Aurora Spine Corporation

Good day and welcome to the Aurora Spine Report's second quarter fiscal year 2022 financial results. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Adam Lowensteiner, Vice President at Lesson Partners. Please go ahead.

Thank you, Cole, and good morning, everyone. Thank you all for joining us today to review the financial results for Aurora Spine for its second quarter ended June 30th, 2022. With us on the call representing the company today are Trent Northcutt, President and CEO of Aurora Spine, and Chad Klaus, CFO of Aurora Spine. Before we begin, I would like to remind everyone that statements made during the course of this call may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended in 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 of future performance and are subject to risks and uncertainties and other important factors that could cause actual performance or achievements to be material different from those projected. For full discussion of these risks, uncertainties, and factors, you are encouraged to read Aurora Spine's documents and 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, and 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 gap measures in accordance with SEC Regulation G can be found in the company's earnings release. With that, I'd like to now turn the call over to Mr. Trent Northcutt, President and CEO of Aurora Spine. Trent, please proceed.

Thank you, Adam. I'd like to welcome everyone to Aurora Spine's second quarter 2022 financial results conference call. Earlier today, we issued a press release detailing our financial results. Hopefully, you've had a chance to review this news release. But if not, a copy can be found on our website at auroraspine.com. That's aurora-spine.com. Under the investor selection and other financial websites, you'll find more listings. To lay out the agenda for today's call, let me first summarize a few events of the quarter, including some of the brief commentary on the numbers. And then I'll talk a bit about the status of each key initiative and products like Zip and Silo. as well as our own initiatives of spine division, including the new DEXA line. Chad will then give you a recap of the financial results, and we can conduct a Q&A session at the end. Key events in Q2 is market overview and dynamics in new products and clinical studies. The second quarter was one of the many accomplishments. A major highlight of today's call are the financial results for the second quarter, which produced Aurora's highest quarterly revenue on record. These results demonstrate that investments we placed in 2021 are starting to pay off and our growth strategy is working. In addition to higher revenue, we also delivered solid levels of gross profit margin, which has also revealed that we are selling more proprietary products. We also continue to sell DEXA C on a limited basis in the second quarter, which is still in beta phase as we gear up for full launch phase later this year. I'll expand on DEXA later in my comments. On a micro level, the momentum we built in the past few quarters has continued into a second quarter. As the pandemic issues in healthcare seem to be mostly behind us and patients are coming out to take care of health issues and doctors are welcoming them back. Also, many doctors have pivoted during the pandemic to conduct their procedures at surgery centers so they can schedule procedures and get them completed. Aurora products like the Zip and the Silo are very compelling to doctors and their patients. For doctors, it means treating patients by conducting procedures in a minimally invasive manner. For patients, they undergo a minor procedure and can usually return home in the same day, usually resuming their normal activity and routines. I believe that these reasons are, our products are able to gain in traction and we've been able to, been receiving, in addition to our products, our alternative ways for doctors to treat patients as little pain medication as possible. especially given the opioid epidemic that has hit the United States in the recent decade. During the quarter, we continue to work diligently and put focus on our proprietary products by educating doctors through our cadaver lab trainings. In the quarter, we continue to train many doctors and pass more than 200 we've trained from last year. We have slated to conduct more sessions in the fall and on track to double the number of doctors we trained in 2021. The trainings are done in various cities throughout the United States and allows around 20 doctors to learn more about Aurora products, specifically the Zip and the Silo at the same training. The Zip series continues to lead the charge for Aurora, which was 30.6% of the sales in the second quarter, or 1.2 million. Our clinical study for this product returning solid data and getting the product into the hands of many doctors that didn't know it existed. The product is a key value-add product to many pain interventionists who can now conduct a fusion procedure in a minimally invasive manner and incorporate such a therapy into their practice and