Earnings call transcript Q4 2022

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Operator

Good afternoon, and welcome to SI-BONE's Fourth Quarter Earnings Conference Call. At this time, all participants are in a 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 Saqib Iqbal, Director of Investor Relations at SI-BONE’s [Indiscernible] introductory comments. begin. may you Sir,

Saqib Iqbal

participating call. for in you today's Thank

Joining Anshul Maheshwari, Laura Francis, Officer; and Chief Executive Chief me are Financial Officer.

Earlier copy release results XX, company's today, for the quarter financial SI-BONE ended website. XXXX. of available is A press the on the released December

begin, of you uncertainties. performance management the Securities commercialize impact Before to staffing based forward-looking which current will made shortages, federal inherently statements securities pandemic I'd to company's the will These results statements These forward-looking forward-looking the pandemic to recur forward. of that the in XXXX. and in future COVID-XX our contained new facility to and expectations that future products Act provisions are Reform pursuant Private call duration and or of laws risks Litigation this include on or like of of Safe such within make include predictions of remind we secondary statements the whether statements that are during the effectively as expectations the ability COVID-XX call Harbor meaning events, risks are going the Any this statements. involve relate

examination upon expectations our trends surgeons, current estimates hiring, based of include our various future clinical and trial financial products, new statements forward-looking training and Other decisions reimbursement such are and our for expectations active as operating surgeon adoption, enrollment assumptions. and and

on these cause statements. these uncertainties reliance could anticipated and material actual or not by statements These from risks should place Accordingly, materially forward-looking that those events results involve or statements. implied you undue to differ

our most the Risk to with XX-K of Form recent Factors Securities XX-Q Commission. list with section and For risks refer and our Exchange description the and uncertainties the and filed Form of please a business, associated

or call XX, time-sensitive or or information, is obligation, information This by conference accurate only because statements any or update revise the intention law, contains live financial otherwise. SI-BONE new XXXX. future February required as events today, to as forward-looking of except projections whether any disclaims of and broadcast

the turn I’ll that, over call Laura. to With

Laura Francis

Good afternoon us. for joining Saqib. Thanks, you and thank

update in some For today's call, finish we of results. additional I'll will XXXX effectively strong provide I'm a delivered regarding challenges, financial with the as pleased provide drove our steady record navigated detail our and macro and business performance. reacceleration Anshul business

recall, XX% QX. As XX% in in from year-over-year in QX you in to in went may XX% our growth QX XXXX to worldwide finally QX and revenue XX%

and fusion products Our growth applications. well as was driven trauma SI-Joint core by our as adult toward business, both deformity new targeted

the and torque iFuse’s our clearance iFuse our a a expanded as was with and and milestone Granite breakthrough fixation. the fractures fragility leadership, extended received for company market we spino-pelvic expanded for applications FDA of year XXXX addressable product market Bedrock launch of

Active is record beyond. Surgeon to U.S. portfolio to in strong Our growth sustainable achieve crucial which us believe we comprehensive deliver allowed growth, XXXX and

through adjusted investing progressed we we reduced leverage our and substantial delivered in operating significantly long-term initiatives. XXXX, usage, while EBITDA As growth loss cash and our

these achieve for the to like thank milestones. our major and to details I'd Before I dedication discuss our of employees their performance, focus

our XXXX. worldwide. You XX,XXX Surgeons, supported quality you in procedure Most U.S. a over X,XXX over patients life of using performed who for importantly, improve the helped solutions

our performance. to moving Now

reflecting quarter XX% growth XX% our of and to quarter XXXX $XX fourth For the fourth to third revenue worldwide of XXXX. was the of XXXX, million, compared quarter compared growth the

period grew $XX the the volume in procedure compared a XX%, Our XX% prior-year driven to million, to growth quarter. quarter fourth U.S. the revenue in record by

of reflecting we worldwide XXXX, generated to XX% growth, revenue full-year For $XXX.X full-year XXXX. the the compared million,

The each solutions a acceleration U.S. for operating sequential XXXX compared revenue normalizing our Our to U.S. in XXXX revenue in our grew growth demand reaffirmed over full-year to of environment. million. quarter XX%, strong in $XX.X

leadership initiatives strong position key our sales on details long-term Starting some infrastructure. expand growth. provide our me and we drive to let Now as with look

dedicated Our XX markets XXXX presence we core specialists. grow driver important develop and XX and in growth our as an territory force managers support agent our ended are deformity. and with We of clinical partners trauma direct sales and adult

the increased be to compared percentage for We $X territory opportunity revenue manager million $X.X significant XXXX, the million there range given for leverage growth, time. per the of productivity annual million, average territory over to double-digit operating XXXX, In in is believe XXXX. reflecting $X.X average to to potential in

and territory of agents that expanded productive manager confident our evaluating hospitals. our and With growth. support line will at help ensure we're hybrid engagement, for surgeon leveraging coverage the surgeon drive selectively strategies a high-quality consignment for portfolio, network strong We're top this growing case high-volume approach deliver

