FNA - Earnings call transcript Q1 2022

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Operator

Good afternoon and welcome to the Paragon 28’s First Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I will now pass the call over to your host, Matt Bacso with Paragon 28.

You may proceed.

Matt Bacso

Joining me from Paragon 28 are Alberta DaCosta, Chairman and CEO and Steve Deitsch, CFO. released for XX March quarter Paragon XXXX. XX, today financial the results ended Earlier

are no product results, upon and statements. materially The or uncertainties events statements those available supply and not on from by commercial current in Accordingly, forward- I'd are obligation remind provisions XXXX. place organization, our forward- involve operating like events, will market begin, impact to forward-looking that Act assumes securities opportunity, hiring, we Before to of made are and assumptions. to call actual material Private upon These to during the or results, relate and the change, statements various including should could expense or looking update year and of and future pursuant call not including All development relating Securities laws performance Paragon within statements. you forward-looking on of differ guidance, future first All Reform which contained to make in XX these this full Safe information, you statements. reliance these growth for performance, but cause this XXXX. and expectations statements. the statements predictions expectations implied revenue statements, for our to current Any trends include our forward-looking pipeline Harbor those statements based of guidance risks looking the meeting financial federal business of revenue statements these quarter estimates that are our based COVID-XX limited management, management that to expansion, and undue our Litigation

except filings XXXX. refer by accurate because Form with or SEC XXXX. any and Annual only live to any required the on as X is broadcast list on or of of and information This our Report sensitive obligation whether as events March financial call May with of forward-looking to public information, the future Securities new XX-K, description our X, business, please update disclaims the filed law statements, For XX or risks uncertainties Exchange and Paragon including time conference risk contains otherwise. factors or section Commission the our of associated projections the our file with intention

this the presentation, During Albert. EBITDA refer adjusted financial issued or with a to loss. in to of release press non-GAAP And we The contained net call income will GAAP over comparable adjusted measures, this to most measure morning. I'll turn reconciliation is our that, financial EBITDA,

Albert DaCosta

Paragon quarter then thank Matt. overview you, an Good and earnings XX’s afternoon. updated Thank update. provide regarding business guidance. provide provide for quarterly detail you additional Steve results XXXX will call. a and our XXXX the our overview XXXX an of first And joining revenue will give of first I quarter

then quarter of our quarter performance, quarter the will to total to first the growth compared revenue first XX% representing XXXX We open first the $XX.X million, of call Q&A. was Beginning XXXX. for with

COVID-XX despite million, was the period, February. revenue and representing $XX compared growth XX% prior in headwinds US to quarter of year January First early

later by commercial Excellent on remarks. the customer surgeon growth of month the our salesforce execution, strong quarter. base and sales including provide driven drivers success for of of revenue I'll increased quarter and during these key growth in during each revenue double record the gains of prepared Our including revenue our my month, March. was rep detail were per drivers expansion more each digit

fourth quarter representing of XX% million to growth $X.X record a of period, compared XX% to sequentially prior was revenue the compared an increase international year XXXX. and quarter First of the

years enable Paragon performance foot be will to business growth and mission ankle outcomes, operating first improve the during for XX strong patient to quarter, our which come. our continues focused to in to addition our In on

quarter, we medical key in accelerated including development, new the SmartXX. commercial expansion, and During education, product investments

we're SmartXX XX in the of has acquisition growth to Disior, opportunities key than more any very exciting a XX members past. Paragon close also at is aspect which of We welcome our excited time Helsinki, Today, team our in and Finland. new

of for the of all between partner the for all several and done to success a career opportunistic Paragon our he has medical Officer, Jason retire To my operations company Jason of XX expansion, been Jason continue Frank the of to another the and as friend Paragon of transition Frank end leader over in We Development welcome outcomes best with personally and Research has Frank of decided make year, record and investments and expanding will Technology decade. part and him disciplined CTO Chief of our hired the his retirement. the Edie. share. an foot smooth the foot in for has market I improving company note, a end spanning to continue the to in our ensure to decades, and the team. be We commercial newly want last ankle. Co-Founder in advancements technology in Bono at dear has our and involved to day-to-day and has after wish Co-Founder to success like him and XX, in been years XXXX patient orthopedics education track Medtech now of for integral thank achieve On and surgeon mission a a XX would will ankle

