Q1 2025 Treace Medical Concepts Inc Earnings Call
Okay.
Operator: Good day, and thank you for standing by.
Speaker Change: Good day, and thank you for standing by and welcome to the medical concepts first quarter 2025 earnings Conference call. At this time, all participants are in a listen only mode.
Operator: Welcome to the Treace Medical Concepts First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand has been raised. To withdraw your question, please just press star 1-1 again. please be advised that today's conference call is being recorded.
Speaker Change: This presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message rising that you hadn't happened rates.
Speaker Change: Your question. Please press star one again.
Speaker Change: Please be advised that today's conference call is being recorded I would now like to hand, the conference over to your first speaker today propeller Investor Relations. Please go ahead.
Operator: I would now like to hand the conference over to your first speaker today, Tripp Taylor, Investor Relations. Please go ahead. Thank you.
John Treace: Good afternoon, everyone, and thank you for joining us on our first quarter 2025 earnings conference call. We started 2025 with solid financial results and made significant progress on our strategy to comprehensively address the evolving needs of surgeons and patients with an expanding portfolio of best-in-class bunion solutions. Revenue in the first quarter was $52.6 million, representing 3% growth over the first quarter of 2024.
Speaker Change: Thank you good afternoon, everyone and thank you for joining us on our first quarter 2025 earnings conference call.
Speaker Change: We started 2025 with solid financial results and made significant progress on our strategy to comprehensively address the evolving needs of surgeons and patients with an expanding portfolio of best in class bonding solutions.
Speaker Change: Revenue in the first quarter was $52 6 million, representing 3% growth over the first quarter of 2024.
John Treace: Thank you, Operator. Good afternoon, everyone, and welcome to our first quarter 2025 earnings conference call.
Speaker Change: Thank you operator, good afternoon, everyone and welcome to our first quarter 2025 earnings Conference call.
John Treace: Participating from the company today will be John Treace, Chief Executive Officer, and Mark Hair, Chief Financial Officer. During the call, John will offer commentary on our commercial activities, followed by Mark, for a review of our first quarter financial results released after market close today.
John Walker: Dissipating from the company today will be John <unk>, Chief Executive Officer, and Mark hair, Chief Financial Officer during the call John Walker commentary on our commercial activities followed by Mark for a review of our first quarter financial results released after market close today.
John Treace: We will then host a question and answer session following our prepared remarks.
John Walker: We will then host a question and answer session. Following our prepared remarks, our press release can be found in the Investor Relations section of our website at investors <unk> Com. This call is being recorded and will be archived in the investors section of our website.
Operator: Our press release can be found in the investor relations section of our website at investors.treace.com. This call is being recorded and will be archived in the investor section of our website.
John Treace: Before we begin, we would like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends, as well as our estimated results or performance, are forward-looking statements. All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon currently available information, and Treace Medical assumes no obligation to update these statements.
John Walker: Before we begin we would like to remind you that is our intent that all forward looking statements made during today's call will be protected under the private Securities Litigation Reform Act of 1995.
John Walker: Any statements that relate to expectations or predictions of future events and market trends as well as our estimated results or performance are forward looking statements. All forward looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause.
John Walker: Cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
John Walker: All forward looking statements are based upon currently available information and treat medical assumes no obligation to update. These statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings, including our Form 10-Q for the first quarter of 2025 filed after market closed today.
John Treace: Accordingly, you should not place undue reliance on these statements.
John Treace: Please refer to our SEC filings, including our Form 10-Q for the first quarter of 2025, filed after market closed today, May 8, and can be found in the With that, I will now turn the call over to John. Good afternoon, everyone, and thank you. Good afternoon, everyone, and thank you for joining us on our first quarter 2025 earnings conference call. We started 2025 with solid financial results and made significant progress on our strategy to comprehensively address the evolving needs of surgeons and patients with an expanding portfolio of best-in-class bunion solutions. Revenue in the first quarter was $52.6 million, representing 3% growth over the first quarter of 2024, and adjusted for one less selling day, growth was 4.5%.
John Walker: At my end.
John Walker: And can be found in the Investor Relations section of our website at investors dot treat dot com for.
John Walker: For a detailed presentation of risks with that I will now turn the call over to John.
John Walker: Good afternoon, everyone and thank you.
John Walker: Good afternoon, everyone and thank you for joining us on our first quarter 2025 earnings conference call.
John Walker: We started 2025 with solid financial results and made significant progress on our strategy to comprehensively address the evolving needs of surgeons and patients with an expanding portfolio of best in class banking solutions.
John Walker: Revenue in the first quarter was $52 6 million, representing 3% growth over the first quarter of 2024 and adjusted for one less selling day growth was four 5%.
John Treace: As expected, this is a difficult comp, and we're pleased with the overall performance, including early positive validation of our three new Bunion systems. We expect 2025 to be a transformational year for Treace, and we're incredibly excited about what we will be delivering in the back half of this year and beyond. From the early days of the company, it's been our strategy to evolve our business from a single technology lapoplasty company to a comprehensive bunion solutions company. Since our first cases in 2015, we're proud to have established a strong customer base of over 3,100 surgeon users, treated over 130,000 patients, propelled our company to over $200 million in revenue, and established Treace Medical as the dollar share leader in the U.S.
John Walker: As expected this was a difficult comp and we're pleased with the overall performance, including early positive validation of our three new bonding systems.
John Walker: We expect 2025 to be a transformational year for trees, and we're incredibly excited about what we will be delivering in the back half of this year and beyond.
John Walker: From the early days of the company, it's been our strategy to evolve our business from a single technology lap of plastic company to a comprehensive banking solutions company.
