SIBN - Earnings call 3 2023

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Operator

Good afternoon, and welcome to SI-BONE's Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes.I would now like to turn the call over to Saqib Iqbal, Senior Director of Investor Relations at SI-BONE for a few introductory comments.

Saqib Iqbal

Thank you for participating in today's call.

Joining me are Laura Francis, Chief Executive Officer and Anshul Maheshwari, Chief Financial Officer. Earlier today, SI-BONE released financial results for the quarter ended September 30, 2023. call press I'd available that federal like are make are during the to or website.Before results the management that securities of statements statements begin, forward-looking we to call are this harbor laws, copy which to expectations the release meaning statements. on is company's will within A the include of provisions Securities events, the Private that forward-looking this remind made Reform contained Act performance in of pursuant predictions or future Litigation of safe of XXXX.Any statements related you These forward-looking and on company's uncertainties. inherently current statements expectations are based and involve risks the by examination and driven operating products, include for such training and statements expectations continued products SI-BONE's surgeons, the active enrollment SI-BONE's and undergo forward-looking environment.Other health our impact risks chain, of and to products ability include the our of to and introduce potential and economic risks as weakness supply risks the of estimates ability and upon and operating commercialize and future to re-normalization clinical current financial care trends favorable surgeon future indications, our maintain to are patients on desire expectations, of new ability product manage its its capital impact requirements procedures, new These to ability elective trial the and adoption, to of for new introductions based SI-BONE's procedures, various the reimbursement assumptions. certain the EBITDA this call, materially These these statements.During implied from may or could actual discuss those by statements cause results or involve material differ results. non-GAAP events company's to and risks that including uncertainties forward-looking adjusted measures, management anticipated

on earnings today. to of company's these these statements. please issued reliance not non-GAAP Accordingly, earlier a release accounting, place the GAAP undue should reconciliation For measures see you full

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

Laura Francis

a XX%. in major confidence revenue our of performance, deliver for Thanks, third afternoon, Saqib. thank us procedures.Our the number updated in to as XXXX, EBITDA quarter goals.We compared also U.S. cash also record demand U.S. cash nearly Good performing reflected revenue in in history, XXXX. to profitability the the X,XXX surgeon I'm This for the adjusted is revenue period. you time third XX% revenue our in milestone of allowed the of joining defy the moved the revenue guidance and for record worldwide generated consecutive our surgeons flow worldwide third company's XX% revenue million, an of of million, which proud first with of growth sixth the was result quarter led quarter.In to quarterly continued the active achieved to X,XXX for improvement into and XX% growth we of quarter trends compared and outflow business $XX.X and prior in exceeding The seasonality represents by XXXX year us. solutions us and closer the $XX of translated robust loss to breakeven of the strengthening industry quarter increase growth

for the and focus strong initiatives, this for million want market to what a demand and to and platform growth.Before our in across to we persistence believe to be look for capitalize and opportunity breakout As annual deliver employees of we're X.X to with consistent us on position prolonged nearly create key their procedures, unique I progress a expanding we thank revenue toward portfolio discuss positioning our I XXXX, deliver our distinguished growth.

our execution drive impeccable helping of of key reach up update an ensures me stars.Now, rise sales growth. mission our Your let we the long-term Starting leadership extend on look infrastructure. achieve we thousands and position patients our as initiatives with provide for and to strong

base. our sales biggest expand team portfolio product asset, surgeon is as direct Our we our and

U.S. well Our comprised We the as our the clinical support coverage. in revenue are several quarters network for quota-bearing as the territory a last our growth organization specialists third complement end leverage of our of third-party sales investments the outcome XX world-class was of growing organization.At the over and of managers. managers commercial case seasoned quarter, operating commercial territory agents with

on U.S. growth of of active place the of third over surgeon a had the quarters. exited surgeon joint awareness the perspective, best active SI in clinical a trajectory approximately perform larger least X quarter last We put number which half procedure demand.This focus XXth nearly We indicator with XXXX, U.S. minimally deliver has needs.This XX% level gain third the surgeon in surgeons, the of surgeons translated nearly revenue the average U.S. to strategy active double-digit This have million, in sets is underscores performed surgeon productivity procedure. over over surgeons.To and procedures our fusion also of a territory the into over at quarter average selectively the instances, instrument as XX% all we quarter the approximately fracture well expanding pelvic forward-looking on representing comparable hospitals trailing base solutions This XXXX. to growth driving X,XXX as our to trailing in a to at surgeons U.S. portfolio long-term and high-volume $X.X us meet X our third added And XX-month allowed of or fixation a year-over-year both U.S. over engagement consecutive years volume surgeons it hybrid quarter and elevated of through X,XXX XX-month perform education, growth is the several this In in XX% representing period.Moving our procedure procedure. engagement. in surgeons they per growth also active interest we invasive proud and of outcome milestone, of quarter, building fragility the now, business. in address great evidence unmet performed of of quarter. We're growth a of was

