TMCI - Earnings call 3 2023 | Treace Medical Concepts, Inc.

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Operator

Good day and thank you for standing by. Welcome to Treace Medical Concepts Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to turn the conference over to your first speaker today, Julie Dewey. Please go ahead.

Julie Dewey

Good afternoon, everyone, and welcome to our third quarter 2023 earnings conference call. us. joining you appreciate We I'm Julie IR Communications Treace's Chief and Officer. Dewey, Chief today and are me Executive John Officer. With Financial Treace, Officer; Chief Mark Hair,

obligation on at forward-looking the our John. that, of a today results after performance, detailed can the the Litigation XXXX, This materially John events including from our Form offer being we of These call risks supplemental all X, market current today's Please a investors.treace.com. statements. forward-looking our in now call, third materials these statements Form statements that presentation those Act Mark for and as the which statements based uncertainties information close Any these and to our or The estimated forward-looking quarter commercial we'll Reform the material statements. future Investor XX-Q Accordingly, recorded call will forward-looking press to are forward-looking you after filings, filed turn on XXXX, cause for based to and archived upon it host statements Investors we'd third of are full undue upon to you released well to Securities update the available during our various made will current year in XX-K to be review session. is involve these of or not over market section XXXX. activity be of Relations or be should results will our our results Treace be and risks.With could filed implied website.Before remind During the financial quarter refer on predictions by relate website that I March found today, section place our and SEC that reliance as assumptions. of question-and-answer statements. statements or that begin, for protected our to are no events estimates is actual and and All call commentary under and will release trends, expectations intent our anticipated assumes Private like the differ statements. All and

John Treace

Julie. and joining I'm our of implant comments going thank everyone, results, and Good progress you, Thank exciting afternoon, launch for today focus us. my third drivers. our other you to on growth the quarter SpeedPlate

my comments, QX Following will guidance. results Mark our of the cover specifics and

foot-and-ankle on that today. we on summary to year-to-date right is place significantly resulting again we metrics, our above we adjusted We our have EBITDA market progress, continued key revenue and believe plan, continue peers, market differentiated in reaffirming let's to XX% penetration I operating start go U.S. of quarter, expand strategic with of across in encouraging our that execute growth into strategies details once our the about the the stand technologies.Before where gains

correcting the market million addressable reflecting annual the market Our constitute the addressable disruptive approximately identified Lapiplasty X.X from address of penetrated million our estimated the quarter bunion.As thereby an U.S. estimated and $X XXXX, specifically and correct bunion We've U.S. cause deformity the billion market penetration the we've addressing approximately X.X% all joint, of XXXX X.X% XXX,XXX total X.X of of X to market. $X underserved the up and X% was U.S. large annual an bunion root solution a third of we annual surgical estimated developed Lapiplasty in proprietary in securing mainly which unstable bunion system quarter undergo bunion is limitations We candidates, that which U.S., of by cause surgical due in of surgically of estimated planes surgical of third the each the the believe addresses root only corrections current the year, candidates with limitations and of billion-plus XXX,XXX these surgery our associated to care. standards believe

treating the market instruments. the fixation In technologies, underpenetrated late platform, our All new LapiTome bunions, to And RazorTome and our new QX, in We're Micro-Lapiplasty in our additional and are procedures begin about expand launch our cover our opportunity quarter my and our I'll Hammertoe we strong commercialization the large instrumentation. expected system, later including company. to sterile and without addition opportunity for we'll market commercialization our meaningfully technologies years SpeedPlate particularly for for our in is growth procedures addressable but of this and Lapiplasty also several to these fixation of initiated and remarks, for diluting exciting SpeedPlate an proprietary detail include that platform. SpeedPlate later fuel more complement focus. come Adductoplasty excited in to

and now of quarter, In Treace. launches most results. third our fact, for which our contribution XX% for and expected to during over for believe important year million is was by procedure begin this vacations to demographic, beyond.Turning the in quarter impacted lower-than-anticipated quarter. and one grew was Lapiplasty a travel QX meaningful profile Revenue this our with expected patient I demand product introductions prioritized new in contributing These $XX.X are XXXX the to growth date led and our more to prior to the

QX this in recall a tough day we also less this You'll last that for X year, grew year of selling with makes comp. XX% and

in in blended metrics ending active kits XXX SXA up up and performance per and of ago; third quarter, We in utilization of an over X% as $X,XXX our over products problem-solving sold and kits including record up such average kits Lapiplasty surgeon TriTome driven for sterile and the prior instruments. and number year in trailing X,XXX in SpeedRelease our per the complementary increase XX-month of XX.X year; surgeon price market continued Adductoplasty, year average quarter, surgeon with key QX the Lapiplasty substantial XX.X gains a adoption up plates, users, XX% year other selling by QX, from our our new quarter continued year-over-year advance surgeon of a active to users, with the

