SI-BONE, Inc.

Good afternoon, and welcome to SI Bones' four-quarters earnings conference call. At this time, all participants are in a listen-only mode. We'll be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Matt Vaxell from the Kilmartin Group for a few introductory comments.

Thank you for participating in today's call. Joining me are Laura Francis, Chief Executive Officer, and Anshul Maheshwari, Chief Financial Officer. Earlier today, SI Bone released financial results for the quarter ended December 31st, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. These forward-looking statements are based on the company's current expectations and inherently involve risks and uncertainties. These risks include the impact the COVID-19 pandemic will have on the ability and desire of patients and physicians to undergo procedures using the company's products, the duration of the COVID-19 pandemic, and whether the COVID-19 pandemic will recur in the future. Other forward-looking statements include our expectations examination of operating trends and our future financial expectations, such as expectations for hiring, surgeon training and adoption, active surgeons, new products, clinical trial enrollment and reimbursement decisions, and 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. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. SI Bone disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 28, 2022 – And with that, I'll turn the call over to Laura.

Thanks, Matt. Good afternoon, and thank you for joining us. For today's call, I'll provide opening comments and a business update. Followed by Anshul, who will provide additional detail regarding our financial results and initial 2022 guidance. Let me start with our performance in the fourth quarter and full year 2021. I'm pleased with the team's execution in 2021 as we extended our market leadership position, grew our commercial infrastructure to 150 U.S. sales representatives, expanded exclusive payer coverage to over 160 million U.S. cover lives, and ended the year with a record 690-plus U.S. active surgeons. Our revenue, consistent with our pre-announcement on January 10th for the fourth quarter of 2021, was $25.2 million, representing growth of 14% compared to the fourth quarter of 2020. Despite various COVID surges throughout the year, we were able to generate sequential revenue growth for the third straight quarter. For the full year 2021, we generated revenue of $90.2 million, representing growth of 23% compared to full year 2020. We navigated through the pandemic very well due to consistent and focused commercial execution. Now, let me provide some insight into the impact of COVID-19 on our U.S. operations in the fourth quarter and early 2022. Despite the impact of Delta and Omicron, growing demand for our solutions allowed us to deliver sequential monthly revenue growth in the fourth quarter. Based on our booking records in the fourth quarter, approximately 100 cases which had been scheduled were deferred due to COVID in the U.S. This impacted revenue in the fourth quarter by over $800,000. These are the cases that were booked and then postponed, but of course, there are many more cases that were affected by COVID. We estimate that Omicron resulted in approximately 40 U.S. cases being deferred in the back half of December, representing approximately $350,000 in revenue. We believe that the execution by our dedicated field organization has been a key differentiator as we managed through the pandemic better than many of our peers. We're also well positioned because approximately 80% of our procedures are performed in an outpatient setting or at surgery centers. Thus far, in the first quarter of 2022, we've experienced an increase in the deferral of procedures due to Omicron. Based on our booking records, over 100 cases were deferred in January. These deferred cases represented approximately $900,000 in revenue. Case deferrals in February declined to approximately 40 cases, which gives us optimism that the operating environment is improving. We remain confident based on our prior recovery experience and our ability to recapture the deferred cases over the next few months as the pandemic recedes. Additionally, while anecdotal, based on our conversations with surgeons, We're aware of some surgeons who have built backlogs of three to four months due to the pandemic surges and hospital infrastructure limitations. The resiliency of our performance throughout the pandemic and the record operating milestones we achieved reaffirmed that our investments in growth initiatives over the last 18 months are delivering, and they positioned us to be a much stronger company in 2022. Now let me provide you an update on our growth initiatives as we look to extend our leadership position and drive durable long-term growth. Starting with sales infrastructure expansion, our sales team remains an important driver of growth as we penetrate our core market and expand our presence in trauma and adult deformity. I'm really proud of our commercial leadership team's effort under the leadership of Tony Recupero to attract high-caliber talent and end the year with a 150-person sales force consisting of 85 territory managers and 65 clinical support specialists. These numbers translate to a 30% increase in territories in 2021. The dedicated sales team has been a clear differentiator, especially in this unique co-operating environment, as it allows us to remain focused on surgeons and deliver 25% growth in procedure volume in 2021. In 2022, we'll continue to strategically add headcount by investing in high-quality sales reps to set up the platform to deliver strong and sustainable long-term growth. Additionally, we remain focused on driving Salesforce productivity by adding to our bench of clinical support specialists. We're targeting ending 2022 with an approximately 170-person Salesforce, of which 55% are anticipated to be sales territory managers. Moving on to surgeon engagement, we ended the year with over 690 US active surgeons who performed at least one case in the fourth quarter of 2021, representing a year-over-year increase of approximately 18% and a sequential increase of 10% from the third quarter of 2021. In 2021, we had over 1,000 surgeons perform at least one procedure in the year. To put that in context, Since our inception, around 1,800 surgeons have been trained and treated at least one patient. The growth in active surgeon base in the quarter, driven by both new and re-engaged surgeons, reaffirms that our multi-pronged approach to drive surgeon engagement is delivering. Our investments in building a dedicated sales organization, combined with the introduction of TORC, exclusive coverage with Anthem and UnitedHealthcare, and the expansion of our proprietary simulator to train surgeons have provided the ideal foundation for us to engage new surgeons and reactivate previously trained surgeons. Our goal is to grow our active surgeon base by approximately 15% by the end of 2022. Our simulator technology remains a cornerstone of our surgeon training program. Specifically, over half of our surgeons trained in the fourth quarter were trained using the simulator. we've continued to experience a steady increase in adoption rate among surgeons who have been trained on the simulator. With 24 simulators in use worldwide and approximately 6,000 surgeons to be trained and retrained, we believe we have the infrastructure to drive surgeon engagement and further expand the active surgeon base. As part of our long-term strategy to grow our active surgeon base, we continue to expand our academic programs to educate residents and fellows on primary SI joint diagnosis and the degenerative and deformity surgical applications of our solutions. Since inception of the program, we've held approximately 170 academic programs in the U.S., resulting in the training of over 850 surgical residents and fellows. Turning to products and solutions, the strong performance of IP's TORQ in 2021 reaffirmed that our broadening product strategy is resonating with our customers. In 2021, our initial focus was on targeted competitive conversion to drive adoption and extend our market leadership as a sacral public solutions company. In 2022, we expect iFuse Torque to continue to be a tailwind as we accelerate our penetration into trauma, which we estimate to be a $350 million market opportunity. In adult deformity, we're excited about the opportunity to build on the excess of bedrocks with our second-generation product. We remain on track to launch this differentiated product in the first half of 2022. On the clinical research front, while the pandemic has impacted the pace of enrollment in CILDIA, a two-year prospective international multi-center randomized controlled trial of two different methods for pelvic fixation in adult patients, we've made significant progress on enrollment in the fourth quarter, nearing approximately 80% of target enrollments. We expect enrollment to continue through the first half of 2022 and anticipate the primary endpoint results in 2024. Talking about our patient awareness initiative, we focused our investment in targeted digital marketing programs in our fourth quarter to educate and empower patients in their SI journey. To provide some preliminary insights, we have more than doubled the number of potential patients we are engaging through marketing. while significantly increasing the referral of patients to surgeons at the end of 2021 compared to the prior year, showing the effectiveness and efficiency of the targeted digital marketing spend. While the preliminary insights are encouraging, we continue to take a disciplined approach to continuously optimizing and focusing our investments across various digital platforms. With that, I'll now turn the call over to Anshul to provide more detail on our financial results.