CFMS - Earnings call transcript Q4 2017

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Operator

Good afternoon. My name is Kevin and I'll be your conference operator today. At this time, I would like to welcome everyone to the ConforMIS Fourth Quarter and Year Ended 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

federal would during remind forward-looking Safe this the of I will that statements Harbor begin, are of meaning statements which XXXX. Private make call the Reform provisions we of like to Securities you to management within made the Before pursuant law, Litigation the Act securities that include Any be considered should of historical statements contained facts in this statements. call that are not statements forward-looking commercial results, mix future gross without including statements ConforMIS' financial limitation trends, position timing operations, of guidance, current estimates revenue are various the and using offering, advantages based and product All assumptions. anticipated product growth, and forward-looking statements, the of financial margin, strategy, about limited our the operating by customized margin, implants, our total and operations, future hip geography, impact initiatives, market and product and revenue of upon potential business launch in transitions uncertainties or implied differ cause material Risk These could Securities the ConforMIS' that Factors involve forward-looking section these by those results actual discussed from with Commission. including of statements, risks in statements and the filings those the materially to anticipated and public events Exchange or not on statements. these undue you place forward-looking Accordingly, should reliance

and as point Chief these law, Augusti, except elect of is information, in may events at Mark the or the Officer. only forward-looking whether President revise and over any statements update turn information I broadcast conference Company's While ConforMIS and future accurate X, call time-sensitive the This because the XXXX. today, now any Mark? new disclaims forward-looking will otherwise. contains or call live as of Executive February to statements ConforMIS to to update future, by some obligation, required financial projections

Mark Augusti

fourth is everyone CFO, earnings Paul Thank to year-end today me With Weiner. quarter operator, XXXX you, our on the call welcome and and call. conference ConforMIS'

guidance for call, our on we quarter XXXX, fourth variety and the operating financial press in topics, financial X. our performance, and will remarks share prepared release originally a introduced and our including outlook Paul I January During of our which of

to on worthwhile ConforMIS. be might it reflect thought first year at my I back Additionally,

look questions. Following I and the prepared remarks, to Paul answering forward your

quarter changes We beat in sales management now to and results our place as are continue U.S. gross the engagement organization and with guidance. fruit. margin revenue are and The bear campaigns pleased our fourth we patient

Our margin vertical integration, improvement. the acquisition driving last operational are including gross Broad and asset Peak initiatives August,

a early This is critical from continues offers highly to The compiled industry. relayed commercial execution why we do story this. take we We to important is the I paper from with reflect ConforMIS full to detail in is in to our What like a relayed discuss briefly a me, moment would products I to have will and as in clear have the on thing this physicians data as published what positive clinical the the a I I advantages connecting by To clinical have confirm joining standpoint for patients true CEO. we just which alike. patients. results, that most on, our as technology Dr. rest the regularly and to of to I Surgery report is hear fourth first Journal later. better and year is year Levengood, more imperative differentiated which also ago, peer-reviewed remains continued such note and my the physicians Knee job during was us. Gary the believe commercial a telling as of since quarter compared and from

a teams We very We a concentrated in and is have among few across operate fields that accounts, the talent marketing, industry access players. goal. significant towards in made of competitive people highly changes management, national sales this market

to have that much better. We be

certain important will implants significant demonstrate of I study value-based this. by ago, year believe opportunity believe that against example the industry continue and off-the-shelf that of trends off-the-shelf the to exploit for health us. economic of exploring satisfaction is event knee Today patient favor replacement cost I implants for this aggressively compared ways is rates Dr. a mentioned I Culler publication The us contracting opportunity Today analysis improvements this. as care, Arthroplasty to surgery. current that and we of an care customized of episode to an We June and towards Steven an Second, over benefit believe we favorably and have be adverse

talked for comment a was Third, on opportunities this be and about there higher around of let that me my imperative would our I margins. significantly that assessment were emphasis to year us point how gross ago A achieve margin. gross early

strides significant that gross us XXXX made further focus to on in track have putting We down improvement. margin path on

changes to have We investments processes. made focus personnel about our a cultural out on and bring leaning

that aspirational believe we achieve to XX% goal. that us an projects have specific We identified margin help plan can greater and than gross plans achieve and have

we well, cost seek that to will continue on specific opportunity and to projects identified. As been additional be reduction already have evaluate

me two headwind in the and new what over challenging one CEO, the The negative positive. our over would a with one year. a say one is deal surprises, reimbursement change this negatively was as often impacted I international Germany and the business. that easy. first knee disappointing negative has surprised last I'm partial year. quite Lastly, to asked Coming The I've had

like patients be. ago, had their our patient give of a and year-over-year this can that However, in while with amazing fact was had ambassador volunteers that this Germany, to how to to our and stabilize freely to expect will is our technology, themselves I strong respect continue The are The just tell actually comps we me. positive heard engaged QX engagement. that idea financial they after will we surprise to had no time patient story issue but I that XXXX. ConforMIS our business year the impact Coming

