Treace Medical Concepts (TMCI) 7 May 242024 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Treace Medical Concept's First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Julie Dewey. Please go ahead.

welcome first and conference XXXX everyone, call. afternoon, to quarter our earnings Good joining appreciate us. We you Dewey, Chief Julie I'm Treace's Officer. Communications and IR

With Chief Treace, Chief are and today Hair, Financial Executive Mark Officer. me Officer; John

activity close John host call, a we financial offer our first Mark During market and after today, the our the and review released will the commentary question-and-answer will on session. commercial of results which quarter after

website section Relations at supplemental and can found section materials being of Investor and in our website. This The be press release recorded investors.treace.com. in be is of call archived the will the our Investors

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

uncertainties upon involve and assumes or could these forward-looking Accordingly, statements. risks no place reliance All these not to implied undue and are those events that differ on information, statements. statements These or by cause actual anticipated statements forward-looking update these statements. current to materially available material based results from obligation Treace you should

first quarter XXXX full of today to refer filed year our XX, on our Form Please XXXX filed detailed for February SEC the filings, our presentation for for XXXX Form XX-Q risks. and a XX-K the including

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

discussing comments highlights, strategies on going thanks including of forward. our and our tell numerous the the opportunities time our as our and product underpinning to everyone, decision is our first afternoon, focus year in joining environment, for Good XXXX and growth going full exciting Julie. us. other you, SpeedPlate, our launches, as progress quarter you I'm today to my developments some about revise market which spend guidance then drivers well Thank

about results XX% in increased the specifics grew by cover was volume will our Mark our comments, driven kit related driven our technologies in XXXX cases, by increased our guidance. We newer all procedure Revenue and my core bunion QX of of performance adoption and first our mix XXXX. by quarter Following base from of surgeons our team. dedicated revenue sales midfoot expanding and supported direct

quarter We from also patient into first benefited our demand that quarter. fourth seasonally trends strong extended strong the

respect made encouraging our adjusted to EBITDA Additionally, progress we with results.

loss loss first $X.X Our compared quarter adjusted million XXXX. to the same for XXXX period a of EBITDA million to in in loss of XX% a improved of $XX the

and frequently expanded same coexist bunions diluting and deformities, are time, the our related market which without in addressed procedures correction namely and million by and by $XXX the systems, with expanded $X have to Hammertoe both position ankle which our foot on of technologies opportunity. U.S. our the bunion together our treat and billion-plus estimated complementary market Adductoplasty TAM at an adding focus We've

our of instruments now we market minimally system, our procedure. full QX, availability number technologies, Micro-Lapiplasty a fixation newest sterile Hammertoe platform, exiting invasive Additionally, have our including for SpeedPlate and

related deformities. measured more to our success We our And transformative are overcome that that not the recognizing our by differentiated patients painful, of and change forward. we to procedure, but new the than expect to Lapiplasty midfoot bunion recently now going contribute that numbers, our these lifestyle-limiting growth provide we've all announced with therapies treated is patients technologies only XXX,XXX

complementary of increase platform. versatile were Adductoplasty SpeedPlate quarter. in drove Lapiplasty, Further highlighting our our the progress and procedures, We delivered across year-over-year in in our gains We key metrics enabled QX. first which operating volume by a

as well offering like SpeedPlate favorable all core also from of products sterile mix being utilized well procedure-specific as frequently our We systems with procedures. more as our in expanded new our benefited Hammertoe instruments, and

Day patient States very to National campaign announced, campaign. the ever activity first on brand the positive, in The and new established increases United an You Find our education Future been we on this we awareness we A amplified driving has April As in response website locator. our previously Bunion significant launched XX, our level traffic and Doctor

