Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to the Treace Medical First Quarter 2023 Earnings Call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Investor conference Relations like speaker to now Cervantes, Vivian at would hand over the your I Gilmartin Group. ahead. go Please

Vivian Cervantes

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

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

or events statements that Securities we will are to of like our forward-looking of statements. results various Reform our or our estimates made we is remind forward-looking Private assumptions. and well you as call and XXXX, statements that during as these that today's All current expectations market Before the Litigation to intent forward-looking based under it performance all statements trends, upon Act and estimated protected would relate predictions are be begin, future

filed of XX-K XXXX on information statements. year for the these and X, forward-looking SEC results for filed that differ on tomorrow forward-looking upon you actual be should implied XX-Q statements. including statements These Please filings, materially statements involve March are material detailed place Accordingly, risks Treace events All available or our obligation or these current refer these statements. uncertainties quarter Form and no XXXX Form by presentation to for could a to and cause our risks. reliance from undue full anticipated not based assumes those update first to

over turn the that, now call to With John. I'll

John Treace

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

business a take effort, surgical technologies at for moment our their and to execution to Medical the for like along nearly focused I'd begin, its collective our treat dedication, of was growth the for bunion the Treace our the our support first with success everyone improve on impact since to we of lives that our team's Before base, and acknowledge user for they having mission for our It's patients procedure passion patients. outcomes have the now, are positive eight loyal supported surgeon Lapiplasty performed. and years company and

the operating confirming differentiating our returns, quarter, business steady same first of gains clear in market with the to strategic strategies our the we that to technologies. continue in the of all the have In to place revenue make investments period XX% compared to are delivering right expand we our penetration in as across XXXX, key increased metrics. It's us strong

Before our summary into where quarter, about on I go details we market the let's start today. with stand

million bunion limitations Lapiplasty associated an market. to bunion due annual specifically $X a year, billion XXX,XXX X.X surgical market U.S. standards estimated of disrupted which the the of surgery plus underserved addressable mainly cause of root Our is and only large was address correct We've each we solution with of candidates, which believe to and undergo current care. identified developed

which quarter up constitute of bunion approximately penetration market reflecting the $X of of quarter annual first surgical the in candidates, first XXX,XXX in market addressable of procedures estimated in have X.X of million surgical from As XXXX, annual and the X.X% our XXXX billion X.X% approximately U.S., U.S. we the U.S. penetrated the the X.X%

representing growth first XX% in quarter Turning was to quarter our XXXX. the QX of results, first the million revenue over $XX.X

strength also of from trends our growth, pleased and to which steady during we from with demand strong quarter. but of trends revenue our XX% team XX% that sales positive mix, users, Growing year-over-year. in QX our not quarter direct investments. with increases fourth new extremely metrics the productivity key force X,XXX QX commercial surgeons sustained quarter, quarter first our our XX% number operating with seasonal bunion-focused top-line the active the including to seasonal benefit only first into our compared the and are of patient surgeon the XXXX, During for Therefore, coupled continue decidedly first and accounted in up expanding strong the sales strategies we extended

expanding growth XX% SpeedRelease and portfolio TriTome direct our our Adductoplasty, [ph] complementary team year A blended prior per sales products broader an a gasket trailing such a as our of year representing the leverages screws months for prices from sold effectively XX kits over and over XX.X Lapiplasty QX instruments problem a in XX.X up as average cases. new realization of selling per solutions, strong year their average surgeon in and our year with $X,XXX in ago, kits kits or increase Adductoplasty solving active into more quarter, of the tissue

Our have proven that growth well-defined, strategic us and focus to the we a business, confidence commercial commercial investments scalable has continued giving our and support of strategy.

to growth we're funds Given leverage. to execution delivering $XXX aggressive modest penetration, of initiatives commercial our guidance We full these XXXX year million revenue in to and our increase remain reflects XX% $XXX while our committed XX% maximize over which market to to targeted positive raising of revenue. improvement an balancing to XXXX million, trends, our

