaker Change: We will increase fee based market development support to raise brand awareness and care Royal engagement to drive efficacy best practice and adoption in the head and neck market.

Speaker Change: We will accelerate patient awareness and activation by increasing the quantity and reach of our campaigns.

Speaker Change: <unk> relationships with advocacy groups and health care providers.

Speaker Change: We're leveraged the societal support and RF and inclusion in the AA RMS Park care guidelines to drive societal support and standard of care designation for nerve repair in mandible reconstruction with key had an exercise.

Speaker Change: And finally, we will advance level, one clinical evidence generation to expand coverage and drive societal support for standard of care.

Speaker Change: Number four.

Speaker Change: And finally, we will drive increased patient and surgeon awareness of the quality of life impact from nerve damage in <unk> in head and neck surgical procedures.

Speaker Change: Are all of Maxim facial and head and neck business represents a large and attractive market opportunity for oxygen with high procedural concentration and about 900 hospitals with strong overlap with our extremities high potential accounts.

Speaker Change: Number five.

Speaker Change: There are numerous large underdeveloped markets for nerve repair and addressing these is an important long term growth driver for oxygen.

Speaker Change: <unk> nerve injuries are common in O M. S. N had an X surgical procedures, but are often not treated due to lack of surgeon education on available nerve repair options as far as awareness of the quality of life impact for patients.

Speaker Change: We will invest in the development of dose with substantial market potential and opportunity to improve patient outcomes.

Speaker Change: Our initial focus will be for nerve repair and protection during prostatectomy.

Speaker Change: To accelerate adoption of the accident and nerve repair algorithm in Oems and head and neck and drive towards standard of care, we will execute on the following strategies.

Speaker Change: Prostatectomy represents a large and attractive market opportunity due to a motivated patient population and a well defined clinical problem that can be addressed with the accident nerve repair algorithm.

Speaker Change: Expand surgeon education and training programs to grow the number of trained surgeons and care sites that incorporate accidents nerve repair algorithm and targeted or map in head and neck procedures.

Speaker Change: Number six.

Speaker Change: We will increase our investment in innovation programs that aim to improve the standard of care in nerve repair and in level, one clinical evidence generation that meets payer requirements for coverage.

Speaker Change: We will increase fee based market development support to raise brand awareness and care Royal engagement to drive efficacy best practice and adoption in the head and neck market.

Speaker Change: Advanced support for standard of care designation and drives consensus for incorporation of our nerve repair algorithm into clinical guidelines.

Speaker Change: We're leveraged the societal support and RF and inclusion in the E. R. M. S Park here guidelines to drive societal support and standard of care designation for nerve repair in mandible reconstruction with key had an exercise.

Speaker Change: Number seven we will drive operational efficiencies in manufacturing by investing in systems and processes to optimize gross margin in the upcoming years and finally, we expect to maintain positive cash flows over the planning period sufficient to fund our organic growth initiatives consistent with our with our strategic plan.

Speaker Change: And finally, we will drive increased patient and surgeon awareness of the quality of five impact from nerve damage in <unk> in head and neck surgical procedures.

Speaker Change: Number five.

We look forward to providing more details on our upcoming Investor day.

Speaker Change: There are numerous large underdeveloped markets for nerve repair and addressing these is an important long term growth driver for oxygen.

Nir: Now I will turn the call over to Nir to provide a review of our financial highlights and guidance.

Speaker Change: We will invest in the development of dose with substantial market potential and the opportunity to improve patient outcomes.

Nir: Thank you again, we're excited about our results for the quarter and the year, we have seen good progress in our commercial execution and resource allocation, both yielding results in terms of top line growth bottom line profitability as well as the cash flow positivity for the year for.

Our initial focus will be for nerve repair and protection during prostatectomy.

Prostatectomy represents a large and attractive market opportunity due to a motivated patient population and a well defined clinical problem that can be addressed with the accident nerve repair algorithm.

Nir: For this quarter, our revenue reached 49 going $4 million, representing 15, 1% growth from the fourth quarter of two and 'twenty three.

Speaker Change: Number six we will increase our investment in innovation programs that aim to improve the standard of care in nerve repair.

Nir: This growth is attributed to an approximately 11% increase in unit volume and mix and a 4% increase in price.

Speaker Change: And in level, one clinical evidence generation that meets payer requirements for coverage advances support for standard of care designation and drives consensus for incorporation of our nerve repair algorithm into clinical guidelines.

Nir: Our gross profit for the quarter was $37 $6 million, an increase from the $32 million recorded in the fourth quarter of 2023.

Nir: This represents a gross margin of 76, 1% up from 74, 6% in the same period last year.

Number seven we will drive operational efficiencies in manufacturing are investing in systems and processes to optimize gross margin in the upcoming years and finally, we expect to maintain positive cash flows over the planning period sufficient to fund organic growth initiatives consistent with our with our strategic plan.

Nir: Our total operating expenses for the quarter increased to $35 6 million up slightly from $35 2 million in Q4 of 2023.

Nir: Sales and marketing expenses as a percentage of total revenue decreased to 46% from 46, 9% in the fourth quarter of two entering as we saw an increase in our sales productivity and solid execution of our strategy focusing on high potential accounts.

Speaker Change: We look forward to providing more details on our upcoming Investor day.

Nir: Now I'll turn the call over to Nir to provide a review of our financial highlights and guidance here.

Nir: Thank you Ian.

Nir: We're excited about our results for the quarter and the year, we have seen good progress in our commercial execution and resource allocation, both yielding results in terms of top line growth bottom line profitability as well as cash flow positivity for the year for.

Nir: Research and development expenses decreased by six 3% to $6 7 million from $7 2 million in 2023 is driven by the completion of the development of <unk> regard to the backlog at the end of Q2 of 2024.

Nir: For this quarter, our revenue reached 40 $914 million, representing 15, 1% growth from the fourth quarter of <unk> 23.

Nir: As a percentage of total revenue total R&D expenses were 13, 6% down from 16, 7% in the last quarter of the prior year.

Nir: This growth is attributed to an approximately 11% increase in unit volume and mix and a 4% increase in price.

Nir: General and administrative expenses were $8 $8 million in Q4 of 2024 up 11, 8% from the seven 9 million in Q4.

Nir: Our gross profit for the quarter was $37 $6 million, an increase from the $32 million recorded in the fourth quarter of 2012.

Nir: Driven mainly by stock compensation expense reversal in Q4 last year due to the departure of some of our leadership team.

Nir: Three.

Nir: This represents a gross margin of 76, 1% up from 74, 6% in the same period last year.

