Earnings call transcript: Aurora Spine Q4 2024 sees revenue growth amid market challenges

Aurora Spine Corporation reported a robust revenue increase for Q4 2024, with a 16.3% year-over-year rise to $4.7 million. The full-year revenue reached $17.56 million, marking a 21% increase from 2023. With a current market capitalization of $283.26 million and a P/E ratio of 5.89, InvestingPro analysis suggests the stock is trading below its Fair Value. Despite these metrics, the company’s stock price fell by 5.41% to $0.35 after the earnings announcement, reflecting investor concerns over ongoing net losses and market conditions.

Key Takeaways

• Aurora Spine achieved a 21% increase in full-year revenue for 2024.
• Gross margins improved to 60.5% from 56.5% in 2023.
• The company reduced its net loss from $1.68 million in 2023 to $1.003 million in 2024.
• Stock price declined by 5.41% post-earnings release.
• Aurora plans to launch the DEXA L system in H2 2025.

Company Performance

Aurora Spine demonstrated strong revenue growth in 2024, driven by increased sales of its innovative medical devices such as the Silo TFX and ZIP series. The company also improved its gross margins, indicating enhanced operational efficiency. However, the net loss, although reduced, remains a concern for investors. Aurora’s expansion efforts, including a larger sales team and new product launches, position it well in the competitive orthopedic and neurosurgery markets.

Financial Highlights

• Revenue: $4.7 million in Q4 2024, a 16.3% increase YoY
• Full-year revenue: $17.56 million, up 21% from 2023
• Gross margin: Improved to 60.5% from 56.5% in 2023
• Net loss: Reduced to $1.003 million from $1.68 million in 2023
• Cash on hand: $826,000 at the end of the quarter

Market Reaction

Despite positive financial results, Aurora Spine’s stock price fell by 5.41% in the aftermath of the earnings announcement. The stock’s decline may be attributed to lingering concerns over the company’s ability to achieve profitability and broader market volatility affecting investor sentiment. With a beta of 1.23, the stock shows higher volatility than the broader market. InvestingPro data reveals the company is not profitable over the last twelve months, though it maintains strong returns over the past five years. For deeper insights into Aurora Spine’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Aurora Spine is targeting a 20% annual revenue growth and aims to achieve cash flow positivity by the end of 2025. The company plans to expand its regional sales coverage and launch the DEXA L system in the second half of 2025. These initiatives are expected to bolster Aurora’s market position and drive future growth.

Executive Commentary

Trent Northcutt, CEO of Aurora Spine, emphasized the company’s achievements in 2024, stating, "Fiscal twenty twenty-four was a great year for Aurora Spine with many achievements including a 21% increase in revenue." He also addressed the company’s financial strategy, noting, "We are not actively looking out to raise any money." Northcutt expressed a strong focus on achieving cash flow positivity in 2025.

Risks and Challenges

• Continued net losses may impact investor confidence.
• Market volatility could affect stock performance.
• Competition in the orthopedic and neurosurgery markets remains intense.
• Achieving cash flow positivity depends on successful product launches and market expansion.
• Economic conditions and healthcare funding changes could influence demand for medical devices.

Aurora Spine’s earnings call highlighted its strategic focus on growth and innovation, but the company’s path to profitability remains a key concern for investors. The company’s current ratio of 0.88 indicates potential liquidity challenges, though InvestingPro analysis identifies several additional growth indicators. Subscribers can access 6 more exclusive ProTips and detailed financial metrics to make more informed investment decisions.

Full transcript - Aurora Spine Corporation (ASG) Q4 2024:

Conference Operator: Good day, and welcome to the Aurora Spine Fourth Quarter and Financial Year twenty twenty four Results Conference Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Adam Lowensteiner with Lytham Partners.

Please go ahead.

Adam Lowensteiner, Investor Relations, Lytham Partners: Thank you, Jacob, and welcome everyone and thank you for joining us today to conduct an update with investors and review the financial results for AurisFine for the fourth quarter and fiscal year twenty twenty four ended 12/31/2024. 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, I 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 of 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 are encouraged to read Aurora Spine’s documents on file with SEDAR, including those set forth in periodic reports filed under the Forward Looking Statements and Risk Factors section. Auroris Fund does not intend to update or revise any forward looking statements whether as a result of new information, 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 not be considered in addition to and not as a substitute for or superior to any other measure of performance prepared in accordance with GAAP. A reconciliation of non GAAP measures to the most directly comparable GAAP measures in accordance with 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’ll review the company’s operational and performance during the fourth quarter and the year then in hand to call over I’ll call I’ll send it over to Chad to review all the financials. After Chad’s remarks, I’ll provide a summary and we’ll open the call to answer any questions you may have. I’m very pleased with our financial results reported today, both for the fourth quarter and for the fiscal year.