John Walker: Since our first cases in 2015, we're proud to have established a strong customer base of over 3100 surgeon users treated over 130000 patients propelled our company to over $200 million in revenue and established <unk> medical is the dollar share leader in the U S. Upon your market.
John Treace: bunion market. Today, our flagship lapoplasty and adductoplasty systems have enabled us to capture, on average, 25% of our surging customers' bunion cases. With the upcoming commercialization of three new best-in-class bunion correction systems, namely our Nanoplasty and Percuplasty 3D MIS osteotomy systems, and our SpeedMTP MTP fusion system, we gain more immediate and more targeted access to the remaining 75% of our surgeons' cases. So beginning in Q3, we have the opportunity to target virtually 100% of surgeon and patient preferences for bunion correction with five best-in-class instrumented systems addressing all four classes of bunion deformities. In addition, this expanded portfolio allows us to appeal to incremental new surgeons who favor osteotomy approaches over lapoplasty.
John Walker: To date, our flagship lack of plastic deducted plastic systems have enabled us to capture on average 25% of our surgeon customers bounding cases.
John Walker: With the upcoming commercialization of three new best in class Bunion correction systems, namely, our nano Plasty and Perky Plastique, <unk> Mis osteotomy systems, and our speed MTP MTP fusion system, we gained more immediate and more targeted access to the remaining 75% of our surgeons cases.
John Walker: So beginning in Q3, we have the opportunity to target virtually 100% of surgeon and patient preferences for binding correction with five best in class Instrumented systems addressing all four classes of opinion deformities.
John Walker: In addition, this expanded portfolio allows us to appeal to incremental new surgeons, who favor osteotomy approaches overlap of plastic.
John Treace: The positive feedback from surgeons participating in our limited market releases of these three new systems, as well as strong turnouts we've seen at our initial Bunyan Masters Surgeon Training Labs, where all five of our systems are now featured, have exceeded our expectations. Additionally, we have high confidence in our inventory timing and volumes to support the customer demand for these three new systems, as well as our ability to meet demand going forward. For all of these reasons, we have even greater conviction in the impact these new systems will have on our business starting in the back half of the year.
John Walker: The positive feedback from surgeons participating in our limited market releases of these three new systems as well as strong turnouts, we've seen at our initial bunion Master surgeon training labs, where all five of our systems are now featured have exceeded our expectations.
John Walker: Additionally, we have high confidence in our inventory timing and volumes to support the customer demand for these three new systems as well as our ability to meet demand going forward.
John Walker: For all of these reasons, we have even greater conviction and the impact these new systems will have on our business starting in the back half of the year.
John Treace: These three new systems will be complemented by expanding commercial availability of several other new technologies, including IntelliGuide PSI. The industry's first and only patient-specific pre-op planning and cut guide solution for lapoplasty, bunion, and adductoplasty midfoot correction. We've been getting rave reviews from surgeon users on the accuracy and the time savings they are experiencing in their cases with this advanced technology. Our SpeedPlate MicroQuad implant delivers robust dynamic fixation for small incision fusion approaches and provides the enabling implant technology to support driving our microlapoplasty and mini-adductoplasty procedures. Our Speed Aiken Implant, an ultra low profile fixation solution for Aiken osteotomies, which are performed in high frequency with bunion cases and particularly with MIS osteotomy.
John Walker: These three new systems will be complemented by expanding commercial availability of several other new technologies, including <unk> Si the.
John Walker: The industry's first and only patient specific preop planning and cut guide solution for lack of plastic bunion and Dr classroom Midfoot corrections.
John Walker: We've been getting rave reviews from surgeon users on the accuracy and the time savings they are experiencing in their cases with this advanced technology.
John Walker: Our speed play micro quiet implant delivers robust dynamic fixation for small incision infusion approaches and provides the enabling implant technology to support driving our micro lap of Plasty and many of Dr. Plassey procedures.
John Walker: Our speed Aiken implant on ultra low profile fixation solution for <unk>, which are performed in high frequency with binding cases, and particularly with mras osteotomy.
John Treace: We will also be launching several new sterile instruments in the back half of the year. These are complementary procedure specific tools utilized in our bunion and midfoot cases. And with this expansion of our portfolio, we've been receiving unprecedented interest from experienced foot and ankle sales professionals wanting to join Treace and participate in this next exciting wave of growth for the company. So it's not just the great products we have coming, but the ever-increasing strength of the commercial team we're assembling as we will be pushing this expanded portfolio into the marketplace in the back half of the year.
John Walker: We will also be launching several new sterile instruments in the back half of the year. These are complementary procedure specific tools utilized in our bunion and mid four cases.
John Walker: And with this expansion of our portfolio, we've been receiving unprecedented interest from experienced foot and ankle sales professionals wanting to join trees and participate in this next exciting wave of growth for the company.
John Walker: So it's not just the great products, we have coming but the ever increasing strength of the commercial team. We're assembling as we will be pushing this expanded portfolio into the marketplace in the back half of the year.
John Treace: Finally, we're excited to announce plans to initiate a limited market release late in the year of our next generation lapoplasty platform. Our forthcoming Lapoplasty Lightning System is another example of our commitment to continuously innovate our flagship systems, making them faster, easier, and to deliver an ever greater experience for our surgeons and their patients. Lightning is more than an incremental improvement. We believe it represents a revolutionary advancement for laparoplasty. We look forward to sharing more details with you on this next generation system later in the year. As you can see, our R&D engine is running open throttle and delivering a robust pipeline of new technologies that we believe will further extend our market leadership position.