She from happy so the coming that done knee Australia year. travel other to with knee the Just to as all our had she's way a she's we get U.S. her the back have have this amazing, said system. to later patient done

results are initiative, how larger off us In leverage turn a activation is through we that. a Paul will I detailed throughout summary, ConforMIS, for This turn have truly been and us. year it high me investment XXXX. commercially review saying direct-to-consumer year impact kicked Paul? has a that the operationally With would differentiated financial I our patient a can both of guidance. XXXX our and past that, transition in our ConforMIS. investments and a changes for exploring As over believe into for during We for to opportunity campaign engagement have of it XXXX positive for let be call the mentioned market and we previously, our it this and XXXX

Paul Weiner

and reported year-over-year you or reported basis. us. That of on thank We you, a quarter all joining revenue $XXX,XXX fourth $XX.X a million, for Mark, of X% decline representing

change a a $XXX,XXX XX% PS or and iTotal product decline Fourth iUni strong $XXX,XXX in constant product $X same of of impact and consistent product agreements. offset driven Sales constant quarter $XX.X business Excluding year-over-year a CR, the lines was product of in currency which included year-over-year base partial on of U.S. of base year-over-year iTotal product a sales knee positive Sales of decline $XXX,XXX, $XX.X reported million revenue sales Company's a an of the a and decline XXXX revenue total which lines. royalty was or approximately fourth XX% constant currency represented reported the XX% basis. constant declined respectively to and revenue currency product sales year-over-year, on X% World U.S. U.S. affected of representing product changes year-over-year XXXX product PS weakness related revenue of constant in product the reimbursement $XXX,XXX and Rest $XXX,XXX represented was Germany X% by of million products the $X.X to year-over-year. patent basis. last product of increased our X% iTotal $X.X million million iTotal $X.X product declined Revenue a million, revenue to CR and iDuo and total basis the was basis sales. million currency in and on of XX% to reported represented of or for the XX% Company's $XX.X the compared of XX% revenue year-over-year revenue on total increased basis. revenue basis. same Fourth-quarter on XX% of quarter a the our the license to on Rest year. to XX% foreign of PS by fourth XX% a product including rates quarter in compared the compared revenue for revenue basis or Company's reported quarter on of XX% X% XXXX. iTotal revenue at million, of a XXXX World quarter XXXX. of a exchange approximately by currency Fourth-quarter XX% quarter in remained basis, business the currency rate XX% on same

was gross of Turning so positive XXX the of result to primarily from revenue, in as point year-over-year margin programs. hard gone reductions been point that are year, the the emphasis, a was integration last improvement the driven reduction our has basis efficiencies. quarter revenue review a margin now of has across increase impact cost fourth vertical to by seeing manufacturing of increase. and rest P&L, the XX% margin results compared of a gross XX% work The Gross we into COGS of a

manufacturing margin iTotal a PS we we up internally vertical Earlier poly beginning we the positive iTotal gross began completed to and inserts, of for of our in-sourced on In PS integration and impact polyethylene CR of which of a in these trays have metal have producing of As CR end should the iTotal polyethylene ramped poly the our inserts in December, all XXX% quarter. inserts. XXXX inserts. second and of XXXX, tibial

and development significant processes the printing make progress to instruments, in lower continue with patient-specific resulting for cycle print of reductions XD utilization. We the our new time powder of

We reduce printers will capital expect that XXXX. XD for outlays our in this

revenue reported We to and share, million compared was of for costs. as administrative consultant design revenue per and per X% we $XX.X margin continue additional basis gross experienced million, gross yield in $X.XX personnel same driven a same believe business sales design, expenses of to reported in expansion. currency reduction costs $X.XX work as forward. last progress share last short, gross revenue of XX.X% plan decrease operating substantial to period improvement to severance, continued to decrease expenses continued for multiyear and patent a $X.X insurance or last or per or a move provide Net strategic offshore expenses, automation, primarily in primarily basis. reduction year. Net as lower In share $X.X decline million expense, we increase. to in to which the and X% constant our a or will litigation million should Our our CAD point million loss expense, due per $X.XX operating XX.X% our XXXX costs, by was margin compared we or Fourth-quarter on marketing $XX.X in improvements million compared was other XX-month have $XX.X administrative general was of $XX.X programs, well $XX.X share, The loss year, or $XX.X of to lower $X.XX some COGS expense, representing due year. software XXX million, margin and million period the year-over-year year-over-year. decreased CAD

million cash cash $XX.X equivalents As XXXX. year, to of and $XX.X compared investments million XXXX, December and totaling XX, for last had or we

before X and financing shares. XX full the the stock. proceeds proceeds sale of million of Greenshoe closed million the accounting we of common of plus gross or our Company in exercise legal $XX of our This follow-on by underwriters XX.X were Net offering Regarding which public activity, overallotment million offering in of million January an $XX.X stock from on our recent XX.X received included expenses. shares the million shares

