Earnings call transcript: Treace Medical Q4 2024 beats EPS expectations

Treace Medical (TASE:BLWV) Concepts Inc. reported its fourth-quarter 2024 earnings, surpassing EPS expectations with a reported loss of $0.01 per share against a forecasted loss of $0.04. The company’s revenue reached $68.7 million, exceeding the anticipated $67.02 million. Despite these positive results, Treace Medical’s stock fell 5.88% to close at $9.03 in aftermarket trading, reflecting investor concerns over future guidance and market conditions. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, though analysts have recently revised earnings expectations downward for the upcoming period.

Key Takeaways

• Treace Medical’s Q4 2024 EPS loss of $0.01 beat forecasts by $0.03.
• Revenue growth for Q4 2024 was 10.4% year-over-year.
• The stock declined 5.88% in aftermarket trading.
• The company launched four new medical technologies.
• Guidance for 2025 indicates a 7-10% revenue growth.

Company Performance

Treace Medical Concepts showed robust performance in Q4 2024, with revenue growth of 10.4% compared to the same quarter last year. The company continues to expand its market share in the bunion procedures sector, driven by innovative product launches and an expanding customer base. Despite a slight decrease in gross margin from 81.6% to 80.7%, the company improved its adjusted EBITDA significantly, showing a 322% year-over-year increase. InvestingPro analysis reveals strong liquidity with a current ratio of 4.12, indicating solid short-term financial stability. The company operates with a moderate debt-to-equity ratio of 0.67, providing flexibility for future growth initiatives.

Financial Highlights

• Revenue: $68.7 million, up 10.4% year-over-year.
• Earnings per share: Loss of $0.01, beating forecasts by $0.03.
• Gross Margin: 80.7% in Q4 2024, down from 81.6% in Q4 2023.
• Adjusted EBITDA: $11.1 million, a 322% improvement year-over-year.
• Cash and Equivalents: $75.7 million, with an additional $26 million credit line.

Earnings vs. Forecast

Treace Medical’s actual EPS loss of $0.01 was better than the forecasted loss of $0.04, marking a positive surprise of 75%. The revenue of $68.7 million also surpassed expectations, indicating strong sales performance and effective cost management.

Market Reaction

Despite beating earnings expectations, Treace Medical’s stock fell 5.88% in aftermarket trading, closing at $9.03. This decline may be attributed to cautious investor sentiment regarding future earnings guidance and broader market conditions. The stock remains below its 52-week high of $14.09 but well above the 52-week low of $3.92. InvestingPro data shows the stock has gained nearly 58% over the past six months, with a relatively low beta of 0.76, indicating lower volatility compared to the broader market. Based on InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels.

Outlook & Guidance

For 2025, Treace Medical projects revenue between $224 million and $230 million, representing a growth rate of 7-10%. The company aims for breakeven adjusted EBITDA and expects to reduce cash burn by 50% compared to 2024. New product introductions are anticipated to drive growth in the latter half of the year. Analyst consensus from InvestingPro shows mixed sentiment, with price targets ranging from $7.50 to $16.00 per share. Get access to the comprehensive Pro Research Report for deeper insights into Treace Medical’s growth potential and market positioning.

Executive Commentary

"We believe our robust portfolio of best-in-class instrumented solutions puts us in a unique and powerful position to extend our market leadership," stated John Treece, CEO. He also highlighted the positive early responses to the company’s four new technologies, emphasizing their potential to democratize complex operations.

Risks and Challenges

• Market Saturation: As Treace Medical expands, capturing additional market share may become increasingly challenging.
• Competitive Pressure: Although minimal in Q4 2024, competitive dynamics could shift.
• Economic Conditions: Broader economic pressures could impact healthcare spending and elective procedures.
• Supply Chain Disruptions: Any disruptions could affect the timely delivery of products.
• Regulatory Changes: Changes in healthcare regulations could impact operational strategies.

Q&A

During the earnings call, analysts inquired about the expected growth in Q1 2025, which the company anticipates will be in the low single digits due to tough comparisons. Questions also focused on the potential market impact of new osteotomy products and continued investment in R&D, signaling a strong pipeline through 2026-2027.

Full transcript - Treace Medical Concepts Inc (TMCI) Q4 2024:

Conference Operator: Welcome to the Trieste Medical Concepts Fourth Quarter twenty twenty four Earnings Conference Call. At this time, all participants are in listen only mode. After this presentation, there will be a question and answer session. To ask a question during this session, you need to press 11 on your telephone. I would now like to hand the conference over to your first speaker today, Vivian Cervantes, Investor Relations, Gilmartin Group.