and launches and or our growth by was trends, to during recent experienced sub hallux segments the driven continued product the segment ankle largest in XX revenue fracture strong growth quarter, first valgus bunion fracture sub bunion, and very execution. strong commercial foot Paragon market two fixation and Moving of fixation

of entire focus significant of expansion with as of Starting markets producing patient product XXX continue strong commercial with and across opportunities our the which a ankle one momentum growing and the company, We in in reps to see for we States. the sales on an growth our surgeon provide with fastest Additionally, the the strategic first our update outcomes. strategic of now key it training. is improvements will portfolio, a remains for few team I United XXXX quarter initiatives. ended

impressive, ankle salesforce US hands the increasing customer representatives, an medical and also exclusive. our foot in to best-in-class which consists US increased technologies oriented Revenue and XX% during was salesforce the XX% of quarter. rep Surgeon reminder, a our of per our strategy independent are quarter in primarily is Growth sales developing majority X,XXX putting in clinically to impressive the providing producing working. of customers. education and surgeons sales Paragon the over base As innovative of first

first events XXXX. attended XXX education, quarter of of over medical Speaking medical the surgeons education in person in

a a quarter skills period to product education medical strong innovative and opportunity for showcase our These education. patient both events surgeon and are also customers. are first seasonally improve is designed line to events to great Medical The ultimately existing outcomes. specialized enhance surgical new

continue our throughout programs to optimize We education XXXX. medical to expect

this mid-April, ankle market. product recent Fracture tissue to implants have launched XX% syndesmotic a to soft broad stabilization for will tissue system, Gorilla RXACT an With The of offer the is in nice and solutions be Plating, development, innovative believe Monster products Moving believe RXACT on addition portfolio, and Ankle we of all customers we Plating, brought RXACT Mini release fracture we fracture I product tissue soft offering complement Gorilla comprehensive now ankle of portfolio. healing, entire for a includes which array ankle screws which system. Peal of requiring our fracture our and estimated we stabilization. to our innovative bolsters fixation With most one the stabilization soft injuries

and Plate we three to innovative Plantar low plate sub Paratrooper patient implant developed Also, and and a acquisition the with providing launched of conditions. growing a for deformities. remains profile significant the our of all a have been cutting one plate hammertoe the of thrilled focus of suture System recently Paratrooper profile and historically the by for plate pathologies of we approach Plate to one tissue edge the plantar fastest initiatives within and preoperative technology. as markets Disior outcomes. it products, low soft growing SmartXX strategic plantar company, implant are plantar more us versatile dimensional has suture of a all Additionally, variety a January of in challenging Plantar the based, which for our the for portfolio surgeons capable System an repair opportunities treating new accelerated forefoot hammertoes adds hammertoe, Repair segment, The is offering improvements planning

on surgeons all and We drive of key are in very summary, progress initiatives the excited have in the about putting In this around to we the strategic technology to coming durable considerable business made long-term growth. year. invest continue will the into hands world

diligent our conditions. and employees efforts are ankle also physicians I mission for sales have like to around experiences and Steve. world for dedication for of over the now from improve their Paragon thank patients outcomes representatives it to fulfilling our the patients and to foot We continuously suffering Steve? trust will and XX. our turn would and I grateful to