Fiscal twenty twenty four was a great year for Aurora Spine with many achievements including a 21% increase in revenue, very strong margin improvement and our first full year positive EBITDAC. The company’s solid performance continues to be fueled by proprietary products primarily the Silo TFX System, which experienced an increase of 135% in revenues during the year. We also saw contributions from our ZIP series, including ZIP51, which offers patients and doctors unique products to conduct fusion in the lowest part of the spine without any need of screws. Also, rounding out the record results were additional sales from the DEXA technology, primarily the DEXA C. Helping us achieve great results was due to the decision that was made to the company a little over a year ago, which was start to build an internal sales force team to detail our products.

The purpose of this investment was to assist our sales efforts with many distributors we work with, but also build a strong relationship with our customers, knowing that Aurora was in the midst of development additional products these very doctors can use. I’m very pleased with our amazing internal sales team, which is now at 14 people and their diligent efforts are driven behind our growth and getting our proprietary products to more doctors’ hands and patients. As part of our growth, as an organization, we recently announced the promotion of Matt Paxton to the Executive Vice President of Sales and Caitlin Sims to the area Vice President of Commercialization and Key Accounts. Both Matt and Caitlin’s commitment to excellence, innovation and delivering exceptional patient outcomes has been the cornerstone of their success and they are embodied the Aurora Spine’s purpose driven mentality and brings a relentless focus and innovation and patient centric care to their new roles. Through their dedication and hard work, both leaders have played pivotal roles in advancing Aurora Spine’s mission to revolutionizing spinal healthcare and cutting edge solutions that improve the quality of life for patients worldwide.

Both promotions reflect Aurora’s Spine strategic focus on enhancing its leadership team to the capabilities and the opportunities ahead. We are excited to make these promotions to Matt and Caitlin based on their contribution, but also their the value of their guidance and support, which should be an integral part further building our organization and internal sales team. The Silo GFX. Moving on to some detail on how the proprietary products are performing, the Silo series, which includes the Silo TFX is selling extremely well and has had a banner 2024 as revenues of that product decreased by 135%. We attribute these increases to higher adoption of the product as we conducted several training sessions throughout the year.

But also our sales team has done a great job identifying new doctors that were seeking an SI joint product as part of their practice. Adoption of the SI joint market is still very much in early innings and our opinion should continue to grow and expand for the next several years. Also healthy sales in the year was the additional kits available to our customers, adding more kits enabling us to obviously conduct more procedures, but also allowed us to streamline shipping of the kits and manage the logistics a lot better. The Zip. Moving on to the Zip series, our products which continue to be workhorses for the Aurora Spine, especially the ZIP 51, which saw a 69% increase in sales during 2024.

The ZIP product continues to offer doctors a fusion procedure without the use of screws, which has been a favorite amongst the interventionalists that we are working with. Subsequent to the fiscal year end, we are announcing the completion of a patent patient enrollment refine study of its Zips inter fixation device for patients suffering from back pain due to symptomatic degenerative disc disease. This prospective multi center multi specialty clinical trial is the first of its kind to evaluate the safety and efficacy of lumbar interlaminate fusion devices making a significant milestone in its advancements of spinal care. The REFINE study designed to bridge the gap between conservative treatment and more invasive surgical options has successfully enrolled its full cohort of patients across multi centers in The United States. Data from this pioneering study will be published out to one year with subsequent cohort publications extended two years, offering robust long term insights into patient outcomes.

The results will be presented at the American Society of Pain Neurosciences, ASPM, the Annual Conference in July 2025, spotlighting Aurora Spine’s commitment to evidence based innovation, so stay tuned. The DEXA. Just a brief update on DEXA. We are working diligently to open up more hospitals to the use of DEXA and have completed our sales team working with more every day. As we as many of you know, the DEXA will be a little bit of a different sale than some of our other products, but we are making inroads to educate doctors on our offerings and many early indications that the value add to the of the technology can be enables patients to proceed with their surgeries even if the patient’s bone density is not so strong.

DEXA C has been contributing to the company’s revenues and we should have data to share on the products in the coming months. In addition, we expect to launch DEXA L for the lumbar procedures during the second half of twenty twenty five. ARO. I’d also like to briefly talk to you about our new product series that received FDA clearance March 2025 subsequent to the quarter and year end. The Arrow Fusion System is a very small implant that will be used in the set joint to obtain fusion to remove back pain patients are experiencing.

The procedure is very new to the industry, but similar to our Arcelo TFX, the arrow was designed with the understanding that many more injections are offered to patients and the arrow’s design is intended for the doctors who utilize needles and easily identify and access the facet joint. In addition to having a similar design, the ARROW also simplistically to the implant is minimally invasive, where the procedure is done in less than an hour and patients can go home the same day. Economic profile is also similar to the TFX, but might have initially better economics as it’s a smaller device, which makes it easier to manufacture, less material is needed to manufacture it as well. And where things are different on the economic scale is unlike the TFX, which is intended for the SI joint pain, an individual only to have the individuals only have two SI joints as opposed to facet joints where there are a total of 48 facet joints. This isn’t to say that the arrow would be implanted in every single joint, but there’s definitely the opportunity for more shots on goal so to speak.

