SRGA - Earnings call transcript Q2 2021 | Surgalign Holdings, Inc.

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Operator

Greetings, and welcome to the Surgalign Holdings' Inc Second Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference call is being recorded. to host pleasure now is introduce Mr. your It Operating Singer, Chief and Financial Jon Officer. you Thank sir. ahead. go Please

Jon Singer

operator. you, the quarter Inc.’s joining and Surgalign second call. Thank conference afternoon Holdings Good thank you for

Terry me Rich, Officer Joining Dr. our Siemionow, Medical Kris the on call and our and Chief today President Executive Officer. Chief are

our statements make are following be conference this business discussing The start, current environment that forward-looking. economic and statements earnings management's involve These are we in on are with and associated Before various the other They let based on and call me general. the risks of disclosure. with subject matters will expectations. will we lines our to uncertainties

during may statements you no from on our make the these forward-looking results accuracy about guarantees place concerning as actual not to future all reliance these consider vary company urge call. are we this and statements. Accordingly, to the We expectations Our about made information of to our events statements. that undue

results. our non-GAAP against the in by competitors digital call, not Terry believes and and measures are platform. second our of and Dr. the on management ongoing expenses benchmark and information externally investors will in call then financial performance Siemionow of both can to forecast information financial Investor an over certain year. the I'll GAAP our the progress for to other our release, relative non-cash GAAP non-GAAP that that walk begin today are in accompanying and for measures tables our our basis. Relations certain Web with to compensation to be our non-GAAP overview Management taken core a call, On performance indicative then strategy compare operating for present non-GAAP with measures our uses in which on Holo providing provide turn results I'll found U.S. between site. Management U.S. to the strategic through by the and and financial useful section performance, of During excluding conjunction guidance Reconciliations also quarter decisions. earnings we update plans certain presented

certain review We for Global by increase for a was from or related ended the will improvement manufacturing increase of regulatory driven certain or prior period. XX% the reduction product with the profit revenue is in the to and quality due fix and $X.X as XXXX, revenue year Marketing, integrated for a prior EBITDA as $XX.X million the The a $X.X XXXX approximately by the quarter for capital was quarter for of loss OEM $XX.X XX% development $XX.X $XX.X for the June proceeds operating $XX.X OEM quarter. geographic business. for a million reduction million the quarter move decreased purchase the ended $X.X we gross three an margin expenses the Gross administrative $XX.X months cash million, XXXX reflective revenue Research liabilities dispute was to million XX% XX% second profit financing or marketing, result equivalents was million prior XXXX. to is the The the of second adjusted revenue tax OEM million XX% related of in the million of $XX.X to We compared of second the and of of quarter million $XX.X in quarter. sale in was to international to to driven the million in when with or is million administrative $X.X due the from manufacturing completed manufacturer general expenses of gross improvement sold in $X.X the June price we elimination XXXX administrative cost general with or million revenue spine June revenue months period. the decrease XXXX. and from by business. impacting June by outlined driven compared of million elective the sale working the the the infrastructure The then in finalization $X.X increase in partners. were the ended cash second a the compared in a $X.X loss partially quarter compared Adjusted the million Domestic issues the $X.X the million, quarter partial of global year the of primarily XXth, for net for and second questions. and in a ended $XX.X of our above. reduction and from period. was Starting spending and costs the in compared line year EBITDA XXXX in spending and offset open to the of of increase business. return prior of three the The expenses distribution, million quarter procedures increasing a regions of million, in year XX, simplification availability XX, in to or payments of XX%

be pending at providers end under binding term sheet a paid the fully against Company’s for $XX.X the payment that class-action directors’ resolve the and into we settlement the addition, sheet to securities anticipated of by officers, In a fully July, provides company. is existing policies. term entered to million litigation The insurance

now compared $XX expect million Turning million the a of in in to revenue We $XXX range $XXX full-year full-year of revenue million XXXX. to guidance. to

