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spk01: Good evening, ladies and gentlemen, and welcome to ANNICA's first quarter 2024 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star zero for the operator assistance at any time. I would like to remind everyone that this call is being recorded. I will now turn the call over to Mark Namerov, Vice President Investor Relations, ESG and Corporate Communications. Please proceed.
spk05: Thank you. Good afternoon, everyone. Thank you for joining us for ANNICA's first quarter 2024 conference call and webcast. Our Q&A earnings press release was issued after the close of the market today and is available on our investor relations website, located annica.com, as are the supplementary PowerPoint sites that will be used for the discussion today. With me on the call today are Dr. Cheryl Blanchard, President and Chief Executive Officer, and Mike Levitz, Executive Vice President, Chief Financial Officer and Treasurer. Please take a moment and open the slide presentation and refer to slide number two. Before we begin, please understand that certain statements made during the call today constitute forward-looking statements as defined in the Securities Exchange Act of 1934. These statements are based on our current beliefs and expectations and are subject to certain risks and uncertainties. The company's actual results could differ materially from any anticipated future results, performance or achievements. We make no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today. Please also see our most recent SEC filings for more information about risk factors that could affect our performance. In addition, during the call, we may refer to several adjusted or non-GAAP financial measures, which includes adjusted gross margin, adjusted EBITDA, adjusted net income and adjusted earnings per share, which are used in addition to the results presented in accordance with GAAP financial measures. We believe that non-GAAP measures provide an additional way of viewing aspects of our operation and performance. But when considered with GAAP financial measures and the reconciliation of GAAP measures, they provide an even more complete understanding of our business. A reconciliation of adjusted non-GAAP financial results to the most comparable GAAP measurements are available at the end of the presentation slide deck and our first quarter 2024 press release. And now I'd like to turn the call over to our president and CEO, Dr. Cheryl Blanchard. Cheryl.
spk08: Thanks Mark. Good afternoon everyone and thanks for joining us. Please turn to slide three. Last quarter, we outlined the actions we're taking to focus our business, optimize performance and drive even stronger results as we accelerate our path to profitability. With continued strength in our market leading OAP management platform and expanding and highly differentiated HA based regenerative solutions pipeline and continued cost discipline, we delivered a good start to the year and are on track to achieve our 2024 guidance. And we are confident that the core elements of our strategy position as well to maximize value creation in an orderly fashion in 2024 and beyond. In the first quarter, our overall revenue was up 7% compared to Q1 last year, driven by another strong quarter in OAP management. We also completed the cost reduction initiatives that we spoke about last quarter, including significant headcount reductions, putting Anika on the path to realize $10 million in annualized cost savings. These cost savings will enable Anika to deliver 75% growth in adjusted EBITDA in 2024, accelerating our profitability for the year. Let me now review our key achievements from the quarter. First, OAP management had another great quarter with revenue of 24.3 million, representing a 7% increase year over year on growing market demand and some favorable order timing. And we're pleased to announce that we've extended the exclusive distribution agreement with our established Canadian commercial partner, Penda Farm, to sell Sengal, Monovisc, Orthovisc through 2030, building on the existing market leadership position in Canada. Sengal remains a key driver as the next generation non-opioid OAP product of choice in now over 40 countries outside the United States. We continue to see strong growth and are exploring partnership opportunities in select Asian markets, and we remain confident that Sengal will truly be a game changer when it is approved in the US. To that end, as we continue to interact with the FDA on a regular basis, we recently received feedback from the agency in response to our proposals that were requested by FDA during the type C meeting in April of last year. While the FDA feedback provided some clarity, there's additional information Anika needs regarding what FDA will require for non-clinical data. We have reverted back to the FDA with questions. As we've said previously, we will begin the remaining non-clinical testing once we have received additional clarity from the FDA. Moving to joint preservation and restoration, we had revenues of 13.8 million up 3%. We are seeing good progress following the recent launches of several new innovative solutions. These early results have energized our teams as we work diligently to increase the adoption of our new products, which offset headwinds from some of our more mature products during the quarter. Let me first describe the progress we are making on the regenerative side. We have now completed more than 200 cases with over 40 surgeons using our HA-based integrity implant system since its limited market release at the end of last November, which has doubled the number since our last update. We continue to receive incredibly positive clinical feedback as it becomes increasingly adopted