Also treatment of the Passat is more prevalent within the industry with over four point five million injections administered annually in The U. S. Compared to one point two million injections to the SI joint. There are just a few catalysts of why we are extremely excited about the ARO and we are anticipating initial surgeries of the product to be commenced in later half of ’20 ’20 ’5. While we’re very pleased with this FDA clearance, I must acknowledge and tip my hat to our R and D team, which worked very diligently to create and design this product in rapid fashion.

That concludes my formal comments. I will now turn the conversation over to Chad Foss, Aurora’s CFO for some commentary on our financials. Chad, please proceed.

Chad Clouse, Chief Financial Officer, Aurora Spine: Thank you, Trent. The company’s financial performance in the fourth quarter and fiscal year demonstrated excellent progress. Let’s discuss some highlights. Total revenue for the fourth quarter of twenty twenty four was $4,700,000 an increase of 16.3% when compared to $4,040,000 in the same quarter a year ago. Total revenues for the fiscal year twenty twenty four were $17,560,000 compared to $14,520,000 for fiscal year twenty twenty three, an increase of over $3,000,000 or approximately 21%.

The improvements in revenue over 2023 were due to more procedures conducted in ambulatory surgical and pain centers that incorporated Aurora products like the Zip and Stylo TFX. The company targeted the pain market with increased marketing training and increasing sales staff, which now turned to 14. Moving on to gross margins, which also showed improvement both in the quarter and the fiscal year. Gross margin on total revenues were 57.8% for the fourth quarter of twenty twenty four compared to 56.7% in Q4 of twenty twenty three. Gross margins on total revenues for the fiscal year 2024 were 60.5% compared to 56.5 for the fiscal twenty twenty three.

It’s a year over year improvement in gross margin attributed to the company’s strategy selling more proprietary, more refined products and into markets with improved pricing like inventory surgery centers. As the company continues to focus on growing sales of proprietary products, gross margin has the capabilities for additional improvements depending on product sales mix, manufacturing and shipping costs. Moving on to operating expenses. Total operating expenses were $3,220,000 for the fourth quarter of twenty twenty four compared to $2,580,000 for the fourth quarter of twenty twenty three. Total operating expenses for fiscal year twenty twenty four were $11,438,000 which includes $1,110,000 of non cash expenses compared to $9,890,000 which included 1,320,000.00 of non cash expenses for fiscal year twenty twenty three.

Operating expenses increased during fourth quarter, primarily due to costs for training of new physicians, attending several society meetings and the training of internal staff. Operating expenses for fiscal year twenty twenty four increased primarily due to the addition of more salespeople for direct sales, increased commissions due to increased sales. EBITDAC and non GAAP figure, a non IFRS figure measures is defined as earnings before interest, tax, depreciation, amortization and share based compensation was a negative $320,000 for the fourth quarter of twenty twenty four compared to a positive $110,000 in the fourth quarter of twenty twenty three. EBITDAC was $280,000 for the fiscal year 2024 compared to a negative $310,000 for fiscal twenty twenty three. EBITDAC levels in Q4 were negatively affected by the fair value of accounting under IFRS of negative $154,000 for the net receivable.

EBITDAC improvements during the year were due to higher revenue levels, improved gross margins and managed expense controls. Net loss was a negative or net loss was $653,000 for the fourth quarter of twenty twenty four, including compared to the fourth quarter of twenty twenty three, which was a loss of $0.25850000.00 Basic and diluted net loss per share was minus $0.1 per share in the fourth quarter of twenty twenty four and basically zero and negative zero per share in the fourth quarter of twenty twenty three. Net loss was $1,003,000 for fiscal year twenty twenty four compared to a net loss of $1,680,000 for fiscal twenty twenty three. Basic and diluted loss per share was $0.1 per share for fiscal twenty twenty four and a loss of $02 per share for fiscal twenty twenty three. Moving on to the balance sheet.

We ended the quarter with $826,000 in cash. Cash collections improved during the year and quarter and we’ve been successful in collecting over half of the order receivables, lowering it to below $05,000,000 As I mentioned in the past, we’ve added personnel consistently improving our collections and process. Majority of receivables on the balance sheets reflect those that are through

Trent Northcutt, President and CEO, Aurora Spine: a gauge or

Chad Clouse, Chief Financial Officer, Aurora Spine: less. As we collected cash during the quarter, we were very prudent in allocating our resources and used the proceeds to reinvest back into the business through additional trainings marketing and sales personnel. We believe the capital structure is sufficient to meet our budget needs this year and should continue to improve as we continue to make progress on our collection efforts and experience growth in the business. That concludes my comments. I’ll now turn the conversation back to Trent.

Trent Northcutt, President and CEO, Aurora Spine: Thank you, Chad. To summarize, I’m extremely proud of our team’s performance and staying focused on building this company. We are well positioned to take advantage of growing markets with several new proprietary products. We remain focused on penetrating these markets further in this year through continued training sessions and clinical trials. While we’re still a few weeks away from reporting our first quarter results, I understand that since the quarter has been completed, many investors would like to know how the quarter performed.