John Walker: Finally, we're excited to announce plans to initiate a limited market release late in the year of our next generation <unk> platform.
John Walker: Our forthcoming lap of Plassey Lightning system is another example of our commitment to continuously innovate our flagship systems, making them faster easier and to deliver an ever greater experience for our surgeons and their patients.
John Walker: Lightning has more than incremental improvement we believe it represents a revolutionary advancement for lack of plastic.
John Walker: We look forward to sharing more details with you on this next generation system later in the year.
John Walker: As you can see our R&D engine is running open throttle and delivering a robust pipeline of new technologies that we believe will further extend our market leadership position.
John Treace: As we envisioned from the start, this year we will be establishing Treace as the one-stop shop with a suite of differentiated best-in-class bunion systems that will drive our top-line growth this year into 2026 and beyond. Turning to our outlook, we are reiterating our revenue guidance for 2025. We continue to expect revenue to be between $224 and $230 million, representing growth of 7% to 10% over prior year. We anticipate our most substantial growth and contribution to come in the fourth quarter. In addition to seasonal strength driven by the timing of patient deductibles, we will have our new products fully available to more quickly penetrate all bunion classes.
John Walker: As we envisioned from the start this year, we will be establishing <unk> as the one stop shop with a suite of differentiated best in class <unk> systems that will drive our top line growth this year into 2026 and beyond.
John Walker: Turning to our outlook, we are reiterating our revenue guidance for 2025.
John Walker: We continue to expect revenue to be between 224, and $230 million representing growth of 7% to 10% over prior year.
John Walker: We anticipate our most substantial growth and contribution to come in the fourth quarter and.
John Walker: In addition to seasonal strength driven by the timing of patient deductibles, we will have our new products fully available to more quickly penetrate all bond classes.
John Treace: As founder of the company, I want to emphasize the significance of this moment. This is the realization of a 10-year vision at Treace to become a focused, comprehensive bunion solutions company. and another big step ahead in our mission to improve surgical outcomes for Bunyan patients. I couldn't be more proud of the efforts of the entire team here at Treace and the surgeons involved in these projects to bring us this important milestone.
Speaker Change: As founder of the company I want to emphasize the significance of this moment.
Speaker Change: This is the realization of a 10 year vision of trees to become a focused comprehensive bundled solutions company.
Speaker Change: And another big step ahead in our mission to improve surgical outcomes for finding patients.
Speaker Change: I couldnt be more proud of the efforts of the entire team here at <unk> and the surgeons involved in these projects to bring us to this important milestone.
Mark Hair: Let me now turn the call over to Mark to review our financial performance. Thank you, John.
Mark: Let me now turn the call over to Mark to review our financial performance Mark.
Mark Hair: Good afternoon, everyone. Revenue in the first quarter was $52.6 million, an increase of $1.5 million, or 3% over the prior year period. Adjusted for one less selling day in the quarter, growth was 4.5% compared to the prior year. Growth was mainly driven by an increase in bunion procedure kits sold compared to the prior year. Gross margin was 79.7% in the first quarter of 2025, compared to 80.2% in the first quarter of 2024. Total operating expenses were $57.5 million in the first quarter of 2025, compared to $59.9 million in the first quarter of 2024. These reductions reflect continued execution on our management initiative.
Mark: Thank you John Good afternoon, everyone revenue in the first quarter was $52 6 million, an increase of $1 5 million or 3% over the prior year period.
Mark: Adjusted for one less selling day in the quarter growth was four 5% compared to the prior year.
Mark: Growth was mainly driven by an increase in binding procedure kits sold compared to the prior year gross.
Mark: Gross margin was 79, 7% in the first quarter 2025 compared to 82% in the first quarter of 2024.
Mark: Total operating expenses were $57 5 million in the first quarter of 2025 compared to $59 9 million in the first quarter of 2024. These reductions reflect continued execution on our expense management initiatives.
Mark Hair: First quarter net loss was $15.9 million, or $0.25 per share. compared to a net loss of $18.7 million, or $0.30 per share, in the first quarter of 2024. Adjusted EBITDA loss for the first quarter was $3.8 million, compared to $8.3 million in the first quarter of 2024, an improvement of 54%. This marks our third consecutive quarter of adjusted EBITDA improvements and represents significant progress toward our improved profitability goals of 2025. Cash equivalents and marketable securities were $76.1 million as of March 31, 2025, compared to $75.7 million as of December 31, 2024. Total liquidity, including access to an additional $22.5 million of cash through our existing revolver, the balance of cash, cash equivalents, and marketable securities would be approximately $98.6 million as of March 31, 2025.
Mark: First quarter net loss was $15 9 million or <unk> 25 per share.
Mark: Compared to a net loss of $18 7 million or <unk> 30 per share in the first quarter 2024.
Mark: Adjusted EBITDA loss for the first quarter was $3 8 million compared to $8 3 million in the first quarter 2024.
Mark: An improvement of 54%.
Mark: This marks our third consecutive quarter of adjusted EBITDA improvements and and represents significant progress toward our improved profitability goals up 2025.
Mark: Cash cash equivalents and marketable securities were $76 1 million as of March 31, 2025, compared to $75 7 million as of December 31, 2024.
Mark: Total liquidity, including access to an additional $22 5 million of cash to our existing revolver. The balance of cash cash equivalents in marketable securities will be approximately $98 6 million as of March 31, 2025, we believe our balance sheet strength and flexibility is sufficient to continue executing our strategic.