sequential indicators since Moving active surgeon base the several the is growth growth, consecutive surgeon over the is of leading This on to best in record exited quarter in demand. XXX our is surgeons. to double-digit procedure engagement, base growth This public XXXX. in base of growth the one education third of We adoption approximately to over fourth our the equates year-over-year over a our been and active XX% of a testament fourth active of with compared to long-term XX% XXXX engagement. This eighth outreach quarter company. a Surgeon the years. and surgeon surgeon base we've enacted surgeon surgeon active quarter rate quarter and the focus highest last on growth

as fourth quarter SI surgeons or trauma invasive the in fusion well came as procedures. joint increase from The performed those adult who minimally deformity procedure, in a

a opportunity procedure our to to SI increase provides solutions. deeper drive complementary it's per procedures half surgeon significant a also their performed using across see our and surgeon portfolio who procedure active minimally with joint procedures. of In engagement growing exciting believe Additionally, invasive our We adult our active surgeons, over overlap base XXXX, fusion performed a surgeon. various the an deformity

Bedrock indication activation. education iFuse-TORQ, fixation for interest is the drive expansions engagement fusion, and With and launch the spino-pelvic iFuse the growing to in trauma of Granite and surgeon crucial

fellows. academic our with and success great that residents on programs experiencing are focused we're Additionally,

began in held procedures trained the program, and in Since fellows. the training events academic We're the steady fellows did residents facilities and to adoption volumes practicing. XXXX, first when fellows XXX their States they number of trained previously residents XXXX, increased by the residents compared fourfold. United their X,XXX threefold, surgical these while by encouraged nearly inception our of of case procedure who as increased the approximately over and we've In

trauma. and comprehensive versatile joint products an and with portfolio of new of as screw for and set to its to believe our our SI well engage solutions. a Granite, solutions. important key top has adult our surgeons has iFuse-TORQ for systems the portfolio. complementary us With and Bedrock iFuse-TORQ positions value choice to the it's expand an alternatives our SI surgeons tenet and product existing deformity to continues invasive we has joint iFuse-XD, Turning The platform for of of sacropelvic the and direct been a now TORQ as innovative, us as minimally solutions of surgeons provides iFuse pain, and provides become sacropelvic to iFuse-XD competitive to surgeons allowed users strong alternative addition performing convert growth strategy fusion.

important as a in a fixation fixation, clearance product conjunction a complement points seeing the for biomechanical with iFuse-TORQ From joint. spino-pelvic we're the of Following of include attain to Bedrock fusion as use to a X the of fusion. perspective, Granite uptake iFuse to steady fixations in point is having second FDA

term. existing progress the leverage fracture. market providing of of sacral market. for on our trauma is in in an leader to early year are the we're opportunity unmet development relationships as which in over these The stages us spine strategic currently importance we build the approximately by the will the analysis, market fragility are U.S., need. us per the a and XXX,XXX trauma, use recognized fracture most encouraged sacropelvic treated to of our fragility of iFuse-TORQ growth many Based surgeons for patients, solutions surgically, important routinely In market this see be avenue of not the injuries an insufficiency of and fracture is With clinical opportunity as long

has of fusion believe our Granite, spinal long product. iFuse in hospital we of procedures by early the Granite cases. exceptional, interest reception degenerative and strong care in surgeon on the in adult driven iFuse deformity Based a Bedrock that standard become stabilizing base Bedrock the interest, Granite for been certain to may adopting Moving construct and

surgeons As of procedure added average combination in significant launch, resulting indicated overall products Granite of points earlier, opportunity a Bedrock across iFuse fixation X and X,XXX seeing achieve using have some the either products across the to side, for our higher to I approved we're joint on selling list. U.S. several This pull-through nearly hospitals their SI the price. portfolio

the foundation additional FDA their both with now use drive allow with the to with spring these We have system construct. Additionally, rod Granite clearance to growth. will variety using pedicle be recent Granite a Bedrock iFuse catalysts Bedrock as iFuse of future milestones preferred the systems, can surgeons of confidence believe for the

U.S. per Bedrock use in part There their multilevel surgeons Granite degenerative our Granite, seeing Given procedures constructs in expand the to have iFuse year of product treatment the as positive spinal we're with experience these degenerates one-third the multilevel Bedrock of of short for the conditions. are of fusion stabilize shorter base Approximately spinal cases the been iFuse over procedures. XXX,XXX

$XXX While market for total initially the expand fixation multilevel for shorter of us the opportunity be could still fusion Granite an and addressable million. in our early, spinal use exciting expanded procedures estimated Bedrock could iFuse our beyond

provide to outpatient reminder facility XX% hand $XX,XXX, to settings January Before the In a procedures hospital increased approximately for Medicare ASC XXXX, CMS over and to and XXXXX I'd or code X. on that like using minimally invasive and respectively. performed Anshul, $XX,XXX by ASC it CPT XX% rule outpatient hospital payments approximately went effective and I to fees

surgery joint setting our centers. of minimally SI or XX% at in invasive an performed are outpatient procedures Today,