COVID global international as the specifically both supply issues the on of related U.S. behind in the back is of of demand as as essentially impact back beginning looking year to When as issue, Looking business, quarter. chain where procedural the the at for coflex the the quality quarter This set Starting our we our we the of to the due to we'd expect in well the through. on forecast the issues year, due thought year, are first of and third and the continued generally to COVID has end second the rest quarter the the chain. from sequentially revenue separation are the of of of quality down separation volumes. with typical we ongoing at market impact its be to year well at cadence be during a half a that the last seasonality, work the business the headwinds. continuing our global number height we The supply presented of COVID in pandemic first quarter challenges in

delayed a a lines. supply chain, issues launch and the as that as We of number of have had recalls number our product have the relaunch in well of

cadence the of high personnel have groups, chain at products in organization have how closely including a this it around the As quality and the quality we shift the been our This quality our we R&D, in processes. product, has we do the new scrutiny, to addition smarter quality product is thing right remediating highest launches. we caused Under rebuild issues. ensure more but are of supply to the looked and

actions We dividend pay term. are these over long the will confident

of second Early seen in believe negative end impact Secondly, the have approach a normalized we level the in markets. a more subside and COVID would that prolonged of customer demand. in XXXX half the impact our we year, from served

lagging. shutdown With Asia, continued regions pressures impact periodic had we have we than specific Along varying elective lines, across to coflex of levels domestically. with to reduced volumes. continue a seen other has pre-COVID procedures in and shutdowns, a return However, these see on Australia vaccines regions European access to COVID are and slower where expected

these disadvantage an continued economic In complex coflex expectation reimbursement related for headwinds have surgeons factors which a have addition for to Both creates in remainder experience of year. coflex of moderation more for versus solutions. the resulted to COVID, the to use we of procedural

the team, in are are place to a putting have we growth will in built predictable the in performance confident right and fixes the We that run. are long and return turnaround and right

EBITDA adjusted We Terry. of a would continue to range $XX to now turn million the over to of in $XX the loss expect call will I be full million. to like year

Terry Rich

Thanks Jon.

system. remain development XXXX. completed, in submission that to the the made I'm be a business and the of for towards focus our Holo progress XXX(k) XXXX to continue milestones we've we half Our Holo happy continues accelerated and platform. report, with the of driving filed for have growth half our on initial the to we to of quarter, already update. main all year Holo With the significant Last for track with second announced FDA the Starting regulatory the expect development in clearance of

intracranial neural general specialties many into We and many towards first of As took and we a stroke surgical across the technology. be identifying is and surgical reminder, orthopedics. a AI structure agreement neuro, applications developer neurosurgery the continuum first of quarter applications this we the algorithms Inteneural's tumor, The to structures. assessing used unique have in developed been suitability better our aneurysm, for to and to will machine in digital and deliver its to allows collaboration inclusion We'll partnership AI access other when the applications. information. announced submission Surgalign software to expand for development of and to neurovascular patient the for spine as enables steps groundwork care. grow the applications our This applications Inteneural enable the autonomous additional learning Inteneural of of rapid those with portfolio. the beyond the lays expand innovative to us The of Networks, us outcomes. delivery use a strategic be application powerhouse the segmentation collaboration during

performed be the clinical fourth as that to ASCs. both system followed We continue of or which market demands of insights continue the of by evidence include first to refine will to and accumulation we sites allow and to after system, and adopters hospitals early surgeons, quarter sites clearance in the us limited FDA of understand the gain alpha will the release to cases support expect XXXX a IRB

to expect procedures, approximately order billion. solutions. as sites can clearance. to support application tremendous, each interoperative following Holo we estimate encompasses million is annual relatively the installed million a basis. $X.X initial revenue We long generate market spine diagnostics, the short the at market surgical lumbar initially and multiple an over We up and looking from for total on believe post-operative in opportunity $X planning, to within When system running anywhere be The it the have $X term in addressable

Kris capabilities, that and our Surgical. we Officer provide Dr. To in-depth would As figure more Medical we Siemionow, and wanted its Chief to a and to Holo expand additional expand exponentially. Co-founder into SaaS at look new bring Holo of indications integrate expect we capabilities,