impact support our have of use in new and also SpeedPlate business, X sterile commercial a investments giving early our well-defined, some us in growth from have We osteotomes and that proven quarter.Our confidence we the the fairly continued scalable strategy. strategic focus commercial saw to

change: surgeon demographic most continued We XXXX to quarter guidance the $XXX guidance lower increase $XXX revenue is anticipated reflects second of which this revenue. to million There are XX% than an patient to from through our at XXXX X over first, reasons the the of our travel are third and midpoint our and started driving year-to-date vacations in count prioritized full-year that million, that quarter. updating are main due

procedures year-end, timeline primarily due heavily in we met.Second, refine the first deductibles As at a to SpeedPlate which concentrate reminder, supply we full insurance also typically decision made step-up achieve bunion commercial platform, strategic see a to which SpeedPlate our we until further large our XXXX. decision extending applications, is foot-and-ankle range to greater enabled to QX being the footprint commercial quarter development of believe broadly to expand which This our the technology activities. applicable a across of and a market generation will has market. us Shifting more X make clinical in our

was over on awareness revenue MedTech and past a and of bunion-focused we a our organization generated market.We XX% focused targeted revenue years. Treace, year. rapidly initiatives, the goal the and by the XXXX that's period to XXX% U.S. our has force, and investments surgery, of penetration our bunion highly-specialized related aware expanding such team patient direct that We including direct believe in our growing market one channel, in only from our this penetration midfoot sales we're sales discussed, our direct the XX% increasing driving the our market targeted same As have quarter, innovations we more R&D sales force, in DTC meaningfully footprint advancing last at continued by of the up In into with coverage the third industry. contributed of previously have the

our in they're during from and of productivity and offering months, X.X we've our and direct revenue leverage within programs. year, with suite channel. our exclusively cost data to invested as continue our past, we We reps past over resources the on achieved corporate Further, XX aggressively XXXX, primarily of direct technologies added fully the see focused expanding significant our sales reps and scale have utilize we demonstrates because historical that in our that discussed typically direct increasing

of much earlier was last achieved we full our call, of which direct our originally quota-carrying target XXX reps QX, planned. earnings having year than As end of the in

courses QX, complementary our our to through procedures foot-and-ankle Lapiplasty our channel.Demand our solution slated continue new online up surgeon matched highest up surgeon also, effective September, reps while for a year X,XXX look additions we new period. robust, remains delivering advanced monthly We substantially leverage, sales person, We're market. additional encouraged additional surgeon key QX. becoming and our that in By with and sessions and base and courses. surgeon introductory we surgeon in ramped Notably, in in the our from which and to in see from active programs, and to active forward doing balancing number the to this, surgeons training growth of advanced hire for to to all-time more customers ensure introducing footprint importantly, which onboarding we're have training growth and expense education through provider record that a the both are broader surgeon is technology company's modest These expanding direct increasing users in XX% continuing programs introductory adds. play executing our revenues role them we prior and in training the of in prudently all improvements

and Lapiplasty our systems, of as utilization complementary portfolio to expanding awareness As to fixation SpeedPlate gains supported continues turn like and our anticipate sales tenure, of surgeon base initiatives.Now datasets, DTC use differentiating platform. products, further Adductoplasty I'd our gains channel, well and by clinical direct our we increased our with to growing as of new all develop patient adoption

joint to many attract stabilization and for activities. has we our fusion that now the the SpeedPlate XXX(k) for allowing of we launch as for as initiated Adductoplasty, surgeon prefer a technology fixation procedures providing designed September, surgeons, early clearance reception of while that SpeedPlate positive our new bone is SpeedPlate provide the dynamic important insertion the has of as how involving second-generation our users. that common which on compression and and application compression gen-X SpeedPlate technology speed surfaces our our fusion both FDA launch favorable as us design nitinol [ received well rapid this from bones with well the versatility company believe We During surgical audience foot. stabilization highlighting overwhelmingly those is users, Again, design announced overemphasize of broad anatomic site.I compression Early the ] dynamic of other Lapiplasty, and the can't in garnered healing. feedback this already dynamic during and is staples, prepared been across

implant We SpeedPlate and believe be and patients of option Lapiplasty accelerate gamechanger." launch from the "the through exciting dissection XXXX in could in half incision that a procedures potential us Lapiplasty and allows common bone the system. We excited and Micro-Lapiplasty to an platform This the bring build bringing patients. Lapiplasty" the SpeedPlate begin the time the We evolution and the with the about to instrumentation our in tell expect to midfoot biggest look further since many size fourth continue many achieve ahead.Next surgeons the technology our the We benefits a for thing growth patented tissue the of to through across to many now supporting broad reduce other and to is, forward this beyond. has launch begin our the bunion our continue to "total had to more fixation XXXX. we've fact, advanced and Micro-Lapiplasty both SpeedPlate In procedure adoption late instrumentation their during Treace first over QX will quarter corrections SpeedPlate of and We're designed in This and months Micro-Lapiplasty incision. our ability procedure. X-centimeter surgeons to to is combination standard performed instrumentation set this foot-and-ankle. the exciting fusion related in anticipate to

