Earnings call transcript: Aurora Spine Q1 2025 highlights product launches

Aurora Spine Corporation, with a market capitalization of $305.59 million, reported its first-quarter financial results for 2025, highlighting a 10% year-over-year increase in total revenues to $4.42 million. Despite the revenue growth, the company posted a net loss of $350,000, compared to a $267,000 loss in the same period last year. According to InvestingPro data, the stock has shown resilience with a 7.15% return over the past year, though it remained unchanged at $0.305 following the announcement.

Key Takeaways

• Aurora Spine launched the Arrow Facet Fusion System and plans a mid-late Q3 launch for the DEXA L lumbar cage.
• The company expanded its internal sales team and is targeting new geographic markets.
• Aurora Spine aims for 20% annual revenue growth and profitability.

Company Performance

Aurora Spine Corporation demonstrated resilience with a 10% increase in total revenues for Q1 2025, driven by strong product performance and strategic market expansion. The company’s overall financial health receives a "FAIR" rating from InvestingPro, with a beta of 1.21 indicating moderate market sensitivity. While the company faced challenges with a decreased gross margin and an increased net loss compared to the previous year, it maintains an active growth strategy through sales force expansion and market development.

Financial Highlights

• Revenue: $4.42 million, a 10% increase year-over-year.
• Gross Margin: 58%, down from 61.9% in Q1 FY2024.
• Net Loss: $350,000, compared to a $267,000 loss in the previous year.
• Cash Position: Nearly $500,000.
• Accounts Receivable: $4.1 million.

Outlook & Guidance

Aurora Spine is optimistic about its future, targeting 20% annual revenue growth and expecting profitability on an annual basis. With a current P/E ratio of 6.33 and a current ratio of 0.88, investors seeking detailed analysis can access comprehensive valuation metrics and growth projections through InvestingPro’s exclusive research reports. The company plans to launch the DEXA L lumbar cage in Q3 and continue expanding its regional sales coverage.

Executive Commentary

CEO Trent Northcutt emphasized the company’s strategic focus, stating, "We simplify the complex" and expressing confidence in the company’s future by saying, "We are extremely bullish on our outlook." He also highlighted the innovation-driven approach: "Every product I make, I’m trying to make products that are considered door opening devices."

Risks and Challenges

• Declining gross margins may pressure profitability.
• The increased net loss could affect investor confidence.
• The company’s cash position is relatively low, potentially limiting operational flexibility.

Aurora Spine’s Q1 2025 earnings call showcased its commitment to innovation and market expansion, despite financial challenges. The company’s strategic initiatives and product launches position it for potential growth, although financial metrics indicate areas needing attention.

Full transcript - Aurora Spine Corporation (ASG) Q1 2025:

Gary, Conference Operator: Good morning, and welcome to the AURORA Spine First Quarter Financial Year twenty twenty five Results Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Adam Lowensteiner with Lithium Partners. Please go ahead.

Adam Lowensteiner, Investor Relations, Lithium Partners: Thank you, Gary. Welcome, everyone, and thank you for joining us today to conduct an update with investors and review the financial results for Aurora Spine for the first quarter of fiscal year twenty twenty five that ended 03/31/2025. With us on the call representing the company today are Mr. Trent Northcutt, President and CEO of Aurora Spine and Mr. Chad Clouse, Chief Financial Officer of Aurora Spine.

Before we begin, would like to remind everyone that statements made during the course of this call may be considered forward looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Act of 1934. These statements reflect current expectations concerning future events and results. Words such as expect, intend, believe, may, will, should, could, anticipate and similar expressions are words that are used to identify forward looking statements, but their absence does not mean a statement is not forward looking. These statements are not guarantees for future performance and are subject to risks and uncertainties and other important factors that could cause actual performance or achievements to be materially different from those projected. For a full discussion of these risks, uncertainties and factors, you’re encouraged to read Aurora documents on file with SEDAR, including those set forth in periodic reports filed under the forward looking statements and risk factors sections.

Aurora Spine does not intend to update or revise any forward looking statements whether as a result of new information or future events or otherwise. On this call, management may refer to EBITDAC, adjusted EBITDAC, adjusted net income and adjusted EPS, which are not measures of financial performance under generally accepted accounting principles or GAAP. Management believes that these non GAAP figures, in addition to other GAAP measures, provide meaningful supplemental information regarding the company’s operational performance. Investors should recognize that these non GAAP figures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to and not as a substitute for or superior to any measure of performance prepared in accordance with GAAP.