Nir: The quarter ended with net income of <unk> $4 million or <unk> <unk> per share compared to a net loss of $3 9 million or <unk> <unk> per share in the fourth quarter of 2023.

Nir: Our total operating expenses for the quarter increased to $35 $6 million up slightly from $35 2 million in Q4 of 2023.

Nir: Adjusted net income for the quarter was $3 5 million or <unk> <unk> per share compared to an adjusted net loss of <unk> 6 million or <unk> six per share in the fourth quarter of 2023.

Nir: Sales and marketing expenses as a percentage of total revenue decreased to 46% from 46, 9% in the fourth quarter of 233, as we saw an increase in our sales productivity and solid execution of our strategy focusing on high potential accounts.

Nir: Adjusted fourth quarter, EBITDA was $6 7 million compared to an adjusted EBITDA of zero point $6 million in the prior year.

Nir: Research and development expenses decreased by six 2% to $6 7 million from $7 2 million in 2023 is driven by the completion of the development of AG, regardless lifeblood at the end of Q2 of 2024.

Nir: As of December 31, our balance of cash cash equivalents and investments was $39 5 million compared to $35 million at the end of the third.

Nir: Turning now to our guidance, we expect full year of 2025 revenue growth to be in the range of 15% to 17% versus the prior year.

Nir: As a percentage of total revenue total R&D expenses were 13, 6% down from 16, 7% in the last quarter of the prior year.

Also anticipates full year 2025 gross margin to be in the range of 73% to 75%.

Nir: General and administrative expenses were $8 8 million in Q4 of 2024 up 11, 8% from the seven 9 million in.

Nir: Our range includes approximately $2 million of one time costs related to the BLA approval, which would impact full year gross margin by approximately one percentage point.

Nir: In Q4 of 'twenty, three driven mainly by stock compensation expense reversal in Q4 of last year due to the departure of some of our leadership team.

Nir: The timing of most of those costs would be around anticipated BLA approval currently expected to be in September.

Nir: The quarter ended with net income of zero point $4 million or one cents per share compared to a net loss of $3 9 million or <unk> <unk> per share in the fourth quarter of 2023.

Nir: Notably we estimate that two thirds of those costs are noncash and pertains to the vesting of our view related to stock compensation.

Nir: From a cash perspective, we expect to be net cash flow positive for the entire year and expect to self fund our new strategic plan.

Nir: Net income for the quarter was $3 5 million or <unk> <unk> per share compared to an adjusted net loss of $2 6 million or six cents per share in the fourth quarter of 2023.

Nir: However, we expect similar seasonality of quarterly cash flows as we have seen historically with Q1 expected to be in net cash outflow due to the yearly bonus payments and the national sales meeting both of which take place during the first quarter, followed by positive cash flow for the remainder of the year.

Nir: Adjusted fourth quarter, EBITDA was $6 $7 million compared to an adjusted EBITDA of <unk> 6 million in the prior year.

Nir: As of December 31, our balance of cash cash equivalents and investments was $39 $5 million compared to $35 million at the end of the third quarter.

Nir: In summary, we're pleased with our fourth quarter performance, we will continue to execute our strategy and invest in innovation improve our resource allocation, while maintaining our full year cash flow productivity and driving towards the greater bottom line profitability.

Turning now to our guidance, we expect full year of 2025 revenue growth to be in the range of 15% to 17% versus the prior year. We also anticipate full year 2025 gross margin to be in the range of 73% to 75%.

Nir: And at this time, we'd like to open the line for questions.

Nir: Yes.

Nir: Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Nir: This range includes approximately $2 million of one time costs related to the BLA approval, which would impact full year gross margin by approximately one percentage point.

Nir: Confirmation tone will indicate that your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.

Nir: The timing of most of those costs would be around anticipated BLA approval date currently expected to be in September.

Nir: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Nir: Notably we estimate that two thirds of those costs are noncash and pertain to the vesting of our BLA related to stock compensation.

Speaker Change: Our first question comes from Chris Pasquale with Nephron Research LLC. Please proceed with your question.

Nir: From a cash perspective, we expect to be net cash flow positive for the entire year and expect to self fund our new strategic plan.

Thanks, Good morning, guys.

Speaker Change: A lot to ask about with the strategic plan you laid out looking forward to getting more details next week.

Nir: However, we expect similar seasonality of quarterly cash flows as we have seen historically with Q1 expected to be a net cash outflow due to the yearly bonus payments and the national sales meeting both of which take place during the first quarter, followed by positive cash flow for the remainder of the year.

As a starting point I noticed the $5 billion U S. Tam you called out I believe that's about to ask how the company had previously thought about the opportunity.

Frankly, even that prior estimate had gotten some pushback at various times from the street in terms of whether that was was real and so I'm curious what the difference is now as you look at a 5 billion dollar opportunity how much of that has to do with new opportunities like prostatectomy that you talked about that really werent part of the calculus previously.

Nir: In summary, we're pleased with our fourth quarter performance, we will continue to execute our strategy and invest in innovation improve our resource allocation, while maintaining our full year cash flow productivity and driving toward greater bottom line profitability.

Nir: And at this time, we'd like to open the line for questions.

Nir: Maria.

Speaker Change: Versus a rethinking of the core markets.

Speaker Change: Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.

Speaker Change: Sure Chris.

Chris Pasquale: No I'm aware of the questions about the town historically.

Chris Pasquale: I can share with you that as part of the new planning process.

Chris Pasquale: Those very basic and critical questions were evaluated and we've looked at all the permutations on incidence presentation of the various promise problems, whether they be electrical or emergent.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Speaker Change: Our first question comes from Chris Pasquale with Nephron Research LLC. Please proceed with your question.

Chris Pasquale: And.

Chris Pasquale: We're very comfortable with the estimates of the overall Tam in terms of the actual components of what makes up that Tam will obviously during the investor day walk through that.

Thanks, Good morning, guys.

Speaker Change: Lot to ask about with the strategic plan you laid out looking forward to getting more details next week.

Speaker Change: Just as a starting point I noticed the 5 billion dollar U S. Tam you called out I believe that's about to ask how the company had previously thought about their opportunity and.

Chris Pasquale: Discreetly in terms of each part of the marketplace.

But.

Chris Pasquale: There is.

<unk>.

Chris Pasquale: Pretty comfortable based upon all the coding.

Speaker Change: Frankly, even that prior estimate had gotten some pushback at various times from the street in terms of whether that was was real and so I'm curious kind of what the difference is now as you look at a 5 billion dollar opportunity how much of that has to do with new opportunities like prostatectomy that you talked about that really weren't part of the calculus previous.

Chris Pasquale: Thats available to us to look at.