We over expect time. to move ASCs our invasive minimally of procedures more to

the these a it for ASP in and too believe it we serve. of business could demand this is assess be sites facility stabilization at significant early While to fees, impact increase tailwind

more the now on turn provide detail financial over call Anshul results. our to I'll to

Anshul Maheshwari

quarter and focused liquidity. operating afternoon, Thanks, My revenue comments leverage Good fourth will today growth, Laura. be everyone. on

Starting revenue growth. with

period the volume revenue XX%, prior-year for period solutions, growth demand compared year XX% was by the resulted $XX was quarter the and was year million, procedure to sequentially. Our strong fourth compared revenue in our total versus increasing prior the prior which driven XX% million, XX% and U.S. growth sequentially. Growth of U.S. $XX growth approximately XX%, in representing approximately period. to

prior were in prior of reflecting Europe, volumes procedure compared underperformance to approximately the Germany range, U.S. performance consistent $X by was the U.K. offset France low-XX% in year and dollars, in Across X% ASC strong revenue the period. with International period. million, maintained year growth the

the the low a single-digit gross reflects our increase XXXX percentage ongoing gross as The freight margin. in depreciation selling well margin from in trades fourth for strong XX%, instrument average quarter margins quarter was product quarter support cost impact line third from with of price, products, increase of to Gross lower the in new cost of higher new and as demand. deployment fourth

expenses X% the revenue increased prior-year of Moving higher compared costs million quarter was to higher leverage. and in associated in the increase The fourth to with Operating $XX.X investments to million operating commissions the by XXXX, $XX.X freight in driven and increased as growth, travel period. R&D.

a top sequential over the operating in revenue have fourth pleased was X%, years. expenses investments higher few quarter. board acceleration associated driven The the approximately scale rate On platform driven commissions the was increased rate performance we by the operating the times our operating by growth and revenue expense made with our from higher across quarter. leverage basis, strong to in growth gains the as We're last in the leverage X productivity operating with line

was diluted million compared quarter as $XX.X XXXX, or a for or fourth period. net to of net per $X.XX share diluted the share million Our in $XX.X prior-year the of loss $X.XX per loss

XXXX prior-year quarter the EBITDA XX% $X.X loss Our adjusted period. over of loss second-half in with of million, improvement the an improved EBITDA adjusted of significantly negative fourth over

Turning to marketable million with in XXXX exited cash $XX.X securities. We and liquidity.

we Our cash outflow declined XXXX. steadily through progressed as

of the XXXX. Our and XX%, compared the the of an improvement quarter to period to total over fourth approximately cash outflow improvement third was in year of compared XX%, prior $X quarter an million,

in While usage progress operating continued trades we to growth, instrument in to additional make expect support our plan and we investments to moderate XXXX. implants leverage in cash

approval a credit additional new million The to needed. $XX with Valley In years January and credit nearly access is includes accordion of $XX company the term million term our a to us to available if borrowing $XX delay the that with lower line costs, including facility we Silicon of a refinanced The $XX outstanding million credit. to amortization refinancing facility of bank. loan million revolving the loan by and XXXX, the liquidity, subject allows credit $XX have two million Bank, a new

our XXXX. to moving Finally, for outlook

demand solutions, portfolio surgeon experience our for to of momentum engagement. well as comprehensive elevated continue as We

in our pace phase of in are annual we international given the business guidance U.S. being and the to reacceleration However, early thoughtful the approach business. recovery of our of

we approximately we XX% $XXX expect Considering worldwide million XX%. revenue at $XXX to to of year-over-year of factors, to growth XXXX In million, these expect margin XXXX, gross approximately implying stabilize XX%. approximately

ASP Our iFuse-TORQ iFuse deployment expense trades XXXX. of gross well back degradation, margin Granite as from assumptions low incorporate the and single-digit additional and in half of XXXX throughout depreciation Bedrock the as

strong full to Turning growth to mid-single-digit operating line percentage in the XXXX. expenses continued top foresee in and operating leverage. the adjusted anticipate a XXXX loss compared We reduction operating We will at expenses. rate EBITDA on a grow based year

questions. over call the that, Operator? will With turn I for

Operator

the line Kyle Rose [Operator Thank Canaccord. from of first Instructions] comes with you. question Our

is line open. Your

Kyle Rose

And you for depreciation more appreciate the think about there? in you're about the gross Maybe a company? should ASP for how everybody. taking about the on the from to interpret I commentary kind ASP afternoon, I higher little second long-term dig seeing just when here. we and good margin bit guidance some question. profile thank just of the stabilization gross perspective the want just Hi, And the XX%, just margin costs. we a decline a of talk that that