Shifting activities. to commercial development our market and

DTC with patient goal driving expanding discussed, previously targeted investments sales we're advancing our market. into footprint in R&D initiatives our more by penetration innovations the market coverage the continuing increasing and direct the we our of bunion-focused targeted XXXX, our of awareness As channel,

force, organization industry. contributed Treace, related team is and rapidly the one the at that in penetration. revenue on focused including only bunion We highly growing and this XXX% specialized surgery represents meaningfully a that to believe direct market of a and U.S. aware We have midfoot medtech has we're our sales such

and XX% by up was sales last up year. XX% from period direct our from our same In in revenue the quarter, the generated first sequentially quarter, XX% fourth the of force, in

XXX reps continue direct aggressively XXXX. up with invest by year-end, target We in sales a carrying of over to channel from at XXX having the of end direct our quota

We XXXX. continue that during XX the productivity from increasing direct reps to we see hired

reminder, within a products leverage historic revenue data and months, cost fully utilize primarily direct because suite and XX our corporate achieved typically significant that our exclusively with on our reps demonstrates of programs. scale As they're our resources and focused

Our component are DTC patient strategy. our of key initiatives awareness commercial a

now DTC hundreds Adductoplasty month, As and in surgeons national surgeon expanding is a using searching website that patient's recall, for larger we of in of our thousands, of you visiting may With their and patients. of area. can patients one have in U.S. in the a four thousands in surgeons every inquiries base from feel the our resulting investment tens volume Adductoplasty, higher

population. momentum, amongst drive investments and patient up the strong target DTC greater we to On initiated efforts year our to year awareness stepped earlier our this last compared

ultimately We in on have patient a educated become foundation their schedule number to experienced that reps DTC increase are and and designed to in locate initiatives of growing consultation. a website steadily Adductoplasty great focused and support sales area on educate of visiting place surgeons our patients to the interest awareness and Adductoplasty procedure, our surgeons remain patient potential the

with well online Interest our remain continue advanced surgeons subscribed. to advanced acquire new training many to attendance are our strong demand. also procedures events show surgeons be both our or and Adductoplasty training Likewise, skills new over like more by surgeon can and and and of at training Our education received. strong in-person programs events and tenured learn continues events approaches

existing in certain the use patient key increasing a through programs. role Were growth education XXX first these who surgeon in we effective play In broadening Our users encouraged onboard new trained base. programs their and surgeon on users of of technologies our of new skill indications. to are our see training the users safe onboarding our quarter, the and user surgeon a effective continuing

our the penetration base U.S. and XX which includes in user the approximately XX,XXX least one estimated performing of XX% surgeons active first bunion surgeons quarter, performed at the trailing the case who Ankle surgery. has achieved As and Foot months surgeon

forward growing utilization expanding as of products. datasets clinical we DTC and continues differentiating All mature, our awareness, gains patient sales base direct our as increased by our supported to systems, adoption Adductoplasty inductive portfolio initiatives. with As well our channel, complementary and of use look surgeon further of Lapiplasty to

our product out Speaking strategy. development

with We leadership and both have as well our new an R&D complementary bunion bunion-related team innovations. systems, correction our maintain programs that's technology committed industry for to technologies other innovation defense pathologies driving development of the to of and IP addressing next-generation as

date, applications pending. announced we U.S. XX April, U.S. patent to in have and patents granted As XX

the performed both Lapiplasty This for and broader plate systems enabling an also our implant many for our new option dissection patented size an two for procedure is of fixation this past Lapiplasty incision micro designed a midfoot through System. American with fixation highlighted Lapiplasty platform exciting designed procedure, surgeons and two-centimeter small of of as Ankle standard evolution be instrumentation is new Lapiplasty as College well technology the both insertion innovations procedure. micro This incisions, namely incisions instrumentation related applicability but and as advanced and the the Lapiplasty allows further technology a rapid platform. our serving two-centimeter our February, speed to procedures. to the Foot reduce This to product We tissue exciting incision with Adductoplasty both

has who have been about clinical excellent dynamic speed access favorable received anticipate and patients. these and with technology only excited plate the We're emphasis as implant the micro benefits speed the of combination by surgeons Feedback stability on could highly of but launch the year-end. benefits on bring time during potential quarter the implant not to commercial Lapiplasty early also compression the plate savings, We from well.