Please go ahead.

Vivian Cervantes, Investor Relations, Gilmartin Group, Treese Medical: Thank you. Good afternoon, everyone, and welcome to our fourth quarter twenty twenty four earnings conference call. Participating from the company today will be John Treece, Chief Executive Officer and Mark Hair, Chief Financial Officer. During the call, John will offer commentary on our commercial activities, followed by Mark for a review of our fourth quarter financial results released after market close today. We will host a question and answer session following our prepared remarks.

Our press release can be found in the Investor Relations section of our website at investors.treat.com. This call is being recorded and will be archived in the Investors section of our website. Before we begin, we would like to remind you that it is our intent that all forward looking statements made during today’s call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends as well as our estimated results or performance are forward looking statements. All forward looking statements are based upon our current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. All forward looking statements are based upon current available information and Treas Medical assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings, including our Form 10 K for the full year 2024 filed after market close today and can be found in the Investor Relations section of our website at investors.trees.com for a detailed presentation of risks. With that, I now turn the call over to John.

John Treece, Chief Executive Officer, Treese Medical: Thank you, Vivian. Good afternoon, everyone, and thank you for joining us on our fourth quarter twenty twenty four earnings conference call. We closed out 2024 and started 2025 on firm footing with a clear focus on executing on our agenda to comprehensively address the evolving needs of surgeons and patients with an expanding portfolio of innovative best in class bunion solutions. With our growing base of over 3,100 surgeon customers representing a ready audience for our growing suite of technologies delivered by our expert bunion focused sales team, we aim to accelerate our penetration into the four hundred and fifty thousand bunion cases performed annually in The U. S.

Since our inception, we’ve worked in close partnership with surgeons to understand and serve the large unmet needs in the bunion market. In fact, in 2018, our Surgeon Advisory Board published a peer reviewed paper describing four different classes of bunion deformities, which included milder deformities, deformities that are more severe in nature, bunions with a coexisting deformity of the midfoot and bunions with a coexisting arthritic great toe joint. When it comes to addressing bunions across a broad spectrum of bunion classes, our patented lapoplasty system leads the way in both market position and innovation with over one hundred and twenty thousand patients treated since late twenty fifteen and has become the dollar share leader in The U. S. Bunion market today.

This said, it’s been our long term strategy to expand our business by addressing all four of the bunion classes with a portfolio of innovative solutions, giving surgeons a broader spectrum of specialized options to address the needs of these patients. A key tenet of our product innovation strategy is to make our flagship procedures less invasive, which we believe translates to less pain and quicker recovery for the patient. And not only makes our procedures more attractive today, but we believe over time can extend our reach up funnel and appeal to a larger portion of the four point four million Americans who seek medical attention for their bunions each year. Accordingly, we’ve innovated our flagship lapoplasty instrumentation and implant technology three times now over the last several years, reducing the required incision size by over two thirds during that period. And today, lapoplasty can be performed through a discrete two centimeter incision with our latest micro lapoplasty option.

Building on our strategy to serve all four bunion classes with disrupted specialized solutions, in late twenty twenty one, we introduced adductoplasty, the first and only instrumented system empowering surgeons to reproducibly correct a class of bunions with a coexisting deformity of the midfoot known as metatarsus adductus. As a reminder, this subsegment of patients is significant with this midfoot deformity present in up to thirty percent of bunion patients. And in our drive to deliver less invasive approaches, we recently introduced mini adductoplasty, which allows the procedure to be performed through a 50% smaller incision, leveraging our SpeedPlate implant technology. And for the milder class of bunions, while lapoplasty is used by many of our surgeon customers as their go to procedure of choice, there are many surgeons who prefer metatarsal osteotomies to treat most patients within this class. As a reminder, metatarsal osteotomies comprise an estimated seventy percent of the bunion surgical cases today.

And for these surgeons, minimally invasive osteotomies represent the fastest growing subsegment. So to broaden our procedure solutions and appeal to the preferences of these surgeons and their patients, we recently introduced two new and differentiated three d osteotomy systems. For background, we estimate around ten percent to fifteen percent of all metatarsal osteotomies today are being performed with minimally invasive or MIS approaches. And we believe that the biggest limiter to broader adoption of the MIS osteotomy is the technical difficulty and steep learning curve associated with conventional freehand techniques. For example, surgeons who teach these techniques talk about a 40 to 50 case learning curve to become proficient in doing them.