Anshul Maheshwari

at and a TORQ the support you've two will the our is if of end sheet, trays XXXX of for line the million-ish see since Kyle, to both we XXXX. been the as a at gone look this years PP&E have north you what Granite. for balance instrument margin From couple seen Anshul. up from in you that And say, end $XX products, investment of in to million introduced see perspective, about, of of at demand we gross have $X as putting over new we've strong last lot

a are get trays these longer much three-year that period. a lifespan Now over depreciated they obviously for. They have used

to about $X line, of lot that of that's investment of margin A the margin Granite million the gross million X came XXXX. to deterioration. about depreciation points second-half about to in equate to will $X But your points of goes X gross which

trays We throughout to expect to roll continue Granite out XXXX. additional

So into that we as took account well.

trays. So I'd of is lot driven the margin a those the by impact gross say of depreciation instrument

year, sort on than of in make and still historically be And what the side, on we of is the are Kyle, but range based X% to of look to trend X%. we've the ASP that have assumptions we it's what single-digit low-to-mid been. ASP sort lower side early to days we always historically in decline on ASP around Now the at seen the tend seeing sort of we

margin So gross that's how we've sort guidance. our of framed

Kyle Rose

development expecting in on to launches. What the allocating Okay. from ring have underserved Very a early the Granite put market about you focuses product pelvic be are launch. before appreciate are But product still larger I pelvic the I to we perspective worth what helpful. commentary areas And the the the would and forward? the new focused cart horse, the should new a so think given And be you company? TORQ think resources you're being R&D that as reconstruction or other that company moving in the speak,

Laura Francis

market, We're solutions. fusion. the And market. SI Yes, we years we doing far, but opportunity company in the been Kyle, space. product and last what -- built leader went thanks the the the public, We've few when by the is were joint single sacropelvic a focused that in we've And question. market on broader we over in for are, capturing pioneer that

well products have in opportunities as that with trauma deformity in adult as well. so And we as provide us launched

that and very have an to we're for out additional play at pipeline speaking certainly do be well strategy So seeing products we we'll us, of that dates. future

our is we've what in these to term our we are that clinical we're development patients fixation market surgically treated. not and joint of now, spino-pelvic more an reacceleration really core and we the an adult on the it identified trauma is pleased right seen area unmet But of that SI that have need, deformity typically infusion. market near-term with about And in then is market but this really Also, capture opportunity granite because do focused where is a fusion, believe really market. we're opportunity opportunity core longer our with

So on education data, support in using a core as we're done, ways, of of focused to develop primary reimbursement lot and it SI order in market joint And our always reminds us we've particular in market. clinical that fusion.

have would today that in and and areas. in our have markets, on more development really the an is extraordinary So the adjacent on message that we're say we focused products market those future, I opportunity core we coming new in

Kyle Rose

the for Great. Thank you questions. taking

Laura Francis

Thanks, Kyle.

Operator

Thank with David Rescott Instructions] you. the [Operator next from comes question Truist. line of Our

Your line is open.

David Rescott

on Hey, just on essentially the It then taking quarter prior Maybe like end to for the of and guidance QX. in the thanks better guys. came was fourth where essentially Congrats seems the questions. ahead lower quarter the quarter. starting in off

for what wondering about of beat maybe way to just you out So set in about the thinking you're essentially the guidance part how be should thinking the went guidance we second XXXX? quarter the there and the right then

Laura Francis

Yes. on. and are for question questions Thanks, your David spot the

growth and the the the year, quarter, we really reacceleration and shows just in shows what curve with primary joint fourth fusion business adoption in environment. the the pleased to our then operating our SI was year-over-year are of saw the fixation. pelvic product of acceleration that XX% it continued with XX% normalization see We growth the Granite shows it sequential throughout It

with saw everything we that pleased So there.

October you, and very December. results little getting nice acceleration this In what more saw solid. we into were November is for terms But in detail of a

had $XXX anticipated that the us in actually year original So back first continued we sales. as to into $XXX well. And million the seen that what for of taking what we've range million into has is of quarter

So accelerate. is the just continued continuing to business indicators that

our growth expectations the the quarter for of acceleration first based first so And business. of the continued perspective upon a is quarter approximately XX% revenue from in the

for year-over-year, say last of XX% I point at a those here focus who growth this XXX surgeon in that probably that that the would were fourth surgeons, That's numbers metric. future And to did about numbers us, case I demand. would increase forward-looking active sequential in one at it's point, for And quarter XX% ecstatic indicator the least XXXX. great on the is up

Anshul Maheshwari

We've David, question for into a where break the your of Laura guidance on different I expectations and then, be a at our guidance out now. And from we strong, the growth. year, it months around would got XQ days couple or just XX down in know, us so. a as the tranches is behind visibility you next the sort pretty XX% perspective. of year-over-year few highlighted our And look for

about the set good business is in feel So the we how up near-term.