Mark Hair: We believe our balance sheet strength and flexibility is sufficient to continue executing our strategic and growth initiatives for the foreseeable future. We are pleased with our cash management efforts, and note that the modest cash build in the quarter was due to seasonal timing of cash collections following our seasonally busy fourth quarter and timing of other expenditures. We do not expect this trend to continue through the year due to the seasonality of our business.
Mark: And gross the initiatives for the foreseeable future.
Mark: We are pleased with our cash management efforts and note that the modest cash build in the quarter was due to seasonal timing of cash collections. Following our seasonally busy fourth quarter and timing of other expenditures. We do not expect this trend to continue through the year due to the seasonality of our business. However, we are pleased with the first <unk>.
Mark Hair: However, we are pleased with the first quarter results, and we continue to focus on improvement.
Mark: Results and we continue to focus on improvements.
Mark Hair: Before concluding, let me turn to our outlook for full year 2025. As John mentioned, we are reaffirming our full year 2025 revenue guidance of $224 million to $230 million, which reflects an expected increase of 7% to 10% over 2024 revenue. Due to timing variability in scheduling procedures, we anticipate year-over-year growth in Q2 to be consistent with the growth rate in Q2 2024, and for revenue growth rates to step up sequentially in each of the following quarters of the year. We continue to expect breakeven adjusted EBITDA for full year 2025 and expect our cash burn to decrease by approximately 50% for full year 2025 versus 2024.
Mark: Before concluding let me turn to our outlook for full year 2025, as John mentioned, we are reaffirming our full year 2025 revenue guidance of 224 million to $230 million, which reflects an expected increase of 7% to 10% over 2024 revenue.
Mark: Due to timing variability and scheduling procedures, we anticipate year over year growth in Q2 to be consistent with the growth rate in Q2, 2024 and for revenue growth rates to step up sequentially in each of the following quarters of the year.
Mark: We continue to expect breakeven adjusted EBITDA for full year, 2025, and expect our cash burn to decrease by approximately 50% for full year 2025 versus 2024.
Mark Hair: Before we open the lines for Q&A, I'd like to touch on our limited tariff exposure. While the majority of our inventory is manufactured in the U.S., we have a reducing portion that is manufactured in Europe and subject to tariffs. We estimate the tariffs will result in an immaterial impact on cost of goods sold in 2025. With additional manufacturing moving to the U.S. this year, we expect our tariff exposure will remain at immaterial levels in 2026 as well.
Before we open the lines for Q&A I'd like to touch on our limited tariff exposure.
Mark: While the majority of our inventory is manufactured in the U S. We have a reducing portion that is manufactured in Europe and subject to tariffs. We estimate that tariffs will result in an immaterial impact on cost of goods sold in 2025 with additional manufacturing moving to the U S. This year, we expect our tariff exposure will.
Mark: We remain immaterial levels in 2026, as well with that let me now turn the call over to the operator to open the line for your questions.
Operator: With that, let me now turn the call over to the operator to open the line for your questions. Thank you. At this time we will conduct the question and answer session.
Mark: Thank you at this time, we will conduct a question and answer session.
Operator: As a reminder, to ask a question you will need to press star 1 1 on your telephone and then just wait for your name to be announced. To withdraw your question please just press star 1 1 again. Please stand by while we compile the Q&A roster.
Mark: As a reminder to ask a question you will need to press star one on your telephone and then just wait for your name to be announced.
Mark: To withdraw your question. Please press star one again.
Mark: Please standby, while we compile the Q&A roster.
Ryan Zimmerman: Our first question today comes from the line of Ryan Zimmerman of BTIG. The line is now open. Hi, everyone.
Mark: Okay.
Speaker Change: Our first question today comes from the line of Ryan Zimmerman of <unk>.
Speaker Change: Your line is now open.
Iseult McMahon: This is Iseult on for Ryan. Thanks for taking the question. So Mark and John, it's been about a year since you first called out the increased competition in the bunion market. And I was curious to understand how you are feeling about your positioning in the overall market today since you've launched the new osteotomy product, whether or not you feel like you're better equipped to navigate competition going forward.
Eddie: Hi, everyone. This is Eddie on for Brian. Thanks for taking the question, so Mark and John It's been about a year since you first called out.
Speaker Change: Competition in the Bunyan market.
Speaker Change: Curious to understand how you are feeling about your positioning in the rural market today since you've launched the new osteotomy products, whether or not you feel like you're better equipped to navigate competition going forward.
John Treace: Hi, Izzy, John here. Thanks. Thanks for your question. You know, not not a lot has changed on the competitive front. As we see it, you know, since last quarter, we previously noted, there are several companies big and small that are participating in the market with, you know, lapoplasty knockoffs. That said, those still tend to be these multi line companies that don't have the sole focus and expertise on servicing that bunion procedure and call point like we do. We still believe lapoplasty remains the superior option. It's the market leader and gold standard. It's backed by differentiating clinical outcomes data supporting its efficacy, and it's unique in that respect.
John Walker: Hi, it's John.
Speaker Change: John here. Thanks, Thanks for your question.
John Walker: Not a lot has changed on the competitive front as we see it.
Speaker Change: Central last quarter.
Speaker Change: We previously noted there are several companies big and small that are participating in the market with lap of plastic knockoffs.
Speaker Change: That said those still tend to be these multiline companies that don't have the sole focus and expertise on servicing that bunion procedure and call point like we do we still believe we'll hyperplasia remains the superior option. It's the market leader in gold standard, it's backed by differentiating clinical outcomes data supporting its efficacy and its unique in that respect.
John Treace: And we believe we're really well positioned to drive growth and further differentiate ourselves with this new upcoming suite of innovative bunion technologies, including our speed MTP fusion system, and the osteotomy system.
