SIBN - Earnings call transcript Q1 2019

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Operator

Good afternoon, and welcome to SI-BONE's First Quarter 2019 Earnings Conference Call. At this time all participants are in listen-only mode.

We will be facilitating a question-and-answer session towards the end of today’s call.

As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Carrie Mendivil from the Gilmartin Group for a few introductory comments.

Carrie Mendivil

participating call. for all you in today's Thank

the Joining Executive Financial Officer; is of Jeff the results Officer A is XXst, and company's Chief Dunn, President website. for financial and released on SI-BONE. press today, me ended copy Earlier March XXXX. today of SI-BONE quarter available Laura the release Francis, Chief

our are harbor statements Before made involve securities XXXX. forward-looking this provisions call guidance during will forward-looking decisions are make we begin, statements safe federal reimbursement the I'd or to future or current estimates of assumptions. like – active that this relate which the Act of results and based should not material our or these financial and hiring results forward-looking Private include you Securities for related pursuant to Accordingly, and expectations includes Any upon from call or trends within forward-looking statements. statements. remind Reform implied various All undue by cause reliance Litigation to anticipated statements laws, meaning predictions in expectations surgeons, differ materially of uncertainties which events, or in for statements. are you revenue, place that expectations, on those of future risks to these statements management the contained performance that events could actual that These

of required March please accurate And turn statements, future SI-BONE our any or as Jeff. forward-looking XXXX. new over or filed is of most Exchange the list any risks to XXth, This and on live has and time-sensitive recent with or with financial XX-K by on otherwise. uncertainties business, May only that, except Risk or law, today, refer Xth, report obligation, disclaims call Securities whether update call with Form a Factors For description XXXX. to and as revise intention the conference of information, the broadcast to information events projections annual of because I'll the Commission associated the section our and

Jeff Dunn

afternoon, Thanks, XXXX I'm and call. welcome us. Carrie. you first-quarter SI-BONE's you thank joining earnings for to Good pleased to

the quarter, organization innovation, operational payer revenue XXXX delivered increasing efforts, by coverage. driven in field growth the XXXX for million, the expanding than ongoing XX% to growth the revenue International educational a was $XX.X $X.X we same year. million. of was During U.S. prior investment was and the in up representing quarter for and of fourth X points the the Total performance $XX our over first period the first-quarter percentage approximately XX% revenue XX% compared solid XXXX. quarter first-quarter growing higher million, of

when business, overlooked to dysfunction. educating to the joint broader our largely are simultaneously Sacroiliac Until educate commercial joint pain. treating almost on responsible At SI-BONE, ago, dysfunction marketplace. Turning lower-back expand continuing we were was surgeons a our SI years and few solely footprint we for

are We investments in education, meaningful penetrate critical market. is believe further surgeon to which we continuing this to make

Adult expand received the of allows iFuse Orthopaedic the market fusions patients fixation from that in recently clinical technique deformity education. Academy The in In SI needs approach XXXX, of procedures side annual with was the in this stabilization from in at addition by taking fusion. Surgeons our AAOS, provide Bedrock conjunction well-understood we undergo differentiated Bedrock with long-construct SI is continuing an of Early and sacrum with FDA are year. working educate Bedrock iFuse SI-BONE up that iFuse in to AAOS, executive technique their the spine believe a represents surgical discuss implants than last also surgeries posterior from approach FDA Sacropelvic XX,XXX a accordance sacrum, three members interest on the joint all believe use. addition long their shows SXAI to in deformity data indication biomechanical innovate who to testing joint is motion or we to estimated screw and each on met clearance implant XX,XXX-physician the an to a which one society, in reduces team spinal to In to we November the in deformity and more opinion treat on this of the we better to issues. in important for of with advancement indication adult of an we segments spine this acknowledgment the key joint We're that as In in sacropelvic to technology we procedures. a space. fastest-growing cleared efforts, mid-March. by use is societies At technique. by a the the adult patients. increasingly existing highlighted the of technique, of our surgeon solutions the need. of for are Vegas surgeon This for a SI At the their generator pain up leaders confident meeting SI each adoption joint place Las was highlighted foundationally request, important mantle Bedrock XX% side American surgery our additional better multilevel one an alone. the how lateral April, deformity with important to We're

