Treace Medical Concepts, Inc. (NASDAQ:TMCI) Q4 2022 Earnings Conference Call March 7, 2023 4:30 PM ET Company Participants Vivian Cervantes - Investor Relations, Gilmartin Group John Treace - Chief Executive Officer Mark Hair - Chief Financial Officer Conference Call Participants Robbie Marcus - JPMorgan Drew Ranieri - Morgan Stanley Ryan Zimmerman - BTIG Operator Hello, and welcome to Treace Medical Concepts Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen only m ...

Financial Data and Key Metrics Changes - Revenue in Q3 2022 was $33.1 million, representing a 53% increase from $21.6 million in Q3 2021 [9][46] - Year-to-date revenue increased by 51% for the first nine months of 2022 [7] - Gross margin was 80% in Q3 2022, slightly down from 80.4% in Q3 2021 [51] - Net loss for Q3 2022 was $12.1 million, or $0.22 per share, compared to a net loss of $6.4 million, or $0.12 per share, in Q3 2021 [54] Business Line Data and Key Metrics Changes - The direct bunion-focused sales team accounted for 74% of Q3 revenue, exceeding the 70% target for the year [10][24] - The number of active surgeons increased by 39% year-over-year to 2,218, achieving 22% penetration of the estimated 10,000 U.S. surgeons performing bunion procedures [47][19] - Average surgeon utilization increased to 10.1 kits per surgeon in Q3, up from 10.0 kits a year ago [11][47] - The company sold 5,705 Lapiplasty procedure kits in Q3, a 44% increase from the prior year [49][75] Market Data and Key Metrics Changes - The company identified a $5 billion U.S. market for bunion surgery, with only 450,000 surgeries performed annually [8] - Market penetration for the Lapiplasty solution reached approximately 5% of the annual surgical bunion procedures in the U.S., up from 3.5% in Q3 2021 [8] Company Strategy and Development Direction - The company is focused on increasing market penetration through patient awareness, surgeon education, and expanding the direct sales channel [14][15] - Investments in direct-to-consumer (DTC) programs and surgeon training are key components of the commercial strategy [15][17] - The company raised its full-year 2022 revenue guidance to $135 million to $138 million, reflecting a 43% to 46% increase over 2021 revenue [13][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth momentum and the effectiveness of strategic investments [55] - The company is poised to scale operations beginning in Q4 2022, with expectations for continued growth in 2023 [55][67] - Management acknowledged macroeconomic pressures but emphasized a focus on executing strategic initiatives [91][92] Other Important Information - The company has 38 granted U.S. patents and over 45 pending applications as part of its commitment to innovation [28] - New product innovations, including the Lapiplasty Micro-Incision System and SpeedPlate, are expected to enhance patient outcomes and drive future growth [29][30] Q&A Session Summary Question: How is the company balancing between driving adoption in new accounts and deeper penetration in existing ones? - Management is focused on both acquiring new surgeon relationships and increasing utilization among existing users through training and outreach initiatives [58][59] Question: What impact has the expansion of the product portfolio had on Lapiplasty adoption? - The introduction of Adductoplasty has generated significant interest and has a compound effect on overall product utilization [60][61] Question: What should investors consider for 2023? - Management is optimistic about growth potential but will provide more specifics in the next earnings call [66][67] Question: How is the company addressing potential staffing shortages and macroeconomic pressures? - Management is focused on executing plans and initiatives while building a stronger sales force [91][92] Question: What is the current status of the Adductoplasty product and its market penetration? - The company is in the early stages of Adductoplasty adoption, with positive feedback and increasing interest from surgeons [93][95]

[Part I: Financial Information](index=5&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section provides the company's financial statements and related disclosures for the period ended September 30, 2022 [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed financial statements for the period ended September 30, 2022, including the balance sheet, statement of operations, statement of stockholders' equity, and statement of cash flows, along with accompanying notes, reporting a net loss of **$38.4 million** and cash and cash equivalents of **$88.5 million** [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) This table summarizes the company's financial position as of September 30, 2022, and December 31, 2021 | Balance Sheet Items (in thousands) | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $88,546 | $105,833 | | Inventories | $16,794 | $10,561 | | Total current assets | $127,902 | $137,972 | | Property and equipment, net | $14,148 | $2,849 | | Total assets | $156,443 | $140,821 | | **Liabilities & Equity** | | | | Total current liabilities | $22,580 | $18,210 | | Long-term debt, net | $52,636 | $29,365 | | Total liabilities | $94,242 | $47,748 | | Accumulated deficit | ($80,308) | ($41,905) | | Total stockholders' equity | $62,201 | $93,073 | [Condensed Statement of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Statement%20of%20Operations%20and%20Comprehensive%20Loss) This table presents the company's revenues, expenses, and net loss for the three and nine months ended September 30, 2022, and 2021 | Income Statement (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $33,055 | $21,619 | $92,069 | $60,980 | | Gross Profit | $26,431 | $17,371 | $74,288 | $49,461 | | Total Operating Expenses | $37,749 | $22,831 | $105,635 | $60,374 | | Loss from Operations | ($11,318) | ($5,460) | ($31,347) | ($10,913) | | Net Loss | ($12,133) | ($6,418) | ($38,403) | ($13,933) | | Net Loss Per Share (basic & diluted) | ($0.22) | ($0.12) | ($0.70) | ($0.30) | [Condensed Statement of Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Statement%20of%20Stockholders%27%20Equity%20%28Deficit%29) This section details changes in the company's stockholders' equity, including the impact of net losses on the accumulated deficit - The company's accumulated deficit increased from **$41.9 million** at the end of 2021 to **$80.3 million** as of September 30, 2022, primarily due to the net loss incurred during the period - Total stockholders' equity decreased from **$93.1 million** to **$62.2 million** over the same period [Condensed Statements of Cash Flows](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This table summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2022, and 2021 | Cash Flow Summary (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($25,290) | ($13,441) | | Net cash used in investing activities | ($12,506) | ($1,805) | | Net cash provided by financing activities | $20,509 | $106,626 | | Net (decrease) increase in cash | ($17,287) | $91,380 | | Cash at end of period | $88,546 | $109,459 | [Notes to Condensed Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) This section provides additional details and context for the financial statements, including business overview, liquidity, and significant transactions - The company is a medical technology firm focused on the surgical treatment of bunions with its Lapiplasty® System, also offering the Adductoplasty™ Midfoot Correction System[27](index=27&type=chunk) - Despite an accumulated deficit of **$80.3 million** as of September 30, 2022, management believes existing cash and cash equivalents of **$88.5 million** are sufficient to fund planned operations for at least the next 12 months[29](index=29&type=chunk)[30](index=30&type=chunk) - In April 2022, the company entered into a new five-year **$150.0 million** credit facility with MidCap, drawing an initial **$50.0 million** term loan and **$4.0 million** from a revolving credit facility to refinance previous debt[56](index=56&type=chunk)[57](index=57&type=chunk) - The company entered into a new 10-year operating lease for its corporate headquarters in February 2022, resulting in the recognition of a **$14.2 million** operating lease right-of-use asset and a **$19.4 million** operating lease liability on the balance sheet as of September 30, 2022[17](index=17&type=chunk)[64](index=64&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting strong revenue growth driven by increased sales of Lapiplasty® Procedure Kits, the impact of COVID-19 and macroeconomic factors, key business metrics like surgeon adoption, and significant increases in operating expenses due to investments in sales, marketing, and R&D, detailing its liquidity position following a major debt refinancing in April 2022, which resulted in a **$4.5 million** debt extinguishment loss [Overview and Key Business Metrics](index=18&type=section&id=Overview%20and%20Key%20Business%20Metrics) This section outlines the company's strategic mission and provides key operational metrics demonstrating the adoption and utilization of its Lapiplasty® System - The company's mission is to establish its Lapiplasty® System as the standard of care for the surgical treatment of bunions[76](index=76&type=chunk) - As of September 30, 2022, the sales force consisted of 143 direct sales representatives and 29 independent sales agencies, with direct reps generating approximately **74% of revenue** in Q3 2022[77](index=77&type=chunk) Key Business Metrics | Key Business Metrics | Change vs. Prior Year Period | | :--- | :--- | | Lapiplasty Procedure Kits Sold (Q3 2022) | +44% | | Active Surgeons (as of Sep 30, 2022) | +39% (to 2,218) | | Surgeon Utilization Rate (YTD 2022) | +1.6% (to 10.1 kits/surgeon) | [Results of Operations](index=22&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing revenue growth, gross margin, and significant increases in operating expenses for the reported periods Financial