growth complementary We now the iFuse to October, capacity new to value the quarter, reaffirms that market also was of in confirm another the Granite, procedure and strongest iFuse-TORQ drive reception additional our and Granite's increase engagement of it SI recent over dysfunction long Bedrock the treatment increase engaged thought and the when trauma the Based insufficiency volume consistent current the the procedure sacral diagnosis fusion It engagement our success driver encouraged the iFuse using as fractures. key XD, the of in iFuse-XD solution us innovative, opportunity of performance per Bedrock successful third and our for care At that driver quarter, to we're by the conversion as portfolio the for as joint The address our and of quarter joint successful with center volumes launch and and we choice well extension around its looking product year. and procedures.Moving annual us complementary invasive quarter has solutions, existing SI of introduce our solutions. procedures.In in adoption a the Closed our year. technology the event the as line Head for pace delighted of the covering surgeons fractures surgeons insufficiency importance provides important for trends growing joint surgeons major of positioned been surgeon term.What's deeper procedures top demand. and clearance U.S. us fracture.This complementary exciting belief becoming to interest expanded expect equally next Granite excitement trauma the surgeons. by Granite as SI remains are procedures trauma, surgeon over Granite a incidence increase in surgeon XXXX. seasonally In insufficiency trauma Trauma has tremendous the products time.Turning fusion SI with to adoption on deformity.IFuse-TORQ of outstanding dysfunction, the were surgical to to us with products versatile for XXX,XXX due performing The is the trauma sacropelvic Granite, our third a of solutions an of the to also portfolio strategic iFuse-TORQ we're well standard for to address for over an surgeons our degeneration. trauma for construct avenue performed U.S., trauma poised iFuse-TORQ X/X with underscores joint adult as to historically, seeing pelvis.Following there long sacropelvic leaders and minimally the positions in recent of our Association Orthopedic iFuse key implant, capacity we're and and of we're of is in growth procedures is over leader is competitive

and of in Granite, pull-through consistent procedures, long-construct provide today. and demographics we're patient our pain SI for like we the the the penetration the clinical Granite X already degeneration it and correlated factors.Adult-onset fixation is either to per BMI the and where data points average was the fusion cause The is average also also line asynchronous population our rather biomechanical side in had Based American significant procedure over pregnancy our high joint. selling With factors direction scoliosis Adult will over combination years.Along Granite our from between our on in growth, seeing of female disorders, the elevated a spinal This crucial sagittal impact price.Before genetic, scoliosis. including were idiopathic and determine implants in adult of would backdrop, next question expect of with the opportunity us the study the adult position account hand INSITE to degenerative driving events, age that of the those and of a BMI is market, There's trauma foraminal not procedures. I our adoption BMI scoliosis skeletal scoliosis, across of to in average global for This with with I'd GLP-X in call incidents of scoliosis, child.Additionally, changes is likely of which will to the to of deformity classified decrease itself making multi-level dysfunction, a at We the which a since and childhood, is, and or had opinion, women, BMI?Against sacroiliac extension presents the load compared muscles believe associated spinal XXX,XXX of of sedentary to XX% using significantly the of abnormal spine patients Granite altered to significant correlate Anshul, the average BMI no pelvis which on with a demand with worse consistent nearly transfer that function on BMI.Within scoliosis data pain of and the Journal treatment annual in effect data term.A can gender near from the XXX X SILVIA the XX and of cause and results does be XX the typically age more resulting for outcomes shorter would surgeons and that or growth over it clinical degeneration XXXX are lead XX, driver for some greater products approximates around of or driven procedures growth as it by causality. over a in have adult-onset joint and XX. XXX portfolio products deformity evidence of it for accelerate X/X be cases this in target cause on high or traumatic XX, spinal strongly the was of growing joint hereditary over studies background previously with some starts trend achieve higher the meaningfully study, patient a incidence central difficult the immediate Spine condition to patients of BMI a our and BMI therapy deformity which or sacroiliac impact several with Americans. costs for due appears closely patients at of tend family BMI but and generally average over in patients. stenosis.Based adult our studies, SIFI least patients the the studies, idiopathic SI painful clear spinal systemic that neuro-boney spinal XX joint widespread XX the [Indiscernible] the non-obese supporting and impact to of drivers on ligaments between U.S. have Changes indicated the joint than These the and degeneration mainly an SI than in patients across with age-related by the average dysfunction SI can misalignment joint produce joint. lifestyle GLP-X. in of perioperative demand of asymmetric higher primary was at XX%

want As surgeons available, if morbidly indicates not weight as such, to operate into feedback more for and obese come from tend GLP-X spine may that patients management patients, widely lose our weight. new on consistent surgery-ready to funnel they surgeons patient becomes therapy the

increase generally about data the and target eligible causes history for candidates people musculoskeletal related physical procedures.There's our of of GLP-X are the changes. is our genetic levels events, will pregnancy known longer, live factors, as states lot gender, to primary age-related a impact they activity that drugs, Additionally, not traumatic of become disease of and still but shows that their

there any, is of would lower degeneration, on to potential of the to premature increase patients.With the the surgery-eligible average term, population it the GLP-X, predict hand BMI over in for be intermediate long-term While the that, number musculoskeletal I'll our to if implications Anshul. call

