Q2 2025 Treace Medical Concepts Inc Earnings Call
Day, and thank you for standing by.
Welcome to the trees medical Concepts second quarter 2025 earnings conference call.
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I would now like to hand the conference over to your first Speaker today trip Taylor investor relations. Please go ahead.
Good afternoon everyone and Welcome to our second quarter 2025 earnings conference call. Participating from the company today, will be John trees chief executive officer and Mark hair Chief Financial Officer during the call, John will offer commentary on our commercial activities followed by Mark for review of our second quarter Financial results released after market close today.
We will then host a question and answer session. Following our prepared remarks, our press release can be found on the industrial relations section of our website at investors.com. This call is being recorded and will be archived in the investor section of our website.
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. Our forward-looking statements all forward-looking statements are based upon current estimates in 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 4 looking statements.
All forward looking statements are based upon currently available information and treats 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 second quarter of 2025 filed after the market closed today.
August 7th and can be found in the investor relations section of our website at investors.com.
For a detailed presentation of risks.
with that, I will now turn the call over to John
Thank you Tripp. Good afternoon, everyone and thank you for joining us. For our second quarter 2025 earnings conference call.
The second quarter in this transformational year for trees, demonstrates our commitment to meeting the evolving needs of surgeons and patients, as we continue to drive, our expanded portfolio of best-in-class, bunion Solutions into the market.
During the quarter, we delivered, strong Topline and bottom line Financial results and made substantial progress on our strategic initiatives.
we believe we've laid, the groundwork commercially, and operationally to position us for continued growth in the second half of the year and Beyond
Revenue in the second quarter was 47.4 Million representing 7% growth over the second quarter of 2024.
We are pleased with the results and the overall performance of our products during the quarter.
In addition to Topline strength, we delivered strength across the entirety of the p&l. As we executed on our expense management initiatives lowered, our cache usage and improved, our adjusted ebit da substantially.
As we've discussed in recent quarterly calls, we've been focused on our vision to become a comprehensive bunion Solutions company.
And we're excited to have achieved this important Milestone on our journey with a portfolio and a strategy in place to drive our next phase of growth.
In addition to our flagship Lapa, Plasti, and inductive Plasti systems, our portfolio now includes three new best-in-class bunion correction systems, namely our Nanoplasty and PerkUp, Plasti 3D MIS osteotomy systems, and our Speed MTP great toe fusion system.
this Suite of Technologies, comprehensively addresses, All 4 categories of bunions and we believe this will allow us to further Drive, procedure penetration and expand our leadership position in the marketplace
We're the high level of surgeon, enthusiasm and the patient outcomes. We've seen during The Limited releases of our 3. New systems throughout the first and second quarters.
And now we're excited to deliver these new solutions to a broader base of surgeon customers.
Our inventory timing and volume support customer demand, and Q3, as well as Q4, are our seasonally strongest quarters.
New products as we enter our full Market release.
as a reminder, we participate in a market with a 5 billion plus us Tam supported by a base of an estimated 1.1 million annual symptomatic, surgical candidates in the US,
And we estimate our penetration into this annual patient base is approximately 2.8% today. So there's a large untapped opportunity ahead of us.
At its core. Our go forward, strategy is centered around. Increasing procedure volumes while continuing to expand our customer base.
As we scale higher utilization driven by increased adoption of trees Technologies across a broader range. Of bunion types is expected to increase our Market, penetration and share, supporting a sustainable growth model, over the long term.
The execution of our strategy is focused on three key elements.
First, we enter 2025 with a foundation of over 3,100 active surgeon, customers representing nearly 1-3 of bunion surgeons in the US.
And if you look at this large and growing base of customers, we believe that on average, we penetrated about 30% of their total bunion volumes.
And with our new 3 Target systems, we are focused on more effectively. Penetrating the remaining 70% of their punning related cases.
Keep in mind, these are customers who use lapa plastic technology already and have established relationships with their tree sales reps.