by surgeons, not only for rotator cuff repair, but also in other tendon repair applications such as in the foot and ankle. The full market release remains on track for the middle of this year and is expected to increase growth in our regenerative business in the back half of 2024. Hyalafast continues to do very well outside the US, now selling in over 35 countries. As a reminder, Hyalafast, our HA single stage cartilage repair system was granted breakthrough device designation by the FDA. We expect to begin filing the modular TMA this year with a target product launch by 2026, creating a highly differentiated entrance into the $1 billion plus US cartilage repair market opportunity. With great clinical feedback on integrity and 15 year data likely publishing this year on Hyalafast, ANICA now has two highly differentiated regenerative platforms to leverage as the basis for additional near term regenerative products. We continue to build out our exciting regenerative pipeline and we look forward to providing additional details about it in the future. We also remain encouraged by the performance of our X-Swiss fixation system, which has been a standout product for us. More than 10,000 X-Swiss anchors have now been implanted globally since the limited release of the peak version early last year, which is a real milestone for us. Between the biocomposite version now fully launched this month and X-Swiss peak, we are addressing the entire $600 million US rotator cuff market. Lastly, regarding our RevoMotion reverse shoulder system, we regularly engage with our distributors to improve our channel and commercial execution and we're actively training surgeons on the safe and effective use of the system. The pace of adoption remains slower than anticipated due to a more complex sales cycle, including obtaining facility approvals. That said, we are encouraged by the recent CMS decision to now reimburse shoulder arthroplasty procedures in the AFC and that surgeons are taking RevoMotion to their surgery centers due to our efficient two instrument tray system design. I'm proud of the work we've done to build on our momentum and enhance execution across our business. We are laser focused on maximizing value for our shareholders and remain open to paths that will help us achieve this objective while continuing to invest in our greatest opportunities. On a separate note, we announced earlier today that Mike made a personal decision to step down as CFO effective June 3rd. On behalf of all of us at Anika, I'd like to thank Mike for his leadership over the past four years. Mike joined Anika in mid 2020, following our two acquisitions. His strategic and operational insights have helped Anika navigate this period of significant change while positioning the company for an exciting future. I appreciate everything Mike has done for Anika and we all wish him the best. We're excited to welcome Steve Griffin as our new CFO on June 3rd. Steve comes to Anika with more than 15 years of experience in public company CFO and other senior finance leadership roles and a proven track record of value creation at both large and small public companies. We are confident that Steve will help us build on our momentum to achieve the meaningful growth and profitability potential across the business. Mike will remain with Anika through the end of the year and will work closely with Steve and me to ensure a smooth transition of responsibilities. We're glad to continue benefiting from his expertise during that time and in the near term, looking forward to introducing you all to Steve. Mike, I'll now turn it over to you for a few words and our financial results.
spk06: Thank you very much Cheryl. While I've decided to leave Anika to spend more time with my family, I am very thankful for the opportunity to have been a part of the Anika team over the last four years. When I joined the company, it was just starting to absorb its acquisitions of Parkus Medical and Arthur Surface in the midst of the first few months of the COVID pandemic. COVID lasted much longer than expected and its impacts were more widespread. The company has navigated this challenging period and made meaningful strides, including thoughtful investments, strengthening the core OA business and advancing a meaningful portfolio and pipeline of products that leverage Anika's HA expertise. While at the same time, maintaining a healthy balance sheet and making targeted cost reductions to support sustainable and growing cash generation. Anika's foundation is strong and the company has tremendous opportunity with its established and differentiated products and pipeline to both fulfill its mission to customers and their patients and deliver value for our shareholders. These last four years, I have so appreciated the opportunity to work closely with Cheryl, with my peers and team in finance and IT, with the many wonderful dedicated people across Anika globally and with such a quality board of directors. Cheryl is a smart and resilient leader who exemplifies the Anika core values of doing the right things the right way, focused on driving high quality products that truly improve lives. Steve is joining a talented team and I look forward to supporting this transition as Anika's next CFO and to following Anika's success for years to come. Now please refer to slide four in the online presentation where I will walk through the results for the first quarter of 2024. Unless otherwise stated, all comparisons will be against the same period in the prior year. I'm pleased to report total revenue for the first quarter grew to $40.5 million, driven by growing demand as well as favorable order timing. Revenue in our largest product family, OA Payne Management, increased 7% in the first quarter to $24.3 million due