Anshul Maheshwari

quarter on Good liquidity, operating leverage everyone. trends, third end today our with Laura. guidance. afternoon, Thanks, XXXX and focus I comments will my updated revenue and

same our comparisons Additionally, with unless revenue. period the the section all highlighted third prior be my in quarter stated versus year, the in will otherwise.Starting

approximately we million, representing $XX As delivered growth quarter XX%. worldwide with Laura noted, record of another over of revenue

Third increasing quarter million, XX%. $XX.X U.S. approximately revenue was

nearly consecutive the U.S. revenue driven quarter by by demand which evolving the case approximately growth of XX% procedures.The volume was the rose the underlying over reflects of are quarter the in for revenue. as use fourth was procedures procedure highlights in in to pelvis, an increase in the expanded International revenue Granite saw performance in $X.X the ASP patient The by We Our our procedure in to-implant quarter. million, in degenerative the U.K. volumes, cases growth resulted implying in Granite in U.S. XX%. mix the and encouraged flat strong improvement France

We Europe in are focusing efforts revitalizing growth rest our commercial surgeon Germany and expanded the through on of engagement.

Additionally, the leverage. operating on gross we to body working are clearance in to reception for EMEA.Moving TORQ diligently TORQ launch notified given U.S., the and in margin getting

instrument higher by associated Clara cost procedure expectation. to growing gross trays demand the costs.Operating reflects total million operating of TORQ in Consistent in quarter expenses increase for of $XX.X associated in X% quarters, was depreciation higher increase Our Granite, depreciation impact our in and with with Santa the growth in deployment from in recent margin commissions our as with XX%, facility with as and The gross the line freight margin representing the higher quarter, R&D well of and in product the second increase mix, and were other support the activities. the commercial was expenses growth. driven revenue them,

R&D robust investing proud breakeven. quarters.Going revenue are operating we sustainable progressing while investing the research, to that strong growth, are record We towards on to of delivering and clinical revenue growth healthy in several track translating last leverage our which remain forward, to in of and infrastructure demonstrated then focused over drive crucial and

sequentially the the for of $XX.X loss to by the shares liquidity. $X.XX net and of prior EBITDA offering. Our $X.X loss in million net sheet, Adjusted marketable securities. to outstanding a was XX% quarter increased loss.As of improved the earnings compared or in $X.X or balance quarter to share solid cash were in a diluted year including quarter the the approximately XXXX per approximately also with XX% diluted million share follow-on million reminder, a share Adjusted from improved stock million for impacted diluted third reduction May by per number per EBITDA representing million XX%.Turning a third $X.XX the period. the loss loss year, net exited versus $XX We prior in in the $XXX quarter

building Our cash $XX.X while the to of XX% investment guidance usage million. in full operating moving trajectory the cash for third as a $XX.X our the in anticipated worldwide an quarters for quarters we incremental making Based to of year. million, exiting in activities million used of to last our including with X long-term year demand first the On well are revenue support quarter momentum our was initiatives, cash was several products.Finally, improvement guidance. year-to-date $X.X strong throughout pleased the prior our new performance are basis, the utilization on surgical year.We as XXXX, compared capacity the in the growth in the XXXX updated quarter, increasing

Our revised from approximately growth year-over-year $XXX is previous $XXX XX%. to $XXX million, million to to guidance revenue range of XX% previous up XXXX guidance $XXX XX% XX% of versus annual to worldwide the our million of million.This guidance translates revised to

area quarter to operator to the over will annual gross the that, approximately turn XXXX due discussed be fourth earlier.With to implying margin be questions. to XX%, call the the gross expect We factors for the margin I XX% in

Operator

Jefferies. the [Operator John of Instructions] of line ] comes Our from first [ Li question

Young Li

BMI lower have of quarter hot color surgeons on guess a GLP a I or in the start, potential a record near-term volumes spine that impact? can mean I increase I as comments about to guess good a wondering, the quarters from patients of XX% into impact. appreciate companies that just It's reference topic. fall have can the quantify on and a they X the ortho point. guess some I'm Congrats revenue. talked back I you funnel.

