Aurora Spine Corporation

Welcome to the Aurora Spine third quarter 2021 financial results conference call. I would now like to turn the call over to Adam Lowensteiner with Lithium Partners. Please go ahead.

Thank you, Gary. Good afternoon, everyone. Thank you for all for joining us today to review the financial results for Aurora Spine's third quarter results ended September 30, 2021. With us on the call representing the company today are Trent Northcutt, President and CEO of Aurora Spine, and Chad Klaus, Chief Financial Officer of Aurora Spine. Before we begin, I would like to remind everyone that statements made during this course of this call may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Act of 1934. These statements reflect current expectations concerning future events and results, words such as expect, intend, believe, may, will, should, could, anticipate, and similar expressions are words that are used to identify forward-looking statements. but their absence does not mean a statement is not forward-looking. These statements are not guarantees for future performance and are subject to risks and uncertainties and other important factors that could cause actual performance or achievements to be materially different from those projected. For a full discussion of these risks, uncertainties, and factors, you're encouraged to read Aurora Spine's documents on file with CDAR, including those set forth in periodic reports filed under the forward-looking statements and risk factors section. Aurora Spine does not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. On this call, management may refer to EBITDA, adjusted EBITDA, adjusted net income, adjusted EPS, which are not measures of financial performance under generally accepted accounting principles or GAAP. Management believes that these non-GAAP figures, in addition to other GAAP measures, provide meaningful supplemental information regarding the company's operational performance. Investors should recognize that these non-GAAP figures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to and not as a substitute for or superior to any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures in accordance with SEC Regulation G can be found in the company's earnings release. With that now, I'd like to turn the call over to Mr. Trent Northcutt, President and Chief Executive Officer of Aurora Spine. Trent, please proceed.

Thank you, Adam. It's a pleasure to be here. I'd like to welcome everyone to the Aurora Spine Third Quarter 2021 Financial Resort Conference Call. Earlier today, we issued a press release detailing our financial results. Hopefully, you've had a chance to review the news of this release. But if not, a copy can be found on the website at www.aurora-spine.com under the investor section or other financial websites that are listed on this release. To lay out the agenda for today's call, let me first summarize a few events of the quarter, including some brief commentary on the numbers. Then I'll talk a bit about the statutes of each of our key initiatives and products, including the highlights of our new pain division, the products such as Silo, Zip, and our initiatives on the spine division, including the new DEXA product platform. Chad Klaus, my CFO, is here, and he'll be joining the call with us. He can give a recap on the financial results. He will conduct a Q&A session at the end of it. We will conduct a full review. The key event in Q3, overall, the third quarter produced solid results and demonstrated that the issues experienced from COVID-19 started a starting look behind us. While there still may be some pockets in areas that surgery cancellations can pop up here and there, overall, the business didn't experience any injury slowdowns for us in the third quarter, like the other companies in our industry did. As seen, Aurora actually surpassed pre-COVID revenue levels and showed the growth year-over-year, as well as sequential improvement from the second quarter. During a quarter, we decided to tap the capital markets and successfully raised $5.1 million. I'd like to clear up front my comments that additional capital was to strengthen our capital structure in order to certain key investments in order to accelerate growth efforts in several of our new products. As we've now clearly fully coveted in our sales proprietary of our products from third-party products, We now prepare to approach more doctors, more surgeons, and immerse in more of the suite offering that Aurora has to offer from a product standpoint. To do so, it was imperative to add more manufacturing capabilities, add some inventory, and build up more of our kits, which contain an amount of instrumentation to conduct procedures in an effective way in hospitals and surgery centers. If we couldn't supply the products to the doctor surgeon, then we would have run the risk of losing those accounts, which we put so much effort towards gaining. In addition, with the infusion of the new capital, we also plan to hire several new direct sales reps in key strategic markets around the U.S., and this would be both in our spine and our pain division. The demand was apparent on the pain side of the business. This pain management division we saw was growing, which we had established a year ago that caused more of a phenomenon of growth. Let me take a step back and explain what was going on in the pain market when we entered into it. We have a few products that we introduced to the pain market, specifically with the Zip product and the Silo product. It has been experiencing many spine care practices which have an established pain care offering within those practices to implant new treatments to treat back pain prior to sending them to a patient to final surgery. Aurora's products have been able to assist in the pain interventionists and the pain management doctors to help treat that patient with a quick and seamless manner of recovery. This avoids the need for a longer surgery and also helps that patient get recovery in an area where they might not be able to sustain a long-term surgery or even a short-term surgery. Aurora's proprietary products into the pain market have offered patients and doctors a new solution that they can offer this patient for their chronic back pain or pain recovery. A little bit of background on this is that the pain market is an emerging market where the pain interventionalists are actually performing more surgical-based procedures, such as SI joint fusion and interspinous device fixation and fusion. This is allowing the patient to have a procedure performed in an outpatient setting where the patient can actually have a recovery of their back pain, their disc degeneration, or their SI joint degeneration. This has been proven in our cadaveric labs, our biomechanical labs, and now we're starting to show it in our short-term results, and we plan on continuing to build off of this because what's happening with Aurora is that we're now entering into a multicenter study with our ZIP implant, that is focused on the pain interventional market, and our silo SI joint system that is now addressing the SI joint pain needs. And our silo product, which is evolving into a new system in the coming year, will also be part of a new multicenter study. We will have two parallel path multicenter studies running in 2022. Other areas that we have advanced during the quarter is our new DEXA technology. We received our patent last year, and we applied that product into this year's development. Last year, the patent hit the ground running with this first-class DEXA product, the DEXA-C, which retained FDA clearance during the quarter. This patented technology allows us to create a series of implants manufactured with varying densities in order to match that patient's bone density and T-score, which should employ superior fixation and promote quicker bone growth. We are now working towards commercialization of this product and plan on securing its use in the initial launch of this product before the end of the year. In addition, we are identifying several key proprietary Aurora products that are asserting which will offer the use of DEXA technology. So it's a complete technology platform for Aurora where we're deploying DEXA technology to help leverage the technology by pursuing maybe licensing opportunities with other med tech companies that are outside of the world of spine. And this would help benefit the patient from an implant standpoint where the patient would be better suited for that patient's bone density. Okay. So we're focused on this, and we think it's a really key initiative for us in this quarter and going into next year. The market overview and dynamics of this new product and our clinical studies, we couldn't be more impressed with our faculty that we've asked to help participate in multiple cadaver labs around the country. We trained over 200 doctors this year, and we will continue this trend going into next year. So to summarize, I'm extremely proud of our team's performance and staying focused during a turbulent time, but staying focused on building the company through the pandemic and all throughout this year staying focused on our goals. We are well-positioned to take advantage of several new initiatives, including new products and new platforms and new surgeons and new doctor approaches. and looking for a long-term as well as a well-positioned for success. The company is well-positioned for the success growth, especially as we have launched these new products and have new products that we'll be launching, along with more clinical studies, proving out our technology, and teaching more doctors using the Aurora products. Good news is that the pandemic is mostly behind us, and surgeries have resumed. I'd like to take a moment now to introduce to Chad Klaus, our CFO, and I'll turn the call over to Chad Klaus for the third quarter financial results. Chad?