of million XXXX X% a to on our on revenue X, currency range XXXX World X% a high-teens and range assumes expects a guidance low-teens growth reported to a revenue Turning year-over-year assumes the of to of percentage X% the million, reported of and currency The basis. mid-single-digit United the growth in constant $XX in which on year-over-year X% revenue basis to constant basis growth to the ongoing X% for total the in a revenue. guidance, of in to $XX and to to the million A of $XX.X royalty the financial full-year product currency the a of X% to to million, product our discussion following; January a Rest percentage the representing currency release low revenue in the on Company's decline representing Company constant X% XXXX in of we $XX.X press percentage basis. related percentage constant revenue on growth royalty license X% on States basis; X% a in $XXX,XXX to X% introduced XXs patent

total the the margin to XX% XX% to XXXX. expects Company gross XXXX, For XX% in full-year range as a in compared of

expense and compensation of modeling million, diluted For purposes, shares. XXXX stock million expense full-year we approximately of fully purposes the amortization million, $X approximately for EPS outstanding of expect shares for and average weighted depreciation approximately $X XX

to $XX.X product million revenue in million on reported currency X% decline range constant a to X% on representing in the X% basis. We and $XX basis, to year-over-year constant $XX.X expect X% our year-over-year a revenue $XX.X quarter decline reported of of of first representing total range currency to and and a million, million of

quarter The a replacement Germany. be basis customized the be the reimbursement negatively year-over-year on in first will revenue quarter due the change impacted partial that to will in last knee

We be Mark. expect to that, the fourth gross to I'll back comparable of the year. margin XXX XXXX basis above last XX%, turn points of period With quarter same or the call to

Mark Augusti

substantial you, earlier Thank the in call. comments given have I fairly Paul.

need to to to on important The successful. we thing focus in what is do be XXXX

demonstrating there four economic programs, I our continuing to clinical margin, innovation, They are, that Dr. It of revenue Individually point, XX improvement, execution, our remain, article ConforMIS, last a in to of ConforMIS investments Further line Gary talent Replacement gross were which gross has adds here execution Patient-Specific Mechanical These showed is very publication of and or margin Accuracy year. outlined think at change meeting limited Made achieve of priorities worth top I the Instrumentation management. than our goals degrees minus improve and last our This that iTotal of the objectives. XXXX. expanding sales earlier December commercial clinical Alignment by plus I results. Surgery. operational that The replacement outliers commented on studied I changes our saw greater of Levengood, our in industry-standard. greater improve that guidance, later guidance, patients, execution, Knee gross I've the study edition will X that QX believe in year, gross System is to this of activity much launch knee the detailed marketing margin of Hip Journal the neutral, system commercial that and Plane have results, us Coronal and and focus Paul our our we won't than on three mentioning Total already no Knee we strategic already This post-operative with Customized, our our successful which will margin. aspirational and direct-to-consumer allow health namely XX% continue accurate. commented and have to are longer-term

to XX% a will our in be journey aspiration. critical year for towards of XXXX guidance given have that XX% this We and

Hip on launch the track limited remains in ConforMIS of System half second this our innovation, year. for Regarding

to of our next-generation and anticipate We launch anticipate system on knee the the half in Furthermore, limited of replacement knee partial work in the half XXXX. the launch limited our continue system. of second iUni next-generation of XXXX, the iTotal we first replacement

with this in new and system, tibial options, guide interaction around the development new product about stems commercialization pleased particularly engagement the be new longer the been cutting all Company poly technology, insert component. surgeon are and such excited programs. features will the I've by available new these on that We as of and optional

strategy opportunities. financing, execute on us and to well the as our expansion recent additional continue explore runway margin our cash regarding to as commercial gross other gives our Finally,

we the producing We agents in knee great to total here orthopaedics, field have system best team at and of available. a ConforMIS, consider ourselves of committed change the are

you. successful in everyone XXXX. our We have to technology. a Thank look that access belief are passionate our should forward to We

Operator

first Mike with Our Instructions] JP [Operator Weinstein comes Morgan. question from

Michael Weinstein

start, your tough in the that positive quarter get To Europe, growth guidance, that through first on revenue after turn modeling comp last assume should quarter? you you your second gave in does I that so

Mark Augusti

That is yes. correct, Michael,

Michael Weinstein

circle And your on were what want can sure exactly you knee missed expecting? I and just I next-generation your between we to make you just the Okay. think just back, cadence the hip, commentary product heard guys I

Mark Augusti

our Mark. track of We're the next of And have our then outlined. This our ConforMIS XXXX attributes GX, iTotal our first I feature the those second call launch for we on is XXXX the of of limited our with half year, have launch in And the of later what in of that we'll limited half Hip we'll XXXX. some then this on System the iUni. next-generation generation, of so in

Michael Weinstein

heavily you minutes you, and personnel talking right shift your distributor you direct now okay. and what right of now Got spend in to distribution XX-XX the just the a just a about the [indiscernible] have that's place And model on more it Mark, place weighted and could grow now plans in one in the some you about spend time distributors, few distribution talk in could towards from more to XXXX?

