TMCI - Earnings call transcript Q2 2021 | Treace Medical Concepts, Inc.

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Operator

Good day. Welcome to the Treace Medical Concepts Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded via webcast. now today, hand Group. Vivian would to conference I speaker your Cervantes Instructions] like the to over [Operator from Gilmartin

may begin. You

Vivian Cervantes

second Financial be John Thank welcome Chief Executive Participating afternoon, Good Mark Treace, the quarter Hair, and our Chief from will you, call. XXXX today everyone, company Officer; earnings Officer. Peter. to and

we The section after activity press website. will today, second quarter our our and During we offer Investor investors.treace.com. will review session. market question-and-answer the a the is commentary can results host Investor release the be found of recorded and of This the released the in being call, after will of Relations in section which on at be our archived our website commercial close Relations call financial

predictions that, of remind Securities available now we'd these will the of today's statements. Reform XX-Q for during you over today statements it quarter and Treace begin, could and or performance statements our these these All involve by all turn forward-looking or Please to Private assumptions. to Form the statements. filings, is forward-looking call XXXX. risks from and undue to statements. upon statements well as that that statements information, I implied our for events risks. forward-looking obligation we SEC actual relate call like or are All results including filed current results trends forward-looking on are place those our you our second the reliance cause These our Litigation With statements. not detailed presentation forward-looking under John. should to materially the refer assumes anticipated differ market Accordingly, update estimated based statements that estimates as to and no based or upon intent Before material current various expectations that made Any Act be future uncertainties are protected of to events

John Treace

earnings Thank on afternoon, call. conference you And joining quarter everyone. Good Vivian. thank for us you, XXXX our second

like I'd announcement well Treace begin, the our our their in way the at for another I thank quarter. as paving from ongoing solid drive, advocates dedication community, support of to the team as the clinical for Before Medical and

growth These totaled in benefits case, traction heels an quarter our coming direct utilization the $XX.X XXX% this with operating to active highly our the our by in XX% the website solid from including sequential in over of a quarter the continued driven increased channel in of surgeon increased DTC Lapiplasty revenue practices, surgeon over second shift average increase million, in and better-than-expected quarter, users business are of which sales visits growth from our impacted registering we On metrics. for of key advancements users, report record Revenue a and campaigns, XX% doctor revenue pleased quarter results ongoing over of with patient number to were accelerating the QX in results, second second the searches. several number find quarter strength made of disruptions. business per a COVID-related first XXXX, was the and by with

we conference our Our Lapiplasty return increased for pleased We ongoing elective the second rapid was podium the System, growth with started which recurrence presented interim demonstrating in, data in see to rolling finally, wavering, early the at adoption of from rates, ALIGNXD certain from to procedures. positive business is quarter generally lower ACFAS the a May. in along QX Mini-Incision soft continued in which And XXXX. we traction. quarter note out quarter, and which are but in third All

more up procedures, Delta guidance $XX year our the hospital they responses than certain $XX million, have in and we the on others. revenue monitoring However, impact electric reasons Notwithstanding, are cautiously full of to may our to optimistic including and increasing from impact are could million changes guidance closely variant, XXXX $XX prior the million. we potential remain affect which of

a anticipate to levels. compared increase in to as QX, XXXX QX flat slight For revenue we

market Now our shifting development to activities. talk to

there We are our still is a unmet efforts. addressing in large a and commercial early market relatively where need