Chris Pasquale: The actual eligibility.

Chris Pasquale: Who could use our products for grass size standpoint.

Chris Pasquale: Versus simply reconnecting nerves.

Chris Pasquale: All of that was evaluated that allowed us to get to that I think the key the key question as with almost any market I don't care, what which market you're speaking to is not so much even what how big it is biggest important because if you're off a little bit. Obviously, you still have a target remaining and that's why people are interested but theres also address ability and so while the market.

Speaker Change: Versus a rethinking of the core markets.

Chris Pasquale: Sure Chris.

I'm aware of the questions about the town historically.

Chris Pasquale: I can share with you that as part of the new planning process.

Chris Pasquale: Large we do believe there are differences and address ability.

Chris Pasquale: Those very basic and critical questions were evaluated and we've looked at all the permutations on incidence presentation of the various promise problems, whether they be elective or emergent.

We're just simply sharing with you the facts.

Chris Pasquale: As as they as they exist as we've been able to produce.

Chris Pasquale: Thanks, That's helpful. And then just as I think about that list that you laid out.

A lot of investment in better market development in driving adoption in new opportunities I'm curious, whether you can do all those things that you guys laid out while still continuing to improve profitability company has come a long way youre cash flow positive now which is a great step.

Chris Pasquale: And.

Chris Pasquale: We're very comfortable with the estimate of the overall Tam in terms of the actual components of what makes up that Tam will obviously during the investor day walk through that.

Chris Pasquale: Discreetly in terms of each part of the marketplace.

Chris Pasquale: <unk>.

Chris Pasquale: But.

There is.

Chris Pasquale: <unk> two a couple of years ago is top line going to be the focus going forward or can you balance that with margin expansion.

Chris Pasquale: Pretty comfortable based upon all the coding.

Chris Pasquale: It's available to us to look at.

Chris Pasquale: We can absolutely a balance it so that's what our plan reflects.

Chris Pasquale: The actual eligibility.

Chris Pasquale: Who could use our products for grass size standpoint.

Chris Pasquale: Last thing we want to do is embarrassed ourselves.

Chris Pasquale: Versus simply reconnecting nerves.

Chris Pasquale: As we go forward here.

Chris Pasquale: All of that was evaluated that allowed us to get to that I think the key is the key question as with almost any market I don't care, what which market you're speaking to is not so much even what how big it is biggest important because if you're off a little bit. Obviously, you still have a target remaining and that's why people are interested but theres also address ability and so while the markets.

Chris Pasquale: So the the plans that we put in place we think are very practical theyre very doable.

Chris Pasquale: The investments that we need to make we've looked at <unk>.

Chris Pasquale: Top to bottom.

Chris Pasquale: And we've tied these to cause and effect by by clinical application. So now obviously, we need to prove it we need to execute.

Chris Pasquale: Your large we do believe there are differences and address ability.

Chris Pasquale: We're just simply sharing with you the facts so.

Chris Pasquale: But the plan.

Chris Pasquale: As as they as they exist as we've been able to produce.

Chris Pasquale: It's pretty straightforward in terms of.

Chris Pasquale: Cause and effect relationship and unless there's something grossly off we believe we'll be able to do what we just described.

Speaker Change: Thanks, That's helpful. And then just as I think about that list that you laid out.

Speaker Change: A lot of investment in a better market developments in driving adoption and new opportunities I'm curious whether you can do all of those things that you guys laid out while still continuing to improve profitability company's come a long way youre cash flow positive now which is a great step.

Chris Pasquale: That's helpful.

Chris Pasquale: Right.

Chris Pasquale: The convenience of last year.

Chris Pasquale: We're not just focusing obviously on top line growth. It is a balanced growth with optimization of resource allocation as we mentioned, yes, when builds investments we expect to be cash flow positive.

Speaker Change: <unk> two a couple of years ago is topline going to be the focus going forward or can you balance that with margin expansion.

Chris Pasquale: For the year for 2025.

Neil: Thanks Neil.

Speaker Change: The key thing I would share Chris everybody has that.

Speaker Change: We can absolutely a balance it so that's what our plan reflects I mean last thing we wanted to do is bearish ourselves.

Neil: X gene chronologically.

Speaker Change: As a company that's.

Neil: For all practical purposes at least 15 years old.

Speaker Change: As we go forward here.

Neil: But from an actual market penetration and market development. This is still a very young company very immature in terms of any individual marketplace and well.

Speaker Change: So.

Speaker Change: The plans that we put in place we think are very practical theyre very doable.

Speaker Change: The investments that we need to make we've looked at.

Neil: We want to believe that we've done and everything is possible. The truth of the matter is as we still have customers, who don't even know our name.

Speaker Change: Top to bottom.

Speaker Change: And we've tied these to cause and effect by by clinical application. So no obviously, we need to prove it we need to execute.

Neil: And so there is much opportunity left in terms of improving basic awareness, while we continue to also teach.

Speaker Change: But the plan.

Neil: Nerve care so.

Speaker Change: It's pretty straightforward in terms of.

Neil: The market opportunity is very large, but we still need to go out and develop that market.

Speaker Change: Cause and effect relationship and unless there's something grossly off we believe we'll be able to do what we just described.

Speaker Change: Yes.

Speaker Change: Our next question comes from Michael Sarcone with Jefferies. Please proceed with your question.

Speaker Change: Uh huh.

Speaker Change: The convenience of last year as we have said, yes, we're not just focusing obviously on the top line growth. It is a balanced growth with optimization of resource allocation as we mentioned, yes with those investments we expect to be cash flow positive.

Michael Sarcone: Good morning, and thanks for taking the question.

Michael Sarcone: I guess just one on on some of the strategic plans you laid out.

Michael Sarcone: Talked about your objectives being 15% to 20% CAGR for the planning period, I know, we're going to get into more details at the Investor day, but.

Speaker Change: For the year for 2025.

Speaker Change: Thanks Neil.

Speaker Change: The key thing I would sure Chris everybody has that.

Michael Sarcone: Any color you can provide on what are the assumptions at the low end versus the high end, there and how much of that is related to kind of penetrating.

Speaker Change: Accident chronologically.

Speaker Change: As a company.

Speaker Change: But for all practical purposes at least 15 years old.

Penetrating your existing core markets versus newer markets.

Speaker Change: But from an actual market penetration market development. This is still a very young company, it's very immature in terms of any individual marketplace and well.

Michael Sarcone: Well, we have obviously history in terms of.

Michael Sarcone: The growth rate to look at and so very simply.

Speaker Change: We want to believe that we've done and everything is possible. The truth of the matter is as we still have customers, who don't even know our name.