then on at by if -- it, decline, And think you're growth, even sequentially, the even think when low-double-digits. QX the been looking right single-digit which and as COVID, at you about about last to QX look years, we XX% Difficulty] but high [Technical it's you four

coming of at in adoption, ASP back here think about perspective. guidance, a trends, about sort a to how when preliminary into stance a was take highlighted So then look and tailwinds OUS QX. procedure pace we of coming annual think again, around the all we risk-adjusted thought we you're Granite recovery business that acceleration seeing prudent view it business from in a of the the remarks nice the And Laura appropriate

given January, the in year is went are we play of of better of rolled facility Granite and early nascent it's factors early the to we're tailwinds like what impact these into potential several could stages, But in the in some than that effect too could And right, and still fees see that that the being out anticipate. be. this out the

appropriately and bracketed So the risks there. our we guidance thought opportunities of some

XX% at margin. was of at through the question we the look, are and And are sure that focused But operating this will just really sort still progress and gross on we to a EBITDA that well XXXX. gross we to continuous us, Kyle focus margin is industry-leading the coming as pretty make to year. on elevated leverage good feel we around other margin increasingly of gross dear our that asked leverage as levels. adjusted And stabilizing about year into then guidance expect go we aspect stay see about to and seeing that into our the continue up at

David Rescott

thanks. Okay. Great,

then. So that just leads question to next the

I'm perhaps wondering, by gross XXXX through gross XX% is rate margin improved that on assumes there So may progress if just that there be reimbursement of as margins upside stabilization year? the is or brought in one, the you

still part margins, improving year. on second of the we estimates, expecting gross bit initial of kind then EBITDA based anticipating, our lower that, little just And than a were through the but

driver of rest just wondering rate maybe improving should the through be on QX of and think biggest you. how year, the that the coming growth we that maybe than cadence line the Thank seems to is So a since about higher year? of profitability of what especially top the rest the

Anshul Maheshwari

a that's great David, Yes. question.

just let leverage drive margin side. to on question first what's operating EBITDA to me take then go acceleration and gross going the and So back the

David, since all the being the natural about point we made business harvest So to that as last talked came pandemic. at going inflection we investments into and had throughout a we year, the public

growth our quarters And accelerate as trajectory. revenue as had where the growth, because growth operating of now And right? exceeded to you saw we've that pretty place. three the got revenue been really revenue in we've we're it's leverage with expenses. consecutive foundational pleased So sort accelerated, And has infrastructure well linear

do And XXXX, get into trend we as change. to think not that, is we that going

higher force, investments to infrastructure to grow our the to a go depreciation sales going we there are is going the going make in And will which are much investments R&D. but P&L. foundational right. We're on as in to We trades, still support still of make level selectively revenue,

leverage the to adjusted to see year, improve. expect the year-over-year as continue accelerates year, and the as we you the you accelerate, So progress EBITDA about through when revenue we think will or

improvement. might year-over-year, some an should we sequentially, seasonality have You see but

David Rescott

Okay, thanks again.

Operator

Bijou [Operator line of Thank you. America. comes Bank question Craig Our from Instructions] next of the with

Craig Bijou

quarter. Thanks guys. on and afternoon, congrats strong Good for the taking questions the

I wanted procedure. with start active comments your of Laurie, on to surgeon So and acceleration the I the core increase, the appreciate

to of if And in SI surgeons same of surgeons of of versus how any, fusions active -- of be then those doing what split? on line how adult wanted SI questioning, were surgeons evenly I you'd see the but much deformity -- those procedures. kind it increase from So active joint joint to the fusions much mix willing and information share doing in the guys previously surgeons? of or trained, new inactive to Is you

Laura Francis

an Craig, in I given we are important Yes. surgeon you think base. have that rapidly seeing a really active here, how we're the highlighting metric increase

If at surgeons I all us fourth procedures. in quarter XXXX, did of you had doing alone, that in we procedures whereas total that look in had X,XXX the XXX XXXX, believe for surgeons we

XX-month a that just in really it progress extraordinary pretty seen So we've period. is

And frankly, even XX% increase, increase since then a been the year-over-year I've public we've highest quite if and seen quarter-over-quarter. company. look XX% a it's So you sequentially a that

from So my really exciting it's perspective.

these give about lot want said, not company because market just of we terms don't see different that growth of all a of be And our driving the business. one or really market It's business, information not is areas, -- to to different solutions some With just the adult new It's of be that reaccelerating. of is primary a clear really we do information. we’re it sacropelvic business the the this provide a differentiation, that segment category. we least same usually just markets the our there fall and the at are of our out parts in product or adjacent that We trauma markets. deformity recognize as core into the need the

deformity minimally it adds, new versus you if doing if the interesting look made core versus And that it's adult you if at you market at markets around surgeon even you comment, trauma, the at invasive SI that look our those is fusion between those in of nearly that are the joint adjacent it's and look the XX-XX adds, products. just

we're we're adult growing and all SI ends. joint is trauma. overlap so where different we're it are this And deformity with come surgeons these pleased of different seeing also seeing And across performing from fusion, procedures areas what that

think So in we've really been products. a a and that we execution of really summary, few it's the to And on terrific education last years. portfolio testament over focused have how outreach we

the are leader space. We the in pelvic safer

favorable in We in think engagement year. market. to density is tailwind reimbursement have our this XXXX that core this And going and we surgeon accelerate