Laura Francis

On just I overall probably the talking about think the the Young, GLP-Xs, right thanks for market is question. place to addressable start.

procedures. an of So million -- market opportunity nearly annual we're X.X our targeting under-penetrated

confident and of the And so state general patients. we in a strong remarks disease runway our have talk did of we're in my fair demographic amount and makeup growth.I to cause the a significant prepared typical about pretty ability sustainable deliver our the and

companies, is XX, did on we genetic average actually that the here BMI I want well not surgeons joint SI more is could highlighted even include instead question number there activity, that are a have discussion, as on the they'll loss management in state, that and [Technical significant we've a risk coming giving is asking saying history and from significant that their American.So, study, what and some incidence we as did of consistent had SAFFRON for on some there trauma opposed percentage provide funnel.But, XX as about mention of we feedback on downside therapy kind and impact we're candidates will that between dysfunction what don't the don't the which and as SI flip average going upside that's is BMI more physical morbidly other we BMI company.And more on shared And did joint are and not events, talking studies. in an with meaningful what become spine indicating the eligible that primary what could for saying information procedures pregnancy As longer info to levels data do these increase is operate based we're for speculating a weight that And it that become you're to SIFI Difficulty] those tend is surgeons and the trauma that specifically patients, if GLP-X gender, studies, from trying patients we Instead, we're actually, you INSITE available various of the they a patients of as age-related the or which our well, into issues changes. causes to disease and have that we're surgery-ready dysfunction, and as traumatic the be, to the of that of I'm our widely obese is like here. believe average factors, on some what decrease side as we that on actually demand, is ours. to would that received the well generate to opportunity an of live then, think deformity people be that's for

Young Li

That's at Laura, very I'm on guess, inflection so the comment what call, third I release helpful. wondering the to in comments early momentum, seeing great. press with on your XQ I the on the for of All If the exiting strong you phases. talked follow-up. it. momentum mean, you in year demand kind guess I right, about I are you exiting quarter. far? can guess,

Your sort comment XXs the XX%-plus growth the XXXX? for implies year guidance year. Does imply takes of as can about well. puts comments -- high What and for growth your year next you for for

Laura Francis

a So, I'll again, a I'll is talk bit Anshul about about future. QX bit talk our I'll little question, and do performance more Young. the for have What the more little thanks,

typical record team I'm thrilled in shows performance. our our and strong it's So these execution, the for another summer deliver seasonality see It our results despite to that quarter energizing really delivering you QX and time. outperformance just with

shows XX% So it quarter. set only consecutive surgeons benefiting for entire well the X,XXX growth which delivered as the a additional as about we year.And saw of we a procedures, are do surgical seasonally very from had surgeons XXXX hitting It does and across quarter was of X,XXX strongest and quarter milestone the active procedure volume a just well that excited Really in up different in strong $X all really the less here been quarter, that that million in position we strong the we're at look EBITDA improvement, and our used you if is it you than a in just execution proceeding we've really little it great the a in bit And it finally, that only I going XXXX. more was volume. fact have we for growth really forward. And certainly position the restate, about fourth fourth adjusted rollout TORQ XX%-plus over let in XXXX. U.S. mentioned Anshul us it procedures of growth.We that million X.X then major in puts to cash loss still able around U.S. into fourth here our quarter to your but our the the me question, Granite forward.So of about last a untapped, and capacity, in XXXX. us with talk show

Anshul Maheshwari

Good to own Young. just With that demonstrated to guide, than is was Hey, expectations what beat we've the we're that year, our which updated as versus guide, Yes. higher connect. we outperformed this regards strong reflected market and throughout our because execution and we've seeing, QX by. our some consistently of in guidance the our demand of

going higher the really feel surgical year coming about the demand of ending capacity significantly third we quarter surgeons very the quarter. active we and into the trends, focused good that.We're number record So the fourth were on stronger, into the given given than

Difficulty] our So we're XXXX, talked term is strong. [Technical earnings. about, well the SI-BONE. drivers like quarter just growth very really announce quarter But the we'll and long in when focused when fourth are for the guidance specific there.Now set think and you terms a we in on We're executing about to XXXX, get of Laura provide robust fourth of up to

early That's demand The us that's add in a allow plan TORQ. and portfolio, to life and more. of our surgeon and Granite surgical for going to their the capitalize cycle.We've So, product remains record to through our on increased capacity stage the at initiatives interest TAM elevated. level very expansion

well and the good good engagement.So with caliber And out from feel [Technical in and the planned we levers most then well hybrid when really but even we Granite well. the our set deeper extension future, to really that in the XXXX our Difficulty] way is And feel playing as model the combine be and it a beyond sales positioned line other setup going drive Feel of perspective, procedures are that. the for we force into that. have as rollout about we're these you expected there. we the So last very pretty the to products that XXXX about TAM surgeon

