SI-BONE, Inc.

Good afternoon and welcome to SIBONE's first quarter earnings conference call. At this time, all participants are on a listen-only mode. We will 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 Vasco from the Gilmartin Group for 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 March 31st, 2022. 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 expectation and are inherently involved risks and uncertainties. These risks include the impact of COVID-19 pandemic will have on the ability and desire of patients and physicians to undergo and perform procedures using the company's products, the duration of the COVID-19 pandemic, and whether the COVID-19 pandemic will occur in the future. Other forward-looking statements include our 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 under 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 Bundesland has 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. May 9, 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 a business update, and Anshul will provide additional detail regarding our financial results. Before I cover our first quarter results, I want to share the exciting news on iFuse Bedrock Granite, our breakthrough product, which is intended to provide SI joint fusion in addition to sacral pelvic fixation for adult spinal deformity procedures. iFuse Granite, which has been in development for a number of years, combines the strength of a solid implant with the porosity of 3D printed technology. iFuse Granite is now awaiting FDA clearance, which we expect to receive this year. We received breakthrough device designation for iFuse Granite in November 2021. We're proud of this recognition, which has previously been extended to only a very select number of orthopedic technologies. The FDA agrees iFuse Granite will provide for more effective treatment of a debilitating condition than the current standard of care for patients undergoing multi-segment spinal fusion procedures. This recognition further distinguishes us as an industry pioneer focused on introducing disruptive technologies to improve patient outcomes. As you saw from our announcement in late April, CMS proposed a new technology add-on payment, or NTAP, for iFuse Granite. The NTAP program is designed to recognize new technologies that provide substantial clinical improvement over existing therapies. This NTAP proposal is supported by the FDA breakthrough device designation for iFuse Granite. Once the NTAP proposal is finalized and we have FDA clearance, It will allow Medicare beneficiaries timely access to this innovative technology while providing incremental reimbursement to healthcare providers when using iFuse Granite as part of multi-segment spinal fusion procedures. While preliminary, based on the CMS proposal, the add-on payment will be based on 65% of the per patient anticipated hospital cost of the case, including iFuse Granite. up to a potential maximum of approximately $9,800. We believe the benefits of iFUSE Granite's differentiated technology, the seamless surging workflow integration, and potential for incremental reimbursement puts us in a strong competitive position. It'll allow us to accelerate our growth in an attractive $250 million adjacent adult deformity market. Now, moving to our performance in the first quarter of 2022. We generated total revenue of $22.4 million, representing growth of approximately 10% compared to the first quarter of 2021. Despite significant COVID disruption in January and February, we were able to deliver the revenue growth due to a robust recovery in March. In fact, we experienced the highest monthly procedure volumes in the company's history in the month of March. We believe that the outpatient nature of our procedure, with approximately 80% of our procedures being performed in an outpatient setting or at surgery centers, combined with the solid execution by our dedicated field organization, contributed to a rapid recovery in procedure volumes. In terms of COVID impacts, approximately 160 U.S. procedures were deferred due to Omicron in the first quarter of 2022. This impacted revenue by over $1.4 million in the quarter, with the largest impact seen in January. These are the procedures that were booked and then postponed, but of course there are more procedures that were affected by COVID. The operating environment improved significantly in the back half of the quarter as Omicron continued to subside, with March seeing fewer than 20 procedure deferrals. We're encouraged by the pace of recovery in March and the continuing momentum in procedure volumes in April, from new patient demand as well as the recapture of previously deferred procedures. Additionally, anecdotal feedback from surgeons suggests that the new patient funnel continues to grow, indicating progress toward a more normalized operating environment. Now, let me provide you an update on our key initiatives as we look to extend our leadership position and drive durable long-term growth. Starting with sales infrastructure, our sales team remains an important driver of growth as we penetrate our core market and grow our presence in trauma and adult deformity. Our sales organization at the end of the first quarter of 2022 comprised of 154 individuals, including 88 territory managers and 66 clinical support specialists. Additionally, to support our expanding portfolio, we added two new regions in the U.S. for a total of 18 regions. The methodical expansion of our sales organization is crucial to ensure high-quality support for our surgeons, drive adoption, and increase active surgeon engagement. While we'll continue to strategically add headcount by investing in high-quality reps to deliver strong and sustainable long-term growth, we are also focusing on increasing productivity of our seasoned territory managers by adding to our bench of clinical support specialists. Moving to surgeon engagement, we ended the first quarter with over 680 active surgeons who performed at least one procedure in the quarter. This represents 17% growth when compared to the prior year period. We're encouraged by the durability of our surgeon base, given the challenges with Omicron and the normal business seasonality in the quarter. This is a good leading indicator of surgeon interest in engaging with us and positions us to drive strong top-line growth. Our growing commercial footprint near universal coverage and expanding product portfolio positions us well to accelerate surgeon engagement and activation as we progress through the year. We're also encouraged by the steady increase in adoption rate of surgeons who have been trained on the simulator, which remains a valuable component in our surgeon training programs. As we move to a more normalized environment, we expect to use a combination of in-person local training, regional training, and simulator training to drive surgeon engagement. 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. Since inception of the program, we've held approximately 175 academic programs in the US, resulting in the training of over 950 surgical residents and fellows. In the first quarter of 2022, 20% of all completed academic training events occurred in new academic centers. We trained over 110 new fellows and residents, demonstrating the growing interest in our academic training initiative. Turning to products and solutions, our portfolio expansion strategy has allowed us to grow the market for Sacral Pelvic Solutions and extend our market leadership. According to the 2021 market data from Spine Market, Inc., an independent third-party provider of industry data, we increased our market share in sacropelvic surgical devices into the high 60% range, confirming that our broad product strategy is resonating with our surgeons. Since its introduction last year, iFuse Torque, along with our flagship iFuse 3D, contributed to our market share growth by providing surgeons with a comprehensive set of surgical solutions for minimally invasive SI joint fusion, we're pleased with the strong reception of IFUSE TORC, which, consistent with the overall business, has record procedure volume in March. Additionally, we continue to methodically build traction in trauma and expect IFUSE TORC to continue to be a tailwind as we accelerate the penetration into the pelvic trauma market in the second half of 2022. After the successful commercialization of IFUSE TORC, we're excited to expand our portfolio with the addition of iFuse Bedrock Granite. iFuse Granite is a unique technology that builds on our experience since 2019 with the Bedrock technique, which addresses surgeons' desire to augment stability at the base of long constructs used to treat adult spinal deformity. We look forward to providing additional details once we launch the product. On the clinical research front, we're at approximately 90% of target enrollment in Sylvia, a two-year prospective international multicenter randomized controlled trial of two different methods for pelvic fixation in adult patients. We expect enrollment to be completed shortly and anticipate the first follow-up results in 2024. Talking about our patient awareness initiative, during the first quarter, we continued to make investments in direct-to-patient marketing. These marketing programs are targeted at patients in chronic, severe SI joint pain who have been in concerted care for an extended period of time. Our goal is to connect patients with surgeons in their area who perform minimally invasive SI joint procedures. Through a variety of channels, including search, social, and display, we have deployed a number of campaigns and are continually optimizing to maximize surgeon referral volume. Our data-driven approach enables us to focus our investment on the most cost-effective programs, We're pleased with our progress thus far based upon increased website traffic, patient engagement, and surgeon referrals. With that, I'll now turn the call over to Anshul to provide more detail on our financial results.