Performance Summary | Metric | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $33.1M | $21.6M | +52.9% | | Gross Margin | 80.0% | 80.4% | -0.4 p.p. | | Sales & Marketing Expense | $25.0M | $16.0M | +56.6% | | R&D Expense | $3.8M | $2.5M | +49.7% | | G&A Expense | $8.9M | $4.3M | +106.9% | | Loss from Operations | ($11.3M) | ($5.5M) | +107.3% | - For the nine months ended September 30, 2022, revenue grew **51.0%** to **$92.1 million**, while the net loss expanded to **$38.4 million** from **$13.9 million** in the prior year period, partly due to a **$4.5 million** debt extinguishment loss from refinancing[104](index=104&type=chunk)[112](index=112&type=chunk)[119](index=119&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, debt obligations, and ability to fund future operations - As of September 30, 2022, the company had **$88.5 million** in cash and cash equivalents and **$54.0 million** in principal outstanding under its term and revolving loans[121](index=121&type=chunk) - Management believes existing cash, available debt, and expected revenues are sufficient to fund operations for at least the next twelve months[121](index=121&type=chunk) - Net cash used in operating activities for the first nine months of 2022 was **$25.3 million**, an increase from **$13.4 million** in the same period of 2021, driven by a larger net loss and investments in inventory[126](index=126&type=chunk)[127](index=127&type=chunk) - Net cash used in investing activities increased to **$12.5 million** for the nine months ended September 30, 2022, primarily for leasehold improvements for the new headquarters and purchases of surgical instruments[129](index=129&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's market risk is primarily limited to interest rate risk on its cash equivalents, which are low-yield overnight investments, with management believing a 10% change in interest rates would not have a significant impact, and no material foreign currency risk as its business is conducted in U.S. dollars - The company's primary market risk is interest rate risk associated with its cash equivalents, which are carried at quoted market prices, and this risk is considered minimal[139](index=139&type=chunk) - The company does not have material foreign currency risk as its business is conducted in U.S. dollars[140](index=140&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of the end of the reporting period, disclosure controls and procedures were effective to provide reasonable assurance that required information is recorded, processed, and reported in a timely manner[142](index=142&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2022[143](index=143&type=chunk) [Part II: Other Information](index=29&type=section&id=Part%20II%3A%20Other%20Information) This section covers other required disclosures, including legal proceedings, risk factors, equity sales, and various other items [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not a party to any legal proceedings that would have a material effect on its business or results of operations - The company is not currently party to any material legal proceedings[147](index=147&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company states there have been no material changes to the risk factors disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes have occurred to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K[148](index=148&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the period and confirms no material change in the planned use of proceeds from its April 2021 Initial Public Offering (IPO) - The company had no unregistered sales of equity securities in the period[149](index=149&type=chunk) - There has been no material change in the planned use of proceeds from the April 2021 IPO, from which the company received net proceeds of approximately **$107.6 million**[150](index=150&type=chunk)[151](index=151&type=chunk) [Other Items (3, 4, 5, 6)](index=30&type=section&id=Other%20Items) This section confirms that there were no defaults upon senior securities, mine safety disclosures are not applicable, there is no other information to report, and lists the exhibits filed with the report - Item 3: No defaults upon senior securities were reported[153](index=153&type=chunk) - Item 4: Mine safety disclosures are not applicable[154](index=154&type=chunk) - Item 6: The report lists several exhibits, including amendments to credit agreements and certifications by the CEO and CFO[156](index=156&type=chunk)