While we’re still a few weeks away from reporting those results, I am limited in what I can share with investors, but expect the quarter to be the best first quarter in Aurora’s history. While on a sequential basis revenues were slightly lower than the first quarter, as usual seasonality and it’s a slower time of the year due to the patients’ access to their health care plans. Whether it be various available benefits or deductibles as the year progresses, we do believe that the year progresses that revenues should continue to show year over year growth and we have budgeted annual revenue growth at least 20% of profitability on an annual basis. Looking to the longer term, we will position we are well positioned for success, especially as have new products and more clinical studies proving our technologies and educational educating more doctors on the benefits of using Aurora’s products. We remain highly focused on the opportunities in front of us and continue to invest in our growth with each of our major platforms, Zip, Stylo, DEXA and now Arrow.

With that said, operator, we are ready for any questions.

Conference Operator: Thank you. We will now begin the question and answer session. The first question comes from Tom Fadykin with MicroCap Connections. Please go ahead.

Tom Fadykin, Analyst, MicroCap Connections: Hey, good morning everyone. Congratulations on another solid quarter. Obviously, company is hitting an inflection point. You’ve had two quarters of $4,700,000 and above in a row. Can you explain where the sales are coming from?

Is it attributed to the onboarding of new doctors? Or is it from new products like OsteoOnix? Or just increased usage per doctor? Maybe if you can elaborate on that that’d be great.

Trent Northcutt, President and CEO, Aurora Spine: Our lumbar business is at 61% where our SI business is around 37%. I’m talking about total of the sales revenue and cervical is still that smaller sledge. So we are seeing good outcomes with all of our devices such as the new Osteo On X in the lumbar region, ZIP51 showing an increase in growth and sales on that. And obviously, the 135 for the year increase on silo TFX, so the SI market gets the door opened. Certainly with some of our new regional salespeople that are out in the field, they’re getting access to interventional and ortho and neuro doctors out there, getting the door open for them to be able to show the new devices from AURORA.

If it’s a spine surgeon, we’re certainly showing them DEXA and Osteo Onyx, but not missing the opportunity to ask them questions such as what do you use currently for your SI. And if we’re talking to an interventional, we’re showing them the features and benefits of ZIP51 where it’s the I think the premier product for L5, S1 and of course we think the best in class in the silo TFX. So those are our shots on goal when we’re in front of those customers.

Tom Fadykin, Analyst, MicroCap Connections: Perfect. You’ve got you’ve had an incredible year. Sales increased right across the board. Can you give us a breakdown as to how much the silo TFX and the silo attributed? What the ZIP represents the DEXYC?

And actually even the Osteo Onix, I know it’s a brand new product, but maybe give us an idea as to the revenue breakdown for that or percentage breakdown even?

Trent Northcutt, President and CEO, Aurora Spine: Yes. So the SiloTFx is running about I said it the other day when I was with you between that 35% to the highest 47% in certain months, right? It all depends on the month. Where the Zip family of products, which is the Zip LP and the Zip 51, they also run the opposite of that about 4035% to 42% in monthly sales given any month on that. And then the lumbar systems such as Osteo On X and DEXA C for cervical, the Apollo plate for cervical and the Hydra all that is blended into those numbers.

And those numbers are anywhere from 2.7% or 4% of the number on the sales revenues. But we’re seeing there’s some ebbs and flows to it, we’re seeing an increase in our spine business versus our interventional business as we like to break it out in our daily sales report. And as we continue to grow on the interventional side, the purposes of us adding Ron Eccles to the team who is our Director of Spine nationally, he goes all around the country and his sole focus is to train our regional sales directors and then be in front of all the leading spine surgeons across the country to show them ecstasy, show them osteonix. But Ron is also very keen on the silo TFX and he’s also very bullish on the new aero product.

Tom Fadykin, Analyst, MicroCap Connections: Perfect. Now you’ve added a number of regional sales directors to your team. I know you plan on expanding on that throughout the year. You’ve mentioned in your earnings release about possible compression of margins through distributorship model. But with the addition of new regional sales directors, do you believe that the margins will actually maintain?

Will it decrease? I know there’s expenses with regional sales directors. Maybe you can elaborate on that as well.

Trent Northcutt, President and CEO, Aurora Spine: Well, I certainly want to improve on our direct sales versus distribution. We don’t want to turn nothing against our distributors. We’re arm in arm with our key distributors around the country and we know that we’re going to find some new distribution opportunities. And that margin is always going to be a little bit higher. It could be 25%, thirty %, thirty five % commission to that distributor.

And that’s just how it’s played out in those regions that you don’t have direct coverage. A lot of the map that I stare at still has a lot of open areas. But our direct areas where we are selling direct are obviously very important, very valuable to the company because we don’t have to pay as high as commission and we’re actually in the face of that customer from company to the customer directly. And that’s an important part of our business that we are focused on. And where we can get that adoption, we’re going to do it.