have sterile we trauma, and procedure less any and surgeon initiated its incisions clear approximately our kit hammertoe to ease believe an expressed portfolio opportunity product less in our We and product pain that utilization cases. reach that Hammertoe the tissue with positions XXX,XXX high-volume why will willingness expands procedure launches had swelling.We to over additional we're we bunion development to This System. involves correction, a from believe the translate above-peer early and blended Treace As and who a this XX% such Fixation new with to our continued growth surgeons prior growth, less in hammertoe into implant is even estimate the support even this continued in for opportunity With space. compelling we our use which commented approximately on no important year, could limited believe us to per also all launch, faster revenue launch have time.While procedures our their recovery of that Though is the offering growth. adopt clinically smaller procedures simultaneous pipeline. use launch about have it represents positively pack of that and U.S. portfolio still of involve very all robust revenue this there's growth correction dissection represent, addition our our of more these excited expansion, that ASP come

of the employees. outcomes, XX innovation XX discussed, a strong on at pipeline accelerating customer to continued sales new patient base, quarter excitement year our Mark what develop on believe we've execution new team and our we just the to positive our surgeon with performance. centered XXXX. emerging over experience, our of In channel, productivity supporting new new real solid launches that, our the continue We'll be come additions to deliver of well strong turn the financial as updates talented direct strategy We're now our months. inclusive technologies a Mark? as from cause line additional and still continued penetration, we in drive core impact to IP that product to user starting I'm place provide of cadence over in have fact, beyond.With market that we to and surgeon growth make with our already market as for confident this SpeedPlate the I've platform the product beginning and encouraging aimed next for around in our improving right and increasing will technologies of several outpace our With third progress of to we other launches, have top are at drivers slated for and the launches competitors, growth our call I'll penetration.In made review closing, new remainder demand, innovations

Mark Hair

afternoon, Good was months growth everyone. the for XXXX Thank first you, John. Revenue over XX% million, $XXX.X X representing of prior year.

price. Growth was a and XX% revenue compared increases increase prior blended in quarter selling in the by in was quarter third million, to volumes year. increases Third $XX.X driven procedure average

the Lapiplasty quarter third The lower XXXX. instruments, procedure XXXX of an In million increase the third direct as the in our quarter our operating contribution record quarter, commercial of in overhead year to for additional well XXX quarter. sterile provisions, driven last decrease the an mentioned, travel the $XX.X third in year, of vacations Hammertoe, support tough price XX.X% the royalty our demographic, for was strategic included inventory Adductoplasty of expenses innovation, requirements, direct X,XXX increased X third compared investments lower-than-anticipated last in product was X% from of reflect The quarter support operating expenses and increase in QX Blended comp such the increase impacted than by expenses mix, quarter led capacity due quarter other that $X,XXX, XXXX in was access sales changes for to selling headcount XXXX. increase SpeedPlate John in were by XXXX. XXXX. continues total addition in quarter our of We across expanding which investments third and in their from point expanding offset a and compared due portfolio surgeon rates. partially the to million in $XX.X quarter third is demand this Lapiplasty less margin growing customers.Gross products, was in in quarter to system, and selling XX.X% the very patient prioritized same XX% blended channel, in product sales some Lapiplasty as procedure Total compared to our initiatives. primarily the the complementary impact to as procedure by day business operating early the kits selling over single-use our and our average average and price a third to This increase channel up as from basis to to of sold

loss Third quarter of EBITDA period for the net the in per $X.XX investment $XXX.X September million of marketable a loss or million for per loss compared XXXX. and of $X.XX of equivalents, Adjusted $XX.X XXXX. net a was was receivable cash in million the period XX, or of compared $X.X $XX.X third million, share, million, securities, as share, XXXX to same same a to XXXX.Cash, $X.X quarter totaled loss of

positive $XXX to flexibility of well full strength initiatives, Our runway total executing We me to and our concluding, level strategic to clear have lengthy as as available pathway believe our a investments sheet including with we turn on cash and is approximately liquidity, a adjusted debt facility, access aggressively terms outlook balance sufficient XXXX. EBITDA.Before million. in to continue achieve our year growth let for our current

the X $XXX to revenue. revenue $XXX less is With to year We of feel which our we land reflects XX% midpoint full comfortable realistically at where year, range. this the updating to months the increase are than an in and million remaining at XXXX XXXX to midpoint expect of compared the guidance million, year the

fourth keep month the specifically the of and which day, of we our we average quarter highest our reflects technology X typically to has is our fourth daily year full quarter QX when the surgery. our selling mentioned, this expected affect Also December, extended timeline historically of SpeedPlate as which and our John commercial for is that in surgeon count year, in the of days. of volume revenue X quarter, this enter which are to As has achieve gen-X our both guidance bunion less XXXX, year-to-date less sales highest selling generate mind supply

rest to of Moving the P&L. the

expenses QX and the starting and XXXX. see down to line are R&D in G&A the in leverage positive quarter fourth of roughly EBITDA to and QX P&L We adjusted expect expect be in with