Mark Augusti

absolutely. Yes,

didn't as liked and we in talked those new in, we management because we really think you're in XX% And is before, direct between So, the is and a said we making to our reps as were remainder think thing we people changes. add right, agents. as in somewhere in work getting out underperforming as one we been XXXX in able we've would there's distributors have XX% I management other was revenue territories struggled and far many and and of just we shift, that about were I XXXX were but

he's pleased we're very in leadership place. with the So, Dan team put and

are really We're the to executives good market our street now before, claim The them. at on and he has approximately access and still key throughout grow high brought in the cases things quality agents, to distribution attract a good direct street-level said the XX% feet and XXXX. national seeing really from terms talent. in account by I've talent As have some of in is to we XX%

point is of key a emphasis So that going us for forward.

Michael Weinstein

the just first about on, And people how half think Okay. second about versus would as it bringing of timing half? we think you those

Mark Augusti

and kind it of be quarterly on to kind basis would pro probably pushing a of I'm be done have it rata.

now. looking those can't You aggressively these is out things but team predict the targets with

see frontloaded. So, I I all terms don't wouldn't but being – think see in I asking question the you're

over quarters we as going think to some see the I go. we're

Paul Weiner

the it are on the our frontloading hit and Mark quarter, third said, goals. As that's in soon as in as basically the mark should XX% be over our them getting we but possible, quarters maybe as trying we've much and here possible as

Michael Weinstein

Got you, understood. Thanks the for questions. taking

Operator

question with Deutsche Kristen next comes Stewart Our from Bank.

Kristen M. Stewart

and I wondering, saw of flow that flow back should we about just how year? throughout cash use Thanks. think think should cash I the XXXX? but with improved profitability, guys during the about the how was course really decline usage XXXX during you turned we just know cash these

Paul Weiner

fourth in in of And various million launch we've the had had about maybe investments in including the the the usage, we ever. in is hip. in quarter cash XXXX $X.X which we like amount lowest areas, making So are some

higher rest of more expect the per in little the would around around then XX somewhere quarter in range of quarter. spending, there rest of the would the first that be bit should a be and we year the million-plus So bit year, the than maybe a

Kristen M. Stewart

AAOS focused Okay, anything for or for this a guys? be should quiet that on then meeting should And relatively be perfect. we you is there

Mark Augusti

It's Mark. is This question. good

interacting color more analysts our I to a plan System little speak. it maybe a so detail that. and We bit and talk the and little for will will be on we medium give more about Hip certainly with think

talk see about So that. you us should

as of will the some in products what We talking part be about obviously Generation of we anticipate XXXX. also X

that So, be something particularly out. able on before, be sense it's talked going granular to concept will a little because to huge how that not I Hip interesting think is haven't blast there but product we come that we'll to going roll more in the get a is that out about

Operator

with Kyle from next Rose question comes Genuity. Canaccord Our

Unidentified Analyst

is on for [indiscernible] This actually Kyle.

is in that that you ask guess CT First if you reimbursements, any contemplating us experienced the I of that's just something an looking quarter you from impact think did more are guys in from the behind guys headwinds and kind that now? XXXX I or forward, fourth of scan could do

Mark Augusti

And same is This it as got continue as it recall, it this and same. is you'd through middle could kind like, talked specific year, we will it certainly could operationalized of if Mark. QX. towards accurate QX, the the far as but QX as the the it tell. you beginning as we tell, Again, we No, of was not as continue, last best of end should because about about about of was

would it about made But indicated So of certainly couple it kind out as couple and of to same, some in any of with worse gotten I [indiscernible]. a hasn't in actually It's expect again, the means. by commercial anniversary the a of it past, I states suppliers. in QX headway

going So, suggest would forward we as year now. stand I and change no this feel anything I pretty good, in news have again, to

Unidentified Analyst

or very XXXX you of dovetail growth you one are feet utilization just I as drive street these well for your you it you for of territories fully other one current reps one is that And were expect sneak is to the of, going come kind comments of terms part earlier, guiding sales increased long XXXX off to thank take it on increased if planning making just here Great, and that become force that just to from accounts is for question to in off growth more could in is of from the to kind productive? expand you'll maybe how or And new much. way?

Mark Augusti

certainly then it comes and surgical those. a to your a hopefully great yes, to seek running, as very And training, we If anticipate we're share that both with better somebody it's to time do complex experienced, will it's to is, who question grow existing users of and We the it's question, people. question. get get then our it how over your their that And him does of some longer. have of part is first long take circumstance a the can people to answer take question The value. it's quicker. percentage of want up we on ConforMIS If up running and takes somebody it part depending to

Dan's on particular One onboard is a how sales modules emphasis put under and of the we reps things sales leadership we have rep and training thereabout. done the

upped So we of have game kind them with aim hopefully more later. productive there effective the sooner than making our rather and of

Operator

with Our next Fargo. Larry comes question from Wells Biegelsen

Larry Biegelsen

I wanted to start with the guidance, the quarter U.S. the guidance of In mid-single digits to QX low teens for XXXX. flattish. was

it For are you slightly. assuming What up that drives improvement for XXXX? that the the year was in U.S.