a follow-up X to and our or down, Lapiplasty the still Scientific Building maintained XX X.X%. compares Conference today osteotomy, implied XXX data presentation. favorably of XXXX, investments of Annual on market interim facility continue deliver with Ankle Lapiplasty surgery. bunion our XX%. procedures As increasing to approximately for at approvals, the clinical of sales a our active an recurrence we well our to investment increased the effective also of via positive previous ACFAS, sales to education ongoing of that on System targeted an rate innovations recurrence share interim the and entities, including execute XX-month R&D our surgical a post as Data for the programs, treatment to patients data regular weeks in customer an at the a showed access aim highly investment opportunity, designed increased around penetration. up include, XD representing billion-plus candidates. to patient we build of to with Foot the on announced rates, at X.X% surgeon at market analysis, build-out rates patient-reported direct of Surgeons Drilling in operations new low These starting annual only end of and programs positive This and represents share radiographic to and lion's American of X.X returns in is customers. annual XXX,XXX an patients programs QX our metatarsal consistent ALIGNXDstudy expanding surgical believe $X next-generation podium while our continue channel, on we point evidence, which College outcomes, differentiated body about of out proprietary market reached demonstrated last of estimated as reported XX-month Armed in May, bunion and literature provide with X recurrence X.X% million and

we in of readout prior is data encouraged While published the a XX-months primary trend surgery endpoint we positive the ways half are go, this we're to post of with builds and outcomes, our have final by note clinical to that in resonating pleased of on first still patient a our and this recurrence XXXX, community.

Our education labs and evidenced differentiated certain programs in-person received the our well by demand training high quarter. as remain for attendance throughout

requests interest the our interest to continue we trained see no third sign-ups active in and physician We physician procedure, be in particularly patient enter softening as with to quarter. --

our We strategies. targeted development also positive saw result market from a

patient from patients. investment and provide that engagement website we quarter, the DTC in increased features accelerated During our with a launched new

in record our of number a of result, witnessed doctor we visits record and a As a QX, searches. a to number patient website find

organization. our to also to We talent continue add sales

in Our channel from XXXX. growing this XX% a compared played role to sales our direct with and over rapidly QX XX% in revenue quarter's team our for direct key XX% coming sales QX performance, of

also leadership Sales, We team very us of who that well Vice to skills bolstered recently experiences strategies. aligned our and are Senior with comes with with a commercial President our

In conditions. innovations technologies well R&D addition, as investments to concomitant Lapiplasty both advance next-generation initiatives we addressing as new in maintain focused

cautiously our surgical as goal more we as by normalcy gains are Our treatment financial our U.S. initiatives, return to XXXX. the drive with and continued in pleased system, optimistic market Lapiplasty call we procedure market I'll to a performance. the and share the standard-of-care positioned With to continues now in Relatively penetration, over our to Lapiplasty early of believe the establish to we for we our with effective are well progress that, Mark is turn bunion remain sufferers. to a commercial delivering review

Mark Hair

XX% the an for XXXX, you second and $X.X XXX% Thank quarter million, representing up our everyone. million the of and quarter quarter sold. of of was Revenue number afternoon, second expanded in joining increase XXXX. utilization Good of from was John. $XX.X higher the procedure us earnings grew surgeon which you, first the over review. by increase increase XXXX Thank a for quarter rates, second an year Lapiplasty base over ago, kits led our The of

XX% an this increased in total kits of $X,XXX, year. $X.X and Gross X% procedures. of expenses and second of compares in a a kits the of XX administrative sold, a second The XX.X% of utilization and second increase research average thousand quarter the pandemic-related over quarter million in in The million, prior operating $X.X the while the second note In to to million, year-over-year million, and the operating year. procedure in to we $XX.X sales million general with disruptions. X,XXX, restrictions surgeons also the ASP increased expenses quarter blended performing Gross expenses blended of impacted of the million $X.X selling active development quarter quarter by the procedure We to quarter saw addition, the and of number expenses second gross increases the $X.X severely in to active of $X.X XXXX kits expenses XX.X% million, months Lapiplasty were XXXX in was increases quarter that results XXXX, year-over-year procedure one XXXX. development quarter in favorable research XXXX QX $XX.X expenses second general of the pandemic, in and In prices margin blended point marketing This Lapiplasty average and compared of marketing XXX the period increase case The of and the efficiencies. of XXXX, expenses months. and of X,XXX, over to including also trailing to quarter Lapiplasty the administrative sales for margin operational of at X.X were margin continued of surgeon expansion XX least total quarter elective increase second of year COVID-XX price basis operating the and $X.X sales including including prior of selling versus an expenses increased were reflects - per number in XXXX second XXXX. due XXX% on average compared trailing X% million. of XX%