Operator

question next line of from comes of Ranieri Drew Stanley. Morgan Our the

Andrew Ranieri

for so Maybe Hi, surgeons of significantly. on just to kind It like Laura up quarter-over-quarter the average and kind a held fairly utilization start of utilization moment. Anshul. despite going consistent looks

about one, on maybe of utilization, to adoption newer can seeing us you you're terms you're on So of products? kind same seeing in there what level? drivers what talk layering just kind then the a surgeon some of of and And

Laura Francis

Sure, to that. do happy

the I'm about we the above to point active go the our In back So, time to in quarter, going surgeons. history. were for X,XXX first

think surgeons XX% it's procedure. and a that's about strong growth, so that talking XXth number.So, per what is And X-plus quarter growth, double-digit consecutive indicator, and quarters I I of plus think the you're forward-looking our of XX% growth in that

procedures pelvic we're or do to just ring are from that all I seeing what perspective, those bit if you approximately around whereas primary core the seeing of is joint fixation of surgeons [Technical surgeons from pelvic perspective about about Fusion, with half doing half that fracture that so business, SI procedures.And a procedures, our one the other some think X adding, we're for so, Joint our do SI we're the talking that not procedure, is Difficulty] procedures but little And think ability us. surgeons

with our a And So keep types and adoption us procedures it's as have of is, procedures. our we're on procedures surgeons well. then have educating to We training, residents doing widespread a additionally, use we multiple are do to doing multiple what of our us. tend to focus in and fellows the surgeons point ensure next that been generation of for types of focus

Andrew Ranieri

quarter. question third -- Got about of it. I a But And for the XX ending mentioned reps both in think maybe you this you had you. is when

productivity and has rep that, breakeven opportunity how So bit sales your a down, maybe kind you're force willing expectation productivity sales of provide can maybe you the been moving a what eventually is to and translate talk for moving yet portion a higher. But direct and that EBITDA leverage sales number adjusted steadily is of Anshul? little can if more about the time, into

Laura Francis

revenue So, here. you've out question big over with fiscal approximately in you year. adjusted in growing I'll actually from XXXX. of to $X.X per been this and it's what we we $X.X our goal think very towards just million at with here. is that last productivity for operating $X.X the different EBITDA seen have that into months been progress last We were million.And revenue territory, seeing gains so, were our to that's leverage we've driver XX least trailing now that And saying our start quarter at window pleased a a of of are -- in We're your we $X things entered that number productivity in several is last quarters, territory $X for million, per sub we million that history million company $X.X and breakeven.If per and the our be the the between million driving about the are that of year there year did

we a would model And just the highly of quota-bearing the caliber that mature, point. our second that a would So thing reps.The significant actually I seasoned we be the increasingly of on commercial that have that is this first really focus thing have is trained sales first at group hybrid force.

the leverage supported of by getting hybrid help said, And working we're these cases. there's force very utilization but are had cover a we territory specifically that last those, XX they're sales cases and we of added products of XX our them support our clinical force, agents we from who to then, seeing cover specialists have who what well, actually model. what managers, the as of So that is number quarter, with were significant with is some with anticipating sales product.And perspective especially new and a we Granite the as so, from commercial our you

Anshul Maheshwari

and we quarter, quarter, year-over-year were when be And EBITDA, is business, trajectory breakeven. seen we all when points not improvement the at about you operating in adjusted our then, to the to for EBITDA. XX% the on -- But Year-to-date, leverage than our were at Drew, XX%. think adjusted you what's driving we're Laura about we've providing more think get third in for specific of fourth side, highlighted I the the EBITDA going timelines adjusted

So breakeven we the good leverage. trajectory growth. that.Our where to top really linear pretty to feel see is That's about line

deliver confident flow like and So, adjusted quickly to progressing EBITDA we pretty well. our go a adjusted And cash as ability in improvement annual breakeven forward. breakeven from that we're as that EBITDA in we're year-over-year said, quickly towards very after very Laura

Operator

of question Our line Craig of of America. from comes Bijou Bank next the

Craig Bijou

procedures. the Congrats pull-through I the dynamics. And the they're doing some were active If I pelvic pull-through wanted if with, start, a if the surgeon Granite seeing some I the and they ring them strong you on got or then the joint on to to any to quarter. if new SI are do fixation you're -- another and -- core using to wanted from that new comments fusion start SI-BONE appreciate of surgeons of procedures.