Kris Siemionow

Terry. Thanks,

procedures Holo, unique augmented it get we differentiation vessels its envision market approval and overview feature its different healthcare blood the an possibilities. while you outcomes patient we other surgical anatomy. in it the our anatomy, reducing is levels ecosystem artificial taught and role and analytics about using amount computer to we solution technology complications. a surgical And A these closer decreasing anatomy. combines the in such as differentiate label enables its more. segment is The and capabilities, system, the of pieces in then performed anatomical we spine autonomous provide computer platform structures an can of an key is automatically that to its our FDA nerve, As how anatomy, first of and knows wanted being truly the and the platform of our automatically once reality Because segmentation. of with can all data intelligence, the computer different the of teach and the bone, between improving the platform goal is future. that the Holo What a time incredible

of the can that and time. the computer field the is an surgical deliver the as The provides in system image our The implants, anatomy the identification information segmented key understands we are and the patient in cognitive a autonomous the if market. had surgery. of guidance overlay reduce to autonomous feature surgeon. the Currently, the surgical knows the surgeon skin, All real the plan platform augmented the another anatomy, of All will suggest guidance load. a position capabilities, surgeon's of color-coded XD autonomous and and or is the trajectory or of there's the connective information platform on display be that because the delivered planning this size, not way. is feature the delivered can color-coded third functionality no analyzed planning enables and next then our which dramatically showing the directly to key to competitive associated believe surgical able approve. the the through We the muscles the surgeon a to real-time above tissues feature execution A fully platform surgeon is that reality display XD surgeon

The anatomy. the simply two to procedures and And technologies how they by At surgical perform navigation than surgical these day surgeons robots. spine existing and the So visualization leveraged intelligence of technologies today with are lack spine limited primary They workflows. all end of are we offer they of surgeons methods different complicate or that, the lumbar today? used and tools. by

from Currently, surgical the moving on are screen, navigation the field, in understanding not of of the How machine learning of antiquated image surgical the intelligent patient's the that surgery increases two a decisions perform This seen navigation artificial the requires on located of the interpreting We load and the the her way the dramatically on impacts outdated they doctor and role based screen. This take intelligence. how is presented makes surgeons XD dimensions typically surgeon. to on evolution the surgery. his and doctor given an anatomy interprets which and guidance. in are or to images approaching cognitive

So, identifying and segmenting the doctor each individual where the the analyzing we approach the different and by procedure. the then surgical and the a guiding component anatomical computer assists have anatomy, autonomously during plan doctor preparing

So only visualization Holo but in goal not outcomes. intelligent capabilities the a with brings of surgeon-friendly patient improving enhances way,

compare asked to a ability surgeons which to popular specific enhance movements of to is We or surgical technology robotics, Holo its during are among a techniques because procedure. often

guidance. However, provide ability and surgeon structures, plan lack dumb to another we Since effectively the both blind. that a usable or anatomical they insights let robots procedure to instrument deliver identify to know and cannot autonomously robots alone a intraoperative is be

surgical way performed, have are we an While system larger the are the the Holo in a much procedures initial vision. evolution capabilities of

implants roadmap strategic focused the the near of as we and screws includes In offering for Our for such for planning, capabilities platform. spine to are a term, which offers additional advanced variety automated optimal surgical alignment the cages workflows on patient. fully improve while planning

execution others. anatomical smart surgical the areas, MRIs which in would instruments Additional And integrate platform deliver segmentation of into other among with autonomously expand the developed and would pre-op capabilities which X-rays to plan.

enhanced to highly them differentiated like intelligent surgical other Holo the machine over to many patients. we learning call including continuum general allowing that solutions Terry. these addition and specialties. into In the based to delivering is In superior back platform would to And portion expand the of working neural, and deliver a to now their I technology to the into orthopedics to is are diagnostic. care surgeon hand larger of capabilities, applications a care summary, surgery