XXXX, to year to EBITDA like I'd modest the For directional to show in XXXX. expect to on compared full adjusted we XXXX.One item. final comments some improvements provide continue

we on operation, will normal guidance As mode is of provide QX XXXX formal call. our our

product I as develop your in some to technologies, will new expect than commercial thoughts significantly Overall, we will drive grow multiple we enable a look However, positive of expanding strong new multiple models. market benefit to product and from as We we XXXX throughout and us opportunities. you expect as recent full launches, while year adoption also mind XXXX. market Adductoplasty protected advantages made to you and well SpeedPlate, with provide continued continued Hammertoe, contribution rep including to product our us portfolio, growth launches the increased from believe to technology, Lapiplasty, to that specifically were peers adoption focused begin capabilities, foot-and-ankle provide keep salesforce faster years.As our and wanted XXXX, additions contribution from that a the we Micro-Lapiplasty, of sales our advance and for with our the of pipeline differentiated

acquisition In and from of of back patient-specific Medical. addition, XXXX, adding in the our anticipate instrumentation preoperative we half RedPoint planning

focus years, our over XXX to increases a of surgeons business significant opportunities, next procedure persist. active procedure related a our blended further will bunion trend we has and and few pipeline new opportunities new the and tightening digits our sales we that additions, market and to given new complement advance strategy surgeon future mid-single approximately new regard utilization These reasonable plans our higher expect We our opportunity, with to complementary Lapiplasty, midfoot position this surgeon forward utilization and believe and to expected penetration, should drive case believe on look ASP With launching our growth platform ongoing large the leadership losing products adoption will in believe annually is XXX and adding core baseline is to accelerate expected adoption. penetration the increased grown and support ASP surgeon we also without both expand market. active product procedures We and ratio additions surgeon procedures, blended training to rep growth.Our bunion historically multiyear drive and base bolster increases. our on surgeon coverage expand to

year a elective procedure quarter expect trends of by the orthopedic seasonality followed QX in include next QX, softer to seasonal stepdown for the the QX, from seasonally year. historically revenue strong revenue which and We is typical QX largest to

the the to P&L. of Turning middle

to continue to leverage for flow operating cash improve with EBITDA quarters expect positive XXXX breakeven in for We XXXX. in and year potential coming full adjusted

and have of SpeedPlate, to the innovation in in follow. forward more addition aggressively position the third the business clinical strong with strategically Hammertoe, such call a in the attacking expanding operator we will focused for data significant able good all to XXXX.With to by provide look business our and successful as Backed scale drive over that, our rest We a be and are great for track in we the open the to we years and remain believe to line the and related the to commercial We these ahead. year closing, TAM questions. drive in and place believe elements earnings with opportunities a the organization, we me performance growth to differentiated and the information bunion, your turn and more QX technologies, on strong, of complementary profitability the new on of quarter midfoot, call.In best-in-class Adductoplasty, progress technologies let made

Operator

with first Our Instructions] the of question comes Danielle line [Operator from Antalffy UBS.

Danielle Antalffy

back to covering Happy be Treace.

make what in out. way about thinking each were the delay $XX up by guidance on of components you color the of give was what's the if could Is entering versus you impact guess versus surgeons called you the those there how just versus question travel at the fewer year $XX I quantify that midpoint. cut million? first I on Mark, So to wondering, the the it of And million my is SpeedPlate any any patient

Mark Hair

Danielle, remarks, both it's those those impact We've hear in impact and voice good the QX, QX. in both of to again. prepared into an had about will talked your have elements an of

So much pronounced in that summer QX QX. how specific why and But in were volumes detail the we were QX It down and that we seasonality. providing adds in not on more had than expected, and and surgeon was as by well. and QX we're was candidly, why QX which were surprised it's the down case

Danielle Antalffy

my maybe QX? point question, comfort or is XX% growth actually impact in meaningful a the you -- from like Is then that second was And more I not the maybe, but seasonal Q and seasonality investor there summer. my second appreciate in summer to on this the a rebound us on the way seasonality. give modeling question sequential community normally, and the

I that gives you the you you do to? treating here? in just is your that something that coming guess in the So QX? point confidence confidence build what how could something of going there's rebound that conversations on Is with surgeons not there level your else

Mark Hair

Yes. Danielle. Great question,

I think couple a So things. of there's

first month for mentioned had adds. summer, highest we September, that of First John all, post a our surgeon record the

in the we've continued When fundamentals about our remain think continued October And had really we metrics. so strength lot be strong. that of had well. seen about thinking advancements a really we're to as QX. and they September, nice of key our in strength And business, you thoughtful wanted we've But into as we've

a as like So that all every years. we go is really It's into step always with revenue that up year. been has it QX. strength have an highest at issue. we QX our is prior quarter doesn't in QX consistent This really seem

our our new several a technologies accelerating make And productivity to channel, of have positive starting are and sales base, additions to that already we also surgeon so increasing direct impact.