A reconciliation of non GAAP measures to the most directly compared GAAP measures in accordance with the SEC Regulation G can be found in the company’s earnings release. With that, I’d now like to turn the call over to Mr. Trent Northcott, President and CEO of Aurora Spine. Trent, please proceed.

Trent Northcutt, President and CEO, Aurora Spine: Thank you, Adam. I’d like to welcome everyone to this call to update everyone about Aurora Spine. To lay out the agenda for today’s call, I plan sharing some brief remarks about the company’s operations as it’s only three weeks since our last conference call. And then I’ll hand the call over to Chad to review financials afterwards. Todd and I will make some brief concluding remarks and then open the call to answers and answer any questions that you may have.

I am very pleased with our financial results reported today for the first quarter results, which recorded Aurora’s best first quarter revenue figures in the company’s history. As we discussed a few weeks ago, we expected to build some momentum in our revenues through the rest of the year as our team engages with more doctors and have more procedures built through the year, combined with the launch of the new products in the coming months. Helping us achieve these improved first quarter revenues was due to our internal sales team, which has done a great job at building strong relationships with our customers. These relationships are highly beneficial in knowing the future of what’s in the midst of launching additional products. Our amazing internal sales team is now at 14 people with their diligent efforts are to drive behind our growth and getting our proprietary products into more doctors’ hands and patients.

Assisting our sales team will be providing out success with our proprietary products and sharing the data we receive behind the usage of our products. Along these lines, we expect to share regarding our proprietary ZIP intersinus fixation device at the upcoming American Society of Pain at Neurosciences, known as ASPEN Conference in July. We’re also eager to share the results of the REFINE study we conducted with our ZiP device, which is used for patients suffering from back pain due to symptomatic degenerative disc disease. The results will be presented at the Aspen Annual Conference mid July and will be spotlight Aurora Spine’s commitment to evidence based innovation. We anticipate that the REFINE study’s findings will reinforce the efficiency and safety of its ZiP System, further solidifying Aurora Spine’s position as a trailblazer in the spine implant market.

Aurora Spine remains committed to empowering physicians and providing patient outcomes through groundbreaking clinical evidence and minimally invasive solutions. The company’s success also continues to come from our key proprietary product platforms, especially the TFX System, where revenues were $1,700,000 in the first quarter, an increase of 33.8% from the first quarter of last year. The Silo TFX Series is just one of five proprietary product platforms that we’ve developed in the past few years and has gained significant traction in a short amount of time. We still believe it’s early innings in the SI joint market opportunity and expect TFX to continue to expand the market share. We believe that the TFX along with our portfolio of proprietary products have a potential for future growth and adoption given that all has been designed to prove ease of use for the doctor and can be implanted using minimally invasive procedure.

Simultaneously, our goal is also to create better outcomes for patients through things like smaller incisions, which limit blood loss, allows patients to return home the same day of the procedure and experience faster recovery times. We believe that this is our secret sauce by creating products with both the doctor and the patients in mind. As we say here at Aurora, we simplify the complex. Just a brief update on DEXA. We are working diligently to open up more hospitals to use DEXA and have a couple of our sales team working and adding more every day.

As many of you know, Dexo will be a little bit different of a sales than some of the other products, but we are making inroads to educate doctors on our offering and many early indications are that the value add of the technology can enable surgeons to proceed with their surgeries even if the patient’s bone density isn’t so strong. DEXA C has been contributing to the company’s revenues. We should have data to share on the product in the upcoming months. In addition, we expect that the launch of the DEXA L for lumbar procedures during the second half of twenty twenty five. We received the FDA clearance on the DEXA L a little less than a year ago and are very excited about its launch in the coming months.

We have the kits built and we have already identified a few surgeons that will that are prepared to start using the product. We have high hopes for DEXA L as subsidence issues occur more frequently in the lumbar section of the spine due to heavier loads that are put on the portion of the spine. We are gearing up, excited about the launch and we’ll update investors as things progress. I’d like to also talk about our new product series that we received FDA clearance during the first quarter, the Arrow Facet Fusion System. It is a very small implant, smallest implant we’ve made, and that will be used in the Facet mark joint pain and obtain fusion to remove back pain patients that patients are experiencing.

The procedure is very new to the industry, but it’s designed implantability to create similarity to the ways that the Silo T affects through use of needle placement in the joint and then use the Ghost Tube to easily install the necessary implant with exact precision. Our thinking behind the ARROW was to be designed with the understanding that many of our more injections are offered to patients than implants, nearly 5,000,000 annually in The U. S. Market alone. The ARROW’s design is intended for doctors who utilize needles and can easily identify and access a facet joint.