Stephen Deitsch

you, Albert. Thank

primarily South the period. or $X.X in our driven the international XXXX. Africa hand in related first representative additional our to becoming Additive for $X.X expense of to and on primarily March cash XX% of of related representing million, was due revenue development was of million, administrative representing to the The related first hand financial of by expense million, or cash development, are revenue $XX.X million of PXX to to approximately fourth XXXX. the million revenue growth of was Paragon’s traded increased in the shows, profit Compared compared both Gross was $X.X marketing inventory the largest XXXX markets. $X.X the $XXX,XXX, to quarter Selling, first new borrow commercial to was first of with XXXX. our XXXX, XXXX strong in compared our of quarter and quarter fourth of of costs facility as of XXXX the XXXX for $XXX,XXX to the first team driven quarter million. or XX%, on Disior investments of the This million, or primarily million, Moving the revenue the of each XXXX. was for international XXXX, of in growth education of of The in quarter the growth, compared first improvement record in Increased first the to general representing more year, higher generally first events. revenue XX.X% education $XX increased Orthopedics publicly $XX.X quarter The timing team two XXXX, quarter quarter commission million, in our performances growth quarter and to in expansion, XXXX, $XX XX%, XXXX. XX% investments senior prior puts compared more SmartXX, or with for a Disior first additional of May XX.X% driven XXXX. to combined in strength. $X.X acquisition revenue by and XXXX. high concentrated including for results. $XX.X SG&A was $X.X demand United of and US sales expense an of expansion margin markets. of XX.X%, very million year medical quarter $XX.X due in $X.X of quarter XXXX compared XXXX. Research quarter the of was XX, was in in via first Kingdom, the International quarter of access person compared primarily increase financial product development the quarter acquisitions company. than in quarter medical expense obsolete first costs. the million, lower primarily first the events, ability to in million, which above primarily and million, to was increased Total first for the increase investments or for and and related position XXXX quarter person of and XXXX a commercial trade quarter acquisition credit research US of was Growth And at and Disior US by in first first XX% quarter costs variable and expense January and the

inflation. the speak to to COVID headwinds quarter quarter topics variance January the of and exited will the surgical related February. XXXX experiencing deferrals, I associated and Next, and related macroeconomic Omicron of respect began constraints fourth in deferrals, chain first of the surgical COVID With XXXX with supply early we

to to XXXX quarter and With to fourth we we meet mid-February. confident X, resurgence continue more headwinds our in X, environment noted instrument environment beginning opportunistically the team remarks decreased that improve. ensure has to difficult, manage with supply hand product purchases As incrementally to and are March the headwinds call in will COVID March on expect our Since calls, from have absence challenge. become but procedure earning earnings have in to respect decreased elective the they Consistent a and headwinds, increase we our past may the effectively continue demand. vendors inventory we on in chain, that

Regarding at not inventory are we instruments gross moment, impacted increases expect significantly do material and margins inflation, the from we experiencing And our not to price suppliers. in XXXX. be

XX% to our Turning COVID representing to revenue our to which we guidance, year have constraints, $XXX XXXX headwinds takes approximately $XXX current million chain increased the of XX%. to XXXX account of and revenue full supply guidance into annual level growth range million

annual for XXXX, combined to and is positive our adjusted to operations. not questions. open expect of While the with raise we providing lines of specific we remarks. this fact our continue be balance do report EBITDA strength sheet, expect capital end adjusted EBITDA That guidance the will the for prepared flow given additional to we to cash not please Operator, fund or

Operator

The Sandler. Piper with Instructions] of first Matthew question from [Operator the O'Brien is line

Matthew O'Brien

higher per to then is about rep around taking have part for thing with reps they're talk characteristics spend some I modeling. quarter far accounts top and we mentioned the kind SG&A on guess new the thanks a great. than and did for Albert, talked in drove And with to same then goes the and as on it QX bit coming were just you the productivity Can think where Steve, the quite that, international to education the Thanks. that if of starting a strength, that one just was think one of follow from, start steam, salesforce maybe that here the was helpful performance. how costs a medical but investments quick down can you well. you guys been would year, in of gain of break that's But it be And then as channel, up. the as have Great, that new questions. you extent. or multi lot some do a I I I about

