SI-BONE, Inc.

Good afternoon and welcome to SIBONE's fourth quarter 2024 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 Saqib Iqbal, Senior Director of Investor Relations at SIBONE, 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, 2024. 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 prediction 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, changes in payer requirements for authorization of procedures involving SI-Bone's products, 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 physician training and adoption, active physicians, new product, 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 risks and uncertainties associated with our business, please refer to the risk factors section of our most recent Form 10-K filed with the Securities and Exchange Commission. During the call, management may also discuss certain non-GAAP measures, including the company's adjusted EBITDA results. Unless otherwise noted, any reference to profitability is in terms of positive adjusted EBITDA. For a reconciliation of these non-GAAP measures to GAAP accounting, please see the company's full earnings release issued earlier today. Unless otherwise noted, all results are compared to the comparable period in the prior year. FI 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 24, 2025. With that, I'll turn the call over to Laura.

Thanks, Saqib. Good afternoon, and thank you for joining us. I'm pleased with the team's execution in the fourth quarter to deliver a record $49 million in worldwide revenue, representing growth exceeding 26%. Fourth quarter revenue in the United States increased by an impressive 28% to $46.9 million, driven by strong demand for our innovative platform from now nearly 1,400 active physicians. The outstanding performance in the quarter is an outcome of the team's focus to build the most innovative medical device platform serving orthopedic, neurosurgical, trauma, and interventional spine physicians. Our growth in the quarter was broad-based. The surge in demand in SI joint fusion procedures was further strengthened by the growing interventional spine physician engagement with TORC and INTRA. Granite 9-5 continued to gain momentum. with adoption outpacing all of our previous product launches. P&T, which was launched in the fourth quarter, has been met with impressive adoption and has exceeded our expectations. These early demand indicators give us confidence that each of these solutions can be major growth drivers in 2025 and beyond. Moving down the P&L, we delivered positive adjusted EBITDA in the fourth quarter. Given our healthy operating leverage, we expect to deliver positive adjusted EBITDA for the full year 2025 and expect adjusted EBITDA margins to expand going forward. The inflection in profitability, combined with our asset-light business model, positions us to progress toward our next milestone of generating positive free cash flow. Coming into 2025, we have three key growth priorities. implement targeted commercial initiatives to fuel adoption of the expanded portfolio and grow our physician base. Second, increase procedure density by focusing on multimodality physician engagement. And finally, lay the groundwork for the commercialization of our disruptive new products. Now let me provide an update on our key initiatives as we look to extend our leadership position and drive strong, durable, and profitable growth. Starting with commercial infrastructure and productivity, we closed the year with 87 quota-carrying U.S. territory managers as we promoted five territory representatives in the fourth quarter. Our territory productivity has nearly doubled in the last three years to $1.8 million in 2024. In 2025, we plan to selectively expand our direct sales force to capitalize on the strong procedure demand. As these territories mature, we anticipate surpassing $2 million per territory over time. Our evolution from a direct sales force to a hybrid model has contributed to the territory productivity gains and market penetration. This strategic shift allows us to scale more efficiently while maintaining strong physician engagement. We've successfully leveraged the hybrid model for granite, and as we look ahead, we're actively pursuing partnerships with trauma third-party agents to facilitate broader adoption and growth for TNT. These initiatives reflect our commitment to optimizing our field approach and ensuring sustained and profitable market expansion. Moving on to physician engagement, The strong physician interest in the portfolio resulted in a record number of physicians trained in the year. This translated into nearly 2,000 US physicians performing at least one procedure in 2024. In the fourth quarter, we had nearly 1,400 active physicians representing 23% growth as we added a record 260 active physicians compared to the prior year period. In the fourth quarter, the number of physicians performing multiple procedure types grew by nearly 40%. Looking at density trends, physicians who performed a case in the fourth quarter of 2024 and 23 averaged five procedures per physician, which is 30% higher than the overall average procedures per physician in the quarter. Our academic programs remain a key contributor to our active physician growth. In 2024, revenue generated from physicians who were previously trained as residents and fellows grew by 70%, highlighting the outsized impact of these programs on adoption and revenue growth. The pace of our active user growth and increasing procedure density are strong leading indicators of future demand. Turning to innovation. In the last three years, we have transformed into a high-growth medical device platform that is consistently delivered in excess of 20% annual revenue growth. We have four product families that are targeting multiple indications across SI joint dysfunction, deformity, and pelvic ring fractures. Let me provide insights into the key themes across our platform. First, I'll discuss SI joint dysfunction. Spine surgeons continue to account for the overwhelming majority of our revenue. Building on the success of iFEWS 3D, TORC has become an essential contributor to our surgeons SI joint dysfunction procedure volume growth. As a reminder, iFEWS 3D and TORC are reimbursed under CPT 27279, which is reimbursed by substantially all payers. Even within interventional spine, most of our trained physicians have embraced TORQ as a preferred solution. In certain instances where the interventionalists prefer an allograft solution, we're seeing