In addition to having a similar design, the arrow so simplistic to the implant is minimally invasive, where the procedure is done in less than an hour and patients go home the same day. Economic profile is also similar to the TFX, which might have initially better economics in a smaller device, which makes it easier to manufacture less materials needed to manufacture it as well. Where things differ on the economic side, it’s unlike the TFX, which is intended for the SI joint, the individual only has two SI joints as opposed to facets where there is a total of 48. This isn’t to say that the ARROW will be implanted in every joint, but there’s potential for more shots on goals, so to speak. But I must remind investors that ARROW has received FDA clearance for the entire spine C2 to S1 inclusive, which is extremely important for us.

It allows us to market the arrow broadly to doctors and interventionalists and detail the product for the cervical and the lumbar procedures. These are just a few catalysts as we are extremely excited about the Arrow’s future. We have already ordered initial kits for the Arrow and they are in the midst of being produced as we speak. We plan on updating investors as we develop, but for now, we are anticipating an initial surgeries of the Arrow to commence over the summer months. That concludes my formal comments.

I will now turn the conversation over to Chad Claus, Aurora’s CFO for commentary on our financials. Chad, please proceed.

Chad Clouse, Chief Financial Officer, Aurora Spine: Thank you, Trent. The company’s financial performance in the first quarter continued to show excellent progress. Let’s discuss some highlights. Total revenues for the first quarter of twenty twenty five were $4,420,000 an increase of 10% when compared to the $4,010,000 in the same quarter a year ago. The improvements in revenue in twenty twenty four twenty twenty five were due to more procedures conducted in the inventory, surgical and pain centers that incorporated overall products like the Zip and Sallo TFS.

The company targeted the pain market with increased marketing training and new product releases and an increase in sales staff. Moving on to discussions of gross margin, which on total revenues were 58% for the first quarter of twenty twenty five compared to 61.9% in Q1 of twenty twenty four. Gross margin was lower compared to last year due to increased shipping costs, higher distributor commissions and offset by lower royalty costs. The company continues to focus on growing sales of proprietary products. Gross margin has the capability for additional improvements depending upon product mix, manufacturing, shipping costs.

Total operating expense were $2,900,000 for the first quarter of twenty twenty five compared to $2,750,000 for the first quarter of twenty twenty four. Operating expenses in Q1 twenty twenty five include $285,000 of non cash expenses compared to $390,000 of non cash expenses. Operating expenses are higher due to the current quarter, primarily due to an increase in total compensation, discretionary education and training spend and health insurance offset by a decrease in consulting professional fees and research and development. EBITDAC, a non GAAP figure, was negative $20,000 for the first quarter of twenty twenty five compared to positive $120,000 in the first quarter of twenty twenty four. EBITDAC was slightly lower from years ago results due to higher expenses for implementation of internal sales teams.

Net loss was a negative $350,000 for the first quarter of twenty twenty five compared to the first quarter of twenty twenty four, which is a loss of a negative $267,000 Basic and diluted net loss per share was 0 per share for the first quarter of twenty twenty five and zero point $0.00 per share for the first quarter of twenty twenty four. Moving on to the balance sheet. We ended the quarter with nearly $500,000 in cash. Accounts receivables were elevated in the quarter, of which have been collected and was a result of improved sales during March. Cash collections continue to be a major focus for us as we have been successful in improving collections, especially with on order receivables.

As I mentioned in the past, we’ve added personnel to assist me in improving our collection process and the majority of receivables in the balance sheet reflect those that are thirty days or less. We believe the capital structure is significant to meet our budget needs this year and we should continue to improve as we continue to make progress in our collection efforts and experience growth in the business. That concludes my comments. I’ll turn the conversation back to Trent.

Trent Northcutt, President and CEO, Aurora Spine: Thanks, Chad. To summarize, I’m extremely proud of our team’s performance and staying focused on building this company. We’re well positioned to take advantage of the growing markets with several new proprietary products. We remain focused on penetrating these markets furthering this year through continued training sessions, clinical trials and sharing data on the success of our products. As I mentioned a few weeks ago, we do believe as the year progresses that revenue should continue to show year over year growth and we have budgeted annual revenue growth for at least 20% and profitability on an annual basis.

We are extremely bullish on our outlook and we believe that we’re on track to continued growth and success. With that said, operator, we are ready for any questions.

Gary, Conference Operator: We will now begin the question and answer session. Our first question is from Tom Fetichen with MicroCap Connection. Please go ahead.