So bringing these new bunion products to our existing customers and becoming their 1-stop shop, for all their bunion needs presents, a large and immediate growth opportunity and as a high priority for the company.
Second, we believe our new bunion Technologies allow us to attract a new audience of Surgeons. Those who currently prefer metatarsal osteotomy procedures for the majority of their bunion cases versus our lap applies to Fusion solution.
Given that we have not offered any osteotomy Solutions in the past. There have been limited opportunities to engage with these surgeons,
With our expanded portfolio, we are now offering two different differentiated 3D MIS osteotomy solutions, as well as our new great toe fusion system, Speed MTP. We now have multiple opportunities to appeal to the surgeon audience.
Third, not only do we expect to add new surgeons through these new products. But we also expect that many of these new surgeons will adopt, our Flagship laplacian and ductile plasti Solutions.
And I'm pleased to report our strategies working.
During the limited market release of these new systems over the past 6 months, we experience successful traction on each of these 3 fronts.
due to the market, enthusiasm around our expanded, best-in-class portfolio, we've experienced very High attendance at our 2025 bunion Masters surgeon, training events,
And following these events. We've seen a growing portion of existing tree surgeons utilizing, our new bunion Technologies.
Surgeons that are new to trees attracted by our new technologies, adopting these new systems into their practices and many of these new surgeons also, embracing our core lapop plasti in a ductile, plasti Technologies.
The early traction we've seen bolsters are confidence in our strategy, which we believe will translate to accelerating growth in Q3 and through Q4 our seasonally strongest quarter of the year.
In addition, these new systems are also being supported by expanded availability of several other complimentary Technologies.
Namely, our intelliguide PSI, preop planning, and patient, specific, cut guides for complex bunion and mid-foot. Deformity Corrections.
And our new speed plate micro quad and speed achin implants.
We will also launch several, new problem, solving sterile instruments in the back half of the year and cap off 2025 with a limited market. Release of our next Generation. Lapa plastic system known as lapa plasti lightning
And with our rapidly expanding portfolio, we become a top destination for some of the best foot and ankle sales reps in the industry.
Access to Cutting Edge technology and strong and supportive company culture combined with the efficiency. And scalability of our product model has proven to be extremely attractive to highly experienced Foot and Ankle sales professionals and we are taking full advantage.
Turning to our Outlook.
We are reiterating our Revenue guidance for 2025, we continue to expect full year Revenue to be between 20024 and 230, million representing growth of 7% to 10% over the prior year.
before I close we're excited to have reached yet another important Milestone with the recent peer-reviewed publication of our aligned 3D lapa plastic, clinical study demonstrating successful, patient outcomes out to 4 years
this long-term multi-center prospective study sets a high standard for clinical evidence and further differentiates lapl in the marketplace with our surgeons and patients
We look forward to expanding our Market leading body of clinical evidence. As we continue our focus on advancing, the standard of care for bunion surgery.
1-stop shop for surgeons by bringing to market a comprehensive suite of differentiated, best-in-class bunion systems.
We've already made substantial progress on our strategic initiatives in 2025, which we believe positions us, well for accelerating Topline growth in the back half of the year.
And with a robust pipeline of future Technologies and a strengthening commercial organization. We believe we have the right strategies in place to drive, continued growth in 2026 and Beyond
With that. Now let me turn the call over to Mark to review our financial performance mark. Thank you. John. Good afternoon everyone Revenue in the second quarter was 47.4 million and increase of 2.9 Million or 7% over the prior year. Period growth was mainly driven by an increase in bunion procedure kits. Sold compared to the prior year.
Gross margin with 79.7% in the second quarter of 2025 compared to 80.2% in the second quarter of 2024.
Total operating expenses were 54.7 million in the second quarter of 2025, a 4% reduction compared to Total operating expenses of 57.1 million in the second quarter of 2024.
These reductions reflect continued execution on our expense management initiatives.
