SI-BONE, Inc.

Good afternoon, and welcome to SI Bones' first quarter earnings conference call. At this time, all participants are in 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 Marissa Beisch from the Gilmartin 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 March 31, 2023. 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 SIPhone's ability to introduce and commercialize new products and indications, SIVONE's ability to maintain favorable reimbursement for its products and procedures, the impact of potential economic weakness on the ability and desire of patients to undergo elective procedures, SIVONE's ability to manage risks to its supply chain, the impact of future capital requirements driven by new product introductions, and risks to the continued renormalization of the healthcare operating environment. Other forward-looking statements include our examination of operating trends and our future financial expectations such as expectations for surgeon training and adoption, active surgeons, new products, and clinical trial enrollment 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 10-Q, filed with the Securities and Exchange Commission. SI BOEM declaims any intentional 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 it's a live broadcast today, May 1, 2023. And with that, I will turn the call over to Laura.

Thanks, Marissa. Good afternoon and thank you for joining us. I am thrilled with our stellar start to 2023. The exceptional performance in the first quarter reaffirms the accelerating procedure demand over the last several quarters. Overall, year-over-year worldwide revenue growth has increased each quarter since the first quarter of 2022, rising from 10% for that period to approximately 46% in the first quarter of 2023. The record revenue and active surgeon-based milestones we achieved in the first quarter reflect our consistent investments over several years to build a world-class commercial organization, introduce innovative products to create new markets, and drive surgeon and referring physician education. As I look forward, I remain highly confident that our commercial execution, combined with our differentiated product pipeline, will allow us to further expand our total addressable market, drive revenue growth, and improve our bottom line. Before I discuss the quarter, I want to recognize our biggest asset, our employees. Your grit and perseverance have put us in the enviable position to capitalize on the expanding demand for our differentiated solutions and to deliver strong, sustainable revenue growth as well as operating leverage. Now, moving to our first quarter performance. In the first quarter of 2023, we generated worldwide revenue of $32.7 million, an increase of approximately 46% compared to the first quarter of 2022. On a sequential basis, worldwide revenue topped our fourth quarter of 2022, which you may recall was our previous best quarter. This sequential growth trend is extremely encouraging since it's the first time as a public company we've seen the first quarter performance exceed our seasonally strong fourth quarter. The strong quarterly performance was led by record U.S. revenue of $30.5 million, which represents U.S. revenue growth of approximately 50% compared to the prior year period. With a normalizing operating environment, robust surge in engagement across our broadened portfolio, and reimbursement tailwinds, we're excited about the potential ahead of us. Now let me provide an update on our key initiatives as we look to extend our leadership position and drive strong long-term growth. Starting with sales infrastructure. Over the last three years, we've made significant investments in expanding our direct commercial infrastructure to ensure we've built a seasoned sales force to support growing surge in demand. Our strong revenue growth and accelerating operating leverage over the last several quarters reaffirmed that the commercial strategy is delivering. At the end of our first quarter, our U.S. commercial organization comprised 87 quota-bearing territory reps. We complement our direct sales team with a growing network of agents for case coverage and are selectively evaluating strategies to place instrument sets at high-volume hospitals to meet the demand. At the end of our first quarter, our trailing 12-month average revenue per territory in the U.S. was approximately $1.3 million, representing a 28% productivity gain over the comparable trailing 12-month period ended the first quarter of 2022. We're confident that our hybrid strategy will allow our territory managers to drive surge in engagement, deliver strong top-line growth, and achieve higher productivity. Moving on to surge in engagement, Surgeon adoption is one of the best leading indicators of long-term procedure demand. We exited the first quarter with over 950 active surgeons, an all-time high. This equates to over 40% growth in our active surgeon base over the first quarter of 2022. This was the highest quarterly growth rate in our active surgeon base since becoming a public company, and the ninth consecutive quarter of double-digit year-over-year growth in our active surgeon base. Sequentially, our active surgeon base increased as compared to the fourth quarter of 2022. It's also encouraging to see surgeon overlap across our procedures. We expect our complementary portfolio to drive deeper engagement and increase procedures per surgeon over time. These trends in active surgeon base reaffirm that our portfolio expansion strategy and investment in surgeon education are resonating with our customers. Academic programs, which we initiated in 2018, have been a strategic priority for us to engage surgeons early on in their careers. We're seeing great success in these training activities and are encouraged by the steady adoption of our procedures by these fellows and residents in the quarters and years that follow their education. In the first quarter of 2023, the procedure revenue in the cohort of surgeons who are trained as fellows and residents increased nearly threefold compared to the first quarter of 2022. Turning to products and solutions. With iFuse 3D, iFuse Torque, and now iFuse Bedrock Granite, the value of our innovative, versatile, and complimentary product portfolio has positioned us as the top choice for surgeons looking for sacral pelvic solutions. Demand for iFuse Torque, which recently completed its second anniversary, remains strong. It provides a complementary technology to iFuse 3D for existing surgeons and has allowed us to engage new surgeons performing minimally invasive SI joint fusion. With the expanded clearance covering SI joint dysfunction, trauma, and adult deformity, iFuse Torque is a key growth driver for the company. We're experiencing increased use of iFuse Torque as the second point of fixation for adult deformity procedures. In trauma, We remain in the early stages of market development and we're encouraged by the steady revenue growth we're seeing in IFUSE TORC and sacral insufficiency fractures. The trauma opportunity is of strategic importance to us as the sacral pelvic solutions leader and is an important avenue for our growth over the long term. Moving to IFUSE Bedrock Granite, As we approach the first anniversary of the Granite launch, we're extremely pleased with the strong surgeon reception and increasing demand for this breakthrough product. With Granite now in the approved product list at over 2,600 hospitals, we believe this differentiated device has the potential to become the standard of care for stabilizing the base of long constructs in adult deformity procedures. Along with the strong demand for Granite, we're seeing a consistent trend in surgeons using some combination of our products with granite to achieve two points of fixation across the SI joint on either side. This is driving a significant pull-through opportunity for the overall portfolio and a higher procedure average selling price. In addition to the use of granite in lung construct adult deformity procedures, We're encouraged by the steady increase in the use of the product to stabilize the base of shorter, multi-level constructs in degenerative spine procedures. Nearly 40% of our granted cases have been in these short construct procedures. There are over 100,000 shorter, multi-level spinal fusion procedures to the sacrum per year in the United States. Given our success with granite, we intend to introduce a new product in the granite family in 2024, more targeted toward these shorter construct procedures. We believe the expanded portfolio will allow us to target additional degenerative procedures to the sacrum, potentially expanding our total addressable market for the granite family products by nearly $700 million to nearly $1 billion. Before I pass the call on to Anshul, let me provide a quick update on our intellectual property. Last week, we were able to extend patent protection covering our first-generation iFuse implant by approximately 13 months to December 2025. As a reminder, the patents covering iFuse 3D, our 3D-printed and fenestrated triangular titanium implant expire in 2035. I'll now turn the call over to Anshul to provide more details on our financial results