We see this as a ripe opportunity for trees to change the landscape and allow MIS osteotomies to be performed by a broader base of surgeons with control and confidence, effectively democratizing these once challenging operations, just as we’ve done and continue to do with our market leading lapoplasty and adductoplasty procedures. Our approach to MIS osteotomies is consistent with our philosophy of anatomic three plane bunion correction in order to achieve the most enduring patient outcomes possible and offering user friendly instrumentation designed to make these complex procedures controlled, reproducible and faster for the surgeon. Our two new three d MIS osteotomy offerings are both performed through very small cosmetically appealing incisions, which we believe can result in less pain and quicker recovery for the patient. Our first system, Nanoplasty, offers a controlled instrumented three plane procedure and importantly utilizes the familiar powered saw to cut the bone as opposed to a powered rotary cutting bur which is used for most MIS osteotomies today and is known for a steep learning curve. For fixation, Nanoplasty utilizes a titanium intramedullary implant with locking screws to support early weight bearing and stability during healing.

Our second MIS platform, Perculoplasty, is designed to be the new standard for surgeons who already use the conventional approach to most MIS osteotomies, namely a less instrumented essentially freehand procedure using the powered cutting burr to cut the bone and two screws for fixation. As with Nanoplasty, Perculoplasty delivers elegant instrumentation to deliver greater control, confidence and consistency of results, allowing the surgeon to effectively dial in the important three plane correction that Treece pioneered and is known for. For fixation, Perculoplasty uses two of our next generation titanium screws to provide stability during healing. And we round out our comprehensive portfolio with a new and innovative solution for a sizable segment of bunion patients with a coexisting arthritic great toe or MTP joint. This class of bunions is treated at the toe joint itself typically by fusing that joint.

Targeting this patient segment, we recently introduced our SpeedMTP system in a limited market release. SpeedMTP combines our market leading SpeedPlate compression fixation technology with additive locking screws to provide surgeons with a unique new option for MTP fusion surgery. This is an implant design that is extremely low profile and highly stable to support early weight bearing for these patients. And as its name indicates, it’s also very fast for the surgeon to implant. As we stated in the past, we estimate that we have captured about twenty five percent on average of our 3,100 plus surgeon customers annual bunion procedures with our market leading lapoplasty solution.

In offering these new specialized technologies targeting preferences of our surgeon customers and patients across all four bunion classes, we believe we are dialed in to maximize our share capture of the remaining seventy five percent of their cases. We’re experiencing very positive early responses on these four new technologies from both existing and new tree surgeon customers. We expect to ramp availability of these new offerings progressively through the first half of the year with increasing revenue impact expected in the back half as we build our supply and train more surgeons. Turning to the quarter, fourth quarter revenue was $68,700,000 representing 10.4% growth over the fourth quarter of twenty twenty three and at the top end of our previously announced preliminary Q4 results of $68,400,000 to $68,800,000 This growth was fueled by continued commercial execution and driven by product mix shift that resulted from increased adoption of newer technologies such as adductoplasty and Speedplate, continued strong demand for our other complementary product offerings, increases in active surgeon users in the quarter and some slight contribution from our limited market releases of Nanoplasty, MicroQuad Speedplate, Perculasty, as well as early surgeon access to our IntelliGuide PSI technology. We expect full inventory levels for these new products as we enter the back half of twenty twenty five.

Turning now to reimbursement. As we previously announced, CMS significantly increased material reimbursement for CPT code 28297, the code predominantly associated with lapidis fusion or lapoplasty procedures in both the hospital outpatient and ASC settings effective January of this year. While certainly a positive development, it’s still very early in the year and too early for us to assess the impact. We’re monitoring our customer base and we’ll update you on trends we see as we progress throughout the year. Turning to our financial outlook.

We are initiating our full year 2025 revenue guidance of $224,000,000 to $230,000,000 which reflects an expected increase of 7% to 10% over 2024 revenue. For the full year 2025, we expect breakeven adjusted EBITDA. We feel good about our setup for 2025, While continuing to drive our market leading lapoplasty, adductoplasty and speed plate offerings deeper into the market, our sales team is excited to deliver this broader portfolio of highly specialized technologies to our ready and captive audience of over 3,100 active surgeon customers. We believe our robust portfolio of best in class instrumented solutions targeting all four classes of bunions puts us in a unique and powerful position to extend our market leadership and execute our strategy to speed penetration in the overall bunion and related midfoot markets. Let me now turn the call over to Mark to review our financial performance.