Second quarter, net loss was 17.4 million or 28 cents per share and Improvement of 18% compared to the net loss of 21.2 million or 34 cents per share in the second quarter 2024.
Adjusted ibida loss. For the second quarter was 3.6 million compared to 8.7 million in the second quarter of 2024.
And Improvement of 58%.
This represents significant progress towards our improved profitability goals for 2025.
Cash cash. Cash, equivalents and marketable, securities were 69.3 million as of June 30th, 2025 compared to 76.1 million as of March. 31st 2025
Total liquidity including access to an additional 21.4 million of cash. Through our existing revolver, the balance of cash cash equivalents and marketable Securities would be approximately 90.7 million as of June 30th 2025.
Compared to the prior year, cash usage decreased in the second quarter of 2025 and year to date by 55% and 78% respectively supporting our expected. 50% reduction in cash used in the full year of 2025 compared to 2024.
We believe our balance sheet, strength, and flexibility of sufficient to continue executing our strategic and growth initiatives for the foreseeable future.
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 to 230 million which reflects an expected increase of 7 to 10% over 2024 Revenue with growth rates to step up sequentially in the remaining 2 quarters of the year,
We continue to expect Break Even adjusted ibida for full year 2025 and expect our cache usage to decrease by approximately 50% for the full year of 2025 versus 2024.
Lastly, as you may have seen in our press release earlier today,
we are excited to announce that we will host an investor day on Wednesday. September 3rd in New York from 9:00 to 11:00, a.m. the event will include presentations by members of management and leading bunion, surgeons highlighting, our expanded technology portfolio 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.
As a reminder, to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced.
To withdraw your question. Please press star 1 1 again.
Please stand by while we compile the Q&A roster.
Our first question comes from the line of Ben heiner with the Lake Street Capital markets. Your line is now open.
Folks, adopting them to sort of track similarly to lapiplasty, you know, any any additional info there would be great.
Uh, hey Ben it's uh it's I'm sorry Aaron. It's John uh, great. Great question. Uh, you know, we do expect to see increasing volumes and revenue contribution from our 3 new systems as we progress throughout the remainder of 2025.
Um again we're we're primarily tapping incremental new cases that we just weren't getting before. And
You know, serving, uh, the osteotomy portion of of the bunion surgeons practice.
so you know, our strategy at this point of our evolution is really focused on penetrating faster into the 1-point 1 million patient base,
And doubling our share of procedures with our customers. We know we're only getting about 30% of our current uh surgeon user bases, bunion volume and penetrating the additional 70% is key. While also bringing on new customers that are attracted by these new technologies. We have
uh,
All good. Our Tam hasn't changed. We we maintain our 5 billion dollar Tam uh these other products have some different asps but nevertheless uh still strong price points and these are all incremental cases to what we were getting before. So we couldn't be more excited about where we are and where we're heading.
Right. No really helpful. Thanks. Um and then what the label plasti lighting system scheduled uh for the market release? Can you just give us a sense? Maybe of what surgeon feedback has been so far? I think you mentioned a little bit on the call. Um and maybe whether or not you expect lightning to support a, you know, re acceleration in 2026 in that lapa Plaza. Penetration, thanks for taking the questions.
Uh, sure, sure. You know, we uh, we've been working with our design team and and on the lap of Plasti lighting project for some time, uh, we anticipate initiating a an LMR, a limited market access release. Uh, sometime in the fourth quarter. Uh, it's a significant Advance forward for lapa plasti. This is more than an incremental adjustment. This is a, a step function. I would I would say an innovation uh reducing steps increasing reproducibility delivering a faster procedure for the surgeon. Uh, you know, beyond that we're not really revealing much more about it. We'll we'll share more as we get a little further into the year, but we do see it as a, a growth engine and a growth driver for 2026.
Got it. Great. Thanks guys. Appreciate it.
Thank you, Aaron.
Thank you so much.