Craig Bijou

Thank last it. positives reimbursement Got months, a it. helpful. had That's you've over of you've mentioned a times of couple couple Laura, it six the you, call

in hospitals QX So one, bit NTAP the I are or kind I And about the the is anecdotal on get getting think much for guys also that on that and any actual joint color payment realizing SI wanted how it to reimbursement in had they there? to but is of it's that see ‘XX? feedback then know driving how early, you then growth of how of procedure, from you -- on -- win a outlined, and fusion the little Granite of much that expected that

Laura Francis

Yes.

question very XXXX. recall, X, On NTAP, And on NTAP you the effect on as the that. October good into went

our industry really of we important have little here really So product that a experience of about our over but this deformity deformity. just a adult adoption the Granite how recently adult that in our quarter factor is I cost issues for companies a a conference asked additional of without on panel was additional that in reimbursement. with thinking the a was these of surgeons. And on was at and we NTAP, questions think one

like technology payment a disruptive that technology add-on new the definitely like critical making something is so sure And is to Granite adopted.

play that seeing are out we at point. And this

to hospitals to to the the to surgeons where cases see is and going as this been importantly, be obviously, We are has important, paid, well. NTAP as and the starting

fixation additional while and securing allows interest to it meaningful, address to a the long construct. fits economics So product workflow Granite's design. need, strong and It the is to surgeon drive are the seamlessly think we surgeon the that believe that them into we clinical the fusion in unmet major of unique and also actually this due is

So NTAP. that's the

facility In SI joint what a bit the the the in in we're It's quarter whether driving it environment of terms it's of this just we're quarter. some we how minimally that with pleased the to of into but really are increase in acceleration reimbursement the first first talked what fusion, procedures begin quoted little terms fee XXXXX if certainly for invasive and anticipating. things how are going about is entering or the seeing point, normalized clear to we are continued a not at

Craig Bijou

Thanks questions. taking for the Great.

Laura Francis

you. Thank

Operator

Thank comes Ross Instructions] the you. of [Operator Osborn Cantor. next question Our with line from

Your line is open.

Ross Osborn

the quarter and taking for on Congrats our thanks questions. Hi.

Just starting in in there? U.S. do turning leadership this there you have business to And more as your business the the new been the team to follow-up, any resources U.K., plan off, has around year? and following progress a Germany

Laura Francis

Ross, with thanks pleased the to are and and is that businesses business. He on the France of stabilizing helping certainly specifically growth how is the U.K., in rest support seeing for the in while question. we're Neville Germany very focusing that We Europe. in the

entire also very meeting January him given in leadership think opportunity the a his is very U.K., team, with get a EMEA arms business. specific the So that in the team. around plus that senior Neville I There was much it to gives kickoff

training a and regularly getting of force first blocking the the just is lot focusing patients. and on very case basic And countries. and It tackling diagnosing the surgeons, these treating surgeons sales in of this is and

moves. that see average, usually takes it of those So us. months impact the XX with On to time sorts of takes

there right so as guidance, new were things information things happening under giving were And those on think leadership. but we the we considered are

Anshul Maheshwari

OUS that would improvement at half we loaded. see say, our be expectation What will best any back Yes. is is I Ross,

Ross Osborn

you the latest more share study? it. Got And Okay. able numbers me. to your from Would SAFFRON then be one enrollment from

Laura Francis

I think giving enrollment don't out actually we're numbers.

I plan be And think actually a give on probably detailed think I provide points key our information actually in to is XXXX at out we report that before SAFFRON. it will time.

Ross Osborn

quarter. for Thanks it. got another questions the Okay, and congrats

Laura Francis

Ross. Thanks,

Operator

you. Our of Thank JMP Securities. question Dave with next line Instructions] the comes from Turkaly [Operator

open. is line Your

Dave Turkaly

to trying we're plus your I depreciation of in all reconcile anything back? out Great, in and numbers some your ortho things U.S. procedure say, the staffing with freight, we the terms just think be coming what like rebound still thanks. about you the COVID, the domestically, in but tackle, hear you maybe other like let's spine said I'm of to like heard the, you volume the growth, I or back get some we've competitors you Laura, you the but given from of thoughts fourth just lingering some seems quarter, I'd that to say XX% mean as world, from are know where the I on but well, mentioned you OUS do have it way you I feel didn't might shortages. but heard saw