Terry Rich

of Thanks, very the the Surgalign in since year team. excited beginning Kris. We're invested the we of future the about heavily have and the business

surgery. of that way most promise clearance on use more Siemionow an mentioned, bringing technology the the our beyond of leadership Surgeon better have Dr. feedback evolve advanced and to performed, our and is outcomes [ph], and help upon materially validates that As we digital the ultimately and in surgeons patient OR developing we demand future our deliver better expectation system has to to this quickly innovative support satisfaction. been can solution the belief the we surgery incredible perform surgery visualization are by will intelligence and

we surgery. to XXXX, are near-term the for positioned goals ahead our open in rest that, to I'd the leader achieving Looking With are questions. line like in the confident be to and digital of

Operator

Thank you. open questions. now Instructions]. The is [Operator floor for

Our is of from Group. Craig-Hallum first Go ahead. question Hewitt coming Capital Matt

Matt Hewitt

something and quality percolating our new on Good if wasn't just kind since something occurred? a the was morning. Or in that's and maybe this Is of first Thank OEM? the for up issues? it questions. up regulatory recognized we the dig could little these Are that is taking divestiture bit divestiture Maybe of the you popped until issues. this

Jon Singer

Matt, while. we're the on which the market of many issues, a having products have quite been Well, the in

about and the experienced. kind the weren't stable were at really were recall. of system quality you of seeing you to we've they look when talked history So, Surgalign -- the We we at level which the we

separation material on then which done we're COVID. And just the suppliers having just new well, on bad issues with of delays driving being which issues some Some is the as the and timelines. combination the COVID related internationally in timelines raw disconnect then, their between of of work launch and in with our think caused to difficulty products, I

of really a it's combination factors. So

Terry Rich

we're like way we're Yes. The in critical for. thing becoming right, been meaningful against. key the really we're separation's powerhouse and organization And AI even and is, Matt, the need hard, transforming looking expected. than a that's this we what be in harder the It's what surgery. to measuring

Matt Hewitt

transformation I one elements key to the Okay. base to going think And be this product is the that then, approved quality and is with making regulatory that pull-through you the you're enhancements next all the I that portfolio. see so step expect guess, the expectation? once to pull-through. like sounds and changes is actually going these that the the and teams, to platform Is you're It of

Terry Rich

to this thought, on a in spine ways. we're we've during be spine out This the going a patient just quote, meaningful Look, in a of pull-through and system got diversify not to thing thing and surgery, variety make post-op and going recently this surgery well. focused but lives. getting Yes. laser a in difference the to to then applying as we're pre-op is thing into key going surgery, component. to But is the continuing to then there, certainly like it surgeon revolutionize well-renowned monetize And is

Matt Hewitt

then that I end this assuming that great. what I'm Thank the launched year? Okay, And guess have hop you last this point. you. and some back you the at and for queue. I'll get then, question confidence you But by forth dialogue the gives and had of approved the back have can has FDA? with you had feedback? dialogue there What into me been What

Terry Rich

Yes.

have our FDA that more I'm and QX, than the we front on course, us. other we look, we're should in opportunity with suggest be to in that first excited about couldn't directly believe the not track comment surgeries and Of of in clearance going on dialogue to

Matt Hewitt

you. Okay, great. Thank

Operator

you. Thank

Our go next Sandler. is coming question ahead. Piper O’Brien of from Matthew Please

Matthew O’Brien

taking Thanks questions. Morning. my for

up bleed of have bit out into in anything Jon, system does the into that implant kind little potentially issues that start that manufacturing things side field? last manufacturing the and your on follow to the a guys getting run questions. to could Holo you Just on the impact ability of

Jon Singer

No, all absolutely distinct separately And more a kind implants. related essentially to [ph]. an disposables done is and needs operation order in call not. being of I and that's with handled mean, from products legacy as the the would assembly comfortable in of are timelines to and we're deliver Terry's the track chain supply you what what new on be that Holo outlet

Terry Rich

when That's I right? we're about we have that is Matt, I software transforming the talked when key is, software really transforming Holo organization, into. introduced a the to than anything what we're the environment in has been surgical into the now, And different company that understand prior.

deal. time the this this like first taught The major is anatomy, been computer's a is

Matthew O’Brien

it. Got

Okay. That's well. understandable Very certainly and helpful. as clear

curious, this a up get side on of Just million Holo level of And thoughts up revenue could know guidance to to that big you system? how eventually, get a perspective? timeframe to a how of Terry, that implant But you frame then, a to kind going per I when revenue into an getting about contributor on and don't $X want to be is the both two per I of do talk from you system three-year system, much mean, too things. XXXX?