Mark?

Mark Hair, Chief Financial Officer, Treese Medical: Thank you, John. Good afternoon, everyone. Revenue in the fourth quarter was $68,700,000 an increase of $6,500,000 and 10% over the prior year period. Growth was driven by a product mix shift, increased adoption of our newer technologies and increase in bunion procedure kits sold and active surgeons. For the full year 2024, revenue was $209,400,000 a 12% increase over 2023 and at the top end of both our pre announced revenue expectation of $2.00 $9,000,000 to $209,400,000 and our prior 2024 revenue guidance range of $2.00 $4,000,000 to $211,000,000 Gross margin was 80.7% in the fourth quarter of twenty twenty four compared to 81.6% in the fourth quarter of twenty twenty three.

For the full year 2024, gross margin was 80.4% compared to 81.2 in 2023. The change in gross margin was driven by a product mix shift to newer product innovations and an increase in inventory provisions partially offset by lower royalty rates. Total (EPA:TTEF) operating expenses were $55,700,000 in the fourth quarter of twenty twenty four compared to $57,500,000 in the fourth quarter of twenty twenty three. These reductions reflect continued execution on our expense management initiatives. For the full year 2024, operating expenses were $224,000,000 compared to $203,400,000 in 2023.

The increase in full year operating expenses reflect increased stock based compensation expense, investments in product innovation and support for other corporate initiatives. Fourth quarter net loss was $500,000 or $0.01 per share compared to a net loss of $6,300,000 or $0.1 per share in the fourth quarter twenty twenty three. For the full year 2024, net loss was $55,700,000 or $0.9 per share compared to a net loss of $49,500,000 or $0.81 per share in 2023. Adjusted EBITDA for the fourth quarter was $11,100,000 compared to $2,600,000 in the fourth quarter twenty twenty three, an improvement of 322%. For the full year 2024, adjusted EBITDA loss was $11,000,000 compared to a loss of $24,400,000 in 2023, an annual improvement of 55%.

Cash, cash equivalents and marketable securities were $75,700,000 as of 12/31/2024, Including access to an additional $26,000,000 of cash through our existing revolver, the balance of cash, cash equivalents and marketable securities will be approximately $102,000,000 as of 12/31/2024. We believe our balance sheet strength and flexibility is sufficient to continue effectively executing on our strategic investments and growth initiatives for the foreseeable future. Before concluding, let me turn our outlook for full year 2025. As John mentioned, we are initiating our full year 2025 revenue guidance of $224,000,000 to $230,000,000 which reflects an expected increase of 7% to 10% over 2024 revenue. In addition, we expect breakeven adjusted EBITDA for full year 2025 and expect our cash burn to decrease by approximately 50% for full year 2025 versus 2024.

With that, let me turn the call over to the operator to open the line for your questions.

Conference Operator: Thank you. At this time, we will conduct a question and answer session. Our first question comes from Ryan Zimmerman from BTIG. Please go ahead.

Ryan Zimmerman, Analyst, BTIG: Good afternoon. Thanks for taking our questions, guys. I want to start with guidance for a bit and talk about the cadence through the year. You have arguably your toughest comp in the first quarter. And so if you could kind of give us your thoughts about pacing through the year, will revenue I’ll just ask it upfront, be down in the first quarter twenty twenty five just given the seasonality?

And then should we think it kind of accelerates linearly through the balance of the year? I’ll start there.

Mark Hair, Chief Financial Officer, Treese Medical: Hey, Ryan, this is Mark. Thanks for the question. Yes, and first of all, let me just say that we’re really pleased with the fourth quarter results, how our sales team grew our top line and how R and D is providing a lot of newer technologies that we’ll be able to benefit from in 2025. As far as cadence goes, you already hit it that Q1, we’ve talked about that. That’s going to be a tougher comp for us.

And so I think we’ve had those conversations last call and we’ve been having those. And then then post Q1, there’s definitely more opportunity to have a higher growth rate. Now most of our story for this year and John said it in his prepared remarks that it’s more of a back half of 2025 story. And so we want to have some opportunity to get these new products into more of our customer surgeons’ hands and then we feel like there’s an opportunity to increase our growth in the back half of this year. But for now, we’re not necessarily looking at it as a linear step up each quarter.