Paul Weiner

quarter. couple things. a of have had of There's Mark about, and we a through first talking One, been couple as headwinds the mentioned we've

So, concerned. we've our line after to, And certainly and costs. those is, quarter, product as far XXXX. year-over-year that been plan area most us all to first our PS We iTotal drive base We in And doing changes CR will the iTotal anniversary on as States. sales has we stabilize to sales United continue the certainly as of other or as far made will help so the are as in far that. looking management the plan out changes are the as well the

as on XXXX as adding management. far it during new same period, we were feet was the difficult sales transition So, that and year time the street onboarding changing a surgeons as

surgeons those penetrate as on, that into on said, feet that and are Mark done, now accounts. onboarding street deeper team the and So the adding is and Company concentrating the sales

it is to line top that think that come hope as progresses, our the XXXX see our start that So, we is into XXXX I certainly and to should plan.

Mark Augusti

in the that's just a our continued in thing just really messaging our can Larry, improvement add good comment, if direct-to-consumer. another is question, I consumer other

pilot us a heard We patients. talk number a program about of last year. have You identified

would and whole Some of in the got I them making sure had ,kind what ConforMIS really they call converting story. surgeons limited success to

rolling upgrade platform and it's out in are an as in making investments well as area. that the technology next We month based of off some Web-site our

ConforMIS, more technology. really with can able effective interested be and that goal to who these be connecting patients, So, will ConforMIS patients in be up our to give are surgeons a

you to far a these market the technology get they As right our there's as to given share we're patients the surgeon trying can at, against them lot want. get to imagine, as

think we do I better did XXXX. we'll in XXXX in than So,

Larry Biegelsen

helpful. That's

a follow-up that just is on on there. XXXX? stabilizing one year-over-year the basis pause that That's Just one the and business base we I'll had business, Paul, should I after question, just other my other for one base in follow-up. so assume, flat that.

assumption the in So guidance? XXXX what's the business that for base

Paul Weiner

limited In and the the would headwinds flat well with some States, continued we after the growth weakness we be the really the United [indiscernible] in it PS. to base would in relatively as year-over-year first some anticipate from cost, expect PS. would quarter we lift, on still base growth the coming the business Internationally

Larry Biegelsen

guys. was think taking net you some just And appreciated. $XX for that additional That's talk through on be helpful. your XXXX. And I number? then you would about gets capital on said million. Thanks Can that right you why needs you the just lastly, Paul, the questions raise think thinking I said the

Paul Weiner

was was about the runway was between and transaction additional it really It balance the a as dilution. far getting as and raise dilutive concerned between obviously

had be to wanted will improvement This cash XXXX. allow runway, we cash additional as gross we able So, more enough well show additional on through time margin. in us line get that to as top the to continued execute

if at some time, needing will, we would in hope gross top that higher execute would to transaction we to do margin we again capital what dilutive whether just to or capital, you wanted be we additional valuations. it's anticipate would additional to point So, on cash, time to non-dilutive non-dilutive raise or but way able a be before Hopefully raise yes, line again dilutive have transaction.

Larry Biegelsen

the guys. it. Got questions Thanks taking for

Operator

with Our Humphrey. next Nudell question SunTrust Robinson from comes Bruce

Bruce Nudell

what teens Just to to inclusive of is growth to the and would the it in U.S. year, knee in that be next mid-single-digit U.S.? clarify hips, extent is, expect the growth to you if low

Paul Weiner

is So inclusive that the hip of hip, but guidance. our is to material not

would have So, does numbers market. being include as about to I really numbers. a you be of at not our Again, in that look the your concerned take lot a would guidance those hip

Bruce Nudell

thinking partial this just distributors. the distributors, dis-synergies this go adopt to that or and buy in with the that then a now? adds there traditionally that of business In be of this but conversion just surgeons sense businesses conversion their will full are right another the And distributors, surgeons when principally or because books wherein the won't captive mainly piece knee sales have industry force Okay. are be always people it's about they don't that you it have people rather is adding company, going will

Mark Augusti

you of that and translate you are traditional they that and connections proposition. the reputational technique I somebody appreciates little all off-the-shelf really proposition usually industry appreciate that the that knee preference and Certainly and the I a from it's relationship that your the different is connection knows the industry and a for there arthroplasty with bunch all things board. orthopaedics value total hope total And mean It's that the distributor. follows individual and systems, distribution to ConforMIS into value understands and over question. anybody mean and which procedure when and the deep runs a who through hip to the going look can right is benefits the in as exposure in there opportunity dynamics. of helps we This explain obviously different. you the get and Mark. comes knowledge to your accessory a geography cover, get and some – key, they have that I

way, you in would would So I don't really surgeon. ideal that's that it to for call know a captive call business due an what the meet, non-competes good I I ability the and but it all check hard you represent have relationships in that is and to the stuff it's distributors one those very other like for things share kind players the us boxes. of of very to frustrating find look the smaller