Albert DaCosta

thanks had into to And had reps becoming part the And surgeons we for growing there, the products having that last ability a handful in both question. three were quarter, probably really franchises performance valgus. of train on those, the And you with like two pleased as like strength, second significant being product really got were those the terrific we've also and our rep terrific quarter for Matt, replacement, quarter. ankle, total XX%. productivity ankle a fracture the mentioned launched our years, drivers the become and selling we in that our there we saw of Yes, things the new as terrific so of our comfortable those comfortable first over or And most those the hallux a and really ‘XX. products, really

about So really that. excited

We having visibility our we've by the a our public to were opportunities to and and also few bring into think continue line, since full opportunities reps of the hire to add the product and high them experienced offering had company. quite never our the reps. driven, we company, company And more size we

been in drivers we remarks. mentioned first prepared of our And increasing as the quarter so in key the actually our that's one well as of investments

honestly, education demand, for incredible by programs. driven opportunities had also We our medical

again compares quarter of trained year to in in because few we the first person. quarter person over first trainings we in So last in very surgeons had that XXX where the COVID. And

quarter. QX, the XXX we've then quarters, QX three last first in XXX the in again plus XXX trained over in So and

and opportunities tier So spend see And money of doesn't about and matter. demanding we we who do opportunities are spend to surgeons it train opportunities. it don't those continue top where we matters, where hire we'll to those. that. And when And We're to money have drive products, our excited there. big also opportunities reps, some

expenses, first trade we it's about a say the trade And first year, that show our quarter. any of last shows didn't heavy have other would I thing quarter quarter. The more in

we first our meeting some on entire really not we national the together strategic year Ankle our So first and well. for our here the and since AOS, our of I've where meetings, sales -- did double salesforce person this at Foot in society the first and worked for been had specific of time as initiatives first, training had some rest that

making but So it the just the revenue investments we was side, been exciting put that also an we've from quarter, not on the up future. performance for the

Matthew O'Brien

at is raise Got that's helpful. at the range million million. quarter the guidance midpoint, $X versus implied low it, in high beat What’s the one Thank very by sense. then the you in by the total Makes $X And end? you. end second the you

Albert DaCosta

question, That's a Matt. great

So as really our driven fundamentally you noted, business. in quarter our strong, was by and was the strength it really and first

coming typically, of slightly continue see quarter, flat be we, mind high March, you of as of year-over-year into a exactly we take year in element consideration seasonality. strong a typically to much That's to QX, first how a kind as I normal growth we as out the And very second the think our implies due third the But in end backlog recapture range and fourth at a XX% record in out there. to our as of guidance that second in driven would you the approximately quarter. of $XXX business. And strengthening both the enter and tell year first to in would difficult down the was model of normal million, our volumes, quarter. high year. our some half was not saw And quarter by month, but to when the we that's of about was backlog as we which growth strong you most recapture. But It's to say really

Operator

from with of is the question next Dave line JMP The Turkaly Securities.

David Turkaly

thanks. great, know a you base. I on comment customer Hey, gave the

it reps highlight you XX%. I but make the total grew think the that? I on comment versus trained? over know said did producing specifically you you was, you XXX did a trained number But producing said

Stephen Deitsch

here, so Dave, ahead we you're year. approximately Hey, over producing XXX, about producing in Steve X,XXX with And was quarter about the asking the think business prior of so customers the quarter. producing I XX% because our first surgeons, did during our surgeons

David Turkaly

that. then And it. all-time record. sort And of you thank for you Got an mentioned

the company record comment time. you I for that think it made? all of was March for revenues Was that the month it

Stephen Deitsch

was all time of business, it a record. month our our March yes, then had international business And me, quarter. terrific record and was, European excuse It first a

So March the and for internationally two quarter. company, then the records total for first

David Turkaly

stronger. I of the being and segments, And maybe little but fracture, lower a in sub some you the some XX% of CAGR I'm guess mentioned the the we across well ankle sectors. just sub curious, maybe in that strength about there sounds really did Maybe you some talked like of

As you now back at XX%, at looking what Are you X% IPO time. were of of some look you think Thank X%, growing faster. taking we markets were those you. are actually the share? those sort When

Stephen Deitsch

think for taking are as those we in were in we're -- as we've the growing think franchises, which a share. ankle launched ankle driver well. out we we with has in calling that hallux of there. as out valgus, us. specifically we're really and than new Fracture hammertoe, total products called the closely well related, specifically fixation, share also We those market above where maybe clearly taking growing nice in that faster we're market the rate share, And And been products area launch the