are all we updated that with all our and that very puts appropriate, new in accounted believe have guidance into coming we the mind, and for So QX. considered we takes

comfortable So we feel range. ] point that the really end of at [

John Treace

bit you that. years can concentrated it gone QX sit as add on we're We've each little glad we of Danielle, I just it's step-ups. of to through what season halfway to today, wanted X it and we bunion a and to year, John. refer this see top significant procedures as again. through here I right feels tell now in

Operator

comes Marcus question from Robbie with Morgan. of next JP line Our the

Lilia-Celine Lozada

This is actually Lily Robbie. on for

than in to the and surgeon XXX done a we XXX the adds than thinking year lower what next new past. you've lower were what is So lot for

that with continue So doc lower, I next are year? a adds utilization. think you And lot would expecting are to adds step-up to be a same in seasonality into doc that going big imply if would

that So you giving that step-up to see next confidence what's year?

John Treace

docs low-hanging that. because continue lot we're about for here. salesforce of loyal and salesforce, The very nice years XXX We've we we XXX we The of at expanded Lily, those lot got we of back, grabbed and it's XXX, that. years of our of a creating go This John. a XX%, more pace to now that's contact, both the surgeon of doubled lot thankful years, ago, think fruit, a added reasonable X of level. you pretty a if we couple past customers we add a XXX year ago, than size by the a year, to size

you we're with what for fruit the to And As fruit. larger customer get try any here. that that's climb tree tougher-to-get to market, higher and and the doing the the get, you in low-hanging up then have base you reach

a new despite thing One rep of us this increase.The of year, still level large other as we're into specifically. Adductoplasty, never come the staples in those before. a avenue docs. an really that group sales come continuing build on we've in at the whole a to able gives customer out out fixation was a of in plays have gives limited important surgeons, compression we're need a a some it to pieces role, they and doing to of Lapiplasty, the through is SpeedPlate is base And believe added we nice that counts that not frankly, we confidence not though different nitinol did SpeedPlate record of surgeons very role bringing found not SpeedPlate because those philosophy, range to some in even in docs be new to that. we appeal supply broader September, of to to a that there play us There's had surgeon

days for continue our So we're surgeons. to we It's it may that new was in our lot not add really a it be pace than ability that of doubling were confident in just at more the the reasons, channel. sales blistering to where

Lilia-Celine Lozada

challenge, it decision or is launch bit Can talk just push getting really the ready? of just the full product to on a you out focus little SpeedPlate? regulatory, to a about second-generation that supply more that Is

John Treace

limited that's We could yes, out through and release, there and quickly in feedback thing. our had would make Lapiplasty just treat conditions, a the a observations identified very this and to of and able be we of it, do things larger using several doctors not broadly that market our through really surgeons range got Adductoplasty more Lily, that appealing procedures. their also larger product to number foot-and-ankle

really glad we the right was And will great and found vendors, It think and make as took new we opportunity did with adjustments, we excited so decision. us be call. a product we that filed FDA. our we the time, we extend to timeline, but XXX(k) worked I So opportunity we that a cost it. It with awesome that very did We these by XXXX. incorporated a that our we that attractive stand the enter little saw

Operator

of Newitter Rich Securities. comes with Truist next the from line Our question

Richard Newitter

to to about so not surgeon commentary contribution. getting do next something off of in XX% thinking really where it year getting I'm slow a is about to apply to XQ, weighting XXX get of adds. mid-single XXX the XQ XQ be I'm it the see throughout we year, jumping going is that to growth me. about mid-single of think we it's somewhere in to XXX, And ramp? XX a the the to rate, A 'XX call SpeedPlate that that from until and And couple XX% and XQ you're way ASP coming growth, to about XX% ASP digit I with to just procedure now and Lapiplasty or the strokes implied right the If Maybe right the growth. growth for guess, rate that business I rate Lapiplasty low-teens XXXX, directionally? broad just run call growth, think with that about digit

Mark Hair

Rich, great This Mark. is question.

fill to that. try maybe can to John help in. And me Let I've anything, if respond missed

So in guidance feel launches, guidance, about remarks, we're as growing like although we with we but things right our provide the a my specific can talk successful regards you a we're mentioned now, with product going on to couple ourselves XXXX prepared new positioning really that XXXX for I channel, mentioned. all to not sales XXXX

adds and surgeon year. thinking that. mentioned a about remarks, saying already we should You was this over XXX. how in date my added to about as the be XXX XXX prepared year Again, I We've something to baseline,

So we larger much, base. surgeon much thing. And have next active we'll as that's a X about think year,

really adding And our so our can come surgeons. on reliant incremental and growth existing base, from as a it's the surgeon lot not

we're but hit going customer a on course, we to of of don't larger I Now, know into incremental sure get base, if all points add that the I all surgeons, new important that those there. our make the products to hands base. surgeon will of existing continue and for look