And where we have to go independent distribution, because it’s just a better way for us to conduct business in that region than we’ll have to. But the margins are certainly better for us if we are direct.

Tom Fadykin, Analyst, MicroCap Connections: Perfect. Can you speak about the new Arrow implant device? And on the rollout of that what that’s going to look like the initial phase with so many doctors and how many kits will be available at that time? Maybe what sort of a return if you’re able to say that right now you expect for the ARO implant?

Trent Northcutt, President and CEO, Aurora Spine: Well, the alpha phase and we’re all set up for this. We have five key doctors that are involved in this alpha rollout. We have one ortho, one ortho spine surgeon, one neuro spine surgeon, one interventional radiologist and two pain doctors that are on the ALPHA trial. Each one of these locations, which are throughout The United States in different areas, key areas for us have all agreed to do a series of implants. They’ve already been doing workups with patients that they can add to these surgeries.

We’re going to do a quick series of cases and we’re instantly going to have that IRB approved and entered into a safety and efficacy study to show that it’s got some merits and some value to patient care. And that will be part of that alpha phase. We have a big meeting scheduled in July following where we have 40 doctors all identified and have actually come forth to want to be part of the beta phase of the release of the product, which we will be starting in the lumbar region. And if many of you who took a look at my press release or read through the press release and I touched on this last week at the Planet Microcap meeting was we got approval from C2 to S1. So that means from your top of your neck all the way to the lowest part of your back.

We’ll be focusing on the low back and we’re very, very excited about the Arrow project. And those first five will be the first steps into the Alpha phase and then we’ll quickly move into the beta phase coming off the success of the knock on wood the success of the Alpha phase. Phase.

Tom Fadykin, Analyst, MicroCap Connections: And you believe that the market is much greater than the size of the silo based on our conversations at the Planet Microcap. Can you elaborate on that to investors?

Trent Northcutt, President and CEO, Aurora Spine: Yeah. It’s always been something I’ve identified and it’s how we wrote the business strategy for Silo TFX. And what I mean by that is that the Silo TFX was meant to be put into the marketplace based upon this potential growth or as Adam Lowe etcetera always like to say the early innings are still present. And we saw that with nearly 300,000 estimated annual procedures performed in SI fusions, but the injections that were performed was $1,200,000 So $300,000 versus $1,200,000 really got our attention. And that’s why we wrote the plan and wrote the model that we did for the Silo TFX and this is why we’re having the results with the Silo TFX.

So to stay on topic with aero, when we started looking at an area of the market that we felt was widely served with an implant that could be used as mechanical fixation, asking ortho and neuro in the international market those doctors how many do you estimate facet injections do you perform annually? And between facet injections and facet ablations and all the treatments that go into facet, we believe that this product in the hands would represent over 4,000,000 injections that are performed annually, where now the doctors would have a mechanical fixation device to be able to treat that patient on the most minimally invasive approach to mechanical fixation that AURORA has ever created. And we just think that this is going to really give the doctors that extra arrow in the quiver that they can use to help treat their patients beyond opioids, beyond injections, beyond steroids, beyond neuroablation, actually giving them that chance to walk into a surgery center in pain and walk out the same day pain free.

Tom Fadykin, Analyst, MicroCap Connections: Amazing. Amazing. And is there any competition in the market today doing the minimally invasive procedures that you would be providing?

Trent Northcutt, President and CEO, Aurora Spine: There are. There’s a few. But the contrast between the SI market and the SET market is that there’s probably in the area of about 65 to 80 players in the SI joint market and there’s probably another 20 or more that are maybe not players in the market that are maybe coming into the market. So call it 80 to 100 SI products out into the marketplace, where in the Facet marketplace from mechanical fixation, the way that we’re going about it, there’s less than 10 competitors.

Tom Fadykin, Analyst, MicroCap Connections: Wow. That’s awesome. Maybe we can move on to talking about your accounts receivables. I did notice they’ve increased. Can you speak about the efforts to keep this in check?

And I know you get asked this every call, but and I’m sure I know the answer, but is there any need to raise capital to help pursue growth?

Trent Northcutt, President and CEO, Aurora Spine: No. We recognize that the AR is The accounts receivable hold on, hold on, hold on. Accounts receivable went down by the way.

Chad Clouse, Chief Financial Officer, Aurora Spine: It’s not up. So we’re staying on script here.

Trent Northcutt, President and CEO, Aurora Spine: Yes, yes. I appreciate that. So we’re always paying close attention to the AR and we have an internal team that’s out there collecting on the AR in hospital systems and surgery center systems around the country. That’s that ebb and flow of collecting that money. But yes, work real diligently because there’s substantial money that still needs to be paid back to Aurora and we have we address it every single day.

Seven days a week we address it. Yes. I believe the second part your question is

Tom Fadykin, Analyst, MicroCap Connections: Yes. It did go down year over year 03/2007 versus 03/2009. But sorry about that there Chad. But yes, you are correct. But sorry there, Trent, go ahead.