to growing demand as well as favorable ordering patterns from both J&J MyTech in the United States and from our international distributors. Our joint preservation and restoration revenue increased 3% in the first quarter to $13.8 million, driven by our recent product launches in the US led by X-Wiz and Integrity. This growth was partially offset by lower sales of certain of our more mature products. Lastly, our non-orthopedic revenue increased 29% to $2.4 million on growing demand and year over year order timing in high-risk veterinary sales. Moving to gross margin, our gross margin in the first quarter was 61%, up from 60% on lower intangible amortization. Our adjusted gross margin with 62% in the quarter, down from 64%, due primarily to the timing of impact of production and efficiencies and reserves in the quarter. Moving to operating expenses. Our operating expenses in the first quarter totaled $29.7 million, that's down $5.7 million. These lower operating expenses reflect fewer non-recurring costs, as well as effective cost control following the launches of key products and addressing the new regulatory requirements in the EU to continue to sell our legacy products there. As a reminder, ANNACA incurred $5.8 million in non-recurring costs in the first quarter of last year for the Parkus arbitration settlement, shareholder activism, and other items. In comparison, operating expenses in the first quarter this year reflected $1.4 million in non-recurring items, including severance costs for the headcount actions we took in the first quarter, and shareholder activism costs. Our net loss for the quarter was $4.5 million, or 31 cents per share, compared to a net loss of $10.4 million, or 71 cents per share. Excuse me. We generated adjusted net income of $1.2 million in the first quarter, or nine cents per diluted share, from an adjusted net loss of $2.2 million, or 14 cents per share. As we highlighted on our last earnings call, beginning this year, the calculations of adjusted net income and adjusted EPS have been revised to exclude stock-based compensation net of tax, and this revised calculation is reflected for all periods presented. ANNACA generated adjusted EBITDA in the quarter of $2.5 million, up from a negative $1.2 million, and our adjusted EBITDA margin in the quarter grew to 6%, up from a negative 3%. The nine-point improvement was primarily due to the combined benefit of both revenue growth and reduced spending. Lastly, with regards to our cash flow and capital structure, operating cash flows were just below breakeven in the first quarter, a $3.5 million improvement from cash outflows of $3.6 million, reflecting lower non-recurring costs and reduced spending. Our capital expenditures in the quarter totaled $1.8 million, up $0.4 million, reflecting continued investments in manufacturing capabilities, supporting growth in our OA-PAY management program. We ended the quarter with $68.6 million in cash and no debt. Please turn to slide five. Now I'd like to review our full year of financial outlook for 2024. Based on our progress to date, we are reiterating our guidance for 2024, with total company revenue of $168 to $173 million, representing growth of 1 to 4%. In OA-PAY management, we continue to expect revenue to grow to $102 to $104 million, up 0 to 2%. This reflects continued above-market growth in end-user sales, led by growth in Monivus globally and Singal outside the US. This year, the impact of the continued above-market growth is offset by unfavorable order timing year over year. On a quarterly basis, we also expect ordering patterns to be lumpy, as they've been historically, with higher revenue in the second half of 2024 based on projected timing of transfer shipments compared to quarterly timing last year. In joint preservation and restoration, we continue to expect revenues to grow to $58 to $60.5 million, up 6 to 10%. As faster growth in our new products, led by X-Quiz and Integrity, is partially offset by lower sales of certain legacy products. We continue to expect that growth to be weighted more towards the second half of the year, due both to normal seasonality and the full-market release of Integrity, which remains right on schedule. In non-orthopedic, we expect revenues to be 8 to $8.5 million, a decrease of 14 to 19%. With regard to gross margin, we continue to expect adjusted gross margin for 2024 of 66 to 66.5%. From a spending perspective, we executed on the planned workforce reduction and other spending reductions in the first quarter and are on track to deliver the $10 million in dollars of annualized operating expense savings as previously announced. As we have said, a partial year impact will be realized this year, due to the timing of the actions. In 2024, we plan to use a portion of the savings to fund the filing of the first PMA module for Hyalafest in the United States, as well as additional clinical follow-up for our HA-based regenerative products, such as Integrity. We continue to expect our adjusted EBITDA in 2024 to be between 25 and $30 million, representing an increase of over 75% at the midpoint. This translates to an adjusted EBITDA margin improvement of over six points, growing to at least 15% for the year. We continue to be positioned to deliver positive adjusted net income this year and generate positive free cash flow, even as we invest in higher capital spending this year, focused on our OA pain management manufacturing operations, in part reflecting timing from last year. In summary, the first quarter was a solid start to 2024, demonstrating the strength of our market leading core OA franchise and growing momentum from our new products like Integrity. And ANICA is on track for significant bottom line growth this year. I will now turn the call back to Cheryl.