Tom Fetichen, Analyst, MicroCap Connection: Hey, good morning guys. Congratulations on another solid quarter. I would like to start off by asking about the DEXA C Line. You had some nice growth from that device, dollars 415,000 versus $204,000 for the preceding quarter twenty twenty four. So I guess the question I have is, what are your expectations for DEXYC in 2025?

Is this a number that should continue to grow now that you’ve got more effort being put in to push this product into the market?

Trent Northcutt, President and CEO, Aurora Spine: Thanks, Tom. Yes, we are very thrilled with the DEXA C and it’s still slow growth, but it’s growth that we like. It’s focused growth too. We are working towards getting more distribution channels, excited about the technology. We’re able to talk about it more because we see that the clinical results that we have as part of the study that we’re in that continue to show positive results.

And since we’re able to talk about it and then we’re obviously working towards publishing those results, but being able to talk to distributors and doctors that we’re having good results has been a benefit to us and this is partial why we’re seeing it. The second part why we’re seeing growth. The second part to that is our Director of Spine, whose sole focus is just to get out there and to speak about the spinal implant market, speaking with ortho and neuro. We participated early this year at a separate spine conference down in Florida just to highlight and show some of the advancements in AURORA’s proprietary technology. And Ron has done a great job of getting after it and getting some people to come on board to not only just trial it, but actually embrace the technology along with his efforts.

The third part was all of his efforts from early last year when he joined us through Q1, Q2, Q3 and Q4 getting new hospital registration approvals and surgery center approvals across the country. And that also is tied to some military facilities and VA facilities. So we should continue to see growth in the DEXYC product. The last thing I’ll comment on that is that we’re close to finishing up some of the instruments that were not working well with the Apollo plate And we got those instruments fixed and we’re working on that and machining some of those new parts. So with the increase of cervical plate sales, which is the Apollo and having more cervical plate trays available for the sales force, it’s that bread and butter, that salt and pepper.

You got to have if you have the cage, you got to have the plate. And the DEXA C is a very, very good cage, but it makes it a little bit more difficult to move if you’re not supplying the plate along with it. So we’re bullish on that too and feel good about it.

Tom Fetichen, Analyst, MicroCap Connection: Wonderful. Now on the last earnings call, you spoke about the seasonality of your business and you’d alluded to the fact that Q1 would see slower revenues as the seasonality of insurance resets hits. Looking forward, do you see that the growth has continued into Q2? And where are you seeing the growth coming from? Is it going to be on the backs of TFX, is it Osteo Onyx?

Maybe you can speak to what you’ve seen towards the latter part of Q1 and even forward looking.

Trent Northcutt, President and CEO, Aurora Spine: Yes. We certainly our company and our current sales cycle with our company for the last at least three years, seasonality and that’s just what it is. We have a dip in December. You have to come out of it through January and then we see it again in March and then we see an uptick in Q2. We’re off to a great start in Q2.

Very, very excited about where we are in Q2. And in Q1, there were some really good results that came out of Q1, which was seeing more DEXA sales, which is great because that’s that balance I was telling some of you at the MicroCap conference was doing over $1,000,000 in pain interventional sales and then start to add on to our spine sales and moving that up closer to $500,000 6 hundred thousand dollars 7 hundred thousand dollars That’s that breakthrough number where we get we stay firm, not to drop below $1,500,000 in a month and then catching ourselves closer and closer to the first two million dollars month and then ultimately get to that first five million dollars quarter. So I feel really good about what we’re doing. And yes, I’m happy with everything we did in Q1, always want to see more, but happy with what we did and we’re off to a great start in Q2.

Tom Fetichen, Analyst, MicroCap Connection: Wonderful. And how is the doctor training labs gone? Have you you’ve had, I think a large one in Q1 that you had spoke about at the conference. But are you consistent in your approach with doctor training throughout the year? Is that I know you’ve got smaller labs that you take part in.

Can you speak about how that is safe for new investors that are listening to the call? How you proceed with your trainings and what your expectations are moving forward in that regard with the addition of new doctors and such?

Trent Northcutt, President and CEO, Aurora Spine: Well, one of the things we added this year versus last year was we added a new VP of Training and Education, somebody who had strong success. He joined us from companies like Vertiflex and Alphatec and other companies of such. And he really knows how to run a training program, where those training programs are not just surgeon training programs, but they’re also sales rep training, where the sales reps have to come in, they have a test they have to take, they have to learn about the products, they have to put their hands on the products even in the cadaveric setting. So they have a better understanding when they’re in the Operating Room with those doctors to be able to understand and explain our technology clearly. And have actually looked a doctor in the eye and say, I put my hands on this product in a kind of very exciting to be able to help you doctor understand our product better.