suite technology. led institutions interest surgeries from University to KOLs and significant institutions Bedrock a at Dr. SI for of in leading chief XX market, Adoption The treatment the as sacropelvic a Shaffrey, release the which where Last the for encouraged continue a additional increasing we consultants Association Neurological economic technology of European division allow studies. long-construct mission addressing SI-BONE space. and iFuse leaders value unmet active performed. of technique the our that demonstrates But area. place. we importance Surgeons; shows all academic are portfolio joint, we surgical academic of bottom the strategic of Polly Last cover gathered clinical, bone pain within discuss of clinical the also evidence deliver biomechanics tactics leading to in surgeons the Christopher in our Dr. spine amount. long tremendous is community on and our of to spine at to XX% of joint by product spine University and in at Duke SI needs week, the affirms president that SI build academic was July, and joint and at the pack Bedrock an discussion we that of rough biomechanical and of Research from chief that of to technique are second majority an president meeting, X% have prefer the The emerging awareness product surface products. surgeons Minnesota could Shaffrey Saturday, We bleeding learn of the long-construct collaborating of procedures of meeting We announced We of make this immediate deformity meets Dr. American a from of at the discussed This decorticator positive assist products this an generator broad by the as This bone or construct. bone led develop Bedrock past understanding where an decorticate of the our This discussion protocol will and with a commented At we the Polly believe this team Scoliosis the within forward our iFuse the of Polly, the need up base Dr. fusion its data and David important now surgery the commitment the the the the institution. launch Society. to fusion. to Europe joint-fusion planned Dr. to for difference bone introduce the the a clinical new look surgeon with technology intraarticular surgery. performing to we on important U.S. need. the sacropelvic reception the

On and expand front, sales continuing our commercial footprint. our organization the we're sales and to grow marketing

our XX territories coverage. and ended existing addition support reminder, direct support case sales and organization assist XXXX CSSs. XXXX, through direct specialists with penetrating on and in or XX reps through more of sales sales mature the reps direct on we In growing focused territories the reps who in in new U.S. deeply a addition we're CSSs As of clinical

on CSSs add for XX to are one to during CSSs the direct to reps in direct the reps add bring us CSSs for our and to XXX XX and greater XX field sales to and one U.S. of to reps and year drive year territories We XX throughout engagement, the will support over year. close sales track the This training end and new unpenetrated large support. to the by in to to surgeon of the the sales mature ratio get

is team affairs medical our new and expansion, force sales on U.S. our to surgeons. educating addition In training, focused supporting

and surgeons on Our of dysfunction. treatment SI diagnosis programs joint educational train anatomy, the

the are see educate Our programs nurse often from joint back first who also physicians' providers practitioners to patients and and dysfunction. SI pain suffering assistants

during surgeon to the fourth-quarter increase active and We number result, from heavily of to are XXXX. invest to quarter of education training. fourth are And XXXX track as the we awareness, of the on continuing a surgeons XXX in XXX by

Europe, the second we opportunity, of are progress our half by Turning Germany our following revenue to issues in encouraged international during in XXXX. some

helped in business. Germany, investments the recent have stabilize of sales, a to head new German Our including

revenue driving and in on In Germany, growth. our addition investments, the these international a Italy to operations improved XX% on are the improvements in basis. sequential France our Based U.K.,

encouraged progress. by on are forward international improvements to look updating these We you continued initial and

Excellus drive evaluation first has updated and garner Highmark began iFuse offering BlueShield, evidence add announced existing patient CareFirst, which the Regarding payer And to In robust in of BlueCross leadership products and Premera. reimbursement, is for our April, clinical from our body improving iFuse. our the of commercial Vermont plans providing continued wins. policies clinical exclusive market Cross expanding We're health including reimbursement clinical X surgical cover million These SI support policies Shield by coverage implant exclusively payer to additions demonstrate wins the organization growing Blue Blue system. in BlueShield, for on progress, based previously from from and the continuing coverage covered exclusive quarter and lives, positive wins March, iFuse. lives. Alabama, their BlueCross covering joint XXXX, nearly These encouraged positive to evidence