spk08: Thanks, Mike. Please turn to slide six. It's clear that ANICA's renewed focus is proving effective as we accelerate our path to profitability. It's still early days and we're continuing to take the necessary steps to optimize performance. We'll remain nimble in our approach and we are confident that ANICA is on the right path. With our product portfolio and exciting pipeline, we will continue to improve the lives of the millions of patients in need of early intervention orthopedic care. We appreciate the support of our ANICA colleagues without whom none of this would be possible. And we appreciate the support of our shareholders as we work to deliver value on your investments. With that, we'll open up the line for questions.
spk01: Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press star followed by the number one on your touchtone phone. You will hear a three tone prompt acknowledging your request. If you would like to cancel your request, please press star two. Please ensure you lift the handset if you're using a speaker phone before pressing any keys. One moment please for your
spk02: first question. Your first question comes from the line of George
spk01: Sellers from Stevens. Your line is now open.
spk07: Good afternoon and thanks for taking the question. Maybe just to start on guidance. Just curious, the OA pain management business continues to outperform. It was pretty strong throughout 2023 with a couple of quarters of double digit growth and another strong growth. We're on quarter here. I'm just curious, how should we think about sort of the cadence through the remainder of the year to get to your guidance? Are those tough comps, what's sort of limiting stronger or an increase in that guidance? And then also, how should we think about for the joint preservation restoration piece, some of the new products like the HA based patch system? How should we think about those contributing more significantly to revenue growth? Thanks.
spk06: Hi George, it's Mike. Thank you for your questions. First to the guidance on OA pain management. One of the things that we mentioned last year and we wanted to continue to mention is that the underlying business is growing above market. One of the things that those that follow this company know quite well is we do generally have volatile order timing because we deal with big companies like Johnson and Johnson. And so that definitely occurred last year. Q2 last year was very high and we called that out in the period and said that was not sustainable. That was just timing of how they manage their inventories. So this year, we have a tough comp as we go into the second quarter because of that. And so the way to think about the cadence this year is again, our guidance, we reiterated our guidance. There's no change to our guidance for the year. So zero to 2% for the year because of the timing of transfer shipments. I do expect the second half to be higher than the first half this year for revenues in our only pain management business just based upon the over your comp. So last year Q2 was bigger, this year Q3 will be bigger. So that's how I would think about the cadence. So you'll see, we guided zero to 2% but we grew 7% this quarter. I would expect given the tough comp, next quarter on a year over year basis, it'll be down but that's not any issue or challenge just because of the timing last year, frankly. With regards to the joint preservation cadence, the growth this year, so we reiterated the guidance of six to 10%. The growth this year is driven. We said on the last call was going to be second half loaded in the sense that we knew we were launching the integrity product in the middle of the year. And as Cheryl said, we remain right on track to do that. We're very excited about what we're seeing in the limited market release and that product is right on track. And so as we look at joint preservation, we again reiterated our guidance. We expect the second half to be stronger both due to integrity moving into full market release as well as the continued growth and ramp of our new products. We're very pleased this first quarter to have the X-twist biocomposite launch and X-twist continues to be a really nice product and doing exactly what we expected it to do when we gave our guidance. So I hope that's helpful, George.
spk07: Yep, that's really helpful, Keller. I appreciate that. And then maybe looking essentially beyond this year, I'm just curious, we've seen some announcements of some studies at various other companies. I'm just curious how y'all are thinking about the competitive dynamics about potentially some competing offerings in the HA injection market or with what HIA-LFS is gonna bring to the table when that's approved. And has there been any change from your perspective on competition in the market as we look beyond this year?
spk08: Hey, George, this is Cheryl. Can I just ask you to clarify what competition you're referring to just to make sure I answered your question?
spk07: Sure, so one specific example would be Organogenesis announcing the phase three trial results from their Renew injection. Just curious if y'all view that as a competing offering to Orthovisc and Monovisc, and then also products like CardiHeal gaining momentum in the market if that's a competitive concern.
spk08: Got it, thank you, I appreciate that. Yeah, so Organogenesis did just announce a readout on their first phase three clinical trial. It's difficult for me to comment on that because they didn't provide any data. So I'll be in a better position to have a thought about that from a competitive perspective once I see their data, but they didn't put any data out yet. And then on the cartilage repair side, from a CardiHeal perspective, obviously CardiHeal will be launching here soon into the space where they'll be competing with the Macy products with, in CardiHeal's place, a situation with a product that has to remove healthy bone to be implanted. So I think it will be going after a smaller segment of the cartilage repair market, that being the osteochondral defect market. Hyalafast, I'm very excited to bring that to market, and we'll start filing that modular PMA this year. We've got 15 years of data that is likely publishing this year. It is off the shelf, single stage, and something that we know how it plays in the market based on our commercial experience, OUS, and doesn't require you to take healthy bone, doesn't require a second surgery. And so we're very excited to compete, to compete with that inside the United States. We just updated that we now sell Hyalafast in over 35 countries outside the United States. So I'm ready to go with Hyalafast, and we've got surgeons waiting for it here in the United States.
