Paragon 28, Inc.

Thank you all for joining. I would like to welcome you all to the Paragon 28, third quarter 2024 earnings conference call. Currently participants are in a listen only mode. We will be facilitating a question and answer session at the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to hand the call over to your host today, Mr. Matthew Brinkman, SVP of Strategy and investor relations. Mr. Brinkman, please go ahead.

Good afternoon, and thank you for joining Paragon 28's third quarter 2024 financial results and earnings call. Presenting on today's call are Albert DaCosta, Chairman and Chief Executive Officer, and Shadi Shaheen, Chief Financial Officer and EVP of Supply Chain Operations. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities law, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations, or predictions of future events, results, or performance. These forward-looking statements are subject to a number of risks uncertainties, estimates, and assumptions that may cause actual results to differ materially from these forward-looking statements. All forward-looking statements are based upon current available information, and Paragon 28 assumes no obligation except as required by law to update these statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. During this presentation, we will refer to the non-GAAP financial measures of adjusted EBITDA, free cash flow, and constant currency net revenue growth. A reconciliation to the most comparable GAAP financial measures, net income, cash from operating activities, and reported net revenue growth, respectively, are contained in our press release issued earlier today. And with that, I will now turn the call over to Albert.

Thanks, Matt. Good afternoon, and thank you for joining us for our third quarter 2024 earnings call. To start, I want to thank the Paragon 2018 for their continued dedication. Thanks to their collective effort, E28 has been able to help improve the lives of over 52,000 patients worldwide year to date. I am truly grateful for their commitment to always ensure we are there for our surgeon customers, and I am inspired by the impact we are continuing to make as a company. 2024 has been one of the most pivotal years in P28's journey as a public company, marking a period of tremendous progress and transformation. This year was incredible, with 13 launches year-to-date, which truly demonstrates our deep commitment to delivering best-in-class solutions to our surgeons and patients and raising the bar in foot and ankles. Our continued focus on innovation and commercial execution is why we have been able to grow well over twice the market rate in every quarter since going public in 2021 and really since the company's inception. And we are now quickly ramping up our operational efficiency to put us on a trajectory for sustainable and profitable growth. Our consistent growth combined with the momentum we have in driving operational excellence has Paragon positioned exceptionally well. Now turning to our third quarter performance, global revenue for the third quarter of 24 was a record $62.3 million, representing 18.1% reported and 17.6% constant currency growth. We had strong growth across our portfolio at over twice the rate of the broader foot and ankle market and continue to have significant momentum from our recent product launches. Looking at the U.S. business performance, Revenue for the third quarter of 24 was $51.2 million, representing 14.8% reported growth. We had one extra billing day in the US this quarter, contributing approximately 150 basis points of tailwind in the quarter. We finished the quarter with 2,244 active surge in customers, representing a 9% increase compared to the third quarter of 23. Over the same time period, we increased our U.S. producing sales rep roster by 10.5% to 284 reps and saw a 4% increase in productivity across our rep base. Third quarter international revenue was $11.2 million, representing 35.7% reported and 32.8% constant currency growth. International growth continues to be driven by our core markets of the UK, Australia, South Africa, Canada, and Spain, where we have made focused investments in market expansion in recent years. Across all geographies, our top line performance continues to be driven by our innovative product portfolio delivered by our dedicated sales force. As noted during our previous earnings call, We saw some degree of choppiness in our sales trends entering the third quarter. Those fluctuations we experienced abated later in the quarter, and we continue to see steady demand for our products. Our balanced portfolio offers a wide variety of product options to our surgeon customers, enabling P28 to continue growing despite shifts in surgeon preference or patient demand. We see tremendous growth opportunity for the foot and ankle market over the long term and believe we are well positioned to deliver sustainable, profitable growth. I will now turn to a few key updates on our product portfolio. We've done an incredible job as a company, continuously innovating and bringing novel products to market. And 2024 really stands out with 13 new product launches to date. And many of our recent launches were in high growth and highly strategic end markets, including our first Smart28 module. I cannot overstate how pleased I am with our development team's ability to deliver such meaningful products at the pace and quality we've done so this year. And I am incredibly excited to see these products changing the standard of care. I receive updates every day, sometimes several an hour, from both our sales team and surging customers with results from recent cases that demonstrate we are achieving our mission to improve foot and ankle patient outcomes. As a reminder, we launched 11 products through our last earnings call, including our first SMART28 module. And in October, we launched two new products. The first was the phantom fibular nail system designed to offer surgeons a less invasive option for treating ankle fractures. There's a lot of excitement for that product to start the fourth quarter, and it's also highly complementary to our broader ankle trauma and soft tissue products. The second launch was a short stem tibia implant for our Apex 3D total ankle replacement system, which allows us to cater to a broader range of total ankle patients, specifically those with complex anatomy. The short stem tibia implant and our recently launched right angle drill are both on limited market release, and we expect they will be key drivers for our ankle portfolio in the future. The products we launched so far this year are setting new benchmarks for the company and for our market. There are too many great products this year to go through each in specific detail, but the adoption and feedback across the board has been overwhelmingly positive from our surgeons and reps alike. We believe our strong foundation and the momentum from our recent product launches put us in a great position to drive sustainable growth moving forward. We remain laser focused on growth while also sharpening our focus on operational efficiency and capital allocation as highlighted in our last quarter's earnings call. Shadi will share details momentarily, but from my perspective, I am pleased to say our efficiency plan is progressing better than expected and resulted in substantial improvement to operating expense and free cash flow. In summary, we are pleased with our performance in this pivotal third quarter. We have incredible momentum driven by our new products, and we are tracking well against our key operational efficiency plans. We believe that now, more than ever, P28 is positioned for long-term sustainable growth and operational excellence. We are highly confident in our ability to execute and believe we are very well aligned to drive shareholder value with every dollar invested. I will now turn it over to Shadi But before I do, I want to say that Shadi has been an incredible addition to our team and as a partner to me in particular. His leadership has had a meaningful impact on our organization, and he has been critical in our ability to drive the results we are able to share this quarter. We are very happy to have him. All right, Shadi, the floor is yours.