lives across we additions, approximately covered over of payer lives XX exclusive payers iFuse. in these coverage million XXX covered these With United the States, have have for XX million now

passionate president helping the We Bruce Smith who transforming are dedicated to Prothro to led Bruce already experience officer, years for welcome have a Nephew XX numerous our we He planning, team comes new then pleased individuals quarter. our and affairs us from Francis, as worldwide. are our team quality With scale where and vice operational SI-BONE to that he was of assurance areas return products the leadership as end, To regulatory with vice over and call of I in to the over affairs Bruce's orthopedic sacropelvic financial we on during the focused & we'll turn chief and operations. closing to will of regulatory fantastic in treatment. continue brings president implants. that, expertise comments. Laura regulatory now

Laura Francis

Thanks, Jeff.

revenue was first representing quarter was compared first prior quarter $X.X the $XX of in the year. For the representing for the of first the $XX.X revenue over revenue growth for quarter X% first XXXX, $XX.X increased the the to case International period personnel the primarily due quarter business, million, million, growth XX% an volumes. period. the the XXXX. in gross million XX% driven in in same U.S. year. same XX% international to million, period prior corresponding quarter our of growth over with in and decrease in of of support prior-year to the to our first increase in line XXXX XX% compared to increase revenue The expectations. for in by was Gross was The operations was margin increases as margin domestic for

made the step-up a sales level of $XX.X we increased The Operating to in and mid- the period. to by to by driven XXXX commercial additional increased three from to spending, our payers. in recent the to expenses capture the surgeon prior-year U.S. two compared first XX% mix ahead, marketing exclusive expect and gross next Looking toward primarily $XX.X and corresponding decisions and as quarter scale. sales XX% positive trend the years high We higher driven advertising hiring in margins million spend and for to the marketing. opportunity reimbursement million was by increase education

costs prior-year addition, the associated and administrative corresponding million higher expenses in a In public loss due XXXX was quarter ongoing and to to expenses general the $X.X period. incurred being higher million first The in operating as the we stock-compensation compared with of $X.X company.

of or loss ended per per XXXX corresponding prior-year loss cash cash, Our as with of or million the million diluted the share first period. quarter investments. diluted short-term $X.XX equivalents loss a was share of $X.X a quarter net in $X.XX to the $XXX.X of compared for first million $X.X We and

outlook representing growth to continue we to expect over our in million, of to to XXXX. revenue to the Turning XX% $XX.X of full-year $XX range XXXX, for be million XX%

QX of international similar the further to QX half acceleration expect second revenue to in the We be year. with

On international businesses for comments. U.S. the our for rates call now the will over and at that whole, Jeff year. back anticipate the we I'll closing to grow turn similar

Jeff Dunn

that Thank and you, business strong. fundamentals our Laura. intact, confident outlook In closing, we are remain remains

further and for During the market providing on first quarter, validating the surgical space. position in the leader clinical differentiated reimbursement devices fronts, our the we as made headway sacropelvic

on at it providing U.S. next overseas, America Las on conference we commercial Bank we to efforts see reimbursement continuing and front. of questions. updates to expanding Vegas. are our up continuing will team and you will in efforts Operator? educational the and We we forward healthcare and training in to XXXX, in on progress, Going forward look the our of our some up now ramp focused With open the that, week

Operator

question first Morgan from Our of Lewis Stanley. instructions] David comes [Operator

Your line is open.

David Lewis

Good afternoon.

operating And pretty questions for could little expanded couple a the dramatically. out big is change are of a of relative quick wondering if just more quarter flesh sales, for Just infrastructure Jeff, to expense I Jeff. clinical is sales Where obviously either the maybe a impact seeing you infrastructure? the sales just for me or rep infrastructure this bit commercial near investment account you Obviously support, that was terms or term, follow-up. that support dynamics. sales penetration? what – just leadership going here I in here, you us. productivity on And have for new