Michael Sarcone: And then we'll go into the detail.

Michael Sarcone: On Mondays and try to answer those questions.

Speaker Change: So there is much opportunity left in terms of improving basic awareness, while we continue to also teach.

Michael Sarcone: More clearly but.

Michael Sarcone: Fundamentally we're expanding.

Michael Sarcone: Parts of our organization.

Michael Sarcone: So for example, breast we will double that organization.

Speaker Change: Nerve care so.

Speaker Change: The market opportunity is very large, but we still need to go out and develop that market.

Michael Sarcone: In terms of footprint.

Michael Sarcone: We have.

Michael Sarcone: A lot of history.

Michael Sarcone: Terms of the.

Michael Sarcone: The business model, so we know or at least we believe we know how extendable that business model is along the execute that expansion on schedule.

Michael Sarcone: Our next question comes from Michael Sarcone with Jefferies. Please proceed with your question.

Michael Sarcone: That should result.

Good morning, and thanks for taking the questions.

Michael Sarcone: Clearly in new customer creation. We also have a lot of history with regards to training. So for individuals surgeons that we bring awareness to the.

Michael Sarcone: I guess just one on on some of the strategic plan you laid out.

Michael Sarcone: Talked about your objective being 15% to 20% CAGR for the planning period, I know, we're going to get into more details at the Investor day, but.

Michael Sarcone: These types of techniques, who go through our programs and some of these areas we have more than the 80% probability that those individuals who go on to do cases, and we know how many cases they will do on average so again.

Michael Sarcone: Any color you can provide on what are the assumptions at the low end versus the high end, there and how much of that is related to kind of penetrating.

Michael Sarcone: Tied to mast out.

Michael Sarcone: Penetrating your existing core markets versus newer markets.

You still have to execute.

Michael Sarcone: But there's nothing that's that.

Michael Sarcone: Well, we have obviously history in terms of.

Michael Sarcone: Our hope past, where youre throwing the ball downfield, and saying Gee I hope someone catches it so everything has.

Michael Sarcone: The growth rate to look at and so very simply.

Michael Sarcone: Pretty simple math that we've tied to.

Michael Sarcone: And it will go it will go into the detail.

Michael Sarcone: If there is any errors.

Michael Sarcone: On Mondays and try to answer those questions.

Michael Sarcone: Some sort of error and assumption that we didn't foresee but we think this plan is eminently executable.

Michael Sarcone: More clearly but.

Michael Sarcone: Mentally we're expanding.

Parts of our organization.

Mike Glenn: Got it that's helpful. Thanks, Mike Glenn maybe one for for near maybe just.

Michael Sarcone: So for example, breast we will double that organization.

Mike Glenn: Comment around the key assumptions for the 15% to 17% sales guide for the year and then maybe some color on how youre thinking about sales cadence through the year.

Michael Sarcone: In terms of footprint we have.

Speaker Change: A lot of history in terms of.

Michael Sarcone: The business model, so we know.

Michael Sarcone: We believe we know how extendable that business model is so long as we execute that expansion on schedule.

Mike Glenn: Yes so.

Michael Sarcone: That should result.

Mike Glenn: The key assumptions are.

Michael Sarcone: Clearly in new customer creation. We also have a lot of history with regards to training so for individual surgeons that we bring awareness to these.

Mike Glenn: Basically.

Mike Glenn: Counting on the existing organization and the existing momentum.

Mike Glenn: And then we have some investments some of the investments already start obviously in 225, but there are staggered and in addition to that they will take time and deliver fruits. So for instance for hiring more sales reps, obviously, there's some timing that it takes to train them and so on so forth. So the key assumptions.

Michael Sarcone: These types of techniques, who go through our programs and some of these areas we have more than the 80% probability that those individuals will go on to do cases, and we know how many cases able do on average so again we.

Michael Sarcone: Tied to mast out.

Mike Glenn: Some of.

Michael Sarcone: You still have to execute.

Mike Glenn: Those investments that are.

Michael Sarcone: But there is nothing thats.

Mike Glenn: <unk> carried out in 2025 will bear fruit already this year, leading up to the high end of the guidance, obviously it would be happy to beat it but this is the.

Hope pass, where youre throwing the ball downfield, and saying Gee I hope someone catches it so everything has.

Michael Sarcone: Pretty simple math that we've tied to.

Mike Glenn: The range that we feel confident with as of now.

Michael Sarcone: If there is any errors.

Michael Sarcone: Some sort of error and assumption that we didn't foresee but we think this plan is eminently executable.

Mike Glenn: And then you asked also about the margin.

Speaker Change: No just about how youre thinking about seasonality on the top line through the year.

Chris Pasquale: Got it that's helpful. Thanks, Mike and then maybe one for near maybe just comp.

Speaker Change: Right. So again we.

Speaker Change: Comment around the key assumptions for the 15% to 17% sales guide for the year and then maybe some color on how youre thinking about sales cadence through the year.

Speaker Change: You know we have.

Speaker Change: <unk>.

Speaker Change: We launched some products last year and.

Speaker Change: We have had.

An uneven year over year growth last year. So obviously, it's not going to be all smooth. This year. There are all sorts of events for instance, Easter and others, which fell this year in different times of versus last year.

Chris Pasquale: Yes so.

Speaker Change: The key assumptions are.

Speaker Change: Sickly.

Speaker Change: <unk> on the existing organization and the existing momentum.

Speaker Change: And then we have some investments some of the investments already start obviously in 225 that said they are staggered and in addition to that they will take time until they bear fruit. So for instance for hiring more sales reps. Obviously, there is some time that it takes to train them and so on and so forth. So.

Speaker Change: Overall, we do expect to have some sort of upward trend in terms of growth for this year that is led by the <unk>.

Speaker Change: The investments that will take time to bear fruit more towards the latter half of this year.

Speaker Change: The key assumptions that some of those investments that are.

Speaker Change: Great. Thank you.

Speaker Change: Being carried out in 2025 will bear fruit already this year, leading up to the high end of the guidance, obviously, we would be happy to repeat it but this is.

Speaker Change: Our next question comes from Caitlin Carmen with Canaccord Genuity. Please proceed with your question.

Speaker Change: The range that we feel confident with.

Caitlin Carmen: Hi, Congrats on a great finish to the year.

Speaker Change: As of now.

Speaker Change: Just starting with.

Speaker Change: And then you asked also about the margin.

Speaker Change: Long term margins I appreciate the longer term gross revenue guidance any longer term gross margin guidance given your plan to drive operating efficiencies.

Michael just about how youre thinking about seasonality on the top line through the year.

Speaker Change: Right.