But as we get further into the year, we’ll definitely get more updates on how these new products are being received by our customers. We’re hearing great feedback already. But as we have a little bit more time, we’ll be able to give a little bit more detail. But I think what you said is Q1 is a tough comp and then we’ll definitely be able to grow at higher rates in Q2, Q3 and Q4.

Ryan Zimmerman, Analyst, BTIG: Okay, helpful. And then when I think about the product pipeline for you, John, I mean, you talked about it impacting in the second half of the year from a growth perspective, but underlying those those comments, when we think about our model, we think about ASPs, we think about unit volumes and we think about potentially the risk to lapoplasty cannibalization. And so I guess what I’m looking for is maybe from a broad stroke perspective, how you think about those products impacting some of those underlying metrics? And is there downward pressure on ASPs? Is it offset by higher volume?

Your ability to train more surgeons because you have potentially more product out there. Just help us kind of think through some of those moving parts. I think that would be very helpful. Thank you for taking the questions guys.

John Treece, Chief Executive Officer, Treese Medical: Sure, sure. Thanks, Ryan. Good to talk to you. Yes, as we get out there with these products and there are several, we’re training surgeons comprehensively on these and these new training initiatives we have called Bunion Masters events where surgeons are coming in. We had one a couple of weeks ago in Nashville for instance, over 100 surgeons came to get trained.

One of the best attended meetings I’ve seen in several years. The attractiveness of multiple technologies being serviced through our dedicated sales channel, now being able to address their minimally invasive osteotomy needs, their midfoot correction needs, their more severe bunion needs with lapoplasty and then of course a ductoplasty for I’m sorry, I said ductoplasty, but the arthritic MTP joints as well. We’ve got this comprehensive portfolio that I think is going to work in great harmony together to further penetrate this big opportunity ahead of us. From a pricing standpoint and a mix, I don’t necessarily think there’s going to be a big shift happening in blended ASP. I see more of this being more of a procedure volume play over the course of the year.

And we got a little dusting of impact from these products right at the end of Q4. We’ll get a little in Q1, but again, it’s a big comp. As we get into Q2, we’ll get a little more impact, three more impact and be in a great situation as we line up for Q4 bunion season. So hope that gives you a perspective, but there are natural kind of guardrails around cannibalization between our MIS osteotomy approaches and lapoplasty. Lapoplasty being in most surgeons minds relegated to the more severe end, moderate to severe and more concentrated there, where these MIS osteotomies are going to be targeting that more mild to moderate end of the spectrum where we’re the least penetrated with lapoplasty.

So again, I think everything’s set up really nicely. I think we’re really excited to see the full impact that this comprehensive bunion solution portfolio can bring. Salesforce (NYSE:CRM) is very excited, morale is very high. We got a sales meeting this weekend in Orlando and it’s going to be a lot of fun. So maybe a little more than you were looking for, but thought I’d give you a little story.

Ryan Zimmerman, Analyst, BTIG: No, I appreciate it and looking forward to it. Thank you.

Conference Operator: Thank you. One moment for our next question. Our next question comes from Lily Lanzada from JPMorgan. Please go ahead.

Lily Lanzada, Analyst, JPMorgan: Great. Thanks so much for taking the question. Maybe just to shift to profitability, that’s obviously come into greater focus. So could you talk through how you’re thinking about the different components down the P and L? What’s driving the leverage this year?

And then part two, how you’re thinking about balancing that leverage with reinvigorating growth, especially with all these new products that you have coming to market that you’ll have to invest behind?

Mark Hair, Chief Financial Officer, Treese Medical: Yes, great question, Lily. And let me begin and maybe John can follow-up with it. We’ve talked a little bit about when we went public some of our initiatives and our focus areas, one of them was to grow a very large direct sales channel and direct sales team. And so we’ve made a lot of progress in that area. And so a lot of the leverage that we’re seeing is we are no longer aggressively building that team the way we had in prior years.

And so there’s some very natural leverage that comes from a more experienced sales force. We have a much higher percentage of our sales force that’s on pure commission, for example, and we’re just not building as aggressively as we used to. So we’re going to see a lot of improvement leverage that you’ll see in the sales and marketing line, but that’s going to be very natural and won’t really impact our ability to grow. That’s the benefit of where we are at this point in time. We’ve spent a lot of time building the sales channels and we’ve built a very large customer base over 3,100 customers.

And so now it doesn’t have a lot of direct incremental costs to just now provide our sales force and our surgeon customers just more products. And so it’s a very natural progression. And so that’s why we know that we’ll see and believe that we’ll see this improved leverage throughout the year. And so that’s why we improved our adjusted EBITDA 50% in 2024 as compared to 2023. And so we’re getting the remaining 50% this year in 2025.