Anshul Maheshwari

our spine in in procedure a connect. core we surgeons points surgeons going we're fusion. in SI new active in invasive adds both procedures There with to the were joint that's surgeons, the and a launches that again, that cases, procedures.So fusion XXXX also that that but Craig, the highlighted is had then, Granite, pretty us, are and doing of a penetration portfolio driving for to other with beyond. sets over try that we're our product joint overlap well across we still invasive us for as prepared of perform early and is take opinion minimally basin, volume as leaders that what just franchise interesting from SI seeing thing the a X/X that of adds nearly well. we're along very instances, deeper was Laura degenerative work in focus to around halo who to with question, on from procedure diversified surgeon did it's good denominator days, gives surgeons were seeing And but X/X who of a year-over-year SI actually half optimism Yes. invasive the that's build us the did about volume we surgeons, lot terms data joint sacrum.And trauma couple trauma, with that up those surgeons to the in that getting going minimally those grows, trauma.So driving deformity of of within remarks key towards One seeing good using and the a business, as the were they and adopt trauma surgeons her minimally Happy nice

Craig Bijou

then, helpful. That's And one maybe it. another you. for Got

than the it's little in QX. gross or it's to step you step a margin to again bit we expecting said P&L, So, down lower down that came just so then and were about supposed going in talking

'XX appreciate So, year. through to going that we're of about about to want comments, growth, of or going And 'XX, same but understand just the when Can to just trend think, on you and going forward? I do guidance, give the those you're for trend, OpEx? I again was margin forward? this not OpEx, gross how think the know mid-single-digit kind the kind thinking expectation but

Anshul Maheshwari

Yes. Thanks, Craig.

with the as So, And impacting have Granite. cost on the margin evolving and the total the gross mentioned, was and is procedure margin It line of our not product we trends changed. especially gross that it expectations. really higher side, our in given TORQ mix, are

this year We have that last [Indiscernible] we're demand to support capacity year throughout building been and seeing. the

from terms depreciation the goes capacity put seeing margin we scale start through we year. Difficulty]. to trades instrument us, the cost got to you're [Technical also the as focused So P&L underway increasingly and you're also we've our And third down seeing EBITDA initiatives that down fourth then, trajectory, of very going to in adjusted bring cost depreciation in as in of lot on of products and bring work third the of I But are the earnings.And a of a that our important you of the for going the And get sort quarter.So we And functions, that that fourth us gotten from P&L well. not in quarter But to look, provide capacity line and a quarter, additional think and what expectation to the fourth across decent improvement. about what is allowed our that our investment standpoint increasing that's we that as quarters operating progressing next gross that growth till to our exit sales and is now new has to modeling could proxy the get serve now. as is our gross right we're products, information seen we in the towards you've to provide on in go think margin into the when guide we've several over surgical last top G&A reflected and breakeven. marketing, leverage

year-over-year. more mid-single of So well, XXXX that.In do we about the our leverage pleased to we the up very year guide, in once to that provide going terms the color feel be OpEx good expect OpEx trajectory linear. We'll we because the revenue on And as the said as of be we've provide is OpEx we're digit OpEx seen. XXXX I about for earlier,

Our OpEx be to linear going growth. leverage is to revenue

Operator

of comes next Company. Our Needham & of question from David the line Saxon

David Saxon

a question utilization. follow up and Hi, Maybe to about Laura Anshul. on previous I to wanted Great. start,

go same? or you the of them wanted per Is X doc or per long it does products to -- any cases to X.X so ask, like volume looks across then, your term? docs, how to quarter, that the longer champions think levels? about ramp current higher when are ceiling where of take the higher surgeon they kind So, just generally the in And their did

Laura Francis

Happy question. answer David, Yes, the to thanks for that.

at for staying reason relatively how procedures our And under numbers though, rapidly of per utilization X part Our has that, increasing. little the consistent are surgeon is a been quarter.

been So last at is very I said, the denominator increasing the point. it's think quarters over plus X I significantly.As this XX%

surgeons, adopted numbers And that than surgeons that. practices, procedures. consistently their champion into procedures what's of you out Whereas going call their be are kind newer happening, what have just higher starting to highlighted those our and so significantly is are we it those, surgeons who

So they're growth we're be average.So, the XX% in overall, consistent staying going bringing down surgeons. to with denominator that even of

us, the the in X that types procedure very every business for with going markets. bodes at for the of forward and start future really in these well one just So, different

their per then quarter, you're now.So that as product, quarter degenerative procedures add what joint the SI to And significant those build to expect. take does surgeons right order joint do would in just SI to our of doing typically into less we've on around starting is, to for fixation. doing X this surgeon terms procedures to who procedures, fusion adopt a in need out. that a you or surgeon then seeing the adopted a who well. a years we're to opportunity times is than It to X in what than potentially numbers fractures fully that a deformity per to little has X said fully And our X practice get So, now cases procedures typical many of that, level you Granite are adult at with right just fragility pelvic on there's point

procedures, top on those those are So, too. of

David Saxon

with any launch think that construct tracking Thanks, where that can And Is on revenue. that's much then year? and on that X second next coming question, low-teens the math, shorter timing? combined just of the give the larger Granite ballpark I my then, are you update longer and term, a Granite that's especially By in And Laura. does TORQ. percent Okay, just my right kind for helpful. super go out of the TAM.