Trent Northcutt, President and CEO, Aurora Spine: And we are not actively looking out to raise any money. We do need to pick up the AR, because that’s our money and we want to get that money into back into the company for all its right purposes. And so we’re not having any conversations with any companies to raise any money.

Tom Fadykin, Analyst, MicroCap Connections: Perfect. Any well, Fiat plans to maintain profitability in 2025. Is that the focus? Or is it to pursue growth?

Trent Northcutt, President and CEO, Aurora Spine: In 2023, I told everyone that my main focus for 2024 was to be EBITDAC positive. It’s my main focus in 2025 to be not just EBITDAC but full cash flow positive where we have actual real money into the bank into our accounts, into our operating capital. It will be there’s seasonality. So we go from end of the year and we get that dip in December and then we come up into January and then it starts to dip right around spring break and everyone has to take do their spring breaks and get that vacation time in and kids in school and all those things that happen in and out of school. And then we get into the summertime, which will hit another wave of seasonality into the summer.

But we’ve started off the year we think on the right step and we really think that this is setting us up nicely for a profitable year. We did put some early expenses into training. We hit the year off with a conference that was in Orlando right off the bat in January. We had a big cadaver lab, a completely sold out, if you will, cadaver lab with a blend of ortho and neuron pain in that lab, which was in Austin, Texas. And we highlighted not only do we highlight a couple of key things, which was ZIP, ZIP51 and SiloTFX, we also showed some surgeons our new upgrades to the Apollo cervical plate system with Racciano who runs a lot of R and D for us and does a lot of really innovative stuff for the company.

He works directly with us. And we highlighted that with some ortho and neurosurgeons at that lab. And that’s how we started the year off. So we put a little bit of cash towards the Q1, because we wanted to be able to hit the ground running hard to get these people trained, because it’s we knew the dip would come in the spring break area.

Tom Fadykin, Analyst, MicroCap Connections: And do you plan on doing many more training sessions? I know you do mention this in your earnings that you will maintain and increase. Is it a dramatic increase? Or is it more steady Eddie for throughout the year compared to say 2024?

Trent Northcutt, President and CEO, Aurora Spine: Well, there won’t be as many large national labs because as much as we like to host them all, it just takes a lot of follow-up. So we’re working towards and we’ve already started this in the second in the Q2 is focusing in on some more regional boutique training sessions where there’s six people that are trained or 10 people that are trained, because it just allows us to be laser focused on those accounts and obviously lower some cost too. And we think we can get a better impact on that. There is another national lab scheduled in the year. In fact, I think there’s a few more.

But they’re all TBD because we want to make sure that one, we run a cash positive business this year, a profitable year and with some good top line revenue results in line with that.

Tom Fadykin, Analyst, MicroCap Connections: Wonderful. Two more questions. How many more new regional sales directors do you plan to have in 2025? You’ve got 14 salespeople now. Do you plan to get up to 20?

Is that high?

Trent Northcutt, President and CEO, Aurora Spine: It’s not scheduled to be at 20 today, but it’s two at a time, right? We look at it. We go into each regions. There’s lots of pockets that are wide open. So we just added a new regional sales director, Ian Hauk, who just joined us.

And he’s in Virginia, North Carolina, South Carolina, Kentucky, Tennessee area. But we have wide open spots still in the Northwest, in and around the Montana, Wyoming, North Dakota, South Dakota, Nebraska, Kansas, Missouri, Iowa, Minnesota and we have another open area in the Great Lakes area. So Wisconsin, Illinois, Indiana, Ohio, Michigan Upper Peninsula. So those are all real key areas that we still need to add. So with adding the addition of Ian, who we put into the we call the Mid Atlantic, we’re going to be identifying the Great Lakes area next.

And then it’s obviously those two people really, really connect and click and we’ll start to expand into the Northwest and into the Midwest further in a lot like the Dakota areas because there’s a lot of really nice pocket areas that do lots of surgery because they have a good little MSA in those locations and patients need to get back up on their feet, especially in areas where there’s fracking and areas that where there’s some real hard work to be done. And we want to get those people back out in the workforce as best we can.

Tom Fadykin, Analyst, MicroCap Connections: Perfect. And last question is the breakeven, the monthly breakeven. Before it was $1,500,000 Is it moving closer to $1,600,000 now? What’s the monthly breakeven for you guys?

Trent Northcutt, President and CEO, Aurora Spine: Chad, go ahead if you want to jump in on this one.

Chad Clouse, Chief Financial Officer, Aurora Spine: It depends because there’s product mix and how much training we do a month and things like that. I mean

Tom Fadykin, Analyst, MicroCap Connections: On average. It doesn’t have to be an exact science. It’s more of just an average of if you hit a certain number you’re happy.

Chad Clouse, Chief Financial Officer, Aurora Spine: I mean, would say the 1.5 area would be a good spot at this point. But again, there’s a lot of stuff that goes into a month products and training and things like that.