Financial Data and Key Metrics Changes - Revenue in Q2 2022 was $30 million, representing a 45% increase from $20.7 million in Q2 2021, driven by increased procedure volumes and higher blended average selling prices [17][36] - Gross margin improved to 81.1% in Q2 2022 from 80.9% in Q2 2021, reflecting operational efficiency [37] - The net loss for Q2 2022 was $17.2 million, compared to a net loss of $5.1 million in the same period of 2021 [41] Business Line Data and Key Metrics Changes - The number of active surgeons performing at least one case in the trailing 12 months increased by 37% year-over-year to 2,047 [36] - Surgeon utilization increased to an average of 10.1 kits per surgeon in Q2 2022, up from 9.8 kits a year ago [19][36] - 68% of revenue in Q2 2022 was generated by the direct sales force, up from 63% in Q1 2022 and 51% a year ago [12] Market Data and Key Metrics Changes - The company has penetrated approximately 4.6% of the estimated 450,000 annual bunion surgical procedures in the U.S., up from 3.3% in Q2 2021 [15] - The total addressable market for bunion surgery is estimated at over $5 billion, with 1.1 million annual surgical candidates [14] Company Strategy and Development Direction - The company is focused on building clinical evidence to become the standard of care for bunion surgery, with a growing body of clinical data supporting its procedures [8][21] - Investments are being made in expanding the direct sales channel and enhancing patient awareness through DTC programs [20][27] - The company is relocating to a larger headquarters to accommodate growth in training, R&D, and infrastructure needs [16][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying strength and momentum of the business, raising the full-year 2022 revenue guidance to $130 million to $134 million, reflecting a 38% to 42% increase from 2021 [20][43] - The company anticipates typical seasonal softness in orthopedic elective surgeries during Q3 but expects strong year-over-year growth [43] Other Important Information - The company announced a new 5-year $150 million loan arrangement to enhance financial flexibility and support growth initiatives [42] - The company has 36 branded U.S. patents and over 40 U.S. patent applications pending, indicating a strong focus on innovation [29] Q&A Session Summary Question: Revenue per procedure has increased, how are reps compensated for adding more to the procedure? - Management noted that sales reps are commission-based, incentivizing them to sell both the Lapiplasty kit and ancillary products [47] Question: What drives higher utilization among surgeons? - The average user progresses from around four cases in their first year to approximately 20 cases by year four, driven by direct sales support and ongoing training [53] Question: Why is Q3 revenue expected to be flat compared to Q2? - Management cited seasonal softness in elective surgeries and staffing shortages as factors influencing the flat expectation, while still projecting strong year-over-year growth [55][56] Question: How do reimbursement trends affect pricing potential? - Management highlighted that reimbursement trends have been positive, and they monitor the relationship between pricing and reimbursement closely [62] Question: What is the outlook for gross margins with new ancillary products? - Management is focused on maintaining current gross margins while exploring opportunities for improvement amidst inflationary pressures [64]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from___ to___ Commission file number: 001-40355 Treace Medical Concepts, Inc. (Exact name of registrant as specified in its charter) Delaware 47-1052611 (State or o ...

Treace Medical Concepts, Inc. (NASDAQ:TMCI) Q1 2022 Earnings Conference Call May 5, 2022 4:30 PM ET Company Participants Vivian Cervantes - Investor Relations John Treace - Chief Executive Officer Mark Hair - Chief Financial Officer Conference Call Participants Drew Ranieri - Morgan Stanley Danielle Antalffy - SVB Securities Operator Good day and thank you for standing by. Welcome to the Treace Medical Concepts’ First Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to hand th ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from___ to___ Commission file number: 001-40355 Treace Medical Concepts, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-40355 TREACE MEDICAL CONCEPTS, INC. (Exact name of Registrant as specified in its Charter) Delaware 47-1052611 (State or other jurisd ...

Treace Medical Concepts, Inc. (NASDAQ:TMCI) Q4 2021 Earnings Conference Call March 3, 2022 4:30 PM ET Company Participants Vivian Cervantes - Gilmartin Investor Relations John Treace - Chief Executive Officer, Founder, & Board Member Mark Hair - Chief Financial Officer Conference Call Participants Robbie Marcus - JPMorgan Drew Ranieri - Morgan Stanley Danielle Antalffy - SVB Leerink Rick Wise - Stifel Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this ...

Treace Medical Concepts, Inc. (NASDAQ:TMCI) Q3 2021 Earnings Conference Call November 4, 2021 4:30 PM ET Company Participants John Treace – Chief Executive Officer Mark Hair – Chief Financial Officer Conference Call Participants Lilia-Celine Breton Lozada – JPMorgan Drew Ranieri – Morgan Stanley Erin Broderick – SVB Leerink Rick Wise – Stifel Operator Welcome to the Treace Medical Concepts Third Quarter 2021 Earnings Conference Call. My name is James, and I’ll be your operator for today’s call. At this time ...