spk07: Okay, great, that's really helpful commentary. Thank you all for the time. Thank
spk02: you.
spk01: Your
spk02: next question
spk01: comes from the line of James Sidoti from Sidoti and Company. Your line is now open.
spk04: Hi, good afternoon, and thanks for taking the questions. Can you talk a little more about the growth rates for the joint business? You know, it's down from the fourth quarter of 23, and you talked about some of the mature products not growing as quickly. Are you de-emphasizing sales of those products? I mean, will you continue to sell those going forward?
spk08: Hi, Jim, thanks for the question. Yeah, I would tell you that our new products are doing really well. I mean, we just announced that we're over 10,000 implantations of X-twist. Integrity is doing very well, even in the limited market release, where our goal there was to get feedback in an LMR, and we're feeling a real pull from the market with that product. We are facing headwinds with some of our more mature products, and while we have a subset of distributors that are doing very well for us in growing strong double digits, we've talked about the fact that that is an area that we continue to focus on and that we are not happy with currently. So we continue to focus on commercial execution and on really driving those new products that are differentiated and have great clinical results and again, I would just say in that business, we have great products that are doing well and really the new products are driving the growth in the face of some of those headwinds.
spk04: So it sounds like you're gonna continue to sell those products and maybe step up some of the marketing efforts in those products?
spk08: Yeah, we are continuing to sell those products and we continue to train and educate on them. We continue to make some investments in them. I will just highlight again, one of the things that we announced last quarter with our cost reduction initiatives really put us in a place where that, again, we report on one segment, but that part of the business is no longer kind of a drag on our adjusted EBITDA. So we've been thoughtful about how we're making our investments there and where we can invest to really drive that growth and focusing on the products that we think are more differentiated.
spk04: Okay, and then if we switch to Simba, you talked about working with the FDA to figure out what non-clinical data they require. Once you guys come to an understanding, how long do you think it'll take to get that data to the FDA?
spk08: Yeah, it's a great question. As soon as I have complete clarity on the additional non-clinical testing that we're gonna need to do, I will be in a better position to answer that question. So it is not, again, just to reiterate, it is not what some years ago the company was talking about doing a significant clinical trial. It is really just the remaining non-clinical testing that the FDA has been talking to us about. As soon as I have that clarity, I will be the first one to be talking about it.
spk04: Okay, and then on pain management, your numbers the past few quarters, even with the lumpiness to the distributor, your numbers have been growing very, very nicely. Your competitor reported last night, they're seeing some good growth. So it feels like that market's very healthy right now. Is that more attributable to procedure growth or pricing improvements?
spk08: Yeah, I think there's a couple of things that have happened. First of all, I think the companies that were more subject to the ASP changes that happened have anniversary out of that dynamic. I think really just starting to see it happen this quarter. So over a period of time, that complete market in the US actually shrunk a bit because of that ASP dynamic. With a couple of those companies that have anniversary out of that dynamic, I think we're gonna start to see growth of that market into dollars. That market, although had some dollar shrinkage because of that ASP dynamic, it never stopped growing from a unit perspective. And so we continue to see kind of low single digit growth of that market in the United States. And it is a healthy market. It is still the kind of along with immediate release steroids that can be used repeatedly, the frontline treatment for osteoarthritis before people move on to a total knee replacement. So it does continue to have very healthy underlying market fundamentals.
spk06: And I would just add consistent with what I said at year end, we're seeing really healthy growth in our single section volume. But the pricing has essentially been fairly consistent over the last couple of years for us, a decline load amid single digits on a fairly consistent basis. But the volume growth in our single and in our monovis products is very healthy.
spk04: And then two quick ones for Mike. Growth margin adjusted growth margin for the quarter was 62%, but you're guiding 66 to 66 and a half of the year. So is that because of a bunch of one times in the first quarter, or do you expect product mix to become much more favorable in the back half of the year?