we swelling. incisions recovery translate As pain with could tissue less faster and patient involves believe less that any procedure and dissection, with this to even smaller

continue look outcomes at new we technologies on develop as core additional We and aimed our IP to surgeon centered user providing and patient penetration. our supporting experience, product to around forward improving updates innovations market our continued pipeline

is and believe evidence, a to see which in we're driver resonates to for growing can clinical body with A the participant clinical only industry patients. what surgeons From key with Turning marketplace, we believe data. we clinical our commitment our data. we the business differentiating of both

scores weight following boot, with low patient and reported recurrence Our rapid demonstrating our a procedure. bunion positive to walking in as outcome well at return rates clinical as months, correction XX interim bearing is XX data

with XXXX wayfaring social and months, recurrence Scientific from XX.X% a interim overall and month interaction and visual reduction XX% life reported American At were on months, months. days, to X.X XX.X% XXX XX in our or patients average analog Oxford in using and and Questionnaire Manchester prospective rate demonstrated quality Ankle of XX patients measured announced XX% X.X% low of patient the pain standing satisfied return we walking XX results using reported at boot with early follow Foot Foot of ALIGNXD Conference a procedure Lapiplasty College XX notably flagship the VAS the which at in Lapiplasty February, improvement Annual respectively, this XX Surgeons past an least very the they And an of the up, at analysis scale of measures satisfied of through months. walking

to patients' lives years The socially in company XX% post the ACFAS only the but on procedures this demonstrated the physically details includes on Lapiplasty surgery. well available impact clinical as we're rewarding rate meaningful of website. which is additional and only poster our as three surgical see making satisfaction it's the patient on by bunion level to a scientific product, commercial offer Lapiplasty evidence We believe not

ago to patient reminder our that exciting in a an combination this first for a primary began journal. the expect of endpoint ALIGNXD publication enrolled year, milestone, with submit activities manuscript is in years XXXX. This As we five later peer-reviewed

data Again, procedure. these the interim surgeons differentiated strongly of reinforcing coming positive resonates and we is patient market and further communities our ALIGNXD believe adoption patient with from Lapiplasty

one highlight item and social the initiatives Treace. quarter. published additional after ESG and outlines our focus progress to we occurred April, ongoing inaugural that end In right governance of like I which across towards environmental, our the early report,

carrying improve while integrate our surgical into on will the to outcomes ways our for patients. We continue mission manage ESG bunion we business to considerations

another I'm Treace. of quarter proud of great at In closing, execution

correction Our continue is model of we've our employees our solid and standard by related care talented in strategic execution and We drive that surgical investments, and and believe mission sheet scalable proven our a the supported driven momentum. specialized by of bunion strong developed deformities. balance growth fueling advance our to business midfoot strategy to team the our of

financial With that, review the now to call Mark I'll turn over to performance. our Mark?

Mark Hair

the first the months of adoption John. surgeons Good in in you, performed approximately blended year-over-year growth and complementary XXXX, an everyone. of newer average X,XXX Thank number prior U.S. by was and increases price of procedure one the the quarter selling over translates increase increase in estimated XX% million, afternoon, who case, technologies. trailing due XX an which of procedures. in revenue at our to Growth volumes, year. $XX.X the $XX.X driven the active The In surgeons million of first quarter surgeons, the XX% XX% penetration least to increased perform bunion XX,XXX was

to trailing Lapiplasty XX purchased increased of average a XX.X ago. the an average utilization from of Surgeon months kits up XX.X in an year

surgeon As nearly total the eight past surgeons, alone, we added procedure years nearly active ago, a of in our active we've reminder, personalized Lapiplasty two and half X,XXX years base.

patient practices. outcomes have each steadily average, expanding increased they On Lapiplasty utilization in positive due indications use the this active the to and number year of growing surgeons

the prior was a X% in Blended in selling first year. increase XX% quarter. QX a increase $X,XXX quarter, kits first from quarter average a procedure in first XXXX first versus Lapiplasty X,XXX year increase sold last over the quarter the and XX% price We