Lily Lanzada, Analyst, JPMorgan: Great. Thanks. Maybe just to follow-up, I know it’s still early in the launch of some of these new products. But can you talk about some of the early feedback and competitive dynamics that you’ve seen since you’ve launched? And have you seen some of the docs that you may have lost to competitive trialing last year come back to either lapoplasty or some of these new MIS osteotomy products?

Thanks so much.

John Treece, Chief Executive Officer, Treese Medical: Sure. Sure. This is John. The early feedback we’re hearing on these products is very positive. These have been worked on for several years.

They’re very refined as they’re now entering early surgeon users’ hands and we’re seeing those post operative X rays, we’re seeing the bone healing and getting some numbers under our belts now. So we’re really confident that this is going to reinforce our position with our customer base and help us bring on new customers now that we have that more diversified and broad portfolio. As far as competition, we really haven’t seen any real changes from earlier discussions. We saw the competitive noise that occurred during mid twenty twenty four kind of abate or level out in the fourth quarter. We saw in the fourth quarter a lot of strength and a lot of surgeons that dabbled with other competitive products during the summer months coming back to lapel in the busy fourth quarter.

That’s hopefully that addressed your question.

Lily Lanzada, Analyst, JPMorgan: Yes, that’s perfect. Thank you.

John Treece, Chief Executive Officer, Treese Medical: Sure.

Conference Operator: Thank you. One moment for our next question. Our next question comes from Colum Tishmarsh from Morgan Stanley (NYSE:MS). Please go ahead.

Colum Tishmarsh, Analyst, Morgan Stanley: Thanks guys for taking the question. Just one quick one for me and it’s something we’ve been asked quite a bit from clients, so I thought it was worth addressing on the call. But keen to hear any of your thoughts on the Zimmer Paragon deal, I guess both shorter term on potentially benefiting from some disruption? And then how you expect this to change competitive dynamics on a longer term basis, if at all? Thank you.

John Treece, Chief Executive Officer, Treese Medical: Hi, Kellan, it’s John. Thanks for the question. I really we probably don’t have a lot to comment on there at this point. We’ve got our heads down growing our product line, running our business and we’ll just have to see how the acquisition plays out and the effects on the market as those two companies formally join up. Sure.

Thanks. Sure. Thanks.

Conference Operator: Thank you. One moment for our next question. Our next question comes from Richard Newitter from Truist Securities. Please go ahead.

Richard Newitter, Analyst, Truist Securities: Hi. Thanks for taking the questions. Maybe just to start off with, just going back to one of the value propositions that I remember initially was around the lapoplasty or lapidistusion versus osteotomy. It was just that the recurrence rates are lower and people were not getting the right procedure for the condition that I’m trying to fix. I guess with your osteotomy solution product, I appreciate that it’s probably easier and more elegant for surgeons.

But do you think that the clinical outcomes over time are going to show that you’re going to have better recurrence rates versus traditional osteotomy products? I’m just trying to think about the actual clinical benefit to physicians and patients over time here versus capitalizing on what physicians are going towards. I appreciate that. But is the clinical utility from your product differentiation going to bear out versus traditional products in the osteotomy segment? Thanks.

John Treece, Chief Executive Officer, Treese Medical: Hi, Rich, John. Yes, great question and one we’ve been answering a fair amount. The important thing about the way we’re approaching our procedures is we’re fixing the third plane, the rotational plane along with the other two planes of the correction. And that’s not something that’s been focused on in osteotomies traditionally to a greater degree, particularly in the minimally invasive osteotomy segment. So our core philosophy and what we pioneered and developed in the market and built into lapoplasty was a three plane correction.

So we’re taking the minimally invasive two plane approach and making it a three plane approach. We believe fixing that rotational plane makes the correction more enduring over the long term and there’s good scientific papers in the clinical literature that indicate that as well. So if not for that, if not for developing a three plane, what we believe can be a more enduring correction, we may not be in that game. But we believe we’re the best equipped to do it and we’ve done it through some really, really well developed instrumentation and now we’ve got the great ability of world renowned minimally invasive foot surgeons helping train surgeons as we roll these products out. So that’s the way we’re approaching it.

Richard Newitter, Analyst, Truist Securities: Got it. Thanks. And then just as a follow-up, it looks like the consensus is it has about just under 53,000,000 for the first quarter of twenty twenty five. So A, does that seem like a reasonable place? It’s a 5% year over year growth rate, which is down from your fourth quarter on a tougher comp.

