Treace(US:TMCI)2022-08-13 16:10Financial 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]