XD official we uniquely is device was by Treace the first drive solution medical used the Tour. and the Pickleball patients to challenges the demographic of Pickleball pioneering fastest-growing correction most named partner awareness and in for greater ankle educate the #X sport procedure, also surgeons. posed Association believe and procedure partner we're foot Professional U.S. the bunions positioned by our Lapiplasty bunion commonly this in and U.S. on

product to our Now turn to I'd launches. like

Our SpeedPlate growth, demand first our we in strong to and saw quarter. launch fuel the continues

fact, In XXXX. to expect and adoption doubled commercialization nearly QX versus through QX achieved usage QX, remainder the we've SpeedPlate XXXX. of in SpeedPlate of Exiting full steadily continue

incremental configuration some address bone procedures SpeedPlate is the expect we new in designed Additionally, which in launch to QX, larger foot. fusion a to

our exciting incision through instrumentation technology. X-centimeter performed using system. our evolution Next, of a the to new Lapiplasty our patented Micro-Lapiplasty be now procedure This fixation allows SpeedPlate

available system QX, a we Micro-Lapiplasty growing fully and Our witnessed minimally utilizing Lapiplasty surgeons number throughout approach. now invasive this of is

other these well midfoot innovations position of related both in on our platforms bunion the all cadence come a look reinforce that progress While development new providing in as pipeline the the to will steady innovations throughout the year. second new our believe Mini-Adductoplasty of excited more our forward market and of we're technologies product updates product about space. leadership product patient-specific even We to from additional growth RedPoint half XXXX, we and launches these expected there's correction robust as including We deliver to as instrumentation. opportunity represent, these

revise expected to guidance innovations decision Despite I evolving, product and our made quickly guidance. market start to to that Turning XXXX. fiscal the new from stemming become for environment our competitive mentioned, the landscape we've year with strong launches just and it's growth clear and is the opportunities

these in do solutions. Osteotomy Both of MIS growth. headwinds increased same dynamics We our At creating we're incremental of our this adoption time, of surgeon decided competition are from the more facing to even have Lapiplasty Lapiplasty now we're use seeing because to products. knockoffs

Specific data and strong to systems performance reproducibility none that are interface, by surgeon-patient sets the clinical nor fundamentally differentiating believe we that Lapiplasty supported at the of these these match knockoffs, they Lapiplasty's offers.

We also some products are violating believe of these our competing IP.

our backdrop, like next advance business. to I'd this With and spend reviewing few minutes the our our to offerings expand strategy

market, position leading to related a we've a of Lapidus our company solutions the strategy been focused Lapidus building While bunion solutions advance simultaneously Treace and bunion to the comprehensive a pursuing solely on in segment from company.

using of launch solution overall systems Osteotomy plan into accounts of to XD to osteotomy strategy our half late base on MIS cases surgeon procedure their perform to osteotomy the segment bunion the bunion of X still then Treace average Meaning, Lapidus Once osteotomies into today innovative X,XXX and portfolio, all have of launched, nearly their customers customers. implement we over address cases. product for our a our in bunding but XXXX will volume Lapiplasty which metatarsal our love expand metatarsal and market, who XX% to the

using a patients. those opportunity will with Osteotomy afford a bias osteotomy the expect bunion for our approaches to their appeal to the MIS of group surgeons, for majority new Additionally, solutions of us strong we

see this XXXX. year these positive starting and benefit of to We expect quarter of innovations ramping in new fourth throughout MIS the the

uniquely position market-leading are leveraging to to to the in believe our impact that while bunding positioned significant osteotomy make continue we build Lapiplasty the segment I market. upon large position of a

customer achieve innovating First, broad bunion and commercializing we acceptance confident reproducibility due elegant effectiveness. design, record rapidly our are technologies XD and track in that their of to developing, clinical

and applied our XD Lapiplasty, proven this approach instrumented systems in we've have earlier. this with MIS to Osteotomy expertise our We mentioned

with certain well therapies. for educate we and about as confident And educational our as our Again, are a in strong Osteotomy proven customers to platforms. have we we with will our forthcoming provide innovative MIS this ability apply XD this patients Lapiplasty, resource experience our