Laura Francis

room. at procedure an that the at the in a operating see And took I our excited it frustrated anything, a it. I in this about it’s pretty think But really is straightforward question. normalized we're that fact know, as We're where four do looking quarters Dave, about operating relatively environment. procedure we're interesting think at. if to procedures, our You was I if order

think even impact these these well. For squeeze on in or an of that and as prioritized in procedures. labor reimbursement part, with the some the are able it's improvements I do a sites have being a I most surgeons service center. procedure squeeze some cases, on that of in to surgery think that in we've And the outpatient seen the done will

And so all things those our working are I favor. think of in

Dave Turkaly

to nice, a which I thoughts landscape. like think sort there. Got to a just that quick little start to guess but And plan you're delay some this a where any if on it. been of of year? of We've transactions help of happen I'd competitive bit the where might things is bring And new then hear some maybe to M&A force some you follow-up again, seen you you reps the getting folks? on the it's and your gain

Laura Francis

pretty to point. to quiet come watch like particular XXXX was in least going It's back definitely what's M&A at our on the does this space. seem at interesting life, environment It because has

a growing actually too. good a of also things And We done then our done a of good see rep happy perspective. job reps it. we're a key very We've within we've reps, -- So of couple from job retaining to there's SI-BONE. our

actually support specialists specialist we XX% support more in do split promote a junior hiring territory, So a these territory when of manager. cases a clinical clinical we into

wherever opportunity it we to can does try and we from provide hire additional promote us So for within new.

leverage is getting XXXX. in of on more focus force sales Our the

productivity that territory rep the junior not. $X.X up a of million $X range million to or growing So to $X.X the million upon there's depending in whether

sales on are I pull of force given in these places trying so growing the our to changes versus thoughts from some own more And landscape. increases productivity say M&A that other and would our

Dave Turkaly

you. Thank

Laura Francis

Thanks, Dave.

Operator

comes line Thank Our Ranieri Morgan the next you. question [Operator with from Drew Stanley. of Instructions]

Your open. is line

Drew Ranieri

companies of may you through just talk questions, softness you adoption? from Thanks to Laura was just launch? And about just follow-up. fourth marketplace I Are few point, right any have affecting -- in can out the taking go quarter. have the supply have the think you And about this ‘XX, in factors talked that are all Granite a I rolling already now? do asked. adequate at a you This a are then terms set environment. and to the incremental growth for back about in rate that seeing you or as Maybe question headwinds demand these Anshul. perspective, mean, a you overall the maybe But seeing meet Granite seeing on do

Laura Francis

our necessarily QX. also fourth softness I in growth Yes. Great, the or our any even further acceleration can year-over-year in seeing shared market is any environment, an see, QX, in thanks, part for we of as terms the And see quarter. the impact Drew, to you of particular in weren't as of expectation

last the though, question And that think, question. the I of part do right is your

at develop use to least really a our for going take quite in construct market at spino-pelvic opportunity Granite looking opportunity joint very that's also unique, with are and case Granite SI they for is long and really SI-BONE. deformity, surgeon adult versus the and is that time are of us markets more to procedure fragility and here perform it's in the to fusion With -- those Our fusion. fixation core Granite and trauma fracture, with

our been products. So in opportunity previous uptake there's have potential for more a Granite than rapid there our much product in

in -- enough But have implants we the what's field. that important the here is

the instrument on we're also the can going to enough procedures have just the approved I that be And last trays progress field. various when We in tell we few hospitals then performed. extraordinary in at are months list you, where And these -- factor the we've were implants, in QX, of us demand. to try we more some keep to even that spoke of started in trays middle towards more it's giving up the we was bringing and and But November, a for rate-limiting this the so us. ability with made

the the that demand we feeling front the confident implants our Granite. definitely for meet And product, and have pretty Granite probably point the we fully but recognizing on in focus of trade for can so both -- I'm us it's opportunity of with primary that

great made we've on addition, that the sure various list In is at hospitals. on approved making Granite progress these

overall, spot this approximately But So have are remaining at through we there. we're a to have we a them tick continue and that approved that Granite X,XXX point. hospitals of their now on list few good in

question. So that I your think that, hopefully, answers

Drew Ranieri

for few provide in taking second, framework XXXX, for you means coming growth, just guidance better you. Great color. us kind can of of a terms strong and can just questions. growth but help times the fourth volume growth? maybe on ‘XX? any the your And quarter volume what we've in frame contextualize help about Anshul, us expectations CapEx acceleration tonight, just maybe And Yes. for Thanks for then volume you talked off Thank

Anshul Maheshwari

Yes.