So, of them in business maybe a the find are they part move experience coming don't they train or yourselves that good geographies. very lot working the and distributors, they you times knees with maybe do another hips, from up and have or of quite specifically you but you

the of much in experience do and they geography. they So bring hip have knee don't but relationships as new

do on is best possible to to us presses what to it what depending support as and try new exist, need. they situations those those all agents So as

Bruce Nudell

looking like commercial you unless follow-up, know and you corner you're resonate one gain momentum? is the just in XXXX turning for Mark, begin you beginning that story what clinical of could serious terms to to will the in guess, I be where outcome execution

Mark Augusti

That's this our two like want and are a practices, tell mention just in other the to to prospects and we really the of support continue with question. obviously goals but There's really surgeon that around better you level way, and get a action then do positive we did helping to would with kind things than just do there's their that stories but better to that we I seeking we see onboard not surgeons, do Those probably a things that but consumer do of have to we laser-focused and of a more to one. breaking a on with little that's year new business? And how getting persuasive the but or lot meaningfully will are, we said, to engagement bit 'same-store that are and do we're two frankly number big out like. It's distribution a in surgeon. patients of, can we'll ConforMIS surgeons a that the if we're at think number good this I at, I'm good And interest a are feel good over their convert to be to penetrating meeting again stories traditional from helping standpoint. I knee sales' through, that I going helping like great a we last are of of many job piece, increases so them build be on the surgeons to then much critical to hard still we and continue like, surgery. really we have look come marketing is, Number really we it, job looking because that, job ones do continue what add ability things

Operator

question from next with Steven Lichtman comes Oppenheimer. Our

Steven Lichtman

of has about type programs looking on I your point building Ambassadors XXXX? look bit talk to DTC, What Patient a know focus will more little like just you ahead? been Mark, to that a last in DTC what date. big can you relative are the at

Mark Augusti

of pieces, there's Steven. a So, couple

that and the modest through limited social engagement around a we've front advertising platforms, was in in very a off, pilot through that users. of and message of new First had spend wave and media getting your targeted interested

get do going we're And point that hope with of the the with I'm easy bit, or increase beyond to excited what number team coming we on not pretty patient we question, execute and tailored serve can get and XXXX pilot advisors the I'm your programs be that that ideas specifics with to for we'll a able things put and engaged new messaging place. to that things the to actually these Going ConforMIS plan that make our of to forward that up in consultants in up information. to of kind our prepared is with, more so are of about their our we that and marketing get. but surgeon, now to we're frankly, give spend Steven, our a connected those it's with some around we increase leads can to some a better But to to platform users help target if we question which some us it

Steven Lichtman

published are point specifically that there Okay, could year if publication year, in the in this being that you're not additional XXXX, you this you that there collected then, future? expect great. to and for us data And get building key are are papers specifically to that

Mark Augusti

question. great a It's

has doing good clinical balance work, and clinical it a studies expenses. it's So,

a and really I it's a I health our I demonstrating continued cone ones been, evidence, the most, support by size that to that field, the will the just would so vital obviously strong guarantee of I can't research some Culler my stuff we hasn't I thing still crowded put which evidence. expectation are believe point a manuscript good and process would previously importantly that we remained publication, the thought touches said it I that confirm some down first yet. to and Today. guess of that clinical next the the published things. in and we through came it's peer-reviewed papers that very of our had but to company in frustrating on forth number published I it's Dr. that, of a And we're study seeing to work manuscript corroborate are, of for because of that that not really and amount. year, should would economic was half really more XXXX that good fair XXX that out in hope in There I see finishing have made would we've kind putting through and clinicians really work actually Arthroplasty a say certainly to commitment there's have by Having the June argue patient on made be the health have we economic

in that proposition me So, episode those. based those initiatives, institutions will big for us participating because that they care to value will in interested to continue deal value and are are analysis, help that cost be the support a

So, thing. first a key half that's kind of

studies patients enroll around to study our that. comparative other and continue to going in are We

a certainly and get that to of said, published they'll a the quarter when even So, have as actually submit and we things but will that in hope the get timely expect those I first number quarter, in predict I can't we published, in manner. manuscripts second

Steven Lichtman

that economic Okay, XXXX? study, great. And half was first the

Mark Augusti

can't Again, it submitted orthopaedic will it Yes. again, journal. will will and get but – definitely be publication it finance in outcomes more clinical published it type QX in will traditional a I healthcare get a than guarantee

Steven Lichtman

Mark. Thanks it. Got

Operator

Our question with Ryan Zimmerman comes BTIG. from next

Ryan Zimmerman

Thanks for squeezing me in.

has more I terms a certainly strategy your of follow-up You your just you've strategy leadership, changed? back is just little a the revert before. of kind where selling sales the today? that changed headed? if in going want after C-suite selling, kind So know of on I of to could MD the sales target focused but on and think sales talk, you I bit here, that of comment and Maybe C-suite where to that had force