one recently initial confident of sales to an we're bunion-focused team's users continue We time. be about our I overwhelmingly XD trained new X,XXX our of of anticipation Osteotomy Osteotomy in limited Lapiplasty Finally, platforms and to excited base technologies size market deliver surgeon XD ability our the and these expand we over MIS to release, group our MIS the customer on not from of significant opportunity surgeon surgeons positive. XD in the upcoming was platforms. feedback nearly expect our could more our new MIS base of direct surgeon

same we become the At on and our bunion serve we product offerings time, continue expanding market to the company. solutions a comprehensive focus to total

to the P&L challenges actions competitive as of our mitigate impact reducing taking rightsizing are our rates growth the by costs. decisive revised as and We well

deliver and ahead we for intend customer to am I our innovate capture for surgeon base our enforce addition, to rights. assert confident shareholders. ability our our in opportunities and IP us, of the In value

our performance I'll details guidance. now to and provide to turn over financial Mark the review quarter more call about first Mark?

dedicated Revenue XXXX of prior adoption Growth all first from and procedure million, a selling our than sales the team. you, expanding kit direct day XX% in one the Thank supported less with quarter surgeons first by afternoon, everyone. volume increased John. technologies, the for was of year. by of was Good driven quarter our increase base $XX.X our increased newer

the the we from than what which into quarter. extended This first of into year, quarter saw the to quarter was upside our quarter more similar first driver mentioned, fourth main John anticipated, strong in the carryover year, fourth As there was quarter. last the seasonally originally

by was in was first expanding a $XX.X XXXX $XX.X to newer XXXX. total primarily expenses the the operating in direct XX.X% strategic our million the increase in support to expenses quarter due for corporate mix other in operating XXXX. product the of This partially first investments in to XX.X% reflects were offset margin sales product Gross of quarter initiatives. and rates. innovation expenses decrease first in operating compared XXXX channel, first Total of The in quarter compared of million quarter products, royalty lower shift in of investments to

a First first in XXXX. period to EBITDA of to the XXXX was or $X.XX XX% to or $XX.X quarter per million same loss million the for in compared $X.X share the net loss $XX $X.XX compared of for loss $XX.X period quarter of loss share loss improved XXXX. a in million Adjusted a of per net million same

with sufficient for totaled March XXXX. XX, current a cash our on We marketable Cash, as balance and executing foreseeable and sheet strategic receivable our initiatives and effectively the of flexibility of level million future. terms investments we believe to investment in lengthy strength runway cash continue growth $XXX.X securities have equivalents,

guidance. now Let XXXX to our turn year me full

million John to XXXX. revenue XX% As of million, earlier, compared million, $XXX $XXX discussed now and growth for X% down representing to guidance revised revenues $XXX of year million to from full XXXX $XXX expect we our to full year

EBITDA anticipate the adjusted compared to full full XXXX XX% year to approximately XXXX. continue year improve We for to the

flat year-over-year and high in growth QX relatively QX expect Given and our now revenue in the revised growth in guidance, prior we versus single-digit revenue QX year.

Now comments. before questions, for call John back concluding the turn we let John? open me for up it to some

Thanks, Mark.

a wrap up, we be takeaways we to the I want to take minute believe from highlight to As this call. key what

company Looking solution from on company to ahead, evolution is Lapidus-focused a bunion underway a and Treace's comprehensive purely track.

over that, navigate by patients. your operator the I'm confident face, standard to be achieve the continue advance demand We the place and our open to for to questions. long-term ambitious call turn shareholders. With innovating the care customers the in are meet let driven we current goals our value me now challenges we market of have the ultimately team our mission line their for and right to deliver certain to to to relentlessly and

first the line [Operator JPMorgan. Marcus question from of Instructions] Robbie of Our comes

competitive for This It really momentum. to competitive for long this the all. time, Lilly actually sounds sudden, like at weren't pretty Robbie. And impact you meaningful it's is any your now Maybe impact with a seeing really all starting a of changed? just on what dynamics, created

your ability can give share you're you're your up or happened recapture that of to seeing, about against what -- So some there? your going players? given especially you loss several talk larger that And in confidence ortho