David Turkaly

much. so you Thank

Albert DaCosta

ankle includes on we which portfolio call to that's is is line nail the product really for to well, newer that And total plating fusion, ankle mentioned the around And that, there. is the us. to which that fusion, Just addition slightly really and some that add And seeing doing previous the in well. ankle systems momentum a doing ankle, nice ankle,

and the the complimentary seeing that to to in that's fracture support really complimentary And that portfolio. soft devices launching products nice really the is some we're we're plating tissue On fracture it the fixation ankle demonstrating growth how side, that syndesmotic of like system.

products, some of their cycle, in some So we're cetera. growth being products with nice seeing those momentum new younger et there

Operator

of from The is next question Needham the & Mattson line with Mike Company.

Mike Mattson

to Yes, thanks. to I inflation comments back on guess, your I supply Steve, Thanks my for and wanted taking chain. go questions. the

But just won’t what inflation talk degree don't that You're if admittedly, of sounding some quite you a prices they're to materials your there I our in quarters little bit over know seem costs and be Titania peers up couple your guess about larger to the I increasing? products. some bit. do a optimistic other impact more But is confidence of your prices versus maybe to used in increasing see can that next you cases.

Stephen Deitsch

some on and just I been experiencing publicly can't very at last exactly are haven't and with the and and us Yes, been they're actively with meeting involved deliver we've chain seen level Albert the of I that they're suppliers it thanks have and traded we buying they're but at for telling what Mike. couple And supply our the speak of the commenting that prices quarters. to peers our able reporting to

in which So pretty haven't that continue. really triggers confident we time driven, cases had in going to the strong are any going that be XX% or in by last driven and you those future expectations of the that say in again, two the so time, we've without higher crystal growth previously point dropping that some to without quarters, uses But we've that at inventory, the margins, visibility growth going the reserved, have first we're product we was it. no it visibility it's XX% too. for to hard margins and see inventory a seen And and happen. adjustment what's we're but obsolescence that's And just even exactly our confident, quarter, ball, that to this

Mike Mattson

mean, I just million CapEx. had E, looks statement, flow And sorry you in guess then PP& Okay, was And cash operating then got activities. your it used million $X.X it. I $XX looking like at for

maybe up there's, earlier about So it's I some stock just comment to inventory. can on on maybe heard trying a without comment what you

and you don't the CapEx, So up for on just certain if things, know, working pre out maybe break peak, that's that bought I drove know the capital I to and willing if portion instrument then you sorry sets. don't the you're

Stephen Deitsch

Yes, happy do that. to

So with in investing had as the this the of million quarter, XX-Q activities for maybe and well. $XX.X starting the investing we is activities,

So you can, yes, it's there.

bought $XX.X million. office a Disior, million, very, put we with building, So we we with our And very mortgage also $XX.X our attractive place that acquired partners. in

were That's we those elements of investing had some had two in so a surgical normal of million. then normal, little approximately that maybe the And the largest seen this We than it pretty on $X.X than of saw And the instrumentation activities. also took a come instrumentation. little quarter in past. bit bit higher we that surgical longer a

of year some that We million $XX on any other a from And million planned. year. $XX so in surgical have orders major we'll typically spend CapEx last items And to instrumentation. trickled don't

building, bit during money as situation. opportunistically from save and to unique we office I And Our I quarter, activities, to inventory a Operating that did mentioned, take of approximately. by think million $XX $XX opportunistic the actually. of was million went building a increase we advantage

this launching, our been up I experienced closing time. additional it to bringing contribute to any driven starting now street was building that the additional a our pass no half products inventory will management the stocks for questions hires on at business lot remarks. team really that for that of expectations some we're And particularly are as move based sets, we of year. the of the into second more additional into the also back just new with There upon feet we've of by so but

Stephen Deitsch

America to And in you at future. the thank you again the This Vegas. Las here your of and many look week this Albert is for today. Steve, we're meeting time of in Bank forward I Conference

So again look future. And Thank forward tomorrow. you. speaking you to to seeing you in the

Operator

you conference That your may concludes disconnect call. today's lines. now .You Thank

Paragon 28 (FNA) 10 May 222022 Q1 Earnings call transcript