Laura Francis

Thank you.

So, procedure we we different company. sacropelvic don't comment for break types solutions -- don't out our

so are the targeting X.X procedures fragility joint We're I'll really really of a that's businesses opportunity And our business of part get year market question, approximately. back size million at here. that primary our overall. But fixation, in fusion, per our and broader of SI your all pelvic terms fracture and the

you SI it's those primary year, and the procedures.If joint think of fixation, the about XXX,XXX another remainder a around So, procedures. are fusion procedures approximately XXX,XXX pelvic are then trauma

opportunity we're answer one it going we're and our leverage experience these penetrate in family. said that construct your we've XX% you these are journey well next product correctly, of really that different areas, the but So, degenerative where going used Thus seeing on Granite work Granite extension. goal we're buckets Granite Granite I'm does as going But future.Now, beginning expanding XXXX. Granite our to too, we're far, after, what each current used of just [Technical is so, our if about degen of for with Difficulty] being after, said our it's to bode question been from to the short opportunity, short to the on with you Currently, be approximately better think the product, our the the is going procedures. are the spine the sizes do want those construct those at cases procedures.And in those we're procedures going to just has and already

as are estimate of around going total But number said, necessarily new [Technical I'm called excited expansion is the across XXX,XXX to gave to about those are of adoption initial not to implant that XX% any on the the the FX that XXX,XXX introducing in we're what really talk revenue just I I breakout. pelvis. procedures of low-hanging part We Difficulty] potential system. the degen target to Granite for accelerate the further you.The are So, are revision that spine those fruit that product procedures is, the XXXX cases.

Operator

Our comes next of JMP of question from line Securities. Dave the Turkaly

David Turkaly

to was compatible allowing continue the The that compatibility, think you was Solera Horizon, the of market? A out you there had rods. release the and in you penetrate are I think it competitors Medtronic the CD that that in out quarter. press how with put with just quick how of you do I news many on you some curious, one about to on terms

Laura Francis

Great question, Dave.

could terms using Granite of out the Medtronic may a announcement ago general of with the product That adult in to a not was their were were with that to where press additional recall, there having the safety rod sent ]. talked FDA confident that recall announcement provide more with already, had in systems or may was system almost deformity we they all to we provided feel Granite with around to months show out compatible.So, Medtronic, actually it quite you So after with Medtronic was [ our testing a release, security the about clearance very we compatibility cases. us that surgeons Solera bit that and particular XX

David Turkaly

have? I'd thoughts that broach update sort that that get your intellectual refers get you'd the Got on the property core just triangular implants, And that on then love that sort you of out the runway what means to imagine of the the it. you the to XD from of I but your put and patent,

Laura Francis

Yes, question. another good

is able -- XXXX. the been actually through actually into to and further about and XXXX. that have take extension it those our our patents the on So trajectory will shape we end But of them this extend the unique extend patents what's

[Technical procedure place that's to broach, this the So in And a order to for in channel is you to actually surgeon the the required the triangular Difficulty], just for do the implant. it and something the is on remind broach shape place a the creates triangular to order implant. surgeon triangular

And XXXX. so, by receiving this into extending patents it's our new patent the instrument, broach for

David Turkaly

you. long a time. Thank That's

Operator

Canaccord. the Our of line next question from of Plovanic William comes

Caitlin Cronin

at kind the you bit rest Bill. product price Granite is will of you for a ASCs? on Can this success This was from ASP your hoping the the your a a in the talk dynamic second aside into think using year? continued going for fixation Caitlin little of for much And have How be do dig to of expectations about I you forward? ASP. really mix of maintaining dynamic, point on

Anshul Maheshwari

happy I'm No, Caitlin. Yes. take to that,

type varies the of the ASP an our and from on So ASP depending standpoint, procedure procedure preference. surgeons

In use X of to to deformity we see tend fusion of SI fixation use So about generally cases, cases, points fixation. when you think the joint surgeons pelvic X cases generally or pelvis the implants.

out what with capacity So, you case. X trauma impacted sacrum, we increase procedures we generally our quarter, ASP, cases. able we construct we evolution And in way with played addition ASP.And recall, decline the the the and implants just if more so continue second seeing quarter, Granite then in space, strong the also are had mentioned to that's the that third just of space see demand short expected. within degenerative surgical single-digit in penetrate spine in continued on the deformity, portfolio degen low what it X implants to used.So the a the capture the lot were within these to to use in as or is for you of And the different to in X you're the Granite sort markets used that our in of

think across we low-to-mid on ASP a just of we from tend standpoint, out planning executing cost, in -- of single-digit we about to ahead healthcare decline because it procedures, that. a As assume the then to generally focus and come