John Treace here. Lilly,

thwart now we're hit here communicating that to but to and we past, would are headwind. that type know that feeling that competition is of We significant targets. more had there's headwind see competitors we market. our our in that the communicated creating of there a entering with ability this As competitive we we've a revenue what revised are What stated we talked recognize was the is is anything pressure that yet competition, about guide

So the why to we change. that's make guide had

in often products, Surgeons to the new just and evaluate like trial solution believe with We've discussed these the a increased for out great osteotomies use alternative there aggressive try MIS to in of that's now. we doctors of to more we another a competitors getting right lot headwind. things, which Lapiplasty, year. seen become to and there's later this And marketplace, we've little a have specific them

of So then competitive surgeons Lapiplasty hard some convert these back systems, a then a it and to stick a headwinds. seen for of We've where to come ultimately for many and Lapiplasty, it's product they fully come to these with might do try how say other many a will how scenarios it definitely creates lot and surgeons competitive but evaluate back while and offering.

for osteotomies base cases. or But fundamentally, comprehensive nearly suite we'll average, we with the X,XXX have late as of market as of union launches, put position our a MIS this to of more stronger we believe time Osteotomy our users bring a planned much who, their more on using into of our are other us that Lapiplasty get along half to should offerings this in over year, sets

plan got couple great got little look of I and we've in year. here of to the the quarters, next So headwind forward launches a a place. at for end We've the we'll think of a bit those

train thinking pieces not the should Got guess, you're count physicians? Is able that that declining? much? step how forward? But and those down? ASP to which moving breaking appreciate can qualitatively, And the Is not kits as So talk on tack and you're pieces Are on those not then that. maybe really it through we just anymore. many you all as is ancillary to be you I helpful. it. about of able driver utilization a I That's the products of follow-up physician out

a Maybe John this incremental Lilly, first any then I'll is take Mark. and add shot can thoughts.

new driving is X It came talked is growth. mix. John It's as incremental volume kit mix that from involving You talked talked as we've about really from And that well and what products as these growth coming the that about. about. things,

have which We is product. SpeedPlate, a premium priced

hammertoe. We have

are incremental procedure. used stares products, instruments, that these complementary have We in the

really So well really in the as growth volume -- QX it's from mix. XX% coming both came as

for full I the asking was year.

those should So breaking lower you're Appreciating play that we the qualitatively, them out moving pieces specifically, in how buckets? what's how be those lower not but thinking into guide? about

Yes.

So that's great a question.

we is of So what mix procedures. a that volume we referred increases talking as uplift in blended new our will see are the well used meaning same our in that's to our We've both ASP. at continue launches year, to blended been lot as saw and last as the time we what product as ASP, Lapiplasty really core

and continue So mix year, we to this new volume offerings but will continue that benefit will as well. product from we increases see that product to

to then from So incremental both increases and going volume it's products. the the come

from maybe saw rate, we growth going same but we're both. in what see QX, So at not similar growth to the

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

on you're "knockoff" Just the offering. bucket like experiencing the core competition one, first it Lapiplasty from sounds up your stepped

to X MIS over offerings kind X quarters to to view just worse? outlook? to of piece? mix some see it offset is you we osteotomy inroads situation on even some the come, trialing the from in just the competition that updated to the getting time offering Lapiplasty down the you supposed core what and So And think the portfolio you Or start the and with call that we then and as continued make that MIS what in buy an the competitive on of understand to next we on I'm the until have do trend just that's -- the extent outlook items trying osteotomy before then growing to continue

Rich, Yes, is Mark. this

the competitors it, see continued way with, with in to indirectly right are the begin is we that space you that Lapiplasty. articulated from competition Lapidus think I

and comp We launches back comps see we have product a easier to and tougher year. in QX, from some have benefit and in QX QX, in new of this half expect we the these

going with to that's So the growth in us half. help back the

it's you talk growth manage going the to your P&L? a of line you're think you you going P&L How year-over-year. sounds -- you're how just as bit trajectory, -- the a the is top like like to that little the accordingly. to but accommodate you I Okay. plan just updated And EBITDA we have obviously, it then slower see XX% it on over do relatively up you sounds unchanged -- to increase it's exiting levers there? step year. the spending need guidance control a And much as Can

So reconcile just me help that.