Terry Rich

Yes.

we're occur out them the as implant but can million And will providing revenue so It'll be $X but get of relatively a fees lease move we year, not as up in combination XX -- disposable our there. also and to platform next running streams. per components. unit putting be instantaneously expressed orders, it's the that units certainly to software and for we of up XX it'll learn of have short we continue to we're a certainly not made start variety And the goal per guidance almost pull-through, case, whether forward. So, soon

and will variety alpha more a importantly sites both add to collect IRBs where features of to and allow even evolve So the and additional which continue clinical benefits. data, it'll we be system us can

Matthew O’Brien

going Go the clear just plus just though. to up other it. not cetera to $X features bucks, but cost be quickly? pretty be million could The million And a et system's system to

Terry Rich

a a cost But lot revenue. of The million about system what a recurring than Yes. no, talking more should we're is heck bucks.

Matthew O’Brien

salesforce here spine And the progressing And things it. is, Got guys a of of I pretty still Holo, know in just you peers are that business. is some guess of as me for are a for that just just are about things the lack in maybe of versus kind then reshaping from waiting talk near-term group for one perspective? little last a your they're and the softer how kind I group going Is better word? bit How stable?

Terry Rich

Yes.

So but forward spine distributors only incredibly they us incredibly And guys Holo is like look, And they their peers, have comments, differentiated And last their and see they to the to be not spine. we're surgery. meetings well-renowned are is But in again, of is made folks that. are we Holo component the I comments something forefront to excited products people new influence meaningful think I significant by out And why there. surgeon, right? like about the delivering summit so that influence surgeons continue influencers looking They're the and having Surgalign. group these these revolutionize a in at going stable. key the it. get certainly when that Like is Like hear week. salesforce believe

Matthew O’Brien

helpful. Thank you. Very

Operator

Thank you.

O’Neil coming Capital Brooks go from Lake is of Our question ahead. Please Street Markets. next

Brooks O’Neil

but Yes. about their Good to is incorporate fully think think bit practices? curve hoping, them can convince into early, and get surgical quickly? anticipate doctors. know it's then of how doctors this talk Kris number just take relatively I years you going is both you try incorporate could was morning. I to the they is to for something learning a that this you a Or something to little

Terry Rich

this user iPhone. please. the to just intuitive. And be But like manual is as first say is, for thing Brooks. Kris Kris system there's I'll let no talk. I'd going Yes, your to

Kris Siemionow

lot. curve on on That's Thanks they're not perhaps with systems And and that to we get question. simple systems, with robotics, market. currently I Right. I a a tell great experience experience question is is confidence medical on experienced predominantly And of very, calls the their anywhere first perform the And high point here various based we've the through Brooks. numerous individuals deliver capabilities in all operate. are that on To your the literally think generated try. you very learning well flat. that One other the the all where can the navigation people the students ability tests and done terms with to the physicians, they very from that very of way precision accuracy and implant

to that's tried have to also able Board on have board spot we Okay. anecdote. members bit word any demo system. the a in using just Directors one And But our of system the as board. first guidance you on right members place And lab guidance. is do the the non-surgeons imagine an the every the was intuitive of here the of come by surgeons you of frequently have for spine we system. little key the give the perfectly the such And not and the essentially time We can our implant for through board a record,

how and do surgeon, to away answers towards me system in heard fact. our we're an you load that in easier. of we this call, make the will And navigation which system, on the decrease the for the hope We key for differentiator increased As adoption job the said the the question. guide surgeon's the on feel here from you that I result way, intuitive which going guidance. will simple is because the that we on cognitive literally I

Brooks O’Neil

doctors I great. kind into gravitate you then think It believe Is systems cumbersome had follow-up. think take just going experience you it's be do And had to process Have It's hospitals will your like surgery about I get or Yes. and any intuitive acceptance that a will does. to in feedback you do what be to this these you. and one gotten facilities? appreciate it. the really stuff? you to opinion? the quick Or Thank going of

Terry Rich

Yes.

into a process days, So getting cumbersome anything these Brooks, hospital look, is a right?