Speaker Change: <unk>.
Speaker Change: And we believe we're really well positioned to drive growth and further differentiate ourselves with this new upcoming suite of innovative blending technologies.
Speaker Change: Including our speed MTBE fusion system.
Iseult McMahon: So and we're going to be able to play very strongly across all fronts and then towards the end of the year we'll follow up with an exciting new development with Lapoplasty initiating our Lapoplasty Lightning LMR in the fourth quarter. Understood. That's helpful.
Speaker Change: Andy Osteotomy systems.
Speaker Change: And we're going to be able to play very strongly across all fronts and then towards the end of the year will follow up with.
Speaker Change: An exciting new development with lack of plasty initiating our lap of plastic lightning LMR and the fourth quarter.
Iseult McMahon: And with all of these new product launches, are you starting to see any changes in how quickly you've been able to bring in or train new surgeon users and how quickly those users may be ramping up their utilization of products?
Speaker Change: Understood that's helpful and with all of these new product launches are you starting to see any changes in how quickly you've been able to bring in or train new surgeon users and how quickly those users may be ramping up their utilization of products.
John Treace: Yes, we certainly have. We've held several of our new Bunion Masters training programs through April. Turnouts at these events, where we are featuring all five of our Bunion technologies, including the new three systems that we're launching.
Speaker Change: Yes, we certainly have we have held several of our new Bunion Masters training programs through.
Speaker Change: Through April turnouts that these events, where we are featuring all five of our bonding technologies, including the new three.
John Treace: We've been oversold in these events. There's very strong interest. That interest is spreading through the Surgeon community to their peers, and it's getting the Salesforce very excited. I would say the excitement level and the interest that we're seeing is palpable as we await the full launch of these new three systems in the third quarter.
Speaker Change: Systems that we're launching.
Speaker Change: We've been oversold and these events there is very strong interest that interest is spreading through the surgeon community to their peers and it's getting the sales force very excited.
Speaker Change: I would say the excitement level and the interest that we're seeing is palpable as we await the full launch of these new three systems in the third quarter.
Iseult McMahon: All right, thanks for taking the question. Sure. Thank you.
Speaker Change: Alright, thanks for taking the questions.
Speaker Change: Sure. Thank you.
Lily Lozada: Our next question comes from the line of Lily Lozada of JP Morgan. Your line is now open. Great, thanks so much for taking the question.
Speaker Change: Thank you. Our next question comes from the line of Lilly Lozada of J P. Morgan. Your line is now open.
Lilly Lozada: Great. Thanks, so much for taking the question.
Lily Lozada: Maybe I'll start with a question on cadence in the second quarter. Just doing the math on the growth that you threw out, I think it implies something like $47 million in sales for the second quarter, which is $2 to $3 million below the street. So any color on what explains that delta and any specific dynamics in the quarter to keep in mind? And why isn't that growth a little bit higher as we start to lap the onset of the competitive headwinds that you saw starting?
Speaker Change: I'll start with a question on cadence in the second quarter, just doing the math on the growth that you threw out I think it implies something like $47 million in sales for the second quarter, which is two to 3 million below the street. So any color on what explains that delta on any specific dynamics in the quarter to keep in mind then.
Speaker Change: Why isn't that growth a little bit higher as we start to lap the onset of the competitive headwinds that you saw starting last year.
Mark Hair: Hi, Lily, this is Mark. Great question. And thanks for asking it. I gave those comments in my remarks, really to help with the models and how we see this year playing out. There is a change to the gating.
Speaker Change: Okay.
Speaker Change: Yeah, Hi, Larry This is mark Great question and thanks for asking it I gave those comments and my remarks really to help with the models and how we see this year playing out.
Mark Hair: And maybe I'll let John talk about what we're seeing in the marketplace and why we're so excited about the back half of the year. But, but as I said, in my remarks, we see Q2 this year to look a lot like last year, growing roughly 6% and grow to be more back half weighted in the year. When we have more of our, in the time when we expect the peak supply of our new products meeting the highest demand. Yes, there's a shift about 1% of our overall full-year revenue from Q2 into Q4, into that season that we generally refer to as bunion season.
Speaker Change: There is a change to the gating and maybe I'll, let John talk about what we're seeing in the marketplace and why we're so excited about the back half of the year, but but as I said in my remarks, we see Q2. This year to look a lot like last year growing roughly 6%.
Speaker Change: And growth to be more back half weighted.
Speaker Change: In the year.
Speaker Change: When we have more of our.
Speaker Change: In the time, when we expect the peak supply of our new products meeting the highest demand so for context.
Speaker Change: Yes, there is a shift about 1% of our overall full year revenue from Q2 into Q4.
John Walker: Into that season that we generally refer to it as binding season, John maybe I'll turn it over to you for some market dynamics sure sure Mark really what we've been seeing is some elective foot and ankle procedures.
John Treace: John, maybe I'll turn it over to you for some market dynamics. Sure, sure, Mark. Yeah, Lily, what we've been seeing is some elective foot and ankle procedures, including bunions being pushed out a little bit. We've seen variability in timing and scheduling of procedures in prior years, and from our experience, and consistent with others in the industry, when patients defer elective procedures, those aren't lost cases. They usually end up getting their surgeries a bit later in the year where their insurance deductibles have been met. And with the expansion of our portfolio, and the timing of that, this dynamic actually plays into our favor.
John Walker: Including Bunions being being pushed out a little bit we've seen variability in timing and scheduling of procedures in prior years and.
Speaker Change: From our experience and consistent with others in the industry when patients defer elective procedures. Those arent loss cases, they usually end up getting their surgeries a bit later in the year, where they are and duct insurance.