Yes.

come them. component costs, So the lower can these revenue our and or that we commissions, we that longer and that Rich, we're impact guide, lower of related based very definitely evaluating opportunities then the discretionary in expenses are and variable healthy term. on we're guide, the COGS, to manage know from business cost we incentives you manage reduce reductions there's remaining if our will naturally on corporate a that all take Based midpoint, expenses the reduced confident to can nature,

nimble nimble our that the So enough effectively on core sight P&L operate we're losing a without we company. opportunities. can We're

guidance. comfortable that feel we So P&L with

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

just, Maybe again, again. the revisit competition

at You X,XXX mentioned about surgeons now. you're

hone you to bit why right range? derisked guidance should And you're now kind giving this seeing to XX% this So competition kind more and of that or really be base. like for at is that we What a this what instill is help I point. we're on to maybe maybe see in growth the confident seeing Like X% are really all little in your surgeon the the also that? that understand just think struggling of you're

it's John. Yes. Drew,

volume the competitive trials, that some were feel got the are We're We've but some surgeons, by MIS definitely to tailwinds. taken of osteotomy. have also guide. some about I our adding pretty being still good some of doing we the think headwinds, but we new surgeons

surgeons. the decide per we that a just to add plan some we're a as And go with continue there new longer reduced. seeing just a little efficiency mid term. competitive there's -- product may to churn It's is surgeon we're So to some getting then or

that -- think -- I is anything there, I missed So that Mark? else

mentioned comps QX. much good. are a feel in lighter Yes. bit the And little we QX it really and earlier that I in -- QX

have advisory So a here. then been product on lines products, products. some used great us time new that these to by MIS to a not build help developed great that's And additional confidence. surgeon new we've ourselves. these that for We've working -- long group having going We've gives been us

John we've been other coming. We've mentioned, talking have a Redpoint things also for products. about got we that got while We've --

new design We other have And have of comps. SpeedPlate the a in as that were that's always the easier year back things coming. we well half with coming

good we So it's the and feel been derisked. about that guide properly

do And can base Okay. the in the maybe this Got attrition rate maybe to surgeons, point, it. think about at about the adoption talk kind that base? the the again, levels? the X, X surgeons? tenured when are historical where you're you getting your you we mean year just mean impact of I base, seeing Or year I or the in year And surgeon with surgeon what within is more like compare curve some dynamic? this curve X, into even competition of like your the to of kind happening most seeing more is this maybe

Drew. question, Great Yes.

that. we talked track year XXX said we've that that plan to XXX So surgeons to with well this grow on we're year about last we

growth. to and they future fuel add current continue We surgeons,

It's an What do And to rate. that. attrition often our the solution of is are so not Lapiplasty, OR. we more how Lapidus to in so they it's we're going much seeing use this continue that

from solutions, a osteotomy, an approach to lot if or of there's competing them. correction, And to just there's it's Lapidus products, MIS both other there a type the bunion altogether are the more different that's the perspective, extent

we're that. so And seeing

new of continue some other what expecting first We continue add than rather but them our surgeons who we're year, we're more They to to tenured that to using surgeons. exclusively. Lapiplasty do in been do have options seeing

Stephens. the [Operator Harrison line Parsons of of question from Instructions] Our next comes

that was I sales this could other you in P&L. on on or leverage George. I and see is take little you in Or primarily areas there to if marketing Harrison are wondering for could expand we costs a XXXX? This just the rightsizing Is start costs on areas out. wanted could see the line? bit some