First as from quarter a provide and our of Lapiplasty such planting blended expanding products, TriTome double of gaskets our instruments and helps X,XXX as our problem average surgeons approximately system, sales solving includes $X,XXX contribution with technologies. approximately direct and selling SpeedRelease portfolio a of from growing our $X,XXX contribution price complementary kits screw channel expanding and of

costs due compared Gross of a quarter payroll was was of result in XX.X% XX.X% quarter first expanding to XXXX. margin XXX-basis and of operations. an related first the as our point in decrease increase in primarily The XXXX, to

of million. of to which administrative expenses first were million of marketing in million, and marketing it operating million included administrative of expenses $XX.X expenses operating the general XXXX, sales expenses expenses which research quarter and and includes million, research total million XXXX, expenses of in $XX.X Total and and quarter million $XX.X expenses sales $X.X general compares this first in and $X.X expenses and million of $XX.X of development the of $XX development of $X.X

expanding investments commercial expenses The capacity direct our sales in operating in well increase reflects for support as as in requirements, other increased initiatives. investments strategic product innovation, channel

attributable common compared of stockholders million or $XX securities marketable $X.XX equivalents $XX.X of First or were $X.XX to per share, of million for XXXX. and a same quarter net XXXX. period million loss $XXX.X March per as was to cash the loss share net Cash XX,

follow February, with of and capital growth $XXX.X mentioned strategic last executing As proceeds to which we believe is the aggressively initiatives. on This balance phased flexibility in we first quarter, us provides investments net we we our a million. offering sheet strength completed time on raised and additional IPO since and this continue our

for Before concluding, year let XXXX. full to turn outlook our me

full to revenue our prior which raising $XXX by As strength business million. is million increase underlying John $XXX mentioned, XXXX to from year XX% in the we and are $XXX and encouraged momentum $XXX an of our full year This guidance an million, increase million to XXXX guidance revenue. XX% are to of over reflects

quarter see continue extended business first our following with from and in-line strong to XXXX, fourth an our expectations expect seasonality, tracking the elective we to quarter. seasonally revenue procedure which quarter, For second benefited

the Turning we grow XXXX. expect will the middle our to continue operations and that continue of P&L, to to expenses throughout

Therefore, adjusted increased while show As full to we our compared costs, EBITDA DTC expenses. improvements and to of force, modest overhead expand leverage our XXXX. direct our sales the investments, fixed increasing further we year expect and in still for

me questions. for over the to your call the operator With turn that, let to open the line

Operator

session. with comes we question time, Our question-and-answer conduct JPMorgan. Instructions] you. will Thank Robbie from [Operator At this Marcus the first

open. is line Your

Robbie Marcus

taking quarter. congrats nice questions for another on Thanks and Great. the

Mark Hair

Robbie. you, Thank

Robbie Marcus

try could rest and contracting, dive you're to it's product add investment, I in of and the quarter. coming drivers Welcome. returns Maybe on in anything going increased start, you seeing what of know to for how saw force? some the complete hard out some into are on more you are focused first trends from better the But of wanted tease of terms components. is year? a what kind much individual probably to of the portfolio, each where And to the you DTC I of place growth sales

Mark Hair

is Yeah, those and really, of investments have on on really great Mark, question. focus items direct with the Robbie, our John, all I about, that you've this to sales talked tried building channel.

a investments bit that we versus in products Our expanded now we've QX well. portfolio And more leaned little DTC year this in last have year. an of as

investments helping. So really all we things, these the are all it's believe

the about prepared really that we the that this talked thing quarter. first really was other extended in strong remarks fourth seasonally into The quarter,

achieved were procedures the fourth quarter. in all not So

quarter benefit And come first that the well. into so we of some as saw

we So last but good I those reminder, we the momentum. feel from one really a tough growth that the really well. XX% know is comp a individually, quantified as each about year as of over don't really And

in. momentum of those pieces playing we feel the together about So good good We all coming that are result. as well we're achieve to really feel like

Robbie Marcus

terms what's hear Do But There's other we're if seeing Thanks. procedures. to I'd you instrumented noise your not ability is Thanks growing, the impeding recently the lower And a a the was which to And the win competitively follow your field. lot. you are don't field think of conversion the out up to love in acquired. reason competitor and Maybe a grow? lot you're reps that hearing are competitors out any number here? and an bunion what one account, here. is for in great in field as the extremity

John Treace

I Most companies. maybe bit from are for what in the offered further these. there quarter. of kind they're really these products the some momentum to large last we Yeah, marketplace, hi, with products. question. ways, just John of companies and long coming here. develop There we Robbie. what we discussed other are little validating our ago. Thanks being We're other In with diversified are think, seeing opposition highly incremental, a Yeah, consistent started not bags what any of from

in company's get found is and sales team's like time It's just eight with so offerings and And the for attention. make refinement, more a just we fractional more truly patient can that years over nearly these of performance products and Lapiplasty elegance to a we're is interface. that patents making we Any what of their portion reproducible. frankly doing, of Lapiplasty. elegant to what doctor continue little challenging something unmatched companies around it of And at the replicate wrap

of our our DTC, training sales can direct clinical multiline real our momentum. just distracted we through in So that's our programs, data our patient I business on further up can't any that, channel, us one of these top any, with that say differentiates But market. advocacy companies back our it our outcomes that there's product slowing the

Robbie Marcus

taking for Thanks Great. the questions.