success with INTRA, which is reimbursed under CPT 27278. With the increase in physician and ASC facility fees for CPT 27278, effective January 1, 2025, We believe INTRA has potential to drive engagement in select markets where payer reimbursement is defined. Currently, four out of seven Medicare administrative contractors are consistently covering CPT 27278 procedures. Our foresight to train physicians on both TORC and INTRA puts us in the best position to meet the needs of the interventionalists and their patients. Similar to our surgeon customers, our strategy to provide the most comprehensive set of solutions along with world-class training and clinical support, has made us the preferred partner for interventional spine physicians. Moving to deformity and pelvic fixation, based on the demand in the first six months since launch, Granite 9-5 has been a resounding success. Usage in adult deformity procedures has been strong. Traction in degenerative spine procedures is increasing, and there is growing interest from pediatric deformity surgeons. With Granite 9-5, we have an opportunity to increase physician engagement as well as drive more procedures per user. Granite 9-5 also has the potential to improve our procedure ASP, as its smaller size provides physicians additional room to stack multiple implants for fusion using two points of fixation. In the fourth quarter, stack granite volume grew by nearly 45% compared to the prior year period. In several of these stack cases, Physicians are using a combination of granite 10-5 and 9-5 implants. Within degenerative spine, we're in the early stages of capturing the S1 and S1-AI opportunity with our existing physicians who perform SI joint fusion procedures. Granite was awarded transitional pass-through or TPT payment status effective January 1st, 2025. We believe there is potential for TPT to play out over time as less severe cases involving shorter construct spinal fusions migrate to the hospital outpatient setting. In finalizing the TPT award, CMS determined that the uniqueness of Granite requires a new device code for hospitals to report its usage in a procedure. Additionally, CMS granted a $0 device offset, which is very important. It allows for hospitals to pass through 100% of the Granite cost they report. receiving that payment in addition to their usual facility fee. With this award, Granite's full cost is eligible for TPT payment, enhancing Granite's reimbursement profile and underscoring its unique clinical value in the sacropelvic space. Application of Granite in pelvic fixation remains one of the most exciting areas of focus at Spine Society conferences. We recently hosted the fifth meeting of the Spinal Pelvic Study Group, or SPSG, It's a consortium of deformity KOLs from the top academic medical centers across the United States. This year, the members are focused on two key areas of pelvic fixation. First is to gather data on the application of fixation at S1. The second is comparing spinal pelvic fixation using granite with conventional screws. The group has two manuscripts currently under peer review and plans to submit additional papers this year. A recent publication demonstrated a significantly lower incidence of screw failures with granite compared to rates reported in prior papers for traditional pelvic screws. There were no incidents of breakage and back out for granite, underscoring its durable integration with bone with low rates of revisions and mechanical failures. The paper substantiates granite's value proposition for healthcare facilities, clinicians, payers, and patients. Given the physician engagement and the nearly 130,000 target procedures, Granite will be a key revenue growth driver for the next several years. Now I'll speak about pelvic ring fractures. We are thrilled with the interest from surgeons in our recently launched TNT solution. Designed as a unique anatomy-specific technology, TNT seamlessly integrates into the trauma surgeon's workflow and allows us to add a new procedure with spine surgeons We're adding to our surgical capacity in 2025 to ensure we can capture this physician demand. Following the breakthrough device designation, or BDD, from the FDA, we are now pursuing a new technology add-on payment, or NTAP approval, for TNT. If approved, the NTAP would take effect in October 2025. TNT holds the potential to become a major growth driver in the future with a TAM of nearly 60,000 target procedures. Finally, I'd like to discuss our exciting product roadmap. With our innovation engine running strong, we have more disruptive product launches on the horizon. Following Granite and TNT, we're excited to share that we have been awarded breakthrough device designation from the FDA for another novel implant system. Since the beginning of the FDA's BDD program, fewer than 10 BDD products in spine have been commercialized. This will be SI-Bone's second product in spine and third overall, putting us in a distinguished position as the only public company in our industry to have three BDD products. This latest BDD is for a device that has the potential to disrupt the medical device industry by providing more effective treatment for one of the most pressing needs in orthopedic and spine surgery. This new device leverages our core technology and targets our existing call points. This fits into our strategy to build a unique platform to increase procedure density by addressing unmet clinical needs. We're in the early development phase and we'll discuss applications as we get closer to launch. Finally, 2025 will be an important year for clinical publications. We expect to publish results this year from our Stacey study for SI joint fusion, Sylvia and Paula for pelvic fixation, and Safran for pelvic brain fractures. We believe clinical evidence will be an important catalyst to accelerating adoption and maintaining our differentiated reimbursement. Now, let me comment on the ongoing DOJ investigation. We have a strong compliance program in place that aligns with the AVAMED code and OIG guidance. We're cooperating with the DOJ in a transparent way. We do not have any material updates at this point. and do not expect to have significant updates prior to any resolution of the matter. Before I hand it over to Anshul to discuss our financial performance, I want to recognize my colleagues for an exceptional effort in Q4. This is our busiest time of the year, and we've laid the groundwork to deliver another stellar year ahead. With that, I'll hand the call over to Anshul.