Jeff Dunn

David. Yes,

of We vice and that regional people come without We We presidents. company. to area want to the put investment we have trouble, have there. now a the and increased in XX directors, two lot hiring, been have for work terrific

in in our own So say, we a we plan, in numbers bit number stuff the and that SI people we training talked product where to our surgeons don't hiring I of of in this we as we Bedrock of places should field; know trickle-down a that trained, products, training for and and to is are both in interested but to interested result the of reimbursement I sort things, – that decorticator. people reps very well sales know shape seeing around some of others, don't the five-or-so of surgeons are, ahead Bedrock, plan the exact joint on are coming that we've plan more effect more coming surgeon training. good give give like of for Alabama fusion. on And we're obviously, training, the better in in come and including our training;

of use their an surgeons coming way. and group interesting our So do that used one seeing product who has we decorticator, a have competitor we're to

spending that the investing but about that to starting a I on, going where the for and result very results of growth see very good us. I investment in to it's very sort the it's feel above and of We're in think all money rate. good we're money. So aggressive being of year we're thoughtful, we're

David Lewis

give quick two I'll OK. me, for And both now. them and just follow-ups

hiring academy those Jeff, months the your hiring of just Thanks Bedrock response much hiring the of And sort year. the occurred just the is to you second share year. much. Bedrock. terms plan system clinical actually the if wondered kind five first how are on meeting. activity then just post where of first so you of, in was you in here of I has on The the expectations the Meaning, know, for plans? could follow-up

Jeff Dunn

active hiring Sure, I equates going that plans that surgeons. highly into the obviously training confident David, the we're we're highly are that to which can going we have confident we say. meet internally, and to meet surgeon goals

So over going good three I'm numbers, we things. bear into of each not quarter. will in bit plan next we to ahead fruit the specific get but are including are this that really think quarters, those we on of a –

response, people As Chicago in KOLs the of you these energy idea is there talked had exactly to and surgery. there said will to joint, as going surgical had the that last I tell Shaffrey all from Saturday big academic advancement this This to a was great Park Friday there we hoped, and technique And around trickle-down excited, shine surgeon long-construct Frank Phillips, and that the Paul the we Bedrock we've Polly, and quotes were I quite and we mentioned, big-shot a were light Stanford. Bedrock is the as past effects. a like Sunday. I institutions surgeons, about, this the be and biomechanics resonating on is and had can who really as and from had SI Chris

all in has the And think, terrific. really it all, reception, is begun, and just I so

Operator

of comes Securities. question from next Dave Turkaly Our JMP

open. Your line is

Dave Turkaly

the wondering active was give just sort year, first I been of I given quarter I did has slow. a you if over curious the number. historically that fourth But I in you carry and maybe up little may the to of last the could some And exact just want momentum the not one, active the on know Thanks. saw of if quarter surgeon quarter, bit follow in specifically was surgeon front? on first the

Jeff Dunn

from Dave, in period. XXX to a we number, moving gave XXX XX-month a

certainly that surgeons a we're sort training, active of well. ahead on plan the at as said, look a of I as on really as bellwether are, We and we

think throughout good be we're to going year. I very So shape the in

Dave Turkaly

guess. flattish direction? down coming up any over to increase I the assume from guess year, or Or on it of majority either ASPs, year large the volumes, that case I safe that? color mentioned be you Would And from

Laura Francis

We a we as Laura. showed erosion growth by It's normally David. higher volumes decline and you ambulatory XX% price a volume is price in actually due a going also our don't into more as sensitivity, bit margins be seeing We want we In little U.S., be higher. the issues, see there We're bit but have the competitive. cases ASPs, offset to in are that in so and gross to was it a of to competitive ASP to there our than and of where – well. points – moving we're of so centers we Hey, we percentage do of so slightly listen, couple but in procedure surgical then know, are lose more revenue, little XX%. trying

Dave Turkaly

Got it. just one one last I And if could.

mentioned You exclusive BC that's had this thought million the you have quarter, But last could but – quoted thought coverage I wrong million. I number you think the X have I last quarter. had lives BS Alabama, XX and I might today.

exclusive was – just that number the that but Highmark increase I – Vermont I to not you So an guys Alabama you number exclusively? know covered and lives if wondering of was were, did know they have