And the doctors, they’ve appreciated that. And we’ve also added that first Q1 training which was a larger training, but it was more laser pointed where we really focused on which doctors that were signing up for our courses. We weren’t having a problem getting people to sign up, but what we wanted to have was people who were signing up that were going to be real users because they see the value in the technology in their communities. So Adam’s been doing managing that.

Tom Fetichen, Analyst, MicroCap Connection: Okay. No, that’s great. Can you speak to the importance of the pain studies? You’d mentioned that during your opening remarks there of how the ZIP has got a study going on that will be released coming out this summer. But I believe you’ve got studies on DEXA C as well and silo TFX.

Can you let investors know the importance of these studies and what it means to doctors and adoption for your company?

Trent Northcutt, President and CEO, Aurora Spine: Certainly. The ZiP study, which I’ll start with, was it was really key for us to do this study because it was the first one of its kind. And what do I mean by that? What I mean is that we decided to branch into a new marketplace which was the interventional spine market. And we had addressed this market because of the many, many interventional doctors that have used inter spinous, inner lamina non fusion technologies.

And they had a lot of patients out there, because those companies had done a good job with getting a lot of implants put into patients around the country. Those implants are non fusion based. So the interventional market was looking for fusion based because they’re going to take those implants out or they’re going to address the levels above or below for adjacent segment. And we were the first company to actually pull together a group of orthopedic, neuro spine and interventional pain doctors and put them into one study, which is the zip study for the, that was going to that that did show that the patients could have good clinical outcomes with a lumbar fusion system for the first time. I mean, this was something that just did not exist in the market.

So the REFINE study included that we had over a large amount of patients over we did a couple hundred patients, but we registered off over 80 patients that showed that they had no adverse effects, they had good clinical results, lowered their pain scores, they got a fusion rate, patients did better, and they did majority of these patients in an outpatient setting. So the REFINE study was our first entry into evidence based medicine to be able to prove to everyone that the ZIP could be used in the hands of ortho neuro and pain. Since then, we have entered into a second study, which was for our DEXA C technology. And DEXA, as you know, is a platform. DEXA technology is an implant opportunity to make it for all an implant that acts within any type of bone structure.

So your cervical space, your lumbar space, your SI joint space, anywhere where the bone is being interfaced together, you wanna be able to have an implant that can best match that patient’s bone density. But we had to prove that. And so DEXA technology is not just three d printing, it’s actually additive manufacturing. So we were able to prove and are continuing to prove that the implant works better in bone of either good quality or high quality, all the way down to patients that have poor quality. So it allows that doctor to make a decision intraoperatively or preoperatively, which implant should I put into this patient’s body.

So, we started with cervical. Cervical has very high success rate, but if we could show an improvement on area of the body that already has good success rate versus just lumbar fusion or decompressions, I’m sorry, cervical fusion or cervical decompressions, then if we could add that benefit with our cage, which is the DEXA C that we felt the doctors would respond to that and they have so far. So they see that there is a clinical result for them and there’s a clinical benefit to them to have that option that they’ve never had before. Every product that’s out there competitive wise does not have that ability to offer lower density, a softer landing for the patient’s bone, especially if the patient has poor bone quality. And third, we’ve have a safety study for the silo TFX.

We are we presented this to a publisher to we were in middle some edits right now, but we’ve submitted that to the editor. We’re making the adjustments on the edits on that paper and that published results and the results are fantastic. They’re absolutely great. So we’re pleased and ready and excited to release those. We’re just waiting for the edits to come in so they can be So we’ll have all three of those and then we have a series of study options for what we’re calling the Guardian study, which will carry more of our product portfolio in through 2025 and beyond.

And the Guardian study will take all of our technologies, separate pathology such as cervical, lumbar, SI joint and other to be able to show that whichever device they’re using in case that the doctor has done say a zip in one patient and the patient comes back and now that doctor wants to use Arrow, that they would be able to extend on that Guardian study. So the zip is not patient isn’t showing that they’ve had an adjacent segment failure, but they’re showing that the patient is just, it’s degenerated, the spine is of health, so they have to have another procedure performed. And since they had such a good result with a segment below such with the zip or other devices that Aurora offers, now we’re going to carry that study and that’s why we call it the Guardian study. We’re continuing forward with those patients to help treat them for as long as they’ll be part of our studies and beyond.

Tom Fetichen, Analyst, MicroCap Connection: Wonderful. No, I appreciate you giving the color there. Now you’ve switching gears, you’ve added a number of new regional sales directors over the last year, year plus. And I saw you recently hired Cassandra Murphy from Medtronic just as an example. Can you speak about the expectations for each regional sales director, the timeframe required for these individuals to be fully trained and contributing?