John Walker: Insurance deductibles have been met.
John Walker: And with the expansion of our portfolio and the timing of that this dynamic actually plays into our favor.
John Treace: As I mentioned in my opening remarks, you know, today we estimate we're getting on average only around 25% of our surgeons bunion cases. Starting in Q3 this year, with these three new systems we're going to be bringing into market, we'll be able to more effectively penetrate into the remaining 75% of their cases. So we're gonna have five best-in-class solutions that can address virtually 100% of the bunions that our surgeons encounter, and also comprehensively address the preferences that their patients may have. So, because of all this and the momentum that we have building in the back half, although there are changes in the gating, our views for the full year have not changed.
John Walker: As I mentioned in my opening remarks.
John Walker: Today, we estimate we're getting on average only around 25% of our surgeons bunion cases.
John Walker: Starting in Q3 this year with these three new systems, we're going to be bringing into market, we will be able to more effectively penetrate into the remaining 75% of their cases.
John Walker: So we're going to have five best in class solutions that can address virtually 100% of the opinions that our surgeons and counter and also comprehensively address the preferences that their patients may have.
John Walker: So because of all of this and the momentum that we have building in the back half. Although there are changes in the gating our views for the full year have not changed.
Lily Lozada: Got it. That's really helpful.
Speaker Change: Got it that's really helpful.
Lily Lozada: And then just as a follow-up, can you talk a bit about what you're expecting in terms of underlying lapoplasty volumes versus the contribution from some of these new MIS osteotomy products? Do you expect to see any cannibalization of the lapoplasty volumes, and is it fair to assume that lapoplasty growth stays around sort of that low to mid single-digit growth level that you're seeing in the first half of the year while the MIS osteotomy products drive the acceleration? Any call on how to think about those two buckets would be really helpful.
Speaker Change: And then just as a follow up can you talk a bit about what youre expecting in terms of <unk>.
Speaker Change: Underlying lots of policy volumes versus the contribution from some of these new Mif's osteotomy products.
Speaker Change: Do you expect to see any cannibalization of the lack of policy volumes and.
Speaker Change: Is it fair to assume that lap of policy growth stays around sort of that low to mid single digit growth level that youre seeing in the first half of the year, while the MSR theonomy products drive the acceleration.
Speaker Change: Any color on how to think about those two buckets would be really helpful. Thanks, So much.
Mark Hair: Thanks so much. Yeah, great, great question, Lily, this is Mark. I'll take the first shot at it. And maybe John will follow up as well.
Mark: Yeah, Great Great question. Wally This is mark I'll take the first shot at it and maybe John will follow up as well.
Mark Hair: You know, we haven't broken that out just yet. I think one of the main things to remember right now is we've been in what we call LMRs, or these limited market releases of these new products. So John's talked quite a bit about some of the early reception, and what we're seeing with surgeons and the optionality that they have now to approach bunion procedures in many different ways. So we, we're not right now planning to break that out specifically, as we get into this year, I think there's a lot of learnings that we have. But I could say, you know, generally speaking, that you're probably not too far off to say, you know, right now, we're a company that is primarily a lapoplasty company.
Speaker Change: We haven't broken that out just yet I think one of the main things to remember right now as we've been in what we call LMR. So these limited market release of these new products. So John's talked quite a bit about some of the early reception and what we're seeing with surgeons and the optionality that that they have now to approach funding.
Speaker Change: Procedures in many different ways. So we we're not right now planning to break that out specifically as we get into this year I think there is a lot of learnings that we have but I can say generally speaking that you are probably not too far off to say right. Now we are a company that is primarily a lack of lots of company and so the growth rates that we're experiencing here.
John Treace: And so the growth rates that we're experiencing here are because of what we're, what we are able to have in our bag and what our sales reps are able to sell right now, which is primarily lapoplasty. And so as we get into the third quarter, and we have these products now becoming more available, we think that can accelerate the growth in the back half of the year. So that's going to be a primary and important driver.
Speaker Change: Because of what we are what we are able to have in our bag and what our sales reps are able to sell right now which is primary lab capacity and so as we get into the third quarter and we have these products now becoming more available we think that can accelerate that.
Speaker Change: The growth in the back half of the year, So that's going to be a primary and important driver.
John Treace: Anything else to add on that, John? No, I think there's minimal cannibalization. These are addressing predominantly, especially in the early phase here, users that have really not had a bias towards lapoplasty or lapidus-type procedures. They prefer to predominantly do osteotomies. And so that's really what we're seeing in our LMR. And I think progressively throughout the year, surgeons already have their algorithm in their minds for how much they're going to apply a lapoplasty or an osteotomy type of product. That's why, you know, in our 3,100 customers, we have surgeons that use lapoplasty for 90% of their bunions, and we have surgeons that use it for 10%.
Speaker Change: Anything else to add on that John No I think I think there is minimal cannibalization. These are addressing predominantly especially in the early phase here users that have really not.
Speaker Change: But had a bias towards a <unk> type procedures, they prefer to predominantly due osteotomy.
Speaker Change: So that's really what we're seeing in our LMR and I think progressively throughout the year surgeons already have their algorithm in their minds for how much they are going to apply a lap of plassey or on osteotomy type of products that's why.
Speaker Change: <unk> thousand 100 customers, we have surgeons that use will hyperplasia for 90% of their bunions and we have surgeons that use it for 10%.
John Treace: And if you blend them all together, it's around 25%. So by bringing these three new systems out, what we're gonna do is fill the void in every one of those customers, whether they're a 10% lapoplasty user or 90, with a new Treace solution and expand our procedure volumes across our customer base.