John Treace

Sure, thanks.

Operator

Thank you.

question comes Stanley. Ranieri with Morgan from next Drew Our

Your open. line is

Drew Ranieri

for Hi, thanks questions. the taking

just the kind maybe breaking kind ASP. Just And you're appreciate the out on expanding portfolio. the obviously look mean, and the from first math kind If expanding Lapiplasty of start of I your at forward. trends. that pricing XXXX, quarter pull kits you blended I I of and

a heard I I you up to think about saying year. you're getting You're direct adding force, and sales this XXX

So with ASP talk the One, that acceleration maybe of even a to XXXX. blended expect and about through XXXX, us kind should couple maybe of things. in just we

that get to want you if dangerous. So

in you. actually maybe the bit in more case? what tenured on Are are of your established And highlight Thank adopters? surgeons surgeons then mature or your seeing And cases? -- seeing you type second, it performing maybe the of Adductoplasty more more attachment on more the can you that recent rate some even you're a for just

John Treace

that Sure, Happy drew, thanks. question. John. answer to it's Hi,

call cases. change from we are X,XXX, the regarding the roughly case complementary think back it X,XXX blended and is X,XXX first using around coming as Lapiplasty Lapiplasty a is that those peel we that products quarter, I and ASP, that had

curve in As in new see other is our those we we on to ASP continued to as we products, early the prepared which recently due that continue as still the well of mentioned the blunted Adductoplasty remarks, commercialized technologies. from lifting adoption adoption think

selling cetera. effect products tools, procedures SXA appreciate this et we're I what the within of is that tissue other these from serve really leverage we're and those release more case. plating Our getting to or that complementary beginning performed, see kits And channel are direct the think Lapiplasty

we innovations, will to with and we as to on, be time. definitely plate more more continue we room over layer grow new later speed example, for more as this believe our year So there's ASP

But to beginner's Adductoplasty Adductoplasty Interestingly, Adductoplasty And as come profile. now brought more gone and has introduce our and we're starting surgeon in to were them makeup courses. tenured the targeted to to they excited most initially we base, certain come. trainings, by, time our to

So it so Adductoplasty on they they get new a to those only for finding training a of to earlier cases trained they on. requesting as get Adductoplasty come and more when And on a not exposed then bit Lapiplasty, course, of well, get but they adopters training are little their we're more then.

users, moving been it's our into now So both more and our of blend advanced good a tenured surgeon base. newer

Drew Ranieri

the maybe -- thank kind And that But about thanks these help utilization second field, was as the quarter fourth out about it, this would and a strong strong tracking improvements? question your flat you're of bit taking the Just kind we for and like more quarter the a quarter. drivers in flush interpret Should Got across given understanding little for is But of of first as could extended the more expectations. of Mark. first you. of to the it quarter seeing little fourth some sequentially? we us that just seasonally some what ASP more maybe commentary think bit surgeon questions. I maybe be

Mark Hair

as know Yeah, of the quarters, on Thanks, comfortable that achieved for raise that's making. of range. we're difficult We And range that result, full year. good feel so to was that our our will we're based next guidance XX% XX% growth be we these do. rates embrace XX% growth investments all And Yeah, we those That the about annual believe with within do we QX. in annual growth last comp. over of a a to we year We And Drew. that course. really midpoints. couple

for rest And we on the we about the year. going good momentum have this feel of that so

Operator

question. you Thank for your

Wise Our next of question from Stifel. comes Rick

is Your Wise. Mr. open, line

Rick Wise

A John. making Hi, excellent see great strides. basically you're couple you. starting sales rep direct another things. just here. of Maybe Thank Hi, at quarter on XX%, Mark. the to Great expansion,

your some that the achieve it? goal you Just for around Maybe if us XXX% How color remind starters, you is to direct? can latest have thinking, quickly would.