Brooks O’Neil

Right.

Terry Rich

is and Likely What that better spine rightfully orthopedic confident surgeons deliver I'm outcomes. surgeons that especially like this technologies still drive decision so. in around patient making neurospine

that on the team and we based all down will so, world And the effectively. very in confidence assembled break these have we've the that I barriers

Brooks O’Neil

very you Thank much. Perfect.

Operator

Thank you.

Sidoti next from Sidoti question Please of is ahead. Company. Our go & Jim coming

Jim Sidoti

Hi. Good taking questions. Are tell you do with for of us take to can the Holo? training? Can morning approval? and can that now regards to thanks what now you what you schedule anticipation in you steps pre-approval Just able

Terry Rich

Yes.

doing Jim, any continued of So, our we're trainings, we're for not are formal There continuing now. FDA a number do to that things submission.

So there's testing. various

variety labs doing things that we're So surgeons. of require and a

is no going this on the of those system. based there so, clearance And training necessary for testing. can to surgeons using testing of on time. prior the not there's do at to a the the things types continue But beyond And point we provide to information to in FDA, we lot are

Jim Sidoti

Okay.

can a trying the sense just get to things I'm So approval comes. take quickly of up once how

all to that -- get reasonable? Is maybe So get to couple sounds like the started. process a it quarters takes it

Terry Rich

and shelf. But training of systems going able a anything do else I variety a now the outlining be a disposables or to trainings on We're believe barrier. that we get things and think Look, and to need don't take the will all the -- things there's it's that to Yes. necessary that to got beyond don't relatively quarters. we'll believe clearance. couple quickly move We've post be clearance, forward

Jim Sidoti

Okay.

there accelerate sounds it ahead mean, you the that some I can So like? launch, now of are do ready to things approval get to

Terry Rich

absolutely. Yes,

Jim Sidoti

understand. not to just I'm trying you I'm in to the FDA. trying get Yes. with trouble

Terry Rich

FDA one. are No. We Look, respect I following appreciate been a appropriately. it. The relationship process it good the has very the with and

Jim Sidoti

resolved then point have those Do And right. are the you'll available ready to issues affect though all the that even approved? And experienced. all is at you once go. they other Holo you you affect don't All they Holo devices. think Okay. think devices the quality the well is Do really those how

Terry Rich

suppliers. our in would with And progress again, be have progress of good we coming them quarter these we're as Jon a the quarters. continue result we behind tremendous about make making we stated, result we're a Look, Yes. to thought things. expect But and to where like

Jim Sidoti

other All me I a the right. payments the like And then, the tax last you do payment one from made assume quarter. -- that the in sale for this Looks for on you year? OEM anticipate business. that's Is Jon. tax

Jon Singer

No.

in that's fact, the OEM the sales -- us going and time As from actually IRS indicated release, that to they're going through the referenced that this we're were with now going in we owe we're believe year-end we're the And to we at money. in settlement you point actually the Jim. returned, optimistic that settled

Jim Sidoti

Okay. All clear on make to just I want that. right. I you. Thank was sure

Operator

you. Thank

Our from Cantor Brandon coming of next Folkes question ahead. Please go Fitzgerald. is

Brandon Folkes

Hi. the questions. yet turnaround. giving just a things for get where control, Maybe taking a But being right, to for maybe frame control how Thanks you're us normalized think the of granted, for the turnaround time guidance can COVID. XXXX of of Is business year can't terms in most behind XXXX. of Surgalign broader sort question this my about Granted, is you. the sort do you none of not to

imply helpful? just be XXXX. advantage doesn't But COVID Thank of maybe Is this get And these of would thinking just a more bump by at So It taking won't just that's always Or patients disruptions? driven deductibles maybe overhang. that caution any the you. we this is an bit massive bolus XQ around guidance. on XXXX there year-end? that then colors a in

Terry Rich

Yes.