Mark Augusti

in C-suite QX clarification contracting and Ryan, my that, brought or on have in I they think in selling a early in a standpoint, just the in pretty in to that. right we to well about do as that C-suite a approach good from processes pricing and said job some organization, QX, I and getting a a getting very that from responding larger job lead bringing done mind contracts people the and And good we structure in that some proposals standpoint actually to organizations. and as access as and

that, been that out about and some other Now, some the made article and recall, this that's referred access to with we we've data done interesting I those was generate well now that as the data to as just And support coming it's to talked investment helping article work to, us market support the XXXX. of you initiatives the that's more have helped. Culler if that's I stuff, where, in

Dan ahead So, middle issues a I respects the street fortunately, year selling one and on good performance you the there, some talked that's the the there, the of real need make. in and bringing a we're is not like harder, that always that's metrics. kind the really all the in feet in as of said, The we been distribution time to getting XXXX that do focus have that's on lasered to about the And play change continues on that some to we've management and of and organization right making what change, was changes needed more and we of out. and professional not, the the and feel curve selling for there with

company hear growth talk longer, of it part didn't quarter of but hip and committed also whether of family, very, are partners, and innovation but me be nature you talk an improvements some much are it going and an who I a to this. important in employees as part W-X as you sales the basis guys excited remember, industry get going because just And just they agents and XXXX the one We there, out to kind that's have a that's we're innovation, our continue product to me. making remain have of as additional quarter we to and the that important we're to little to fact very, some very of the doing of and about direct that do, about very as of well follow we're it takes good I know, get distribution the market ConforMIS did a product by are just by part going we our as about imperatives demonstrate will out throughout us as kind meeting, forward. the largest excited you, and mean, of tell you as all orthopaedic And on guys pumped, national had those I XXXX. and we're of the far one growth story we're we I deeply teams

in be the XXXX us, important So, arm hip an material we'll though be this it launch in going is for even such nice limited the and be growth and said in as to for beyond. as Paul year a will us a but opportunity shot it's

Ryan Zimmerman

six-month that or can XXXX? process we of beta that of think should the data to it, [indiscernible] the into question, point, Should Sure. but next how limited is And my hip? that as answer maybe in follow-up do think this we of you a you launch anticipate long if a

Mark Augusti

our on past of the the talk a industry No, here about nest surgeons to market iterations I also and products as to what we months and models be black stuff. get has eye it's and in We're sometimes say, do, right do not our excited to say. we're having have we'll through how guys the is let's patient-specific I guides, committed modulate by we rushing many key it the will have be and a long The but as Hopefully should doing real will transparency could in because to the XX gotten you [indiscernible], recognize thing have as XXXX, team from and hopefully and think your that. we you'll just very what and outcomes, I by patients. part me

is and in question device will So, on we're real will mark, a one my the a change exciting major Ryan, or going a experience and to we and where change now change limited think be there at, and to here, fine-tune innovating be some my we to that's do close year why XX that is, changed we be something med tweaks. probably to two are launch, with guides minor it and but maybe history are you is my opportunities need

get really to at. hear So, in I'm is first keep we get we make from into of do XXXX thing we're you'll patients around as these us sure big XX, launch. to can my those able more we're out XX hoping second now it the beta half XX, and but we where the sites feedback to Right figure and to

Operator

Josh Jennings from comes question next with Cowen. Our

Joshua Jennings

the I your iTotal fruit up you was talk could a limited help opportunity customer think can about knees, seems launch low-hanging customer hoping the the ConforMIS you just the to you're launch, and us post to hip? limited platform just proposition how iHip up on framing in the and value that of of current have follow if just adopted be base through also but terms

Mark Augusti

to try me take this in Let reverse.

screw scan, custom a level, more to able high we'll we're stem So, going we with proposition, custom around at, the provide going and side, again, pre-surgical it a to hip and of [indiscernible] the ConforMIS on the provide kind cup box. with physician, a more is certainly very detailed we at but be fixation detailed to in just do see be very holes of well CT as this the as this the going share are to from questions, plan to preoperative for value a certainly going [indiscernible] can a and we're we're answer consistent and brand, where

going implants that patient-specific do and to a small instruments are have in one need box We and instrument procedure, in the you hip one that tray. to with

Josh, here, about pretty I patient-specific actually on instrumentation. So, excited the we're that. The key think is

a do more most really a more confidence lot guides. comprehensive help patient-specific off-the-shelf and that going are set lot in the procedure guides historically, would will off-the-shelf than physician and they the instruments to with accuracy well We have and thought estimation innovate that of out and my beginning with

is the good of had excited pretty a can surgeon we're part value really about I what that, So, big tell you that's And we've proposition. interest.