John Treace

Rich, John here.

start an a you or stride will its asking think SpeedPlate hit about I making when were impact? really little bit

Richard Newitter

Yes, that's questions. the one of

surgeon ASP growth I imply on kind should mid-single active think be that The just looking other Is helpful do the set of rate. we think that would of how that guess I it correct? level SpeedPlate? for at adds. would low-teens you're And yes, thinking X, about increases, a Lapiplasty us ramp procedure then, digit

John Treace

that's reverse be questions. I'll we'll very be QX, on good getting But Okay. go maybe exit the through as because as quarter. okay in we And QX, And to within go supply. ramp, Mark SpeedPlate if order into we'll stride at I forward-guide usually answer we them the full

So really what's we're Adductoplasty meaningful we'll about us a defocus very be how for year the attracting on but product both this customer foot-and-ankle next able us. because ASP, customers, exit And that's that going sales our and and satisfy and a excited ramp don't demand. and to channel. blended procedures new additional year all This Lapiplasty got blockbuster real it's aggregating is are it's outside of deal to big

Mark Hair

Lapiplasty our details and to forward fourth we to in additional guidance providing next growth look year, regard with in call. quarter And

you than giving overview some an So we're to there just other much giving things too not of come.

Operator

of Our with question comes to Stifel. line Rick Wise next the

Frederick Wise

trying driver when obviously you fit together. day, I'm the that X with to right the But If selling and the Is how cut? less remember the seeing knew I sure the from launch September, full last salesforce you quarter delayed, quarter. million making times. August, that's and The is November absolutely a of correctly, reason I of cautious. that major that slower the month in wanted trends understand the how but into more little products We're you seasonality about I Are cautioned SpeedPlate and it's some you change? $XX think, July, And can't understanding that you and I'm been quarter. concerned were the midpoint a believe only pieces new just Micro-Lapiplasty expanded. are, You week that make has or fourth vacation so now this to other before, all were I we're in. same starting

I'm I'm sure million is and trying understanding cut $XX what make to at driving what conservatism. that So midpoint the what's to degree the just

long for Sorry the question.

Mark Hair

to Mark. a me is couple things. of let And this respond Rick, those

other think that I that SpeedPlate. first, Micro-Lapiplasty available. question and utilize going some will it's is the there's about launched come Just of have been not the in been so quarter, a to fourth products

of you what of It what surgeon we reminder, pronounced we the as before demographic expected.And a And more A your mention, what was a surveying more narrow, lot just case much cautioning we summer I had are come. bit patient were a it's your couple said asking seeing other patient seasonality. customers, lot to volumes, a the to than count, than of far is much a as as that them, things companies. demographic? and is, our seeing have specific what in I've just little that wanted were and we So were about we

in John were going we those into what surgeon as views September. that had means a of asking we but was QX said, guide to from hoped, it were of lot our we the based some September on turn. so turn going summer adds. had the new doing away And what as and with hearing strong really didn't take questions. Well, that customer That time A positives quickly was softness it is, base hopes this lot first we've from anecdotal they're in we the of our this surgeon just like cases for

continued and helpful a add into beneficial, from that So strength of October perspective. and some has very surgeon that was

bit challenge quarter. So think about beneficial.But into that's full as team was very going the we little full the you we complement of as number of it, about having fourth team, because also go the we the have want as it think think a we of a into not surgeons, our to quarter, the busiest

And the of course, so, And using SpeedPlate quarter. that having quarter, surgeons many will in the as Lapiplasty on pushed have as not definitely an a fourth into the not of so third launched with impact. same thing and having team in way aggressive has

that the the know of quarter. things way those And that far. so we're of feel in given midpoint we informing confident are everything guide, really at both the fourth so And looking we

Frederick Wise

on gross there's this your in the we Mark, specific about you Okay. your guessing extent was third less not quarter our margin maybe does than greater the and would than forward. And second, frame margin you but general overhead. mix margin. thinking about I'm what remembering about I'm going how one It right talk think thinking comments and you'd and fourth less gross a gross expand and drivers the thought expected. help continue to just And And maybe think into which us that I

Mark Hair

question, Yes, great Rick.

product quarter, say we and to growing business in some provisions, lower a have we was rates. volume it and that I XX.X% inventory employees mix, and have, some when overhead, by the and the partially by so increased was growing And it handle that was royalty offset impacted

so the those would as uncommon. and all were And view not this I puts takes.

quarter Our fluctuate of some gross will the to quarter margin depending mix. on

not what Rick, SpeedPlate, that As we may fully see all have we when at tended other sterile only we've and our things, available. some introduce launches other but beginning efficiencies to the new processes we products, manufacturing instruments the in have our not of is

it X, before And X, get quarters may we so take those all X efficiencies.

about relatively it's few sellable north a And previously of SKUs. we've feel have XX% which our that. products so being somewhat is preferred Again, some new mentioned we selling good of we anything and of sold or the or customers? by that Are really products are mix. And strong, we think we really

