Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record global revenue of $61.1 million in Q1 2024, showing a 17.4% growth in both reported and constant currency terms.
- U.S. business performance saw a 13.5% reported growth with an increase in the U.S. producing sales rep roster by 6% and a 12% growth in surgeon customer base.
- International net revenue grew by 42.2% and 42.5% in reported and constant currency terms respectively, driven by strong performances in the United Kingdom and Australia.
- Launched six new products in Q1 2024, focusing on high-growth foot and ankle segments, which are expected to drive sustainable long-term growth.
- Strong financial position with $108 million in total liquidity at the end of Q1 2024, providing a solid foundation for future investments and growth.
Negative Points
- Decrease in gross profit margin from 82.9% in Q1 2023 to 80% in Q1 2024, primarily due to higher supplier costs and product/geographic mix shifts.
- Increased operating expenses led to a $5.5 million loss in adjusted EBITDA for Q1 2024 compared to a $1.4 million loss in the same period the previous year.
- Negative operating cash flow of $11 million in Q1 2024, attributed to higher operating costs and changes in working capital items.
- SG&A expenses increased by 23.7% to $54.2 million, driven by higher headcount, merit increases, and other variable costs associated with revenue growth.
- The impact of investments made in Q1 has slightly delayed the expectation for achieving EBITDA breakeven within 2024.
Q & A Highlights
Q: What are the expectations for the contribution from new devices launched in Q1 and the underlying market and competitive dynamics?
A: Albert DaCosta, CEO, noted that the new products launched in Q1 are generating excitement and are expected to contribute more significantly in the latter half of the year and into the next year. The international business has been particularly strong, benefiting from investments and showing higher growth rates than the U.S.
Q: Can you elaborate on the EBITDA outlook and the investments being made?
A: Albert DaCosta, CEO, explained that the investments made in Q1 are intended to accelerate growth. These include investments in the commercial team and R&D. The company is focused on leveraging these investments to improve efficiency and drive growth, expecting sequential improvement in EBITDA throughout the year.
Q: What is driving the need for increased sales force investment, and what opportunities does this present?
A: Albert DaCosta, CEO, mentioned that new technology launches create buzz, attracting sales talent. The company evaluates clinical approaches and geographic coverage to ensure effective market penetration. The focus is on maintaining a sales culture that values clinical knowledge and customer service.
Q: How are the recent product launches performing, particularly in the bunion category?
A: Albert DaCosta, CEO, stated that the new products in the bunion category are being well received and are believed to be taking market share. The MIS bunion portfolio, in particular, has exceeded expectations, contributing to growth and market penetration.
Q: What are the plans for hiring and expanding the sales force in 2024?
A: Albert DaCosta, CEO, did not specify exact numbers for new sales reps but emphasized the importance of increasing the count of producing reps. The focus is on expanding both in the U.S. and internationally, ensuring that new hires are productive and aligned with the company’s goals.
Q: What are the long-term strategies to improve profitability and leverage operating investments?
A: Krissy Wright, Interim CEO, highlighted that the company plans to leverage its historical investments in G&A and selling/marketing as it grows. Consistent investment in R&D will remain a focus, aiming to maintain it as a percentage of revenue to foster continuous innovation and technology advancement.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