million of compared was share same period were of for XXXX. loss $X.X million and per $XXX.X a net a the or $X.XX $X.XX XX, Cash as cash quarter per million of to Second of loss net equivalents XXXX. share loss June $X.X or

Let for outlook XXXX. turn me our to

$XX million, our of year revenue from our to full company's previous and guidance raising million. to revenue $XX fiscal representing expect and the of for now the growth XX% guidance over are million approximately million, $XX $XX.X year from XXXX We million to XX% $XX to up XXXX range

of noted, As impact difficult changes to the to going potential pandemic for surgeries and are optimistic. forward, in while effects responses monitoring Delta regularly the John hospital and cautiously lingering elective variant gauge remain the we of

in of year. the of trends continued half back normalization Our outlook assumes procedure the pre-pandemic to levels

recent regional to elective despite related delays. surgeries representing We from to year-over-year expect the to in revenue a quarter revenue elective persist reported some procedure strength pandemic QX orthopedic expect in generally reflect sequentially seasonal softness and now growth. QX, during increase third We flat strong slight typical

execution questions. Our Operator? reaffirms operator business. let the outlook growth me our commitment for to to line open your focus and With call the in that, XXXX over the to turn our

Operator

your Thank you. Robbie [Operator Instructions] JPMorgan. with Marcus will And come first question from

line is open. Your

Unidentified Analyst

is bit on little a Hi. hoping what was Lili the This seeing dive been actually question. Thanks you I Robbie. the for you've deeper recovery. taking into for on could just

spread or So that have you variant up? with be held largely procedures month has Delta deferred has belt, as onto third start the canceled of been your quarter one to seeing or

John Treace

recently alarming us some sure. capacity pushed unknown of Hi. spots an can preserve for for little impact setting an forward seen Yes, surgery hospitals Delta John. like the Nothing an cases Happy case a of getting market point, selling this it's closely of shed Lili, to delayed there at this Delta or one variant in we're that to conditions. from monitoring. We've elective outpatient the ASC this is all they just on but so and light here and is that.

Unidentified Analyst

just how from you Okay. or headwinds And expenses. inflation operating one talk over that course are meaningful Thanks. follow-up progressing seeing then you the constraints? supply Can year? any the And through see quick on you of

Mark Hair

Yes.

Lili. is Mark. Thanks, this So

being we're really forward going matters, that severely in operating with continue So similar from trends from respect our and to of the any year not inflationary leverage back to see expenses. impacted half operating expenses an through seeing perspective, the margin we're we and

year. about, approach of we feel this So half the good as we back

Unidentified Analyst

Okay. Thank you.

Operator

Drew Morgan question will come Stanley. Ranieri And from with your next

Your open line is

Drew Ranieri

a the I Hi, taking the other the guidance. just guidance you're just John give for half to questions. on back companies return us you if Mark. having you. and that revenue vacation the so of end the guess, through top surgeon also been of how normal updated Thanks and Can or mentioning a into be spine move you're of sense bottom talking first, the have we getting that any given to You're are variants just we better dynamic range, about as increase? earnings year. the seeing orthopedic Thank And curious of far? I'd

Mark Hair

Drew. Thanks, at half $X would guidance, The the Yes. our in of as so year we back that as due looking looking of is did it raise to range there we're beat in way we're QX. the QX be the million, the increase well at a partly how