I just want to get your view on that. And then can from just how the year plays out, should we be thinking of 4Q as like a 33%, thirty four % weighting of the year as a percentage of the total? Thanks.

Mark Hair, Chief Financial Officer, Treese Medical: Yes, Raj, this is Mark. Thanks for the question. So what we’ve been talking about Q1 is, we’ve said, hey, it’s probably going to be low single digit growth rates year over year compared to Q1 of twenty twenty four. We had a really strong quarter last year in Q1. And so we’ve been saying it’s probably low single digits.

And then we have the ability to expand and grow from there. So it’s going to be a tougher comp and then we feel like there’s a real opportunity to be in the double digits for most of, if not all the remaining quarters in the year. It’s just we’ve got to get over this tough comp first. With respect to Q4, I think we’re going to have somewhat similar growth rates in the fourth quarter. And so it will be somewhere in that range that you talked about as far as its contribution for the full year.

It might be a little bit stronger than what you said, but I think we’ll give a little bit more color as each quarter progresses here. And as these new products are getting to the hands of surgeons, we see the adoption rates there. But I think that’s the way we see it. Q1 is the tough quarter and then we really see some improvement in every quarter after that.

Richard Newitter, Analyst, Truist Securities: Thank you.

Conference Operator: Thank you. One moment for our next question. Our next question comes from Dael Antalffy from UBS. Please go ahead.

Dael Antalffy, Analyst, UBS: Hey, good afternoon guys. Thanks so much for taking the question. Congrats to a nice end to the year. John, I was hoping you could comment a little bit on, you alluded to potentially the osteotomy, broader product offering, getting new surgeons to pick up your devices as a whole. And I wanted to see if there was a way to sort of frame that for us, like how many surgeons do you see as opportunistic there and how quickly something like that could transpire?

And then I have one follow-up.

John Treece, Chief Executive Officer, Treese Medical: Sure. Hi, Danielle. Thanks for the question. We talked about adding roughly 200 new surgeons during the year to add to our base of surgeon users. We think that’s a reasonable target for this year.

I think when we think about framing the side of the market that we’re really targeting with these new technologies, we’re going after the 70% portion of the 450,000 procedures. So we think we have about nearly a quarter of the Lapidus market segment today on a procedure penetration basis. So we’re very concentrated in the more moderate to severe end of that of the total bunion market and we have pretty good market share there, like I said, approaching 25%. So if Lapidus is around 30% of the overall market, we’re going to continue to drive penetration into that segment with lapoplasty and adductoplasty and we’re going to keep iterating and innovating those like we always have. But now we’ve got this additional opportunity to drive these new targeted technologies into the larger 70% of available procedures, which is a really big opportunity for us.

And if we can get to 25% share of that larger volume segment of the market like we did with lapoplasty and the lapidus segment, that could amount to another $350,000,000 of potential revenue that we’re focused on building on over the next several years. So we believe this comprehensive portfolio really targeting these four segments of the bunion classes is going to give us a lot more shots on goal and ramping our penetration in the overall market.

Dael Antalffy, Analyst, UBS: Got you. Okay, that’s helpful. And then my follow-up question is, at a higher level, I guess, looking at the total foot and ankle and I know you guys have a lot of runway in bunions alone, but, and midfoot, for example, but and I don’t want you to to give anything away to the competition or anything like that, but maybe talk about how you guys look at the opportunities throughout the rest of the foot and ankle and what you think is reasonable over the next five years to attack there based on what you guys have in house today from a technology perspective? Thanks so much.

John Treece, Chief Executive Officer, Treese Medical: Yes, great one. I’ll try to deliver on that as best I can. We’ve got a very active R and D program and we’ve been working on products for the last three years. We’ve got a robust pipeline of more product rollouts coming from throughout this year beyond what we’ve advertised. And we have programs leading into 2026 and 2027 that are going to continue to fuel the growth of the business.

So I think if you look at where we will look to innovate and what you’ll see, you’ll see types of products that speed penetration into our core bunion and midfoot markets. You’ll see us targeting new incremental procedures that anchor back to that core procedure base. And then we’re also introducing new complementary technology or product platforms that allow our reps to more fully service the case with a more comprehensive line of products, so that they can become more of a one stop shop for all the surgeons needs in their bunion and bunion midfoot related cases. That’s how we look at it for at least the near to moderate term. Longer term, obviously, we have opportunities and we can explore other areas in the foot and ankle if needed.