We SKUs. XX than have less sellable

on levels, we about so focus impact So SKUs. at we above to talking a does mix near and our have high XX%. when or remain But an you're margins, few to gross these continue plan

Operator

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

Andrew Ranieri

more what you Just and of maybe you what to picking aspect, entry the so any this competitive seasonality in not might fourth becoming it's essentially that truly appreciate start be on is that landscape the a are my it why and changes confidence that quarter, the the third confidence gives us confident but into end, trying And I or terms capturing seasonality a in up problem what that maybe you seeing of like just that were incremental 'XX, better at but know surgeon all surgeon in look we're you could to procedures? levels maybe giving utilization I utilization same appreciating. that's maybe mind share we're or get any help into in quarter not understand

John Treace

demand, a I'll the What's other lot during of surgeons as asking surgery, figure a with active to these surgeons and Drew, a Mark softness on in try tons me of But first a what we what the root of summer counted new the our get John rate did work, surgery the months they first, in if the then coming train for and a of that surveying, can remind to going out patients us confidence new here. a is don't work normal to one doctor. can lot in of at giving cause on. are We affected was get of coming lot parts. doctors.

years of and SpeedPlate, season in as here X it's is real. today, again, it But So what's in doable we're which that's we're with us count. through we've It tell sit QX, confident bit activity. QX. this combining our into lower delay got certainly going different that the of very availability, bunion is full a And we the been and on can back, season, that comfortable. doctor bunion And is trajectory, I you and midpoint feeling the

not during in utilization side tough me point availability of what's and continuing going express see extreme comes other happened surgeons that's to my and it's the to QX. because a come. what's for how But and that affecting into can ramp enthusiasm summer SpeedPlate full as it's on the I So that's this

Mark Hair

I same utilization That That's a than more think with question time. over utilization. prior XX.X. It's up the another to Drew, your number. X% at customer strong part year was the of there's And, regards

lack just and had up decision. decision But the of QX impact a combination little out just of there So per going it our right utilization, a caused really of talked that things. then was the SpeedPlate as is that's And isn't that patient well, demand that in QX. and It demographic then was those was a few about to pushing with which what it's a X different for patient for John bit, us the set se. really an

an that So guide X appropriate felt understanding for those items. we that's why it's QX,

John Treace

And, we've in think your about of another this competition question Drew, several I missed had and component for the competition, last I years space.

way we've market. exciting best big, the a over We ahead, got in created expected The the very out technology. $X We're is We market billion U.S. it. very and

got come New a the continue entrants to pretty market, into we've but will offense. powerful

this Our advocacy and our drive channel, our DTC. then focus, through rapid innovation, that direct we sales patient our

place. left, we're quite this the it other and will there female softness bottled was and Europe a our because of the see International XX-year-old only was demographic shift once will to And U.S. in XX- And patient demographic, the plans piling this all summer year. you what's least wife So the with to demographics. in way know don't this COVID companies' my over year. and think the that the I real go dramatic driving all it restrictions behaved headlines, year behaved that's in months. that at can into to. This was what me and we pre-COVID shift. to continue was it that be the than years has the it the That's up, travel, not came be probably X didn't been there? driving once differently this upset continue people competition not But Yes,

Mark Hair

questions. And I ask piece stayed our to think final to close really that, on is base, them we the these surgeon customer and Drew, we continue

that's hearing what also we're we're is The you what So telling from them. things. same

Andrew Ranieri

And John. a just for on SpeedPlate moment,

a to earlier mentioning your in this system. range appeal a different broader remarks were You in could of that that fixation surgeons believe

year, going do about particular broadly So you portfolio, SpeedPlates think or to will expect you these area SpeedPlate? do be X more adopt into and the Treace surgeons next when adopt also more of portfolio siloed in them your with

John Treace

for I technology. The nitinol is from staple technology. there. and love we and next strength thing why combination cases be. is great do this commonly of first access of to doctors attractive to have in to not of pretty is and your nitinol can now doctors a plate our or get it it took for found have routinely it with as only that its and and very unique be the access your capabilities homerun, Adductoplasty only And quickly, small of right There a This system great the combination over stability be to could titanium it's And now. preferred fraction I limited availability, have question. a cases on even the comments beyond it with procedures X and its that's time where cases as and And It possibly we're way to started again. there the your outside very this compression that extra fixation work and X we But an I of big now it. Treace Yes, a fixation rep can are quickly, to extremely all be right a that hearing dynamic the the with quickly. other use going or like, foot. this Lapiplasty

out and only go first we say, wow, Treace. when now product So Adductoplasty and first and Lapiplasty, another customers our there from with only, this product, awesome

be more procedures. of core the across adopted time So our think will it over broadly I outside foot-and-ankle