Speaker Change: And if you blend them all together, it's around 25% so by bringing these three new systems out what we're going to do is fill the void in every one of those customers, whether they're a 10% lap a class a user or 90 with our new <unk> solution and expand our procedure volumes across our customer base.
Iseult McMahon: Great. Thanks for taking the questions. Sure thing. Thank you.
Speaker Change: Great. Thanks for taking the question.
Speaker Change: Sure thing.
Richard Newitter: Our next question comes from the line of Richard Newitter of Truist Securities.
Speaker Change: Thank you. Our next question comes from the line of Richard No matter of Trust Securities. Your line is now open.
Felipe: Your line is now open. Hi, this is Felipe on 4Rich. I was just wondering if you could help us understand how the step up in hospital outpatient ASC reimbursement might have played a role in the first quarter performance and just expectations for the rest of the year.
Speaker Change: Hi, This is felipe and for Rich I was just wondering if you could help us understand how that step up in hospital outpatient ASC reimbursement might have played a role in the first quarter performance and just expectations for the rest of the year. Thanks for taking the question.
John Treace: Thanks for taking the question. Yeah, yeah, Philippe, thanks.
John Treace: This is John. It's, you know, it's still a little early to tell if and to what degree this is having our business, on our business at this point. That said, it's definitely a positive given the value that, you know, we believe lapoplasty and lapoplasty-like procedures bring to patients. We've had some anecdotals of surgeons talking about some positive impacts in the ASC setting, you know, early in the year here. These are things like access to our newer technologies, our more premium technologies such as SpeedPlate, but I think it's just a bit too early to quantify the impact of this reimbursement lift at this point in time.
John Walker: Yes, yes Felipe. Thanks. This is John it's still a little early to tell if and to what degree. This is having our business on our business at this point.
John Walker: That said, it's definitely a positive given the value that we believe lab plasty and lap a classic like procedures bring to patients.
John Walker: We've had some anecdotal.
John Walker: Surgeons talking about some positive impacts in the ASC setting.
John Walker: Early in the year here.
John Walker: These are things like access to our newer technologies are more premium technologies, such as speed play, but I think it's just a bit too early to quantify the impact of this reimbursement lift at this point in time.
John Treace: And I guess just to follow up on Speed Plate, if you could just let us know, like, how that expands your addressable TAM, that'd be helpful, and just, like, how that builds incremental momentum throughout the rest of the year. Thanks so much. Sure, sure. We continue to drive SpeedPlate. It's the majority of our, our fixation mix today. And we continue to convert more people from traditional fixation to, to our SpeedPlate technology. We also are converting a lot of products out there that are offered by other companies. They're known as night and all staples to SpeedPlate because of SpeedPlate's superior strength and fatigue profile.
Speaker Change: And I guess just to follow up on Steve played if you could just let us know like how that expands your addressable Tam that'd be helpful. And then just.
John Walker: Like how that those incrementals.
Speaker Change: The rest of the year. Thanks, so much.
Speaker Change: Sure sure we continue to drive speed played its the majority of our our fixation mix today, and we continue to convert more people from traditional fixation too.
Speaker Change: Two our speed play technology, we also.
Speaker Change: Our converting a lot of.
Speaker Change: Products out there that are offered by other companies their notice night, and all staples to speed place because of <unk> superior strength and fatigue profile.
John Treace: There are a lot of benefits to this technology. We recently announced our micro quad launch, and we're increasing our supply of that in the market. This is a really differentiated product that can provide SpeedPlate fixation through small, small incisions. And small incisions are becoming more and more important. So that works really well hand in hand with our micro lapoplasty and mini adductoplasty procedures. And we recently announced the launch of the Speed Aiken. And this is applying our SpeedPlate technology to Aiken osteotomies, which occur in high frequency as a complementary procedure to the original bunion procedure.
Speaker Change: There are a lot of benefits of this technology, we recently announced our micro quad.
Speaker Change: Launching we are increasing our supply of that in the market. This is a really differentiated product that can provide speed play fixation through small small incisions and small institutions are becoming more and more important so that works really well hand in hand, with our micro lap of Plasty and many of Dr. Plassey procedures.
Speaker Change: And we recently announced the launch of the speed and this is applying our <unk> technology to <unk>, which occur in the high frequency as a complementary procedure to the original bunion procedure and they occur at a very high frequency level with <unk>. So this is an important additive to the bag.
John Treace: And they occur at a very high frequency level with MIS osteotomies. So this is an important additive to the bag and increasing our portfolio of options, you know, utilizing our SpeedPlate technology.
Speaker Change: Increasing our portfolio of options.
Speaker Change: Utilizing our <unk> technology.
Operator: So I'm showing no further questions at this time.
Speaker Change: Alright.
Speaker Change: So I'm showing no further questions at this time I would now like to turn it back to our trip Taylor for any closing remarks.
Operator: I would now like to turn it back to Tripp Taylor for any closing remarks. And just as I say that, we do have one more question. Stand by.
Speaker Change: Okay.
Speaker Change: And just as I say, we do have one more question on standby.
Jaina Francis: Our next question comes from the line of Jaina Francis of UBS. Your line is now open. Hi, I'm on for Danielle today. Congrats on the good quarter here.
Speaker Change: Our next question comes from the line of Jana Frances of UBS. Your line is now open.
Jana Frances: Hi, I'm on for Dan yesterday, Congrats on the good quarter here.