Speaker Change: So really more general I think 2025 is all about getting through the BLA process. So it doesn't mean that we're not focused on continuous improvements, but that the BLA.

Speaker Change: So again, we as you know we have a.

Speaker Change: We launched some products last year and we.

Speaker Change: We have had.

Speaker Change: Approval inspection.

Speaker Change: Uneven year over year growth last year. So obviously, it's not going to be all smooth. This year. There are all sorts of events for instance, Easter and others, which fall this year in different times of versus last year. Overall, yes, we do expect to have some sort of upward trend in terms of.

Speaker Change: All of these are predicated on an existing quality system and expectation as part of the license approval and so dramatic changes or improvements in that while we're working through that process with FDA.

Speaker Change: That mean that some level theres a governor if you will in terms of how quickly we could.

Speaker Change: Layer in process improvements.

Speaker Change: <unk> growth for this year.

Speaker Change: That is led by the investments that will take time to bear fruit more towards the latter half.

Speaker Change: So long winded way of saying that.

Speaker Change: The margin guidance that near shared with you is what we should all rely on this year longer term, we expect to incrementally continue to improve.

Speaker Change: Of this year.

Speaker Change: Great. Thanks, Neil.

Speaker Change: Our next question comes from Caitlin Cronin with Canaccord Genuity. Please proceed with your question.

Speaker Change: As any up operations.

Speaker Change: The situation would in terms of.

Speaker Change: Shortening cycle times.

Caitlin Cronin: Hi, Congrats on a great finish to the year.

Speaker Change: Further improving waste.

Yields.

Speaker Change: Just starting with them long.

Speaker Change: All of the normal measure.

Speaker Change: Long term margins I appreciate the longer term gross revenue guidance any longer term gross margin guidance given your plan to drive operating efficiencies.

Speaker Change: The measures that you.

Speaker Change: You tried to take advantage of but in 2025, I think that the range that we've shared with you is what's prudent to plan around.

Speaker Change: Well it really more general I think 2025 is all about getting through the BLA process. So it doesn't mean that we're not focused on continuous improvements, but that the BLA approval.

Speaker Change: That's great. Thanks, and then just any concerns or changes to your expectations with the new administration regards to the BLA application.

Speaker Change: So far no.

Speaker Change: The pace of the information requests that we're receiving from the FDA.

Speaker Change: Approval inspection.

Speaker Change: Events all of these are predicated on an existing quality system and expectations part of the license approval and so dramatic changes or improvements in that while we're working through that process with FDA.

Speaker Change: Continue without a break so that's a good sign everyone's working very hard on both sides.

Speaker Change: The FDA.

In terms of their review and then request for information and then our side in terms of responding so.

Speaker Change: That mean that some level theres a governor if you will in terms of how quickly we could.

Speaker Change: Theres literally activity weekly.

Layer in process improvements, so long winded way of saying that.

Speaker Change: So far I can't point to anything.

Speaker Change: The suggested delay.

Speaker Change: The margin guidance that near shared with you is what we should all rely on this year longer term, we expect to incrementally continue to improve.

Speaker Change: Thank you so much.

Speaker Change: Sure. Thank you Caitlin.

Speaker Change: Our next question comes from Mike <unk> with Leerink Partners. Please proceed with your question.

Speaker Change: As any up operations.

Speaker Change: The situation would in terms of.

Mike Glenn: Hi, everyone. Thanks for taking my questions. Maybe first can you help us understand to what extent youre going to increase sales and marketing and as part of your growth strategy. This year I think you mentioned doubling the size of your footprint and breadth. So how large of a sales force expansion are you expecting to implement as part of this and how should we see that play out in 2025.

Speaker Change: Shortening cycle times.

Speaker Change: They're improving waste.

Speaker Change: Yields.

Speaker Change: All of the normal.

Speaker Change: The measures that you tried to take advantage of but in 2025 I think the range that we've shared with you is what's prudent to plan around.

Speaker Change: That's great. Thanks, and then just any concerns or changes to your expectations with the new administration regards to the BLA application.

Speaker Change: Sure. So breast for example is 12 people at the moment.

Speaker Change: And so we'll double that to 24.

Speaker Change: And.

Speaker Change: So far no.

Speaker Change: In addition across various parts of the organization, whether or not direct salespeople. There's about another 10 I think is that right.

Speaker Change: The pace of the information requests that we're receiving from the FDA.

Speaker Change: Continue without a break so that's a good sign everyone's working very hard on both sides.

Speaker Change: Yes.

Speaker Change: And these are market development in professional education staff, they're required to also do the training. So you had the customer facing head count.

Speaker Change: The FDA.

Speaker Change: In terms of their review and then request for information and then our side in terms of responding so.

Speaker Change: Which will increase.

Speaker Change: In breast and then across both extremities as well as in.

Speaker Change: Theres literally activity weekly.

Speaker Change: Breast.

Speaker Change: So far I can't point to anything.

Speaker Change: We'll have.

Speaker Change: A fairly significant number of teachers and trainers.

Speaker Change: As suggested delay.

Speaker Change: And these are required to put people through those programs that we mentioned so they have a they have a significant impact on customer creation and then finally on the prostate side.

Speaker Change: Thank you so much.

Speaker Change: Sure. Thank you Caitlin.

Speaker Change: Our next question comes from Mike <unk> with Leerink Partners. Please proceed with your question.

Speaker Change: Not expected to be a lot of revenue. This year is essentially what we're doing is we are developing.

Mike: Hi, everyone. Thanks for taking my questions. Maybe first can you help us understand to what extent youre going to increase sales and marketing and as part of your growth strategy. This year I think you mentioned doubling the size of your footprint and breadth. So how large of a sales force expansion are you expecting to implement as part of this and how should we see that play out in 2025.

Speaker Change: With this small organization, which will involve.

Speaker Change: Physicians physician professional education and market development managers to develop the business model that we intend to use to scale with our sales organization.

Speaker Change: As we as we complete that development towards the end of the year.

Speaker Change: Sure. So breast for example is 12 people at the moment.

Speaker Change: In addition, we need to develop surgical techniques that were willing to.

Mike: And so we'll double that to 24.

And.

Speaker Change: Our guide and teach too.

Mike: In addition across various parts of the organization, whether or not direct salespeople. There's about another 10 I think is that right.

Speaker Change: And that's a process that's underway today.

Speaker Change: Where we're doing different different valuations that we ultimately need to settle on a protocol just like we did for breast re sensation, we need to do the same thing for prostate.

Mike: Yes.

Mike: And these are market development in professional education staff, they're required to also do the training. So you had the customer facing head count.

Early clinical data that makes us excited thats part of why we.