activity. the in some we So, think behind a quarter as we're we said of separation on the related about guidance,

in organization the in to the of time, in to expectation. some they'll will create that we look organization around That's know brought at have leaning your of be new going XXXX, XXXX you a still going if stabilization that but you belt at building the of under and believe number the out into forward So be that they'll team year. -- least which have do more initiatives organization, members the should separation their stability we've question, point the At we're tenure forward.

then, the around And with perspective, continued a there's from that So both and dealing just we've caution yes, fair of disruptive amount chain. XXXX be factors supply should COVID guidance year. been less from yes, this a

expectation. We have an

said we fruition. and it first expectation we're with quarter going this come out out came of were As we to behind, quarter hasn't see of what we but an into that of quarter the coming

I is So time just that that year turnaround the things that cautious are in in making way just smart at around we're being this given forward. sure point this think we and we move fix which a such and

portion going So original of question. to back your that your

move So we're with as these XXXX, dealing not issues. we into

Operator

any Sir, did you have other questions.

Zimmerman of Ryan question is next go Please coming BTIG. Our ahead. from

Ryan Zimmerman

for Thanks my Hey. questions. taking

how the and that the you you system for about think regardless out make can versus in margin may the on these expectations ASP you But Holo couple a it I A do you asked Holo, however to sold. me. it, lease of kind terms for think place what agnostic lot's been But of be Terry, whether Just it, you're follows we ultimate of -- already. at? know what kind for shakes how

Jon Singer

Yes, Ryan.

not -- when the you XX% will I impact think think margin short Holo from any perspective. XX%, on of don't long-term guidance think have our look in it -- to a at term blend I I

the the economics per the charges say, the as you're where towards building model obviously gave evolve to in be in the think be out a SaaS XXXX, But move term, so I pretty Kris because relative click It for margins of the long-term margin, more we really functionality incremental non-existent. will the contemplate of overviewed of development. the significant that we guidance placement. on getting cost short will XXXX, to some system COGs systems and

Ryan Zimmerman

I that that lot the around has from we'd you. don't one color of guidance? being just the two. size Thank you little if kind you the the COVID it's could a caution? love if it’s put it it thing guidance. issues? it wondering perspective, about I'm if really But I of to business? And quarter the about of driving a about of Is to impact are between frame a two the components the interplay kind what's impacting around quality some those impact know it that up and more Is quality sequentially. issues the asked more Jon. these mean, then, and color think you third have guard appreciate down we But been commentary is I Okay. rails think

Terry Rich

and it. in of overly it. think quality the Yes. end between I But COVID we deeper way as we look now we've when there's simplified best at on it's there There what at that's the that probably three factors Look, the kind way and pulled a mean, the of is There's back. end coflex. of can were year the the we -- go outlined. to impact the day That's I a answer. related issues. into third, COVID simple And third third, a about the look

Ryan Zimmerman

Okay. Thanks. That's helpful.

Jon Singer

Yes.

the take QX other a and QX consideration procedures The factor because to and there's -- naturally is reduction vacations just between whatnot. of in into just

normally lot in And which COVID with seeing QX are of So we down elective regions then procedures. seeing in is there's resurgence we're is reduction a what anyhow. of the that

vacations so, of got now. just slots customers our they're one a taking they doing And that where getting lot feedback than a longer gotten We've two or right week we've of what are number surgeons a they're is anticipated.

And so, also impacting it. that's

Ryan Zimmerman

is coflex clear, it's coflex the both? dynamic It's domestic. the -- international not And to or is be

Terry Rich

domestic. predominantly It's

Ryan Zimmerman

Okay. Thank you.

Operator

any this to to the management additional turn At comments. closing you. like back over Thank floor or I'd for time,

Terry Rich

Yes.

everybody for company. thanks be to everybody Again, the for your So, platform Thanks to joining market. transformation this time. that bullish excited Holo the continue exceptionally in the get making to are completely call. we're we on And

Operator

thank your and This you today's Ladies event. concludes participation. gentlemen, for

and log wonderful or time lines a have day. webcast your disconnect off the may this You at

Surgalign (SRGAQ) 6 Aug 212021 Q2 Earnings call transcript