We John said, other aware and impacting. variant aware throughout are much the how Delta regions. are, is like that differently regions than very monitoring some in being we're much US We're impacted COVID very the

the able be here. both have cautiously that's quarter we've optimistic, we're quarter how still But approached fourth the we growth we're so And continued from that where is to get in third to been. we'll normalcy really it and optimistic to that going

Drew Ranieri

XXX you're if a seeing Got adding up thinking amount year, quarters, making training questions. should utilization experienced over is in are in slowdown but part curious initial taking a the surgeons uplift just mean, per for the similar you're more you've through or the in quarter? I it. that what a Thank of you. an XXX, past if, in we several for as been that Thanks key environment, thinking surgeons? you given doing Just the growth, to surgeon And be

John Treace

is John. sign-ups at and having we've Drew, our training surgical pretty what events. this strong attendance we're seen, From

there. slowdown a seen haven't We

really trained patient starting for desire year, the do the expect attendance, we strong the We to it. is to DTC permeate to on Lapiplasty. planned and data education continue evidence, have But that are clinical for of and increase that of other surgeon events our willingness patients get half date, but to we'll that increasing and a that monitoring Lapiplasty, ALIGNXD back number initiatives surgeons number and of looking

Drew Ranieri

taking the questions. for Thanks

John Treace

Drew. Thanks,

Operator

come next from Your SVB Leerink. with question Newitter will Richard

Your line is open. Hey, Rick.

Richard Newitter

for A standard-of-care between And for minority the a the from which ramp? of LAP guys. Thank osteotomy, the have Thanks you as cases. are converted that the also there drive taking addressable the if quarter. me. Hi. questions. adoption done which the that is majority faster there cases the sense current Nice have of bucket out convert then you diffusion, where your coming for Hi, you. But Curious which of couple today? getting a for is two are is you here sense opportunities market to is

John Treace

Yes, Rich, John. it's

I think in a surgeons some blend prone be we place. see where are first the more to operations doing Lapidus type

portion start over Lapiplasty their procedure. of minority start they with at with cases addressing So is the patients larger see goes new they their that the when the the an do a it we treat that And they bunion majority their a of other typical the and Lapiplasty, surgeries Lapidus. percentage they does And that higher their surgeon is Lapidus. and adopt bunion by then Lapiplasty of they just adopting practice And as for carving is osteotomy what what time, immediately osteotomy bunion into occasional does overall nature.

cannibalizing So the time. they're osteotomies over

Richard Newitter

Maybe second question, to see just encouraging helpful. sequentially your the higher number utilization denominator, - was That's of active going the as creeping Okay. surgeons it the up as well. despite it's

those your in just upward seeing utilization curious, I'm of the you technology adopters, Are pace? those a and consistent experiences or in of are XXXX, are older moving trend the levels a any adopted utilization give you So standpoint, they were forward? different base nature from with within classes at the XXXX? a your maybe user higher on faster of trends can move guess color I continuing to how

Mark Hair

see of they're and The the that are done every surgeons question, year great stab at on number Rich, -- the the first it. procedures. average, our increasing performing I'll We take Yes, year-after-year. procedures

The reference seeing us, their you that increase. to Lapiplasty they're opportunities the XXXX. that to So We're they year-over-year made an practice. with find there's longer more do within

about helps now customer really as base. our a And us mature which so also step-up, more nicely continues think going forward business that have to we

it's really so And helpful.

increased we surgeons, increased of we're all on pleased number an with - doing more. number average, of really but fact yes, So healthy have not the that only they're

Richard Newitter

the That’s Thanks great. for Okay. taking questions.