Mike: Which will increase.

Speaker Change: We've chosen this particular marketplace, but we still need to be able to teach it at scale. So hopefully that answers the question.

Mike: In breast and then across both extremities as well as in.

Mike: Breast.

Mike: We'll have.

Speaker Change: Great. Yeah. That's very helpful. Thanks, and then just separately can you talk about some of the commonality as you've seen the cost the high potential accounts and how you've been able to identify some of those in advance.

Mike: Fairly significant number of teachers and trainers.

These are required to put people through those programs that we mentioned so they have a they have a significant impact on customer creation and then finally on the prostate side.

Speaker Change: And once you go ahead and speak to that yes, we look at.

Not expected to be a lot of revenue. This year is essentially what we're doing is we are developing with.

As Mike mentioned on the call and we look for commonalities in terms of level one trauma centers.

Mike: This small organization, which will involve.

Speaker Change: A large.

Mike: Physicians physician professional education and market development managers to develop the business model that we intend to use to scale with our sales organization.

Speaker Change: <unk> body of Microsurgery trained surgeons in the facility we look at.

Speaker Change: Nerve repair cases et cetera. So we have a whole algorithm that we use to identify high potential accounts.

Mike: As we as we complete that development towards the end of the year.

Speaker Change: And Thats.

Speaker Change: That's really what we use for our targeting so of all of these accounts.

Mike: In addition, we need to develop surgical techniques that were willing to.

Mike: Our guide and teach too.

Speaker Change: About 600 of high potential accounts, we're focusing on right now.

Mike: And that's a process that's underway today.

Speaker Change: And they all share common characteristics, which we.

Mike: We're doing different different valuations, but we ultimate need to settle on a protocol just like we did for breast we sensation, we need to do the same thing for prostate.

Speaker Change: I believe.

Speaker Change: <unk> very high potential for expanding our nerve repair algorithm.

Mike: Early clinical data that makes us excited thats part of the way.

Speaker Change: Understood Thanks very much.

Mike: Chosen this particular marketplace, but we still need to be able to teach it at scale. So hopefully that answers the question.

Speaker Change: Our next question comes from Jason Bedford with Raymond James. Please proceed with your question.

Speaker Change: Great. Yeah. That's very helpful. Thanks, and then just separately can you talk about some of the commonality as you've seen across the high potential accounts and how you've been able to identify some of those in advance.

Jason Bedford: Good morning.

Jason Bedford: Maybe just a few here on nerve repair for prostatectomy, you have some data but.

Speaker Change: Do you need additional data like bigger studies here before you go into kind of a full launch and is there a different regulatory dynamic to think about or does it fit within the BLA.

Mike: And once you go ahead and speak to that.

Mike: Look at.

Mike: As Mike mentioned on the call we look for commonalities in terms of level one trauma centers.

Speaker Change: The latter question it fits within the BLA, but in each case.

Mike: A large.

Mike: Our body of Microsurgery trained surgeons in the facility we look at a.

Speaker Change: There is virtually no part of our business, where we will not have to continue to engage in development.

Mike: Nerve repair cases et cetera. So we have a whole algorithm that we use to identify high potential accounts.

Speaker Change: Additional data so prostate in particular breast we will continue to develop data we already have studies in a way we're going to do more.

And that's.

That's really what we use for our targeting so of all of these accounts.

Speaker Change: And the same thing with regards to certain areas of extremities.

Speaker Change: So.

Mike: There's about 600 high potential accounts, we're focusing on right now.

Speaker Change: I just wanted to be very clear about that so when we as part of our strategic plan primary assumption is that significant high quality data. In addition to quantity of data.

Mike: And they all share common characteristics, which we.

Mike: I believe.

Mike: Very high potential for expanding our nerve repair algorithm.

Speaker Change: Is going to be required to fully develop the opportunities we are targeting.

Mike: Understood Thanks very much.

Speaker Change: Okay.

Speaker Change: That's helpful. Maybe for Amir you did 76% gross margin in 'twenty four 'twenty five guide captures this kind of at the high end, if we back out the BLA expense, but I guess the question is what needs to happen for gross margin to trend higher.

Mike: Our next question comes from Jason Bedford with Raymond James. Please proceed with your question.

Jason Bedford: Good morning.

Jason Bedford: Maybe just a few here on nerve repair for prostatectomy, you have some data but.

Speaker Change: Right so.

Speaker Change: Do you need additional data like bigger studies here before you go into kind of a full launch and is there a different regulatory dynamic to think about or does it fit within the BLA.

Speaker Change: As we mentioned.

Speaker Change: Last year gross margin is impacted by the growing proportion of advanced product sold that were manufacturer the new processing facility at a higher cost.

Speaker Change: The latter question that fits within the BLA, but in each case.

Speaker Change: So as time goes by the disproportionate growth and Thats, one of the drivers for which.

Speaker Change: Theres virtually no part of our business, where we will not have to continue to engage in development.

Speaker Change: Gross margin went down ounces.

Speaker Change: Additional data so prostate in particular breast we will continue to develop data we already have studies in a way we're going to do more.

Speaker Change: It relates to call on the other hand, and as Mike mentioned before yes, we have been working actively already as of 2024 and that will continue, especially after the BLA approval on efficiency improvements.

Speaker Change: And the same thing with regards to certain areas of extremities.

Speaker Change: And regardless, we expect to capitalize more on higher capacity utilization those are the things that need to take place for the margin too.

Speaker Change: So.

Speaker Change: I just want to be very clear about that so when we as part of our strategic plan primary assumption is that significant high quality data. In addition to quantity of data.

Speaker Change: <unk> continued to improve.

Speaker Change: Okay. That's helpful. And then maybe just a quick one for Mike.

Speaker Change: It's going to be required to fully develop the opportunities we are targeting.

Speaker Change: On the last call you talked about implementing these different different business models for different applications and the focus on high potential accounts was that evident in the fourth quarter results are these models and actions being implemented now.

Speaker Change: Okay.

That's helpful. Maybe for Amir you did 76% gross margin in 'twenty four 'twenty five guide captures this kind of at the high end, if we back up the BLA expense, but I guess the question is what needs to happen for gross margin to trend higher.

Speaker Change: Well, yes, but they are still being implemented so maybe two.

Speaker Change: Right so.

Speaker Change: More discretely describe that so for example in the small small breasts team.

Speaker Change: As we mentioned.

Speaker Change: Last year gross margin is impacted by the growing proportion of advanced product sold that were manufactured the new processing facility at a higher cost.

If you use the bell curve.

Speaker Change: From an from an overview, it's extremely tight which we know exactly.