And what sort of expectations, I guess, per what you’re looking for per hire as you bring them on? You’ve got 14 of these regional sales directors now or I guess, should say sales personnel now. And I believe on our last call you’d mentioned you’re looking at hiring potentially four more this year. Maybe you can add some color as to what you what we can expect this year from these new hires? And maybe also talk about the how the margins, I guess, are improved.

I know in the earnings statement you had mentioned or it was mentioned that margins had declined a little bit due to shipping, but also due to distributor costs and whatnot. So if you can add some color there, that’d be great.

Trent Northcutt, President and CEO, Aurora Spine: You got it. Yes, Cassandra joined us from Medtronic. She was very, very strong in her area, the Northeast, and continues to do amazing work. We’ve added another new salesperson in the Mid Atlantic location who comes from experience from companies like Nalu and from other competitive companies where they have good reputation in their backyard, in their region where they have doctor touches where they can get out there and talk to those accounts. We will continue to look in pockets of the country that we do not have regional coverage.

And we’re interviewing all the time. So we’re still interviewing process in the Great Lakes area as we’re seeking. We’re trying to add some people in that location. The Northwest is another area that we would like to address as soon as we can. We were interviewing somebody as early as yesterday here in the office.

So we are constantly interviewing, trying to find the right fit for us. And we want to make sure that we’re the right fit for them and they’re the right fit for us. And we’re looking for people that have a vast experience in areas that we’re not getting any traction because we just don’t have people there. Attraction meaning there’s just no one there. So, we’re Ron and Matt Matt Paxton.

They are focused if they can’t get a regional director, sales director in a location, we’re open to having independent distribution there because that’ll cover those procedures and potentially get the doors open for us in areas that we don’t have regional sales directors. Those commissions are when you pay distributor, you got to pay them more than you pay a direct person to manage accounts. The distributors get to eat what they kill, if you will. And that does affect the margin of the company. It’s a give and a take, right?

The give is, is that you got to pay them some commissions to get up there and go get cultivate that marketplace because they’re experts in their own market. The advantage to that is that they run a business and they’re an independent distributor. So we have those distributors all across the country, but we want to add it in more pockets of areas that we think that we can get good sales revenues in areas, especially with the high MSA areas and places like Seattle and Chicago and Denver. We’ve just done some recent first surgeries in Denver, which went really, really well. And we’re now in the Colorado market getting started.

We think we’re going to ramp up. That’s a state that had basically had zero sales revenue for us for the last couple of years. So they have new sales revenues in Colorado, new sales revenues in places like Kentucky and other areas. Those are exciting locations for us because they’re growth areas. And as we continue to develop those areas, we’ll look for regional sales directors or we’ll use independent distributors or a blend of both.

Tom Fetichen, Analyst, MicroCap Connection: Would you expect, if a new hire has been posted three months just till you start to see revenues come in from that new regional sales director? Or how long does it take for someone to be fully trained and actually up and running?

Trent Northcutt, President and CEO, Aurora Spine: Yes, that’s right. I didn’t answer it completely. So yes, if you’re direct with us, it takes about I mean, it’d be great if you hit the ground running in thirty days, but the first thirty days are on board, they’re getting themselves organized. But definitely within that sixty, ninety day period, we expect some beginning results in that area. And that’s very similar to even what happens with distributors.

Independent distributors, you have to get a you have to enter into a contract with them. They have to take a look at your products. They have to talk to their sales team that’s part of that independent distributor. We have to train them and talk to them in the office. It’s not catty barric necessarily, but it is product review, product training.

And then they typically take thirty, sixty, ninety days to ramp up as well once you execute a contract with a new distributor or a new regional sales director.

Tom Fetichen, Analyst, MicroCap Connection: Okay. A couple of more questions. DEXA L and the facets will be released this summer. Are you expecting them to be released late Q3, early Q4? What sort of timeframe are you looking at for free leases on both?

And you’ve got the kits for both, I assume?

Trent Northcutt, President and CEO, Aurora Spine: Yes. We’ll have the kits manufactured for both. So mid to late Q2 I’m sorry, mid to late Q3, excuse me, for DEXA L and for ARO. We might be able to pick up a couple of trial cases, but we’re really focused for the later half of Q3 with both those products.

Tom Fetichen, Analyst, MicroCap Connection: Okay. And question on the accounts receivables. They increased to $4,100,000 and your cash is around $500,000 Have you been able to collect since Q1 ended? Are you confident that you don’t need to raise any additional capital here?