John Treace

Hi, above thanks are field. that's excellent, the numbers what year Rick, to Sure. likely it's independent that really John, we really XX% for continue ratio this partners more driving have salespeople that through the This who progress, overtime, elevate said, excellent, question. direct putting into aligned, that excellent. And distributor We'll will, we up would expect. are some

channel So we progress expect we with to continue some move we'll way ahead. that of the But them you as I continue continue and in out direct to to continue think to forward. along our ratio build can move work direct as

Rick Wise

growth momentum what shifts but just at Right. ignorance, concern pace independent a saying And to of you're in appreciate I'm stark as conversion and saying of this about distributors, all it slows that terms growth max that driving factors? get just levels, your drive other or strong -- Is your to the worries factors, from you it John.

John Treace

can more specific? little I probably think you be can you the a it's latter,

Rick Wise

does way kind Yeah, thinking, momentum intensity, reps, I'm once before? of your your max of growth these idea slow to get I'm all sorry, not focus conversion, that share the direct that just I'm of level and any if and direct in clear. having just you of going sort

once portion and to of is that 'XX terms looking ahead In 'XX finished.

John Treace

for continue expectations we'll rep high new our on we side. Yeah, growth our distributors either additions and forward. expectations don't independent have any to concede of as remaining growth any on go our of direct We

can everything given training, to growth reinforcing surgeons, build drive find of product as we strong with distribution this go So playbook our datasets. new continue we'll the territory run more most more forward in to launching DTC, any clinical just we high innovations, continue and in effective and rates business, course,

think we see I the that's a way brick.

Rick Wise

Got you.

all Obviously, clearly. we average we the I blended innovative selling speed here? jump the you've do do move assume cascade ASPs, up the really as like blended the And just in level? with we move price. to going about plates. your system of do Is very we uptake explained of sustainability was it How the things On think impressed this How see, of or from that micro think products and Lapiplasty new from ASP the it? here is about

John Treace

way think the to average about Medicare think again. for John, $XX,XXX. Rick, plus if facility it you of reimbursement is minus materials mix we about procedures, One is Yeah, have rates or use

So, definitely have of more that today, other if X,XXX case. go in to Lapiplasty a coexist addressing terms we procedures in headroom

new bunion. to to all look but we're can case, So to interrelated stay that Lapiplasty additional in for innovate so continue going provide problems and more of solve our procedures, a innovations that the sales reps comprehensively

ASP. And up more do that there so, we believe is room on the blended to go into the right

we and Medicare But, average that the hard for is reimbursement feel somewhere is case that's on like to going the out. average XX,XXX. to level It's ceiling where max the say around

majority surgery. reimbursement premium of that patient have to a where is for actually our mix you commercial in materials implants the or of used Now, pay, terms in

of to ASP according time. over rate. kind to a could the blended we've vary nice runway an to could wobble of So, got quarter It would or at see right, quarter. But I quarter over, movement modest that continue yeah, I it think a think you annual -- term,

Rick Wise

again. Thanks, great. That's

John Treace

Sure.

Operator

of Ryan BTIG. Zimmerman Our comes next from question

Your open. line is

Ryan Zimmerman

for congrats guys, our quarter. the on nice taking Hey, thanks questions. And

both questions okay. As are my if that's upfront

start think see leverage scale. on in level First, do DTC grow, you're you mark? the reaching the as competitive, of P&L are investors certain a markets efforts spend When to DTC the

of of to Center And percentage your the customer taking the about et time general those questions, then the do second surgeons different question a point base, for Excellence, how advanced I'll just funnel ask more the what upfront look is, of So in a as guys. at novice say, you think surgeons center categories distinction, progressing or what of Thanks and user user options? the moves, from to someone or at we cetera.