Mark. is Great Harrison, question. this

that mention did variable that and is I healthy there's costs of there when As purely a in before fair come out portion they're revenue, nature. because lower

that a And reductions of where variable and from. just But expenses be sales some so the there P&L. marketing will there line because will overall that's item be reductions lot come also the in throughout

we without we're believe can nimble are and items again, that effectively going the to we discretionary losing talking But sight programs those commercial operate and on P&L definitely initiatives enough these we're that spending all about. and that that be launches and

the and the there yes, will are will -- sales G&A line, in as well. it's be that some variable but marketing some So R&D it and impact of

Okay. Yes.

And then been game IP, of protecting I a while. And a of Sounds after is -- there protecting something if specific guess in to I kind new wondering your what's that for because the terms competition IP? there? mean there's plan terms was good. Or in I been I of product? know there Has go

Harrison, not things on John happen, really strategy our we progress. and here. to may will when as much We're timing. we comment you communicate to IP going as But Yes,

of line question Danielle next of the Our from UBS. Antalffy comes

When from think competition that surgeons Or the you're is want is converting form you when -- you're you Simon that. know not about that for this Just coming in this Danielle. is think how we competitive the purely from currently headwinds on larger from the competitive competition Lapiplasty about about This osteotomies? products? of the to facing, Nigan should think over

MIS than now selling for Yes, also that's more have, not as a do of today small us. Simon, but of year. this John private, an compete products, that which, there time, competitor Several directly intended companies of it's really And it's se, situation those temporary but Osteotomy competitors Lapiplasty. products a were to with we per public big there offer are last here. competitors, amalgamation one number companies, and of are companies, not

capabilities to opportunities navigating effectively environment very and focused have a a excited full-line innovate and product and business. to the next surgeon we've the our Osteotomy capture got and the of that bunion great we're Medical and this fueling for company QX, market ahead continue growth we'll coming on base into MIS platform work leg in and this we're of But about transforming Treace

were follow-up that That's Do we quick And of impacting, future in comments guess, maybe you. penetration per for think has less think total on couple should There how for really than utilization this helpful. maybe is near I your efficiency And we a how guess, this just a bit surgeon targets come impacting about expectations. Lapiplasty I over growth? over the term? the next, a

a question. that's -- uptick we great Yes, that nice to steady of surgeon a One is surgeon thing net adds. continue see

adds we -- So had of as surgeon adds. year We've lot a additions year. surgeon continue well. this We've we healthy had had XXX last

been So the that. more unions. always -- of continue we to how surgeons It's to see had have option of approach

we Lapiplasty solution. a that so great And provides believe

type believe, Lapidus any we lot data, solution. than other more clinical We have of a

they Lapiplasty we solution the great a more efficient. surgeons. much more and confidence so it regularly the how We and designed and it's design And have results, our constantly hear lot effective we've gives in and for OR, faster of appreciate made that elegantly

have option osteotomy. or approach had between a they're However, patient the an procedure the some of surgeons there And a approaches. whether going have differences surgery X not or always with to been Lapidus

Lapis in bit. the base may but continue patient procedures maybe may that And of use have see we their overall the percentage Lapiplasty shifting to the some is so surgeons decide a to or and little Lapiplasty that, continue

procedure it's because more don't MIS So that. to say seen every different, a trend every answer overall that's more of that I of Osteotomies for want but surgeon are more surgeon the and we've is the base. definitely

we're that's can cases about opting we're excited MIS that they're potentially. to upcoming of that solution going for because pretty Osteotomies Lapiplasty MIS today this on And think those Mark, instead now to a program I be Osteotomy the provider do why launching be we

you operator, Julia, there? are

Julie back to remarks. further like time. turn Yes, to I I'm now am. I at showing it closing questions Dewey would for no this

Thank you, appreciate interest. today. and your time for joining everybody, thanks, us and We

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

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