Tom Fadykin, Analyst, MicroCap Connections: Okay. Fair enough. Well, you guys. Quarter. said.

Chad Clouse, Chief Financial Officer, Aurora Spine: You’re welcome.

Tom Fadykin, Analyst, MicroCap Connections: Okay. No, I appreciate that Chad. Fantastic quarter. Appreciate it guys and wish you the very best for 2025. And I’m excited to see what you have coming forward.

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

Conference Operator: Thank you. The next question comes from Renzai Leith with MicroCap Connections. Please go ahead.

Tom Fadykin, Analyst, MicroCap Connections: Hi, and congratulations on a strong Q4 and overall 2024. I wanted to start out talking about Arrow. Trent, can you talk about the Arrow instrument kit and how it compares to the instrument kit of the Silo TFX?

Trent Northcutt, President and CEO, Aurora Spine: Yeah, Lindsay, good to hear from you. Yes, it’s a really, really slick, well precise designed instrument. The steps that are involved in the silo TFX are the exact same steps that are taken in the new Arrow system. So we say this because it the doctors that we currently work with, they don’t even realize they’re being trained on it already, right? So I say that tongue in cheek.

So really, really excited that we were able to essentially minimize everything down. So the instruments we’re talking about the same six instruments that you use to get into the cassette versus how you get into the SI joint. And it allows that doctor to have full access, all manual. There’s no power. They don’t have to pull up any power tools and they’re able to just get right in there and go bilateral with the aero implant.

And it’s really, really amazing. I can’t wait for everyone to see it. Obviously, it’s still under wraps a little bit as we go into our alpha phase. But I couldn’t be more thrilled with how the design of the instruments came together and how slick the procedure is. We will do two phases with it though, which I think will be really exciting for investors and shareholders to understand is that we’ll start with the reusable instruments that are kind of the razor blade handle concept, where we’ll consign the instruments at centers that are doing good rapid growth with the product.

But we are working in a Phase two, which will come later towards 2026 at some time. But disposable kit where the kit can be flown in and merchandised if you will on the doctor’s shelf and they can just open up the kit with everything in it. And when they’re done they can actually just throw the kit away and they don’t have to worry about reprocessing the instruments. This will be a really exciting thing for us to be talking about in late twenty twenty six, but it’s part of the plan.

Tom Fadykin, Analyst, MicroCap Connections: Awesome. I’d love to hear that. You were talking about the Aero Alpha phase and 40 doctors in July. Are you you’re training them in July and then they are free to start doing some surgeries. Did I understand that correctly?

Adam Lowensteiner, Investor Relations, Lytham Partners: We have the first. So the first

Trent Northcutt, President and CEO, Aurora Spine: five alpha sites are going to do a quick series of implants. So we’ve asked them to all do between three to five or three to six implants and to be able to collect that data put it right into a safety and efficacy write up and review to be submitted an IRB submission on that an actual study that shows that there is good outcomes on just on that first initial patients. Obviously, patients still need to be followed for more than a few months. This is to be long term. But then we are meeting with a second group of doctors and it’s a good list.

It’s a really good list of people that really good people, really good doctors, really good hands that really want to see this because they’ve been interested in this approach, this type of implants. And we’re going to select out of that group of 40 that is coming to a meeting and we’ll start to roll that beta phase out with them. I don’t know what the numbers will be because it will have to be based upon their practice size and how they identify these patients. But because of the size of the market, the estimates of the market are so great with the over 4,000,000 injections that are performed annually in the facet or the ablation treatment in the facet, this could be that outcome that device they need for that positive outcome that they’re looking for because patients might respond really well to this. And it’s going to all get discovered, but we believe that like we see in the success of the Silo T effects, we think we’re going to see even greater success with the ARROW project.

Tom Fadykin, Analyst, MicroCap Connections: So you were saying that the approach to the surgery for the ARROW procedures, it’s very similar to the silo TFX approach, but they still require training to be able to run the ARROW procedure. Would that be correct?

Trent Northcutt, President and CEO, Aurora Spine: That would be correct. But that’s and that’s a good question. But it’s also really great that from my perspective, here we are where we’ve got these doctors coming to the trainings. And our first training started out with what? It started out with here’s the Zip product.

And then it was the Zip 51 product. And then from the Zip 51 product, it was the silo allograft system, if you recall, Lindsay. And then from the silo allograft, we introduced the silo TFX system. And now we’re going to be able to show them the lumbar arrow. And then later down the road here, we’ll be able to show them the arrow for cervical.

But how exciting it will be for a doctor to be able to walk you to a lab. Let’s say they’ve never done a fusion. They’re still just doing injections and they’re learning this or an ortho or neurosurgeon who usually use big hardware now want to come in and see what Aurora is doing on the most minimal approach to lumbar fusion, cervical fusion. So we think our labs are really taking shape. And I think they’re a lab that people are going to want to participate at because what they’re going to get out of that lab is going to cover so much ground with them and it’s going to be a real opportunity for Aurora as we like to say get more shots on goal.