Mark Hair

this is Mark. Ryan, Thanks,

and previous a about activity I will some calls, And, really We've our said DTC investment But seen as in to great a procedure. our question that overall, DTC efforts. about think it's perspective. to educate the we quarter-to-quarter. a and train great fluctuate our understand invest valuable that more drive way Lapiplasty they patients, and to from make we of it's sure them think to website

P&L, last this leverage leverage to year. about regard an talked With increased we've even versus on year, the having

So be a we're of to And premature year. to leverage. next year. this well, that go little if coming that. we things believe It's there'll see for about beginning some maybe But, some already talk that's more

XXXX. feel John this funnel. we good And talk that's have so maybe I'll And about about how year out playing the for

John Treace

I Ryan. surgeons question levels -- your progressing think Sure, through different around how Yeah, was of are

Ryan Zimmerman

think Yeah, about to -- pace if Thanks. changing centers the base. it a maybe so with from you was even start Yeah, people these ladder, what all of you forth What as as up comfortable so introduce of that broader percentage you the at customer just those the the the kind and of will. progress mean, year extremely products just And on and to ago, XX% system. distinction shift the how you're and that's of and market. of I just become

John Treace

analysis our website our, the Yeah, there. on Ryan, and you surgeons centers lot on and are do a our into of great very our dialed

center of evolve experienced tend But I Elite you're and Center overtime, play of ahead that with there to excellence, the and So that. me. say, more probably certain different can achieving for those items into through and multiple fixed are criteria step distinction product. titles They a status, Centurion

past of than surgeon What is first in that you this months has group I group, XX the adopted any Lapiplasty year tell year business. aggressively tenured tenure more other history the first prior can is

to on it's coming that Lapiplasty aggressively. procedure, think more be established largely as mainstream. the to tend reputation the has due an they that's Lapiplasty faster, getting more now We and So, and

it in they a where little a embracing little So ago a patients comfortable practice, of come then see how few would the do very couple feel back. versus wait bit, a maybe cases, aggressively more years and their try surgeons

using trained of And surveyed say respected having here. reason lot our So Lapiplasty Lapiplasty effect they're respected and to they adopting of the get is a peer is that a peer users. results. hold is because taking good We've coming one now are on theirs number new

We the So starting this. we early And to in -- it's like majority the what the we exciting part to into get curve. think see see adoption we're of there.

-- So

Ryan Zimmerman

Good John. Appreciate. Thank you. stuff,

John Treace

Ryan. Sure,

You bet.

Operator

Thank you.

Rich Newitter Our comes from Truist. next with question

Your open. line is

Rich Newitter

first, you Hi, just I'm here. really how increasingly or to pretty taking impressive get this, you're -- direct to focusing you compensating A reps I drive one, for the sales couple is you thanks the organization, levers increase. more with emphasizing per -- trying what revenue procedure, what's growth? if for at me Maybe where ASP are the good here now especially questions. on will, guess,

it new that's or get especially accounts? higher with more customer or this you growth, I'm new procedure sense avenue revenue towards Is opening per just how of balance that any less Lapiplasty for a trying to materializing?

John Treace

they more. make straightforward team. great keep it's We fully little great, quota. John. their it a make during quarter. be They can hi, They they a Yeah, number, question. And pretty certain to with have quarter if Rich, a the And much sales make pretty commissioned, tend the they percentage

kind on we of that. So them motivate

other those number is the they the compensated on productive numbers, hires that of on management being the number reps add their and on but then On how the side, team regional to not the reps and team get. of rep hitting new only

their it. that's part kind of aligned we've way as with new well users plan. of surgeon the compensation been also They're adding So as doing

surgeons event, the in surgeon can making and out events, then having efficiently. with So to identify salespeople and training that adopt that Lapiplasty there to working a successful their our getting to they're back practice bring training sure new

we've of kind So at. that's how been working

to portfolio case higher or see that we're benefit blunted now we in starting that bigger we into bag have -- added ASP. those cases. is a of have don't have can a products it a But incentives implemented not to of sell necessarily more Lapiplasty their that an It's be products

doctors great more in. a So able on before. a be doctors makes And there's great to find Lapiplasty. And called opportunity that new it's coming those to new reps divide to who territories, because convert relationships those a then ourselves reps, weren't those are getting more for trainings. And new make our with that are We now. to now up situation being doctors room

me what if your I there. please can answered hopefully, I So not, question do. know But let

Rich Newitter

you at maybe last 'XX you're my year that helpful. said little No, DTC. definitely to know, was it. more putting just up I on least. And follow your sooner Got relative little in a a

you do how spend? what any the to from can? How this hoping a standpoint So the thinking was And I do year? we spend us quantification in what ROI, last half? leverage or be is if decision then, that there you for should growing give about of DTC back was a, guys maybe year, And you behind the some quantify amount was planned is your that what can accelerate much that dollar to what you