Mark Hair

[Operator Thanks, next will Drew. with come course. And Wise Operator Instructions] your Stifel. question Of Rick from

open. is line Your

Rick Wise

gentlemen. far has the or in on so many margins? off, questions. there's afternoon, how we go Where there? to do rollout? more any, - quarter. Nice you the how Good start excellent are to remind that if the to And Maybe just And see mini much price impact, us have

John Treace

terms in We're two supply, supplied third John. out Rick, probably, Hi, there. of

price. and selling that case our broadening We little adoptions have ancillary base average with - our giving higher ancillary or - the along average that's kit our along revenue. broadened is on a does of the come Mini user price case kit average a tailwind And System, of Incision adoption little with it us

Rick Wise

Okay.

we taking do going progresses? on the initiative? it, I is average direct this answer be prices we is similar, about mini year the profitability the think And think or blended as we he you my growth I'll as my maybe the where just And about question price, positive called question how you you. same a this should us continue XX% on of do The as How - summary as the percentage progress sort reasonable you unfolds, QX similar of the a stat question, sales the to understand really question a hit you you exit and what's target that us average year to which last I'm of going. for -- ask Thank nicely. think direct mix, might and essentially from now, direct sales, to rep sort impact Again, which year? - as imagine sales remind reps, so of reps,

John Treace

having just We're WX XX% QX, mix. Rick. in over Yes, a Sure. rep

the Rick, the we're and management doctors be out to direct help to side. higher, our look going over revenue with driving some I up team don't new and are independent the strong that do reps. corporate company partners along some time, and be that our have for distributor very think given a sales significant accounts that, making majority open our facility to but the of to very the to excellent and plan, we're that's future, both in we very, investments also co-invest number for reps then out And drive direct we'll to on As internally and access who we time, aligned continue us. the numbers and we've over with exact

support so them well. as And we

the question case mix the our Mini average impact around so of ancillary blending think Incision I us the It's kits' the nicely far. and on helped price.

However, to going we long little access. are potentially are pricing that going But prices. kit base cautious to on contracts market concede right some could level the forward, if be going And agreements, being to will, to larger this kits thing about too we're GPO because to drive entering maintaining ASP, probably the to our have a it's some in dampening we do get high gain that on IDN we some you for our share.

discounts We have hospital into some larger get networks. to provide to the

Rick Wise

to the Great appreciate the Thank quarter. color I you. color. see Got Thank an you. you. – such excellent

John Treace

Thanks, Rick.

Mark Hair

Thank you, Rick.

Operator

come And Leerink. SVB Richard with Newitter your question next will from

Richard Newitter

Hi. Thanks I guidance the follow go wanted to range. for to up. just back taking the

in end be about trend the of at upper assumption would moves COVID assume, maybe year? someone does earlier think the in just mind Is else equal, as lower I assumptions we and the for for How your the that think guidance, it what XQ. anything then had midpoint some be what that should through line the end, and worse worse, for or essentially about that the COVID. it isolating you're just asked all the from be do think upper do get the the about - now, would range isolate would you you what is part it in the don't no no trend saw we things How from Delta the the COVID? midpoint, if variant doesn't upper the things seeing

John Treace

wide Rich. unknowns that little a range giving good those mentioned. that provided, we've a some we're And of ourselves with you clearly, That's the more Yes. with flexibility just question,

half think as so the going year. into of the And back is that I our we're range

are optimistic. We cautiously

some our eyes hospitals regions. some have and We impacted been than differently monitoring regions have open. wide We're other

and where cautiously think responses with that we assuming we that - doctors our are So dramatically achievable. is surgeries. able now. we're that, definitely be to And That worse their optimistic to get range is not that it's we and from elective to through we'll going work have hospitals

we and range. feel that that range midpoint And with that so of comfortable

Richard Newitter

Okay. Thanks.

Operator

over Excuse speakers, questions showing any me, now to I'm back at this I for time. Cervantes will closing statements. no further hand Vivian it

Vivian Cervantes

This good forward you, close Thank quarter call, of Treace you. Medical, you next today. On Thank afternoon. of update third following thank the to Peter. our we Have us and our concludes for look behalf joining a the XXXX.

Operator

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

You may now disconnect.

Treace Medical Concepts (TMCI) 8 Aug 212021 Q2 Earnings call transcript