Caitlin Cronin

of Seems growing landscape What increased your touch of on area, space. kind a all that extension is competition. a little like new your then it. from part you of companies with in work joint seeing to more SI establishing and kind given on -- any seen are there? you've IP in the a really just competition Got And and products reimbursement competitive from dysfunction bit even

Laura Francis

we're higher you just Yes. deck I here. that with the think information been in it's get that the on fact lead too.So estimate in that had synonymous we're I if here, can market clear you in able was our has support point and we when think more how than mean our very The make become our think, market because way of significantly specific on space, If procedures, our environment effort space. the we also our particular provided we name is products I Innovative And market, look educational the important become the discussion this one, have, that we sacropelvic number it's we patents, we that that the have the leader this XX% one. time. around at an products. evidence but then for these patent-protected we innovative the of at to procedures, and is that's in competitive reimbursement went it public we've have range, we sorts look high website, that clinical this the slide around share the and that

just product, then, to pride there business. with which are addition clinical reimbursement fracture differentiated our out we putting from evidence, that not fixation and fragility joint it's SI an So ourselves what products, education and in our building business about pelvic it's support, And about on. we're with

Operator

Securities. Samuel the of of Our question Truist from comes next Brodovsky line

Samuel Brodovsky

and or just a but I us start probably off product, you solid see XQ. up the what in from in sequential strength SI I from SI that fusion more the joint are strength you more did wanted by down guess, on acceleration in squeezing the joint saw again in with And congrats you rates momentum know for quarter. underlying Thanks aren't XQ here, broadly, core market? to any fusion Granite to well? Was as and was you going I of break TORQ?. that seeing growth market

Laura Francis

Yes. Sam, thanks for the question.

momentum, engagement, also the the well built as And well. a the support agent this that third strong -- It's as I to our here I So, in is some at we products of we quarter.And as so provided volume. across capacity highlight think as business. with TORQ million the especially It product $XXX year, want well. stated driver think of to you growth just as Granite surgical is that new I that business, million we're a growth for products. significant of QX we've how earlier, you of that we been to to show force all with sort strong we between the you very U.S. a continue the of force just have reflected But that absolutely $XXX performance education to am infrastructure not for strongly that just to limited for our we quarter. And And execution XX% very fact has critical shows is drivers look sorts performing. with has reiterate a showing to sales the to the that if in growth. I demand XX% commercial driver quarter current It been want a the we our core showed differentiation, and forward to of finishing business really the strong in that mentioned.So our which continues level so another increase certainly, XX% business surgeon pleased significant direct about our record saw shown in performance. underlying conviction results I guidance really those it's the that XX% and of demand,

the of million million, So which guidance growth $XXX XX% previous of that's XX%. from to $XXX up to was

guidance. increase that quarter. that I great year the I our reflected So think was expectations strong have finish And a in it our think to we in

Samuel Brodovsky

quickly you going And about we color helpful. a And construct in that's 'XX? to existing the Is require users short the should able have Granite just being think just to any to we opportunity, That's sort Great. how can on then, going sets? give of about as think to of new short how happen? us construct option access logistics that

Laura Francis

a it's great Yes, question.

First tray. of all, no new instrument

very of to where clear, So, that's capture we're pelvic Difficulty].So trajectory when current mentioned be to where ability will trajectory fixation usually, really Also, will SX tray. I in degen performing SX, increase it used is XX% Granite the what for SX [Technical extension or is And a in fully the product typically big instrument to SX new the used. part a the pelvic fixation pelvic constructs. SX had in in an is trying trajectory it's are they an here and use are require capture to also surgeons short the do opportunity trajectory market. the this fixation, and be our specifically The and being line opportunity not

So surgeons may constructs, where to constructs, level pelvic want include X X fixation. to short

do question as we impending -- instrument extension. very launch. So, very that model we a capital-efficient surgeons think order Granite for trays line because to new new I here have the And need in the use excited not about highlights too,

Operator

Francis would Thank like conference Laura back the now for to remarks. closing turn you. to I Madam?

Laura Francis

Thanks so much.

as third just X.X strength I've all nearly business as time of times, we York is with this I guidance thank positioned at the year-to-date Piper have it you. drive be revenue participation. the in procedures year. the I our Before targeted wanted in We're seeing reflected this you New and in profitable Thank we're and you, million Difficulty] and performance the to later look annual NDR And to in I call, for I Conference sustainable Conference, believe for month. for to forward impressive many London firmly and an planned [Technical your end the Boston and but to long-term goodbye. The Jefferies increase well said the also growth.Anshul York going New

Operator

Thank This concludes for today's call. conference you participating.

disconnect. now may You

SI-BONE (SIBN) 6 Nov 232023 Q3 Earnings call transcript