John Treace

Yeah, appreciate great being on call. question Rich you the and

this really where about our ended year investment. an and we year really talked the an it specifically we investment we full when XXXX as called last So out being year. think about we was year, DTC

felt DTC. all a of we all different happening year channels, which And that lot what of was can with assessments. our results in did tracking really We make in last throughout we of them the in good about

So in to that's why wanted lean year. came in. we we really this And

increase we've feel we in year. going XX%-XX% base. surgeon last growing good to So that's And our leaned over support like

leaning part from DTC. process Lapiplasty thought There we without really surgeons in our this was, point surgeon was was to this surgeons base. enough far out no benefit there There really of large too in needed --

to last year. that lot into that last we to year We So now year, good using surgeons was just continue results are We've we the have lean felt learned We've really of all Lapiplasty. seen this XX% that. a really learn.

group of that we've so surgeons we larger got this benefit. invest can this year, And to because more want

Rich Newitter

And the congrats Got Thank it. a you. answers. for on great you Thank quarter.

John Treace

Rich, Thanks,

Mark Hair

Rich. Thanks,

Operator

you Thank your question. for

with George Stephens. Our next question Sellers from comes

Your is open. line

George Sellers

congrats osteotomy? on doing procedures for associated much population is osteotomy? great Maybe to growth further surgeons Hey, who still doing Lapiplasty how thinking already good converting the to surgeons using afternoon. Lapidus and treating procedures So are fusion traditional of start from time more and bunions kind traditional using versus a fusion who's much Lapidus Lapiplasty Thanks that with on are versus their bunions attribute How penetrating the to who of Lapidus surgeon to for the the a surgeon with driving quarter. treat you fusion penetration greater would surgeons algorithm. and about growth just

John Treace

see we you've see really, question. Hi, great them cancer really surgeons, identified Yeah, and well. it's George, two Well, John. we

come of it to convert correcting for to Lapiplasty have people And it. principle quickly. out their And point You that surgeons training correct cases. very some to of And programs, that believe of embrace origin. at XX% tend of way in the deformity the those Lapidus they'll it already do highly upwards the is Lapidus-centric. They the use of

cases extreme algorithms The really follow them -- population and that, XX% osteotomy. mobile other or treat group they're fusion for the the hyper be are the are their or it's can't majority of deformity angles, should that certain traditional Lapidus and of with that the effectively an in you so

osteotomy through it And time. what their so they for they past, with plus of moderate their doctors, time, progress more severes, those Lapiplasty starting reproducible base that with expose in we go is, would time. and over the training straightforward and realize fusion use So case, Lapiplasty to going get programs. in the superior their Lapidus then struggled back be and they what find they percent the over begin and our is a them more cases they'll cases comfortable to over carve into we them XX%-XX% over They it with to time, how for with next much

having growth and conservative, revenue of Lapiplasty. and growth the osteotomy-biased of converting surgeons those So success. majority lot their more we're converting coming osteotomies is to our would I a from say

George Sellers

the some devices? for And additional devices commented of that's full those you give then timeline an on. if helpful. that this, Okay, us commercialization some of can you Apologies, micro I really other Lapiplasty the on and missed but update on

George Sellers

Sure, been micro prior the a fourth then in commercial, the probably quarter with Both and doing few And and fully Lapiplasty Lapiplasty plate this of ramp instrumentation, fourth going we've micro already late end component instrumentation into select towards speed centers. more is The our quarter. year, cases XXXX. through up come yeah. implants to year

hand So two a late-XXXX go hand in launch. those of and kind

George Sellers

great. the Congrats, for again Okay, the Thank much so quarter. you time. on

John Treace

it. Thanks, Appreciate George.

Operator

it I At would your this for Vivian time, the questions. to turn over like closing to remarks. for you Thank Cervantes

Vivian Cervantes

Thanks, us concludes Teresa. for second XXXX. the This call close next following forward everybody our to of you, joining Thank of quarter update our we and the look today.

Operator

does participation, the conclude you program. your Thank everyone. for This

may now disconnect. You

Treace Medical Concepts (TMCI) 8 May 232023 Q1 Earnings call transcript