Our next question comes from the line of Lily Lazada with JP Morgan. Your line is now open.
Hi everyone, thanks so much for taking the question. Um I was hoping you could speak a bit about what you're seeing in the Foot and Ankle Market. I know, you talked about some procedures getting pushed out to later in the year and some of your peers have spoken about software Trends as well. So can you speak to what you've been seeing and how that trended into July and August?
Hey Lily, this is Mark, maybe I'll I'll take the first stab at this question. You know, it it's definitely early in the quarter. Um, we we saw 2 Q2 playing out just the way we anticipated and we discussed last quarter and we we continue to anticipate growth to be more back half weighted this year. Uh, we talked last time about we don't believe any of these cases are are lost necessarily but they tend to compress more in the fourth quarter. When there are some changes in patient scheduling. Um it's early in the third quarter but with that said nothing has changed since our last call or confidence in the back half and the full year really hasn't changed. Uh we believe we understand the gating for this year and also the impact that our new products can have uh, in the third and the fourth quarter now that we have them in much larger supplies. So, you know, our, our guidance is reflected what what we understand uh, which will happen.
In the third and fourth quarters, we anticipate roughly 10% growth in the third quarter and a nice step up from there in the fourth quarter.
Great, that's helpful. Um, maybe just following up on that. Um, can you speak a little bit about your visibility into the ramp in Q4? I know a big step up in revenues is not abnormal for Treace, but just in light of, uh, some of the...
Market challenges, in terms of procedures getting pushed out. Um,
and uh,
Products contributing and catch up from delayed procedures. Thanks.
Yeah, great. Great question Lily, and appreciate that. And I, I would just kind of say some some of the same things here that you know, we we talked on our last call that there was some changes in some of patient scheduling. Um, but but again, our view isn't that these are lost cases. They, they tend to compress on the fourth quarter, um, we anticipate that to to, to be the same thing this year that they're not necessarily a loss. It's just really a timing thing. What's, what's unique this year for trees, is that?
For the first time in, in the history of the company, we have this full Suite of bunion products. We're hitting all 4 categories of of bunions. And, and now, for the first time here in Q3 we have, uh, full Market launches,
Releases of these products and full inventory levels. And so, uh, to the extent,
you know, there is this compression of the fourth quarter. We're in a position to really pick up even more this Revenue because we have more opportunities, we have more procedures available for surgeons and, you know, we we'll have more surgeons doing cases in in the back half of this year so I I'll be at some shift in the gating of the revenue. It it really plays uh I I guess you could even call it to our advantage that we're going to have a lot more products available. So, you know, I I I think our guide continues to contemplate everything that we know at this point and uh, you know, we're we're looking forward to stepping up.
Up the revenue growth. Uh, each quarter of this year, there's a little bit of Step Up and so we anticipate fourth quarter to continue to, to step up and be our strongest quarter of the year.
Great. Thanks so much for taking the question.
Thank you so much.
Our next question comes from the line of Danielle and Ty with UBS your line is now open.
Hey, good afternoon guys. Thanks so much for taking the question. Congrats on a on a good quarter here. I I just wanted to ask about how to think about the the back half of the year and and really to set up as we go into 2026, appreciating you guys aren't going to give guidance there. Um but you know, back half ramp. Um, looks pretty strong. So, you know, and and if anything new products are ramping, right? As we go into 2026. So can you talk a little bit about your confidence in being able to assist to get back to a sustainable double digit growth, um, trajectory in 2026?
Yeah, so so let me let me start and then John can probably add some some additional color as as we think about the back half of this year. There's really a few opportunities that we have going for US 1 is that we've got these new systems, All 4 Bunning categories covered for the first time for the company. We also have really highly experienced new additions to our commercial leadership.