Operator

line question comes BTIG. Ryan to next of Our Zimmerman the with

Ryan Zimmerman

to few be so much of operating as calls maintain I didn't the think around a on hear has EBITDA, and or say, done context Juggling position, tonight, you in maybe remarks I'm needs metrics. how continue I if DTC investment your well-balancing profitability-oriented to model But I your wondering more of this your what the about some prepared leverage more And driving guys. profit asked, just been on and priorities. in adjusted those should to apologize that

John Treace

Ryan, it's John.

nutshell, we'd remarks cut this on You're on head of expertise in our very with strong in and reduce with running, come consumer call. up DTC programs marketing the brought in more the core optimize and follow ago been catchup quickly a to he's right, new months we able spend a script several at we detailed thought get output. and higher and to look fast QX But in DTC, to we're a even them, wins, prepared our and ways

call deep on and levels through surgeon efficiencies seeing center. and contact of spend, we're getting customer great locator higher we're side. the and So really With patient engagement some our less website DTC

Championship really we're We're on down National So the right Pickleball now, in with very pleased going what's here. also, sponsoring Dallas. actively

ESPN, watching some... may you you're see if So

Ryan Zimmerman

John. that, I saw that. I saw

player, pickleball As a budding thank you.

John Treace

right a dialed exposure quickly wheelhouse on that and lot and our which low-cost very is very in way Well, a to is very Yes. get efficient, of savvy impact. Nathan up demographic, and

a these So bring I he's say Nathan's and our he's months X on lot things in, really to going already, to and of to the have initiatives. roll of kinds X, value DTC that working are on a

Mark Hair

little of and the about portion prepared EBITDA cash XXXX and think that bit breakeven even adjusted profitability, remarks about don't XXXX, I a think in talked following talked a year. potential in in my -- a flow Ryan, positive you there was And perhaps I

full EBITDA already. started definitely the leverage to to And to expect compared on for year. year seeing we've modest So XXXX, in last continue the P&L improvement we show adjusted

and leverage operating coming expect the we continue XXXX. quarters So into in to

Ryan Zimmerman

really calls, so at relative few a just John, space as and asked, changed think Hammertoe about beyond has to me. in been you're of foot-and-ankle terms question opened and if product the the prior strategy this expanding following has expansive juggling you stop be I'm Lapiplasty, your but products? you view apologize. bunion again, And and all bunion you're a outward more into being if it. your the views it complementary up But pathway, in Got for then has your on maybe opportunities to like bit seems around adding deeper look focused wondering aperture for as get segment markets natural almost some new growth. I'm this and

John Treace

No, timely. and great question very

high loyalty still will surgeon where we where direct bunion for the on spot. and our sales That built We our continue our to That's built That's overlap case sweet have with the we and is case a we market, focus years. we're future initial penetrating wonderful base that now that channel bunion position a from. or But in we lay some into the in to high technologies leverage complementary product to large and bunion degree. this direct a to have start fit channel.

provide Osteotomes, Our our other they want in didn't our in can plate. areas the that to Sterile they're that SpeedPlate Hammertoe, fixation a while use case

bunion more keep penetrating but around and see the to will foot-and-ankle that time. expand broadly across you continue our focus our just market building us as over So laser footprint the on spearpoint market

Operator

Stephens. comes question Sellers next Our of George with the from line

George Sellers

help how the XQ it's fourth in to here just still quarter commercialization those full 'XX? referring quarter? think SpeedPlate the Should And we launch comment first launching rollout commentary? with the the clarify of in commercialization about this read into quarter a we relative maybe SpeedPlate targeted you then Or 'XX comments Could Micro SpeedPlate? is of full to should as gen-X that more

John Treace

Sure.

clarify of. supplies a SpeedPlate, to build only we to will know that confusing. So, the is we've SpeedPlate just I is that. product the it SpeedPlate, refined market little gen-X the is large That decided

be quarter. as We we production quarter availability and this throughout will full first then go within market our levels achieving the ramping

very So get vendors this with quickly. hard done to we're our working

to had and This had is it product clarify, to to platform. SpeedPlate trajectory in out try chain to and quickly planned too to we supply is with revenue issue. the a our our configuration change get lose achieved a work we we figure the not vendors of how that this much for make, decided that to Just not

George Sellers

are next that XX deformities on give many over you new new maybe on launching existing then maybe additional foot-and-ankle how new of of devices devices that some And that the you've XX versus your updating technologies the you portfolio? currently the for improving attacking could some months, talked in have about those color and are

John Treace

significant would I majority George, new say that's of them. products, innovations. them technology, of Yes, the impact RedPoint X are significant

that's that expand have major us beyond market. that Something the in year back into significant increase introducing help and first coming the as between to That's Mark year the be call it now we of we'll the half half will, that believe, a the alluded handful we platform. well. and bunion then a And of penetration

Julie Dewey

us. for today, think Thank that's interest. I your and you everybody. We appreciate for it time joining

reach you call. and quarter. to out have to you please next forward more This questions, look our concludes talking If we'll

Treace Medical Concepts (TMCI) 9 Nov 232023 Q3 Earnings call transcript