spk06: Hi, Jim, both actually. So we expect favorable mix as we go through the year compared to the first quarter. And we just had a number of one time things in the quarter. So we had production and efficiencies that got amortized into the period. We expected that that was built into our guidance. We also had some reserves that were recorded in the period. Oftentimes those happen throughout the year, it happened in Q1. So, you know, that's why we felt comfortable reiterating our guidance for the year. And we expect that to improve for the balance of the year so that we're in line with the
spk04: full year guidance. Okay, and the $900,000 of severance costs, is that in the SG&A line?
spk06: The severance costs were split in the areas, they're recorded in the areas to which they related. And so they're split evenly between research and development in SG&A.
spk04: Got it.
spk06: Okay,
spk04: all right, thank you. That's it for me.
spk07: Thanks, Jim.
spk01: Your next question comes from the line of Mike Matuski from Barrington Research. Your line is now open.
spk03: Good evening. I'm curious on the sort of the severance and sort of the cost reduction, when did that happen? Did that happen sort of in March, second half of March? When did that happen? Like, I'm just curious how this is sort of gonna, well, you know, how much of that actually impact at Q1 versus, you know, Q2?
spk08: Yeah, hi Mike. It was at the end of Q1, so it really didn't have an impact yet in Q1. So you're gonna see this year, basically an impact of that on three quarters, but not fully annualized until next year. Sure, okay, all right.
spk06: And from a cash perspective, the severance was actually paid out in the second quarter.
spk03: Okay, okay, that's helpful. All right, and then Cheryl, on the FDA feedback, you know, you said some clarity, talking about non-clinical data. What's your confidence level that, you know, you're not gonna get surprised and they're gonna come back to you and say, actually, we're gonna need a material clinical trial to sort of finish this out. I mean, what's your confidence level that that is not on the table?
spk08: Yeah, I would never wanna try to speculate around FDA, but we have met with our clinical data, the endpoints that they set out for the company to meet. We've done so with statistical significance in multiple phase three clinical trials, and FDA continues to reiterate that our clinical data will be a review issue. So they're, you know, I'm not gonna get any additional clarity on that topic until we actually file. But we do have continued ongoing dialogue with them. They did give us some feedback here recently. We went back to them with some additional clarifying questions, and I look forward to continuing to give updates on this as we make progress.
spk03: Shifting over to integrity, any learnings from the last 100 or so cases and new surgeons, any feedback that, you know, is worthy of mention?
spk08: Yeah, thanks for asking. The feedback has been really quite stellar. The surgeons, a number of the surgeons now have patients in a number of shoulder applications, although primarily rotator cuff repair, and a number of foot and ankle applications, and some even in other parts of the body with appropriate unlabeled use, where the feedback has just been, this is great. It's a, you know, the implant, the patch implant itself is strong. It's manipulatable under arthroscopy. It's simple surgical technique. The fixation elements are great. Their patients are having great outcomes, and it has just given us really great feedback and the confidence that we need to, as we remain on track for our full market release in mid-year. We're also really experiencing uphold from surgeons and distributors on this product. So we're very excited to get to that full market release.
spk03: And then just last one, jumping back to the gross margin question. Mike, would you expect sort of, you know, particularly given the inefficiencies in production manufacturing, I suspect, is this sort of the cadence of gross margin? I mean, should we look for sort of gradual improvement, or are the factors that sort of impacted Q1's gross margin you know, completely behind, and it should be a much cleaner number, even starting in Q2?
spk06: Good question. And Mike, you know, we don't give quarterly guidance in part because of the lumpiness of the business, which can impact things on a quarterly basis. You know, one of the things that we did this year, our guidance is essentially consistent with what we guided to last year and what we actually delivered last year. And in Q1 of last year, we had a low gross margin and then it was higher in the remainder of the year. I don't know that there's anything unique to the subsequent quarters that I can speak to, just because it can move. I think it's fair to say, you know, you could take the guidance for the year and if you wanted to spread it evenly, you'd probably, you know, that's a pretty reasonable place to go in terms of the gross margin percent. But what I, but keep in mind that from a gross profit dollars, the revenue growth that we expect to be weighted towards the second half, both in OA pain management and in joint preservation. So, but from a percentage basis, we might get some that moves into Q2 from the time of things, but it's hard to say at this point.
spk03: I guess what I was really trying to get at, whatever production inefficiencies you're referring to, has that been rectified? Has that been essentially fixed?
spk00: Yes.
spk02: That's all I've got for now. Thank you. Great. Thanks, Mike. There are no further questions at this time. Ladies and gentlemen, this concludes today's
spk01: conference call. Thank you for your participation. You may now disconnect.
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