Trent Northcutt, President and CEO, Aurora Spine: We are confident on Yes, go ahead, Chuck.

Chad Clouse, Chief Financial Officer, Aurora Spine: I can answer. The actual trade receivables part of that is only up $200,000 and some of that is due to pretty strong sales in March. Our DSOs around seventy eight days in that area. So if a lot of sales end up in the later half of the quarter, then we end up with a higher balance there. But to answer your question, yes, we’ve collected most of that and we’re very confident that we don’t need to raise money, which what this trend was about to say.

Tom Fetichen, Analyst, MicroCap Connection: Perfect. Perfect. And I guess another question here is that I have and this is just more for my personal modeling of the core business which is Zip, Silo, Silo, Ziris and the DEXA. Last year Zip grew, I believe it was approximately 35% and Silo grew, the TFX grew 135%. Do you foresee Zip continuing on that growth rate through 2025?

And do you believe that even the TFX will grow even at 50% with all these with new sales efforts with new regional sales directors and doctors further adopting these products. Is that something you foresee, do you foresee a similar rate of growth?

Trent Northcutt, President and CEO, Aurora Spine: Well, we’re absolutely committed to continually marketing the brand of Zipp products and siloTFxpike. But Zip in particular, where I think you’re going to see more growth with the Zip device is two parts. The number one part is that we have to add more salespeople and distribution. So adding headcount is going to be the driver for all of our products, specifically the products that are currently our core base products that when we enter into new markets, that’s new growth, that’s new opportunity. The second part of that for Zip is the DEXA L is an anterior approach product where the cage goes through the abdomen and it fixates itself into the abdomen.

That has a very good COGS and a very high price point for the device. So we’re really thrilled on the potential of how the implant can be built out. But the second part to that is that doctors can do a couple of different things. They can put in the DEXA L cage and sew the patient up and they’ll be good to go and that’s one approach. The surgeons, the orthopedic and the neurosurgeons can actually increase their billables if they roll the patient over into prone position and put in three different products that it has, that Aurora has.

It’s Osteo On X products, which would be screws. They can put those in posterior. They can put in a zip device, which would be a very a faster approach to doing a three sixty lumbar fusion procedure and get a maximum billable for that particular doctor. And then of course, in Q3, the doctors could roll a patient over after they do a DEXA L and put in the arrow posteriorly. So we’re going to have additional shots on goal with the Oceonics product, the Zip product and the Arrow product following an anterior approach procedure with the DEXA L.

So the doctors that we are working with and are part of our DEXA L development team, they do three sixty procedures. So they often roll the patient over and add posterior fixation.

Tom Fetichen, Analyst, MicroCap Connection: Wonderful, wonderful. No, that’s great to hear their trend. Osteo Onix, speaking of that, have you seen, an improvement in sales since the rollout of that quarter over quarter?

Trent Northcutt, President and CEO, Aurora Spine: We see that it is growing. It’s pockets in pocket locations, but we got more sets in just the other day. More kits just came into the building. It’s usually an inventory thing, but we got more kits in the building just the other day. So yes, I think by the end of the year and throughout the year, we’ll constantly see Osteo On X increasing and growing as a product offering.

That will also help with the other product that’s it’s in our queue, which is the DEXA SD Cage, which is a posterior cage that goes into the back. And then you fixate that with either a zip or with screws. And that’s those big lumbar surgeries that we try to promote against, if you will, because we’re more of that minimally invasive approach. But we got some new percutaneous MIS systems in from Osteo Onyx that are screw based and those kits came in and they’ll be supporting the growth for our Spine division, which is why we’re really bullish on where Spine is going to go in 2025 and beyond.

Gary, Conference Operator: The next question is from Lindsey Leeds, a private investor. Please go ahead.

Lindsey Leeds, Private Investor: Hi, congratulations on record Q1. I wanted to ask about the DEXA L and the higher price point. Is that going to help you penetrate with the market with maybe some doctors that were looking for a higher dollar product?

Trent Northcutt, President and CEO, Aurora Spine: Yes. Hi, Lindsay. Yes, absolutely. The DEXA L has been anticipated for a long, long time. I made the decision to start with cervical first because I wanted to make sure we had good outcomes.

And so we are having good outcomes with the DEXA C. ADXA L has always been what when we first did our first roundtable, we had, I think it was nine orthoneurosurgeons come to San Diego in a roundtable, an R and D discussion. They were all like, give us the lumbar systems, want that to come out as fast as we want cervical to come out and we had to start somewhere. And so we picked our lane, we did get good results. And so now that there’s a it’s a higher ticket item, a procedure that’s widely accepted around the country, it’s all approved by every insurance.

