SI-BONE, Inc.

Good afternoon, and welcome to SI Bone's second quarter earnings conference call. At this time, all participants are now 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, and I would now like to turn the call over to Saqib Iqbal, Senior Director of Investor Relations at SI Bone, for a few introductory comments. Sir, please go ahead.

Thank you for participating in today's call. Joining me are Laura Francis, Chief Executive Officer, and Anshul Maheshwari, Chief Financial Officer. Earlier today, SF1 released financial results for the quarter ended June 30th, 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 Driver 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 SI-Bone's ability to introduce and commercialize new products and indications, SI-Bone'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, SI-Bone'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 Form 10-Q filed with the Securities and Exchange Commission. SI-Borne 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, August 7, 2023. With that, I'll turn the call over to Laura.

Thanks, Saqib. Good afternoon, and thank you for joining us. I'm pleased with our performance in the quarter. as we delivered over 30% revenue growth led by robust demand for our portfolio of solutions, strong surge in engagement, and favorable reimbursement tailwinds. The U.S. procedure growth trends over the last several quarters give me confidence that we're well positioned to deliver a strong second half of 2023. Furthermore, our strong liquidity position bolstered by the successful capital raise in May provides us the flexibility to continue our judicious investments and portfolio expansion and commercialization initiatives. We believe these investments combined with secular growth factors in the business will allow us to deliver continued revenue growth and accelerate our progress toward adjusted EBITDA and cash flow breakeven. Before we discuss our results, I want to thank our employees as they've continued to demonstrate unwavering dedication, to serve our expanding surgeon base and ensure patients have access to our best in class solutions. This level of consistent record performance over the last several quarters would not be possible without you. Now, moving to our second quarter performance. In the second quarter of 2023, we generated record worldwide revenue of $33.3 million, an increase of over 30% compared to the second quarter of 2022. The quarterly result was led by record U.S. revenue of $31.2 million, which represents U.S. revenue growth of over 31% compared to the prior year period. This fifth consecutive quarter of record worldwide revenue and improving operating leverage exemplifies the consistency of execution and strength in the business. Now let me provide an update on our key initiatives as we continue to look to extend our leadership position and drive strong long-term growth. Starting with sales infrastructure, our direct sales team is our biggest asset as we expand our product portfolio and surgeon base. At the end of the second quarter, our U.S. commercial organization comprised 85 quota-bearing territory managers. We complement our territory managers with clinical support specialists, as well as a growing network of third party sales agents for case coverage. We also selectively place instrument sets at high volume hospitals to meet demand. We're confident that our hybrid strategies will allow us to further penetrate the surgeon market cost effectively, accelerate top line growth, and achieve higher productivity. At the end of the second quarter, our trailing 12-month average revenue per territory in the U.S. was approximately $1.4 million, representing a 32% productivity gain over the comparable trailing 12-month period. Our strong revenue growth and increased operating leverage over the last several quarters are the results of our investments in building a world-class commercial organization. Moving on to surgeon engagement, We exited the second quarter with approximately 935 active surgeons. This equates to approximately 30% growth in our active surgeons over the second quarter of 2022. This was the 10th consecutive quarter of double digit year over year growth in our active surgeons. Based on the early third quarter trends, we surpassed the 950 active surgeons milestone we set at the end of the first quarter. It's also encouraging to see surgeon overlap across our procedures. We expect our complimentary 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 education are resonating with our customers. On academic training, we're pleased to see steady adoption of our procedures by surgeons first trained as residents and fellows as they matriculate to independent practice. For example, among the cohort of surgeons first trained as residents and fellows, procedure revenue in the second quarter of 2023 nearly doubled compared to the second 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 complementary product portfolio has positioned us as the top choice for surgeons looking for sacral pelvic solutions. IFUSE TORC has become a key growth driver for us due to its expanded clearance covering SI joint dysfunction, trauma, and adult deformity. IFUSE TORC provides a complementary technology to IFUSE 3D for our existing surgeons. It's also allowed us to engage new surgeons and successfully convert several surgeons using competitor products when performing minimally invasive SI joint fusion procedures. While we remain strong advocates of the lateral transiliac trajectory as being the gold standard when performing SI joint fusion procedures, in June we received FDA clearance for placement of ICUS-TORC in the posterior lateral trajectory. This clearance provides surgeons, mostly those who are competitor conversions, the flexibility and confidence to use their preferred approach. The use of iPHUSE TORC as a second point of fixation across the SI joint in adult deformity procedures is increasing since the product received FDA clearance for the bedrock trajectory last year. In trauma, we remain in the early stages of market development and are encouraged by the adoption we're seeing for iPHUSE TORC in 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 ICU's bedrock granite. We are extremely pleased with the success of granite in its first full year on the market. This breakthrough device has allowed us to target 130,000 annual cases across long construct adult deformity procedures and degenerative spying procedures to the sacrum, expanding our total addressable market by approximately $1 billion to over $3 billion. Given the positive surge in reception, we're actively rolling out instruments and implant sets to capitalize on the demand momentum for granite. Furthermore, in June, we expanded the granite implant family with the launch of a closed head granite implant. This addition to the granite family will allow us to drive adoption with a subset of surgeons who prefer implants with a closed tulip head to attach the rod. We believe granite has the potential to become the standard of care for stabilizing the basal lung constructs in adult 4B procedures. And this addition ensures that granite can address the preferences of surgeons performing pelvic fixation procedures. In addition to the use of granite in lung construct adult deformity procedures, we're encouraged to see that year-to-date nearly 40% of the procedures in which granite is used are actually shorter multilevel constructs, generally a treatment for degenerative spine disorders. Given the demand trends and over 100,000 annual procedures involving spinal fusion to the sacrum, We're progressing toward a 2024 launch of another new product in the granite family. We believe the new product will further accelerate adoption of granite in these short construct procedures. Along with the growing 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 in long construct procedures. This is driving a significant pull-through opportunity for the portfolio and a higher per procedure average selling price. Moving on to clinical evidence. Given the growing interest in the SI joint space, as a market leader with commitment to clinical evidence and patient safety, we launched the STACI study in June. STACI is a prospective study of the use of IFUSE TORC in patients with sacroiliac joint dysfunction. The purpose of STACI is to work with a select group of physicians and gather post-market information on the use of IFUSE TORC for Sacroiliac Joint Fusion. I'll now turn the call over to Anshul to provide more detail on our financial results.