Speaker Change: What an individual will be able to produce how many customers. They can manage how many they can create.

Speaker Change: So as time goes by the disproportionate growth and that's one of the drivers for which.

Speaker Change: Gross margin went down absent of those deal related costs on the other hand, and as Mike mentioned before yes, we have been working actually already as of 2024 and that will continue, especially after the BLA approval on efficiency improvements.

Speaker Change: And it's a very.

Speaker Change: <unk>.

Speaker Change: Common distributions.

Speaker Change: So that business model, we can characterize and we can do the math on say, okay, well, let's do that times two.

Speaker Change: Regardless, we expect to capitalize more on higher capacity utilization those are the things that need to take place for the margin too.

Speaker Change: With regards to extremity, depending upon which part of extremities, it's much more varied.

Speaker Change: And because of some of the different changes in approach historically.

Speaker Change: Continue to improve.

Speaker Change: That business model is less clear.

Speaker Change: Okay. That's helpful. And then maybe just quick one for Mike.

Speaker Change: And so.

Speaker Change: The high potential of focus which is pretty basic when you think about it in terms of the strategy that we're trying to employ just to go deep in places that you have a chance for the plants to grow.

Speaker Change: On the last call you talked about implementing these these different different business models for different applications and the focus on high potential accounts was that evident in the fourth quarter results are these models and actions being implemented now.

Speaker Change: And to that end we've.

Speaker Change: We have about three quarters under our belt, where I could say, we have consistency and a stable organization realistically I think we need another quarter or more.

Speaker Change: Well, yes, but they are still being implemented so maybe two.

Speaker Change: More discretely describe it so for example in the small small breast team.

Speaker Change: On the extremity side to get comfortable enough that we think that this particular strategy.

Speaker Change: If you use the bell curve.

Speaker Change: Is sufficient.

Speaker Change: From an overview, it's extremely tight and which we know exactly.

Speaker Change: Certainly showing showing progress I wouldn't look anyone in the eye, including ourselves when we talk internally to say that that we have our arms fully around it on the extremity side.

Speaker Change: What an individual will be able to produce how many customers. They can manage how many they can create.

Speaker Change: Again, the part of the challenges with extremities as we've touched upon is that theres more than 5000 service providers potentially.

Speaker Change: And.

Speaker Change: It's a very.

Speaker Change:

Speaker Change: Common distributions.

Speaker Change: So that business model, we can characterize and we can do the math on say, okay, well, let's do that times two.

Speaker Change: And so there's lots of activity.

Speaker Change: With a relatively small organization like ours of 100 people.

Speaker Change: You got to be careful not to be everywhere. Because then essentially youre not building enduring recurring revenue based upon standard of care status and so this strategy is at the end of the day pretty simple and so far as we are trying to develop.

Speaker Change: With regards to extremities, depending upon which part of extremities, it's much more berry.

And because of some of the different changes in approach historically.

Speaker Change: That business model is less clear.

Speaker Change: And so.

Speaker Change: The high potential of focus which is pretty basic when you think about it in terms of the strategy that we're trying to employ just to go deep in places that you have a chance for the plants to grow.

Speaker Change: More concentrated.

Speaker Change: Care approaches to Europe care.

Speaker Change: By focusing on a small number of accounts with the people that we have.

Speaker Change: We're seeing good results.

Speaker Change: And to that end we've.

Speaker Change: But we're not ready to suggest that.

Speaker Change: We have about three quarters under our belt, where I could say, we have consistency and a stable organization realistically I think we need another quarter or more.

Speaker Change: This is the last thing we need to do on the extremity side based upon our footprint.

Speaker Change: Very helpful. Thank you.

Speaker Change: On the extremity side to get comfortable enough that we think that this particular strategy.

Speaker Change: Sure.

Speaker Change: Our next question comes from Ross Osborne with Cantor Fitzgerald. Please proceed with your question.

Speaker Change: Is sufficient.

Speaker Change: Certainly showing showing progress I wouldn't look anyone in the eye, including ourselves when we talk internally to say that that we have are our arms fully around it.

Ross Osborne: Hey, guys congrats on the progress and thanks for taking our questions starting off with the guide for 'twenty five and apologies if I missed this but can you parse out volume growth versus price baked into your 2025 revenue guidance.

Speaker Change: The extremity side.

Speaker Change: Again that part of the challenges with extremities as we've touched upon is that theres more than 5000 service providers potentially.

Speaker Change: Yes.

Speaker Change: And so there's lots of activity.

Speaker Change: Pretty much in line with past years so.

Speaker Change: With a relatively small organization like ours of a 100 people.

Speaker Change: Price growth is around the CPI.

Speaker Change: Be careful not to be everywhere, because then essentially youre not building enduring recurring revenue based upon standard of care status and so this strategy is at the end of the day pretty simple and so far as we are trying to develop.

Speaker Change: <unk>.

Speaker Change: The rest is volume and mix.

Speaker Change: Okay, Great and then looking at your press from E. Com business, what is your comfort level with access and data and what areas economic clinical et cetera, do you need to generate more data to support incremental adoption.

Speaker Change: More concentrated.

Speaker Change: Care approaches to in Europe care.

Speaker Change: Sure.

Speaker Change: By focusing on a small number of accounts with the people that we have.

Speaker Change: At the Investor Day, we will make sure that we highlight that breast.

Speaker Change: We're seeing good results.

Speaker Change: But we're very comfortable comfortable or not comfortable for onward, we're very confident.

Speaker Change: But we're not ready to suggest that.

Speaker Change: This is the last thing we need to do on the extremity side based upon our footprint.

Speaker Change: That.

Speaker Change: From a benefit risk proposition, our breast <unk> technique.

Speaker Change: Very helpful. Thank you.

Speaker Change: Is 100% justified.

Speaker Change: Sure.

So the zero safety risk very high probability of benefit.

Speaker Change: Our next question comes from Ross Osborne with Cantor Fitzgerald. Please proceed with your question.

Speaker Change: To the patient.

<unk>.

Speaker Change: Sadly I can't recite off the top of my head all of that data, but we just literally this last couple of weeks have prepared the updated.

Ross Osborne: Hey, guys congrats on the progress and thanks for taking our questions starting off with the guide for 2005 and apologies if I missed this but can you parse out volume growth versus price baked into your 2025 revenue guidance.

Speaker Change: Executive summaries of exactly how breast looks so we're very comfortable that the data is.

Speaker Change: <unk>.

Speaker Change: What it needs to be what we need to do however in terms of breath, because we just need to do more data when you establish a new therapy.

Speaker Change: Yes.

Speaker Change: Pretty much in line with past years so.