But we see such a tremendous opportunity just capitalizing on what I described there for the next several years that there’s really not a ton of need to really go elsewhere.

Dael Antalffy, Analyst, UBS: That’s helpful. Thanks so much guys.

John Treece, Chief Executive Officer, Treese Medical: Thank you.

Conference Operator: Thank you. One moment for our next question. Our next question comes from Ben Haynor from Lake Street Capital Markets. Please go ahead.

Ben Haynor, Analyst, Lake Street Capital Markets: Good afternoon, gentlemen. Thanks for taking the questions. First off for me, can you give us a sense of the utilization that you see from the surgeons that have adopted your osteotomy offerings thus far? I know it’s early days and all, but can you maybe characterize what those folks look like? Are they the ones that are doing fifty percent of their cases with lapoplasty?

Are they ones that maybe are newer and have only dabbled in lapoplasty? What are those folks look like? And what does their utilization of the osteotomy offerings look like?

John Treece, Chief Executive Officer, Treese Medical: Yes, Ben, pleased to meet you online here. This is John. As we rolled out our new osteotomy systems, we developed them in conjunction with a modest group of surgeons that really specialize in minimally invasive osteotomies and minimally invasive osteotomy surgery. So they tend to be very high utilizers of that technology. Some of them actually do use lapoplasty to some degree in their practice, some more than others.

As we’ve segmented our customer base, the earlier doctors that we’ve been giving access to our minimally invasive osteotomy products have been those that are on the lower end of utilization of lapoplasty, so that we can fill a bigger void in that customer’s practice. Over time, we’ll continue to expand and we believe we’ll have a more balanced business, a blend of lapoplasty for the more moderate to severe range of the user basis bunions and our MIS osteotomy solutions and even our SpeedMTP for those that have great toe arthritis for the others.

Mark Hair, Chief Financial Officer, Treese Medical: Hey, Ben, this is Mark. And one thing that John said, I just wanted to add a little bit to that is, there’s different surgeons have different criteria for how they treat bunions. And so the way we’ve said, mentioned the marketplace is, we were initially trying to go after those surgeons that do more of these minimally invasive osteotomy approaches. And, but there’s and John alluded to it earlier, there’s kind of a natural guardrails too because a lot of these surgeons have predetermined severity distinctions as far as when certain technologies are used or certain approaches are being used. But initially to answer your question specifically, initially we’re going after those surgeons who primarily focus on osteotomies.

And so we hope to get a really large share of their current business.

Ben Haynor, Analyst, Lake Street Capital Markets: Okay. Thanks for the color there. That makes a lot of sense. It kind of segues into my second question. How does the new kind of four classes of Bunyan’s, the sub segments messaging alter your direct to patient marketing activities, does that change that at all?

Is there any adjustments that need to be made there?

John Treece, Chief Executive Officer, Treese Medical: That’s a great question. We have opportunities definitely now that we did not have before. We’ve been pretty concentrated on driving the lapoplasty message, making patients aware, helping them get educated and connect with doctors on that front. But as these technologies gain more traction and we see the uptake, we definitely have the opportunity to take some different approaches there.

Ben Haynor, Analyst, Lake Street Capital Markets: Okay. So stay tuned. And then if I could sneak in one more. Just any update on the attach rates for Speedplate and Sibley’s? I think last time you talked about it is over 40%.

Any update there?

John Treece, Chief Executive Officer, Treese Medical: Yes, sure. SpeedPlate continues to become more popular. It is now north of 50% of our overall fixation mix and will it continue to grow and then become a much larger share, it has the opportunity to do so. We are working on new configurations of Speedplate for next generation implant designs and serving other opportunistic indications. We think it’s setting a new standard in bone fusion fixation out there in the marketplace and it’s a really exciting technology for us.

Ben Haynor, Analyst, Lake Street Capital Markets: So Excellent. Well, that’s all I have. Thanks so much for taking the questions. Thanks, Ben.

John Treece, Chief Executive Officer, Treese Medical: Thank you, Ben.

Conference Operator: Thank you. I’m showing no further questions at this time. I would now turn it back over to Vivien for for closing remarks.

Vivian Cervantes, Investor Relations, Gilmartin Group, Treese Medical: Thank you, operator. On behalf of Trease Medical, thank you everybody for joining us today. This concludes our call and we look forward to our next update following the close of the first quarter of twenty twenty five.

Conference Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.

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