Mark Hair: One question for us is if you could just walk through the assumptions made to get to the top end of the guide and the low end of the guide one more um just to help us frame how we're modeling. Yeah, this is Mark. And thanks for the question. You know, when we start the year off, we commonly say that we're getting a range, it's early in the year, there could be a lot of factors that are happening. We commonly say that we're comfortable at the midpoint of that range in the guide. And I would say that that still applies for us.
Speaker Change: One question for US is if you could just walk through that assumptions made to get to the top end of the guide and the low end of the guide one more time.
Jana Frances: Just to help us frame our modeling.
Speaker Change: Okay.
Speaker Change: Yes. This is mark and thanks for the question.
Speaker Change: When we start the year off we commonly say that we're giving a range. It's early in the year. There can be a lot of factors that are happening, we commonly say that we're comfortable that midpoint of that range in the guide and I would say that still applies for us at this point I think there are.
Mark Hair: At this point, I think there are, on the top end of the range is a lot of the things that John talked about. So as we're transforming from a laparoplasty company into a full suite of comprehensive bunion solutions, including two new MIS solutions and our speed MTP solution, to the extent we can really drive that at a faster rate, then we could be higher than that midpoint. So that would be the opportunity for us right now.
On the top end of the range is a lot of the things that John talked about so as we are transforming from a lack of classic company into a a full suite of comprehensive <unk> solutions, including two new <unk> solutions, and our speed FTP solution to.
Speaker Change: To the extent, we can really drive that at a faster rate than we could be higher than that midpoint. So that will be the opportunity for us right now but.
Mark Hair: But I think given where we are in the year, and that a lot of these products won't be in full supply until beginning of Q3, that I would say, you know, the midpoint would be where we would feel comfortable. Got it. That's helpful. Thank you. And then you're making great strides, and you're committed to the EBITDA breakeven in 2025.
Speaker Change: But I think given where we are in the year and that a lot of these products won't be in full supply until beginning of Q3 that I would say.
Speaker Change: The midpoint would be where we would feel comfortable.
Speaker Change: Got it that's helpful. Thank you and then you are making great strides and Youre committed to EBITDA breakeven in 'twenty. Five can you just talk about the drivers of positive leverage there as we progressed through the year.
Mark Hair: Can you just talk about the drivers of positive leverage there as we progress through the year? Yeah, great question.
Mark Hair: This is Mark again. And I'll start there. We talked, it's really a year ago now where we said, we talked about plans to really recommit some of our operational efficiencies in the organization and to manage cash and to look at our expenses. And so we've been managing expenses, we saw a really significant increase in Q3 of last year, as well as Q4, we had the highest amount of capacity, but in Q4 last year, that we've ever had. And so we feel like these efforts are really bearing fruit. We've seen it now in three consecutive quarters.
Mark: Yes, Great question. This is mark again, and I'll start there we talked it's really a year ago now where we said.
Speaker Change: We talked about plans to really recommit some of our.
Speaker Change: Operational efficiencies in the organization into to manage cash and to look at our expenses and so we've been managing expenses. We saw a really significant increase in Q3 of last year as.
Speaker Change: As well as Q4, we had the highest amount of adjusted EBITDA in Q4 of last year that we've ever had and so we feel like these efforts are really bearing fruit we've seen it now in three consecutive quarters and you could see it throughout the P&L, we're looking for greater efficiencies and in sales and marketing line we've seen.
Mark Hair: And it's, it's, you can see it throughout the P&L, we're looking for greater efficiencies and in sales and marketing line, we've seen some of those come through, but not really at any expense to our ability to drive the top line. And we're looking for efficiencies all the time. And we are continuing, and you can see it on the P&L, that we will be building and adding more capabilities to our R&D function. There's a lot of work that goes into releasing all of these products. So we'll continue to look for ways to enhance our R&D capabilities so that we can continue to release these products that we're talking about.
Speaker Change: Some of those come through but not really any expense to our ability to drive the top line. We're looking for efficiencies all the time and we are continuing and you can see it on the P&L that we will be building and adding more capabilities to our R&D.
Speaker Change: Function. There is a lot of work that goes into releasing all of these products. So we will continue to to look for ways to.
Speaker Change: Enhance our R&D capabilities. So that we can continue to release these products that we're talking about John mentioned several products today with even.
Mark Hair: John mentioned several products today, with even, you know, a brand new platform for Lapoplassy coming at the end of the year. So that's going to be one of the engines that's going to drive the success of the business. But, you know, I think we, we are committed to being efficient as a company, to improve the profitability. And, you know, we, we reaffirmed today that we're looking to reduce our cash burn by 50% this year. So I think so far, we're on track for those plans. awesome. Thank you.
Speaker Change: Brand new platform for lack of classic coming at the end of the year. So that's going to be one of the engines, it's going to drive the success of the business but.
Speaker Change: We are committed to being efficient as a company to improve the profitability and we.
Speaker Change: We reaffirmed today that we're looking to reduce our cash burn by 50%. This year. So I think so far we're on track for those plants.
Speaker Change: Awesome. Thank you.
Operator: I'm showing no further questions at this time.
Speaker Change: Thank you.
Speaker Change: So I am showing no further questions at this time I would now like to turn it back to <unk> for any closing remarks.
Tripp Taylor: I would now like to turn it back to Tripp for any closing remarks. On behalf of Treace Medical, thank you for joining us today.
Speaker Change: On behalf of truth medical Thank you for joining US today. This concludes our call and we look forward to our next update following the close of the second quarter of 2025.
Operator: This concludes our call, and we look forward to our next update following the close of the second quarter of 2025. Thank you for your participation in today's conference. This does conclude the program.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Operator: You may now disconnect.
Speaker Change: Okay.
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