It’s not every orthopedic spine surgeon does anterior approaches, but the ones that do are very, very good at it. It’s a very good procedure, a very robust procedure, meaning the fixation because you’re you can I’ve been in many of these procedures and you literally can see the spinal cord, mean, the spinal column there through the anterior part of the belly. You can actually see it and when you put the implant in there, you see how it’s fixated down and how it seats nicely and flush up against the spine. It’s a very satisfying procedure and the ortho neuro doctors that perform these procedures are very skilled and it’s a great result. So yeah, we do think that there we think there’s a lot of doctors out there that would love to hear that we’ve had such good success with the DEXA C and how it’s helping subsidence and helping the we’ve even are showing lowering patients’ pain score with our product versus competitors.

So if we can prove that in the lumbar space, that would be a win for Aurora.

Lindsey Leeds, Private Investor: Okay. I also wanted to ask about, with the launch of Aero, is that a potential thing that could help you attract talented salespeople that you want to recruit?

Trent Northcutt, President and CEO, Aurora Spine: No question. Every product I make, I’m trying to make products that are considered door opening devices that get the, for sure get the appointment, and then it’s up to the salesperson and of course the technology to perform. But having a story that is true, and having a story that is benefiting patients, meeting the coding and reimbursement criteria, and then of course, the easy use. And as we put in our slogan, simplify the complex, it’s not just a slogan, it’s actually how we created the company. We wanted to reduce the steps and wanted to make things as minimally invasive as possible.

And with Arrow, we’re talking about making an incision about the size of a pencil eraser. It’s going be the smallest implant we’ve ever made. It’s going to be the smallest skin incision we perform. It’s going to absolutely draw people in that see the results of this. We have a roundtable scheduled in July with OrthoNeuro in Pain, a big group of people coming in.

We’ve got our first five alpha sites. They’re already searching for patients right now that are part of their practice. So we are working on this as we speak. And I think it’s going to draw on some really good talent because the results are going be great. We’re going go right into a safety and efficacy study on it because we want to prove our results and the performance of the product.

But we’re very encouraged by the biomechanics of it and the cadaver labs that we’ve done with these five alpha sites. And we’re really excited. And the other thing is I’m not that you asked, but I’ll just bring it up. This is a product that’s approved from C2 to S1. So we’ll focus on the lumbar today, but it’s going to give us an entire spine to work on with potentially one of the smallest implant ever, right?

One of the smallest implants, all outpatient driven.

Lindsey Leeds, Private Investor: So, for you to adopt that product for, I guess, the cervical part of the spine, are you what’s the effort involved there?

Trent Northcutt, President and CEO, Aurora Spine: It would be, obviously as you go up your spine, the size of your vertebra and the shape of the vertebra changes. So, the way that the facets articulate from your lumbar through your thoracic region all the way up to your cervical, the facets are in different locations, right, the way that the spine moves. So, making some modifications for you have seven cervical vertebra, you don’t put typically anything up in your C1 because that’s the top of your head, right? But C2, three, four, five, six and seven, and then that junction between C7 and T1, which T1 is your thoracic region. Again, every level has a facet, and facet treatment is the number one procedure in the interventional market, and ortho neuro doctors also have to deal with facet pain, facet issues.

And so, giving doctors an implant that’s so minimal that can offer up, in our opinion, and of course we have to prove but can offer that patient a minimally invasive approach to a lumbar fusion without having to put the big screws in there or anything that’s more complicated, if you will, of a technology and certainly smaller, smaller versus bigger implants. And of course, not everyone is going to be an ideal candidate for ARO, just like not every patient’s ideal for pedicle screws.

Lindsey Leeds, Private Investor: Okay. Well, that’s all the questions I have. Thank you so much.

Trent Northcutt, President and CEO, Aurora Spine: Thank you, Lindsey.

Gary, Conference Operator: Showing no further questions, this concludes our question and answer session. I would like to turn the conference back over to Trent Northcutt for any closing remarks.

Trent Northcutt, President and CEO, Aurora Spine: Sorry, I had it on mute. I apologize. Thank you for joining us. We appreciate your time and interest in Aurora Spine. We are very excited on what’s ahead.

We appreciate your interest and support in Aurora Spine and looking forward to updating everyone in the coming months on our progress. We will be participating in the Lifem Partners Spring twenty twenty five Investor Conference next week on May 29. And if you’d like to participate and meet with us, please reach out to Adam Lowensteiner from Lytham Partners, and we’d be happy to schedule a meeting. Thanks again, everyone, and have a great rest of your day.

Gary, Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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