patients, which they didn't offer before. The clinical trial for the ZIP continues and is growing very well. As mentioned, it has attracted many new doctors to try the device, and many have embraced it now and have incorporated it into their practice. Subsequent to the quarter end, we announced the FDA clearance of a new lumbar stenosis indication for use in our ZIP family of MIS implants. Spinal stenosis when the spinal canal narrows, which can lead back to leg pain. Adding lumbar stenosis to the existing FDA clearance indicates a generation of disc disease and spondylolisthesis trauma or tumor allows physicians to identify and treat new patient population using the ZIP MIS implant device. The receipt of this additional lumbar spinal stenosis, or LSS, indicated for the ZipMIS interspinous fusion system is another key milestone for Aurora Spine and allows us to expand our spinal product portfolio and act a nice tailwind for the product series which will open up the Zip for more potential procedures and would be a more attractive option for doctors going forward. Silo, our SI joint device, also was an important contributor to the company's growth in the second quarter. Its revenues represented 23.5% of the total revenues in the quarter, or nearly $1 million. As SI joint procedures continues to be adopted by paying doctors across the country, it is still in infancy and expect the silo franchise for its own right to have very positive future ahead. As SI joint procedures continue to be introduced to the marketplace, We have been busy making sure that our current supply is available, but also working diligently with the FDA obtaining approvals on our next generation SI joint system, the Silo TFX, which will be a titanium version with additional fixation capabilities. We continue to conduct biomechanical testing on the product, and the results are coming back positive. We're hopeful for an approval in the coming months. Another area we have advanced our IP during the quarter is our DEXA technology platforms. We are secured a key patent with the DEXA, and we have hit the ground running with creating our first DEXA product, the DEXA-C, which stands for cervical, which retained FDA clearance during the third quarter in 2021. And during the second quarter of 2022, we received 510K clearance on our DEXA Solo-L, which stands for lumbar, spinal fusion system, a 3D-printed standalone anterior lumbar interbody fusion device, ALIF. The device Solo-L contains sorry, the DEXA SoloL, part of the DEXA technology platform, is a standalone device for anterior lumbar, lateral lumbar interbody fusion. The procedure is its first of its kind device for lumbar spine in the world. It's also the first color-coded bone-mimicking structure implant in the marketplace and will help doctors match the patient to the patient's bone quality and density. Now with two DEXA products with FDA clearance, We are in the midst of building product sets and inventory and expect to detail these products further in the second half of the year as supply chain is currently ramping up. We are now working towards marketing of this product, including training sessions and partnerships. Before I pass the call over to Chad, it's important to note that during the second quarter, we also continue to make advancements in our product pipeline as we receive a patent from the United States Patent Office for Spinal Implant for Motion Preservation Fusions. This patent covers the Aurora ZipFlex, a technology for minimally invasive posterior interlaminar implant for motion preservation that can be adapted in a fusion or a non-fusion device while implanting into a patient via small modular attachment. This new patent covers interlaminar motion preservation, fusion, and is also one device that can treat lumbar spinal degeneration. Such as spinal stenosis, we are continuing to work on our prototypes of the ZipFlex and we expect to advance it during the 2023. This patent shows the improvements we have made with our intellectual property and patent portfolio. As we build Aurora and we continue to grow, which has also been important to our investors, we are consistently working and thinking about the next generation of proprietary products that makes it easier for the doctors and for the patients. Summary. I'm extremely proud of our team's performance and staying focused on building this company. We are well positioned to take advantage of growth markets in several of our new proprietary products. We remain focused on penetrating these markets furthering this year through continued training sessions and clinical trials. Looking to the long term, we are well positioned for success and especially we have new products, more clinical studies providing out our technologies and teaching for more doctors to use the Aurora products. We remain highly focused at the opportunities that are in front of us and continue to invest our growth with each of our major platforms. That's Zip, Silo, and the DEXA platform. I will now turn the call over to Chad Klaus, Aurora Spine CFO, who will review the second quarter financial results. Chad, please proceed.