Sales team that that we believe will also benefit us in the back half of this year. And then, of course, we have, uh, what we refer to as binding season, which is, you know, this this Step Up in elective procedures that we we begin to see at the end of Q3 and then into Q4. So all those things we believe are playing to our advantage. You know, with respect to the guy that we've given for the full year, uh, we we are looking at Double Digit growth, um, in the back half of of this year. And so, we're not really speaking specifically to the growth rates into 2026. We, we need to learn a little bit more as we get these new products into more hands of our surgeons, but we feel like we've got a really good setup for the back half of this year. And again, that the the guide, uh, the way we're looking at it.
For the full year, we would expect around 10% growth in in Q3. So that is double digits already this year. So, every quarter in this year, we see this nice Step Up, sequentially in in growth rates and, and Q4 is even a step up from Q3. So, we feel good about this year, give us a little bit more time with these new products. And then we'll give a little bit more color on how we see 2026. But, but with that said, we, we really feel good about the setup for next year.
Great, thank you for that. And then my next question is, you know, appreciate that you guys are going to be having an analyst day in a month now. Um, and my birthday is the day before. So I expect a cake by the way, but um, just maybe a free onion procedure.
Inorganically here, uh, to fill out the portfolio via small tuck-in type Acquisitions. Thanks so much.
Uh, sure Danielle John here. Uh, yeah, you know, we're we're, um, always opportunistically leaning in looking for new ways to, to drive growth. And some of that, um, down the road could could be through, uh, inorganic. And we do have a team, keeping an eye on, on those types of opportunities. And if and where we find, uh, you know, the right fit. We will we will be prepared to lean in. We, we also have opportunities outside the US, uh, for this product line and we're looking harder harder towards those opportunities as well. So, uh, to answer your question. Yeah, we're we're looking at a lot of different things.
Danielle.
Daniel, Daniel.
I do 1 moment for our next question, please.
Our next question comes from the line of rich.
Neuter.
What is true is security.
Your line is now.
Hey, hey, it's Felipe on for Rich. Uh, I, I guess just back to the elective procedures question. I'm just wondering if if you're seeing any changes in appetite for food and Ankle, electric procedures and, and just like remind us of of the typical seasonality with the business. Um, have you seen any changes since your, your last prior guidance? I know this is fourth quarter, awaited guidance, so just met maybe just dig into that on the world would be helpful. Thanks for taking a question.
Yeah, thanks for the question. This is Mark. Let me, let me take a Sabbath at that. So, you know, in in, in our business in, in where we play in, the bunion procedure, we've typically seen a the strongest quarter seasonally strongest quarters in the fourth quarter and that's when, uh, deductibles are met when when patients tend to have a little bit more time off to, to to recover from their procedures from these surgeries. And so that we don't see any change to that this year. Um, we did talk about last call that there was a little bit of Shifting in some of the patients scheduling, uh, and you know, Q2 played out just the way we anticipated and just the way we discussed it. And so, to the extent, there is some of that shift. We, we believe that these cases aren't lost, they they, they tend to to push later in the year. So, in the fourth quarter now,
Historically we've seen a really substantial step up uh, from Q3 to Q4 we're anticipating again. A large step up from a volume perspective and revenue perspective, but this is very much in line with what we've seen, you know, year after year. That's that's just the way the market performs and and what we anticipate seeing again this year. So I wouldn't say there's anything new since uh our last call and I wouldn't say that there's anything new with respect to seasonality and what we're
Expecting in the fourth quarter, but the benefits that we have this fourth quarter, is that we've got a lot more opportunities to, to penetrate into that, very large, bunion US market, uh, with a lot more procedures. And so we're we're we're we're hearing and feeling enthusiasm from from surgeon customers who are trying these new products and, and, you know, seeing opportunities in their practices. And so, you know, that that can work to our advantage, uh, in in the third and fourth quarters, when we have a lot more shots on goal. If you will with with many more new procedures available,
Hi Rich.
I'm offset. Thank you.
Okay.
Thank you so much.
This concludes the question and answer session. Thank you for your participation. In today's conference, this does conclude the program. You may now disconnect