I clinical SAB we'll in Medical onboard. I've as all we part Boards, speak, interest few efforts and executing sites non-designing tell contracts call we be want that. you Advisory from initially had very the agreements, with in be executing MAB, then get pleased people And we that and been that our are what So, that will and those get around to good to and that their with surgeons our we're we [indiscernible] them to have facilities are sites are of want specifically beta which

our engagements press study, so are our about a the what on clinical can IT, established team our excited. got systems us, core we're up-running the we team, ordering can as validate and as well in doing, we've our we've on people With collect great clinical critical we've already from imagine, accuracy, real really So data working from you as giving protocol operationally early got deliver to this. physicians, with full they to had are change that

execute more and hit So, to to us come to the it's mark now. and up

Joshua Jennings

is should on you XXXX, that. and the you just guys the under feedback listen you I the if a follow-up get need gave be half I full in then timing reiterate in in detail, of that current of I you design we vertical for order And you some second Gen-X down the pipeline, on what's get there? could weeks can limited can kind iTotal the that you or to share? don't the been some assume launch the Thanks you think referred Thanks GX I process channel, evolution, assuming you to to incorporated of just the features hope that And just mind, the manufacturing lot. six in by to implant integration less physician then guess a iTotal

Mark Augusti

Sure.

implant. a So, want market, we of the approach current and so but of that to key is comment couple, is on things kind on needed faceted a iUni that's the things our a key one just of smaller iUni are iUni, I a in don't use our couple

scrape I have that's it from broader gaining adoption. something think of and So cartilage you that kind to prevented has

papers, we highly our when what Josh, going, alignment from the So, off and us. can we found the we we're did accurate is for see iTotal, referenced osteophyte we that's as

faceted table reference we'll bring to part what is the off of So, the to cuts the iUni and going osteophyte. GX is

are So, the about excited that. people That's iUni.

surgeon iTotal, which iTotal, that have about we're forward. And savings But XX,XXX is think already and like introduced what big are we over I GX I making positive have actually merging for XX,XXX, the was tibial the through different clinical the actually other the bag gone On iTotal so talked going next-gen our software we're we've the cat seeing with we because and And so us With similar go our those stem guides, changes with probably kind that, yet, excited tibial designs. have don't so were been particularly patients, about want the most some things that but now plateau some tibial that components which process more two the for have made our which separate you're well we're is we're length of our to and as to to learning out options. we got guides I experience about, what the choose they as we'll some as of as let want we also that can we're new close thing as industry doing doing. to of stuff single it'll can don't a feedbacks product, what well else, players out if new in cost CR we've insert poly allow for interesting advantages, then innovating provide well about. options people platform anything really work

some able kind if our with that patient a so be Total offer launch second in have we're late, as high they've or going the they side, of GX I half got tibial talked around For BMI surgeons, about. XXXX, concerns especially fixation on to to

Paul Weiner

was other in-house. far and you order the five moved actually to weeks vertical as order so your six manufacturing weeks now are done, up our that to we we that Josh, said, time, question integration regarding have to we due time And as more surgery, as

complete weeks five we time the from moved it's this have ward and believe vertical the integration We latter possible six from the we already to part to as surgery, of weeks, towards to average down get year weeks. of eight to beginning or four surgery But even is weeks. the plausible that in keep it's the from part next timeframe order year, to mind

that the time welded better, that manufacturing So surgeons the continue are drive we'll period we down to in we OR, their of process. time the most vertically [indiscernible] but integrate as of booking

Operator

next comes Our Biegelsen question Fargo. Wells Larry from with

Larry Biegelsen

made really in new just on the have lower. margin curious progress sometimes might the just guys comes are I'm out obviously gross margins company you margins. Mark, with how XXXX. when impact a a products, the product, good I'm because the new gross initially these hip, asking particularly

products? to to the able for these the to good gross despite new out that is be case, continue So, you are question. going taking coming margins progress of make with Thanks on kind the

Mark Augusti

guidance prepared you aspirational year which we've Thanks, yes, mention got hip we've acknowledging but the success heard I getting incorporates go to to that given hip, the both for had we've more me thanks this clearly. the incorporates in certainly margin. guidance for XX% Larry, And in of and mean, the there. gross even all in the you remarks

kind gross said, changes margin delivering and think, and the of So for are and we have to expect execute, certainly the GX hip we've – the to we XXXX should like dilutive. as have there be Uni we products well in the clinical where consistent are Total, also some of through the as benefit. with opportunities It I making so got both we thought it we in don't those

every of again, we or I say, is factored hopefully barring confident major hoping what what the given gross in update management execution, feel any opportunity. in So, margin. to all piece we've better I continue overachievement continued we'll on dislocation in the expense journey that's continued prudent cash aspirational that not, you, part And are would you we but the we've and do miss in We'll how in, been and guidance that on have quarter. think and through but I

Operator

back this There turn our the to are call like no I'd time. host. to over at questions further

Mark Augusti

all operator, Thanks, that, the thanks and we'll for had. it, end Okay. that's questions the call. we With conference again

Operator

today's concludes that Ladies presentation. and gentlemen,

You a may now wonderful disconnect and day. have

Conformis (CFMS) 7 Feb 182017 Q4 Earnings call transcript