terms months, that breakdown of last degradation there. perspective, of that's from which ASP between an to our what volume to put So and our in had X% growth XX ASP volume ASP in what's Drew, X% degradation of a sort between having similar assumptions are is growth revenue we've sort is

of hit if do you high you be to able XX will the the range. the volume to growth should give that of to or the where an low-end So math estimate be -end XX, the of

would OUS, be a growth, said and is faster in within even previously and the U.S., the question, more is the like our an And well. muted I back-half expectation OUS growth be lot earlier that to as more U.S. loaded to going

the of volume sort side. on that's So

that and significantly trend the on of and disported the year years, first-half be about terms acceleration, the how should the the been that's unfortunately, of we've it's progress you three something by at when COVID. you a sequencing in Now last look internally talked as lot through

bit layer in two the sequential trend that that QX. a look launched of a difficult the trending like. what some So to QX what look on say the years, more it's new normal last really like from would it difficult to say you makes to then would going And little we've even products

But QX, and Seasonally, bit QX like that's a is growth again. see more Laura trajectory year-over-year. said, now. little think that. you And we at you'll ramp QX we about expect sort you will QX higher think be we think to have flattish same of then XX% than that be the

Drew Ranieri

year? CapEx for Got then it. the And

Anshul Maheshwari

still Granite perspective, on focus is the should you more perspective capture about. similar from for to going TORQ key trays be spend CapEx trend because but continuing to would saw a we'll last the to from be to put continue to I CapEx year trays, Laura very what out talked the us opportunity to be say a introduce more able

Drew Ranieri

questions. the taking for Thanks

Operator

the comes Thank you. Company. from of Saxon & [Operator with line next Our Instructions] Needham question David

open. is line Your

David Saxon

and the active into count? quarterly doc the for good to Maybe X Hi, strong past, terms I'll questions. maybe you surgeons, X then average year. I thanks said are I afternoon in wondering the expectations on of in what Obviously, for start XXXX was per range. in taking And active think really procedures the is surgeon your the

see to you to that some portfolio? would months think as go XX could the next pull-through hear you where XX over So across the love I

Anshul Maheshwari

David, happy to Yes, that take question.

we've quarters of active growth, double-digit surgeon of terms again, growth. eight In had

QX in I is mid-teens range this So about to when our XXXX. of year, it. QX it XXXX compare the expectation growth you feel really Coming good the end of at into

guidance there. guidance points if delta productivity. give And versus about think in you the would of the of XX to to the come reference range you of XX, from base range that increase surgeon Just

to We case. getting are have better reaching surgeons, creating them to control first we out on them making and sure

think adult and the that do procedures as we the fusion, that doing procedure, about we've million an expect surgeons cases. with deformity deformity with closely the get broader also then we that works really why get that's team an fusion on the And X them we did SI how limited Difficulty] surgeons been SI to But for can the But sales joint procedure. XXXX adult even more time the many [Technical surgeons of period joint number the adult example an portfolio, then where case. focus first of because repeat the retrain to

them can at be that and So postpone procedures with fusion base SI we on to there of existing having stop per is after low-hanging surgeon density But this conservative well. want as we this patients go fruit sort and diagnose there that surgeon point.

David Saxon

up That's the helpful. that think you Okay. script, just super stabilized on in margin gross Anshul, follow And said maybe to then margin guidance. the gross at I XX%. wanted I

taking thanks implying So for is questions. you're slightly so that? does that that exiting mean guide at XX%? you're Or exiting the year And of full-year kind a the much below

Anshul Maheshwari

you word glad caught I'm that stabilized, right.

differentiator because you we will trays which, to competitive at our expectation XX% XX% will end So the to it is roll again, that And gross that around similar year huge margins at out. for we is expect us. look, stabilize saw continue in what margin level, XXXX, then the industry-leading, they're to mark, a gross

beyond forward. So work that couple hard from And there margin those gross you are to XXXX continue out things we will play get as going of gross margins a maintain to a will perspective.

you you capacity We're TORQ on to right? more XXXX. newer capitalize some are Granite done trays when in the the on starting the that a demand, the and with significant roll is we've off, to in launch product, And with that you is, market see able So older XXXX. starting One roll-off be replacement to come effect, have trees capacity. of what a that do with

gross one. margin stabilization number some on there. So That's you have

these potentially scale as into cost gain taken yet for because we products. is improving that products those right? start you still early two per implant in both the account Number time, seeing So haven't also the it's market, over

David Saxon

helpful. super taking Thanks questions. for the Okay,

Operator

to now would to showing I'm for queue. you. Francis I closing back no in Thank the over further Laura turn like remarks. questions the call

Laura Francis

the call Thanks, Towanda, and for of today. all thank joining you

heard a that voices, economic the we're our I'm us you've procedure opportunity strong health optimistic of we're in surgeon favorable momentum, of growth sure in on about sustained demand seeing also and we're environment, a and the I'm growing the Based XXXX. As ahead entering bullish interest in period U.S.

at to to be we're there Las also meeting of see in Goodbye. the I attending upcoming going you upcoming say wanted that and AAOS some events. as Just hope to well as Thank Vegas, investor you.

Operator

for Ladies gentlemen, Thank conference call. participation. today's you and your this concludes

disconnect. may You now

SI-BONE (SIBN) 27 Feb 232022 Q4 Earnings call transcript