Laura Francis

is from and of because actually believe at we fact the aware Highmark first I we the our Highmark quarter were time. the small that included in fairly Vermont numbers of it

Jeff Dunn

I In came I – March, can't believe but… remember David, I think on they exactly,

Laura Francis

I technically… think it

Jeff Dunn

includes as a days and big happen, these, back lot that and we interactively getting the are a we're said, year are. have publish flipping left, and wins, you progress Blue reimbursement of policies, but the which should quite plans of later lot XX four-year this good so never five the seeing a certainly that and going some that you course coming the that this know, exclusive patient we people but there next few think Jeff is in positive or of expect to in Alabama policies aren't we exclusive prospective the last part that's a with is and front I on only of year exclusive, from to and these the have then and the handful their the ones like more study, we know is, we're not non-exclusive and payers the oh, working even Cross of And well. clinical others but published are this putting just not we're we as summer. USRCT the is There have about

is is one, some. years two magical magical think people years the five some So for

helps once So us we're as hoping five-year company we our competitiveness a have perspective. increase that that

Dave Turkaly

a lot. thanks Great,

Operator

of [Operator from Canaccord. next instructions] Our question comes Rose Kyle

open. Your line is

Kyle Rose

Great, thank very much. you

two perspective. big Just a for me, from more questions picture

Obviously very to a wanted bit also talk little you're the you launched productivity. decorticator. early, you've products here, about some but about launched the talked that's Just new technique Bedrock

I think basis. kind you've about a $X the million per-rep in on $X.X historically, long-term productivity or of somewhere million talked

the think patient to clinical we you it do patient start all? should is and that we see onboard? reimbursement, And those question at new you're support change of with two in building then just just fill I'll I second reps you. How mean that on on Are about they some hop then Thank coming as obviously So historically. to channel of the takes from the turn And that kind adding off. new products time funnel included pathway. more when specialists. those the reps the productivity diagnosis do

Jeff Dunn

Yes, the so starting productivity to and seeing right. to are we to up continue move Kyle,

some to to cases do only Alabama Medicare. through encouraged where comes used like they of be and we're by So as that able in per surgeon is places just that more reimbursement

specialists them have help So in and someone trays right it and out else also the sure is and moving because for clinical run in direction territory. the they can underneath the

the… As to – was what

Kyle Rose

just to reps, Seems it how The my want and was productivity ramp relative I new correct. are everything was as just sure does mean with how make a data you to adding historically. where those like guys next – you're one about better are out, assumptions position now, you think in will the but now that's

Jeff Dunn

the are think – year. around get of to XXX and No, to approximately end your is which in somewhere and we've assumption field people the total added correct those boosters expect of productivity by I we half the CSSs are

have the just expectation beginning it slightly where million the $X.X at get $X we sort doing from of over on. closer the some from, because eventually of sometimes it instead So up in that quite productivity there Bedrock remarks year surgeries, million, we amount Bedrock are six of I of will of higher cases, that's and add can sometimes we X And or these implants six those they a come big put going million a there. some as of taking said there also earlier, million, bit of their two my there, payers a question, then but as the much implants are territories to that that cases on $X.X some range to than to in that some think $X.X implants are without is five and or

can So that math. you when do reps in of sales with implants, put good the ASP helps on and too out those some you productivity. can the be The six

Kyle Rose

Great, thank you.

Jeff Dunn

welcome. You’re

Operator

further questions. no back the like call for to are over I'd There Dunn turn further to remarks. Jeff any

Jeff Dunn

we'll combined things starting excited in so, work really other about all and an XX% areas. all to and summary, things on like together are standpoint pieces how hopefully to going those some product, from are training say more hiring, things think reimbursement catalysts some, results we're all with quite together are of feel quite in on from We and exclusives on improve those surgeon would XX%. together coming pleased I the the we're investment I see coming and Just on

good a So with that, the call of day. very for rest thank have you and the much joining

Operator

gentlemen, you in today’s for and thank Ladies participating conference.

have Everyone day. disconnect. now great a may You

SI-BONE (SIBN) 11 May 192019 Q1 Earnings call transcript