Speaker Change: Price growth is around the CPI.

Speaker Change: To pursue standard of care there is a certain.

Speaker Change: <unk>.

Speaker Change: Data quality type.

Speaker Change: The rest is volume and mix.

Speaker Change: It's required and we need to do more studies than we presently have we have one underway that's almost complete and we have one more that we believe we need to do over the next three to five years.

Speaker Change: Okay, Great and then looking at your breast recon business, what is your comfort level with existing data and what areas economic clinical et cetera, do you need to generate more data to support incremental adoption.

Speaker Change: Great. Thanks for taking the questions.

Speaker Change: Sure.

Speaker Change: At the Investor Day, we will make sure that we highlight that breast.

Speaker Change: Our next question comes from Dave carefully with citizens. Please proceed with your question.

Speaker Change: But we're very comfortably comfortable or not comfortable wrong word we're very confident.

Hey, good morning, guys.

Speaker Change: Thank you Ed.

Speaker Change: You mentioned that your APC has three times the previous capacity that you had.

From a benefit risk proposition our breast recent say she technique.

Speaker Change: Curious I don't think there's any issue with you, but as you look at your plans ahead.

Speaker Change: Is 100% justified.

Speaker Change: So the zero safety risk very high probability of benefit.

Speaker Change: How comfortable are you that you have.

Speaker Change: I have to kind of where youre going that maybe any comment on even on longer term.

Speaker Change: To the patient.

Speaker Change: <unk>.

Speaker Change: Sadly I can't recite off the top of my head all of that data, but we just literally this last couple of weeks have prepared the updated.

Speaker Change: Over the planning period.

Speaker Change: We're comfortable that we have capacity.

Speaker Change: Now beyond that.

Speaker Change: Executive summaries of exactly how breast looks so we're very comfortable that the data is.

Speaker Change: I can't speak too definitively.

Speaker Change: <unk>.

Speaker Change: But we would be able to but we would be able to plan for that.

Speaker Change: What it needs to be what we need to do however in terms of breath, because we just need to do more data when you establish a new therapy in trying to pursue standard of care there is a certain.

Speaker Change: That would be obviously.

Speaker Change: An exciting requirement in the near term, but we don't presently believe during the planning period that we have any kind of capacity.

Constraints.

Speaker Change: Data quality type.

Speaker Change: Got it and then maybe a follow up for Nir.

Speaker Change: It's required and we need to do more studies than we presently have we have one.

Speaker Change: I know you were profitable in the quarter, so the share count.

Speaker Change: Went up a bit but I was just curious.

Speaker Change: Underway, that's almost complete and we have one more that we believe we need to do over the next three to five years.

Speaker Change: Is that a good level that we should use for 25, and then any thoughts on sort of.

Speaker Change: Timing of any incremental sort of.

Speaker Change: Great. Thanks, Shannon for questions.

Dave: Bump ups that we might need to consider Dave could you could you repeat that question did you say did you asked about the share count.

Speaker Change: Our next question comes from Dave carefully with citizens. Please proceed with your question.

Speaker Change: Ed.

Speaker Change: And I know you were profitable, yes, I know you are profitable. So I think it bumped up a bit and I was just wondering if thats. The number we should use sort of carrying forward through 'twenty five and if there's anything else we should consider in terms of.

Speaker Change: Hey, good morning, guys.

Speaker Change: I think you had mentioned.

Speaker Change: You mentioned that your APC has three times the previous capacity that you had I was just curious I don't think there's any issue with you, but as you look at your plans ahead, how comfortable are you that you have.

Speaker Change: Any other bump ups as we go through the year.

Speaker Change: Share count I think that share count is the one that was reported as what you can use for now yes.

Speaker Change: To kind of where you're going that maybe any comment on even though longer term.

Over the planning period.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: We're comfortable that we have capacity.

Speaker Change: As we mentioned we expect to self.

So fund ourselves.

Speaker Change: Now beyond that.

Speaker Change: So we don't expect to do a raise.

Speaker Change: I can't speak too definitively.

Speaker Change: <unk>.

Speaker Change: Near future does that answer the question.

Speaker Change: Yes.

Speaker Change: But we would be able to we would be able to plan for that.

Yeah, that's fine thank you.

Speaker Change: That would be obviously.

Thanks, Dave.

Speaker Change: An exciting requirement in the near term, but we don't presently believe during the planning period that we have any kind of capacity.

Operator: There are no further questions at this time I would now like to turn the floor back over to Mike Doyle for closing comments.

Speaker Change: Straights.

Speaker Change: Got it and then maybe a follow up for Nir.

Operator: Thank you operator on behalf of the accident team I want to thank everyone for their time and interest in our work to fulfill the promise and potential for all stakeholders in our business purpose to restore health and improved quality of life by making restoration of peripheral nerve function and expected standard of care. We look forward to updating you on our continued progress.

Speaker Change: I know you were profitable in the quarter, so the share count.

Speaker Change: Went up a bit but I was just curious.

Speaker Change: Is that a good level that we should use for 25, and then any thoughts on sort of.

Speaker Change: Timing of any incremental sort of a bump ups that we might need to consider.

Speaker Change: Dave could you repeat that question did you say did you asked about the share count.

Operator: Yes, and our plans for the future at our March Investor Day, and our earnings call next quarter. Thank you.

Speaker Change: Good.

Speaker Change: And I know you were profitable yeah. I know you are profitable. So I think it bumped up a bit and I was just wondering if that's a number we should use sort of carrying forward through 'twenty five and if there's anything else we should consider in terms of.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Any other bump ups.

Speaker Change: Through the year share count I think that share count is the one that was reported as what you can use for now yeah.

Speaker Change: Yeah.

Speaker Change: Yeah, No I mean.

Speaker Change: As we mentioned, we expect to fund ourselves.

Speaker Change: So we don't expect to do a raise in the.

Speaker Change: Near future does that answer the question.

Speaker Change: Yeah.

Speaker Change: Yeah, that's fine thank you.

Thanks, Dave.

Speaker Change: Okay.

Speaker Change: There are no further questions at this time I would now like to turn the floor back over to Mike Doyle for closing comments.

Mike Doyle: Thank you operator on behalf of the accident team I want to thank everyone for their time and interest in our work to fulfill the promise and potential for all stakeholders in our business purpose to restore health and improved quality of life by making restoration of peripheral nerve function and expected standard of care. We look forward to updating you on our continued.

Mike Doyle: Progress in our plans for the future at our March Investor Day, and our earnings call next quarter. Thank you.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: [music].

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Speaker Change: Sure.

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Speaker Change: Okay.

Speaker Change: Yes.

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