Tom Fadykin, Analyst, MicroCap Connections: Okay. If you have a sales rep and let’s just say hypothetically they’re selling $1,000,000 of product a year today, is there room for them to say sell $1,500,000 a year by adding aero sales into their mix and then that’s just they’re making more commission and Aurora is making a better margin and you’re not really increasing your cost that much?

Trent Northcutt, President and CEO, Aurora Spine: Certainly. Yeah. If you have if you’ve got the attention of an account already and were actively they’re busy with us with SI or they’re busy with us with ZIP. ZIP and ARO are complete two different treatments, right? I mean, they’re in the lumbar, but their way of treating different indications for that patient’s problem either with the back pain, back stabilization and whatever the doctor identifies in there, is going to give them an additional option.

So can they go from $1,000,000 to 1,500,000.0 I would love to see it. It could be as simple as going from $1,000,000 to 1,100,000.0 and then 1,200,000.0 and start to expand on it. It also might just be that some doctors who see the ZIP, it’s just not something that they want to use or just not something they feel comfortable using and maybe the arrow gets them that gets that door opened for us. Because we’ve been showing the arrow to some selected ortho and neuro and the pain interventional markets. And I’m yet to have somebody look at me and say that’s something I would never use.

I have nothing but every single meeting I’ve had and I’ve had lots of them. They all look at me and say when is it going to be available. So, proof will be in the results. And we got to crawl before we walk and run, but the early conversations, early indications have all been positive arrows up.

Conference Operator: Okay.

Tom Fadykin, Analyst, MicroCap Connections: Think I’m going to switch gears to silo TFX. Are you still seeing that as a growth opportunity? 135% in 2024, that’s going to be impossible to match in 2025. But do you still see maybe strong double digit growth in silo TFX in 2025?

Trent Northcutt, President and CEO, Aurora Spine: I do. And it has to continue to be penetrated. It has to be continuing to be presented. I would love to say the product itself, but it really this business is always relationship driven and we need to always stay out in front. We need to be sharing the successful data.

We’ve recently put out a safety and efficacy study on the silo TFX in a publication and we’re showing showed our biomechanics paper, which shows some great clinical results and biomechanics results. We need to continue to share that information. The growth was good, but I don’t want to just lay on our laurels and say that the product is going to sell itself. It’s still going to take some getting up and getting after it and asking doctors to take a closer look at the Silo T effects because it’s unique. Its patented approach is I think one of the best of its kind.

I’ve been in a number of surgeries and I just I’m impressed every single time I see somebody do it because it’s been in different hands. And I’ve seen some really, really great outcomes. So such good outcomes with the product where we have many patients now that have had one side done. They feel so good. Now they’ve had their contralateral side done.

So that way their SIs are now both fused because it’s just taken away that pain that they’ve had. And I’ve got it’s on my business card now. I’ve got an X-ray that shows a bilateral TFX procedure and a ZIP51 on the same patient. And that patient is doing great to this day.

Tom Fadykin, Analyst, MicroCap Connections: Great. Last question from me. I see in your SEDAR filings that you guys spent more money on conferences in 2024 it looks like. Are you seeing a good ROI on attending the kind of trade conferences where you’re showing your product? Are you picking up any positions from those?

Trent Northcutt, President and CEO, Aurora Spine: Think we’re always getting we get FaceTime. I’m watching them very closely, Lindsay. I don’t want to just go to a meeting just to go to a meeting. In fact, I’m even kind of tailoring some of that down this year. But I want to make sure that we still got to be strategic.

We want to be at certain conferences because they’re important to the exposure for Aurora to be there and be able to interact with the different doctors. But certainly, if some of these conferences start to price themselves out, I don’t need to just spend money to go to them. I’d rather create my own meeting and get some face time with the doctors in certain regions if that’s a better outcome for us because sometimes the trade shows can be a bit expensive. Some of them have some really great information and I usually post on where I thought the meeting was worth it. And sometimes I don’t feel like it’s worth it.

And we look at those meetings and even this year I’m starting to move some things around because I don’t know if we need to participate at every single obviously it’s impossible to go to all of them, but to be more selective I guess is what I’m trying to say. Maybe cost conscious on that. So I want to be really profitable this year. Like this is the goal. This is the year that I want to be able to not just show top line revenue, not just be EBITDAC positive, but actually be able to put some money in the bank.

Tom Fadykin, Analyst, MicroCap Connections: Excellent. Thank you so much. That’s all for me.

Chad Clouse, Chief Financial Officer, Aurora Spine: Thank you.

Conference Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Trent Northgood for any closing remarks.

Trent Northcutt, President and CEO, Aurora Spine: Thank you for joining us. We appreciate your time, your interest in Aurora Spine. We’re very excited about what’s ahead. If you have any questions, please feel free to reach out to Adam Loenside of Lakeland Partners and we’d be happy to schedule any follow-up calls. Thanks again everyone and have a great rest of your day.

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

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