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spk01: Good day and welcome to the Aurora Spine Report's third quarter of fiscal year 2022 financial results conference call. All participants will be in 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. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Adam Lowensteiner, Vice President of Lithum Partners. Please go ahead.
spk00: Thank you, Betsy, and good morning, everyone, and thank you all for joining us today to review the financial results for Aurora Spine for the third quarter ended September 30th, 2022. 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 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 materially different from those projected. For full discussion of these results, 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. or respond as 9 to 10 to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. On the score, management may refer to EBITDA, 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 not 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 measures in accordance with SEC Regulation G can be found in a 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.
spk06: Pleasure to be here, and thanks for having us. Brett, do you want to proceed with the prepared remarks?
spk04: Yeah, it keeps cutting in and out, and I get a high-pitched signal going through my phone. I'm sorry. It's like echoing back and forth. I apologize.
spk00: That's okay. Chad, would you like to read Trent's prepared remarks?
spk05: Yeah, I can do that. Morning, everybody. Earlier today, we issued a press release detailing our financial results. Hopefully, you'll have had a chance to review that news release. But if not, a copy can be found on our website, aurora-spine.com, under the Investors section or other financial websites. To lay out the agenda for the call today, let me first summarize a few key events of the quarter. I'll then talk a bit about the status of each of our key initiatives and products like Zip and Silo, as well as our initiatives on the Spine Division, including our DEXA product line. And then Jad, which is me, will give a recap of the financial results. Excuse me. As we anticipated, the third quarter was a bit lower quarter in its on a sequential basis due to the slowdown in procedures performed in the summer months due to extended vacations in the medical community. That said, third quarter was still a very productive quarter as we continue to focus on growth through product placement and education and still produced even strong revenue growth over last year and positive EBITDA. On a macro level, we continue to see momentum gaining in the minimally invasive surgery market, especially with regards to the reimbursement coding as insurances are embracing more procedures that can be done in a minimally invasive manner and have the patient recoup at home in a quicker time frame. Overall products like the Zip and Silo are very complementing to doctors and their patients and designed for minimally invasive procedures. I believe it is. These catalysts are why our products are able to gain the traction we've been receiving. In addition, our products offer alternative ways for doctors to treat patients with as little pain medication as possible, especially given the opioid epidemic that has hit the United States in recent decades. This, too, is the main tailwind for the med tech industry. While Q3 was a little bit on the quiet side, shortly after its close, we built up some significant momentum heading into the North American Spine Association, or NAS, industry conference, which took place in early October. Specifically speaking, we received FDA clearance for the siloed TFX, which was a very important catalyst for Aurora and the future growth opportunity within the SI joint marketplace, which is still in very early in its very early innings. Obtaining this clearance improves our IP franchise, but also demonstrates that we've created a new product that offers transfixing capabilities, which is something many doctors are desiring. We are currently moving forward on preparing initial surgeries for the TFX, and if all goes well, it should be ready for commercialization in Q1 2023. We'll definitely keep investors updated with this progress with the TFX, as we believe it will be a contributor to our growth for several years to come. The ZIP series continued to be a nice contributor for Aurora. Subsequent to the third quarter's end, we were pleased to learn the initial positive interim results from the clinical study using the ZIP, which was published in an abstract posted in the publication Pain and Therapy, entitled A Perspective Observational Open Label Non-Randomized multicenter studies measuring functional outcomes on a novel interspinous fusion device in subjects with low back pain, refined study. The publication discussed the results of the interim three-month analysis, which included 54 patients, of which 82% reported improvement as a result of the procedure, while 65% of patients demonstrated clinically meaningful improvement in their pain and function. The publication also demonstrated that the use of the ZIP device was both effective and safe at the three-month follow-up. This study remains active and enrollment is continuing with more follow-up data expected in the future as more patient data is compiled. The study included results gathered from 11 doctors and were conducted on behalf of Aurora Spine to determine the utility of using interspinous fusion devices as a fusion therapy for the treatment of lumbar spinal stenosis. The treatment of lumbar spinal stenosis has a large unmet treatment need that bridges the gap between conservative measures and invasive surgical procedures.
spk04: In this publication, it is an exciting validation of Aurora's spine ability to provide safe and effective outcomes by utilizing Aurora's ZIP product line. We look forward to the additional results set to be published at the 12-month collection point and believe it will be a continued trend positively for our physicians and their patients. Last but not least, moving on to the DEXA. We have been invested heavily during the third quarter to build several surgery kits for the DEXA-C and are in the midst of placing them with doctors as we speak. We started the year initially with just two kits in our field, out of the field, where we're able to ship another two earlier in the quarter, which helped incremental revenues at DEXA represent 10.5% of total sales in the third quarter were approximately $383,000. This was up from DEXA-C sales beginning at 5.3% of revenue in the second quarter, or approximately $212,000. This demonstrates that we believe DEXA-C could be a meaningful revenue source for Aurora moving forward. As we expressed earlier, we have developed several kits for the DEXA-C and are now in possession of finalizing many of them and will have recently shipped into the initial tranche of them into the doctors. While initial deployment shows successful deployments, we do want to express that not every deployment will have equate to the success of our initial team working diligently to make sure that we share these kits with doctors that will not only will try the DEX technology, but also will embrace it into their practice. Also another factor to remember is pricing. Since DEXA is a proprietary product of Aurora, we should be able to have some financial flexibility regarding to the internal costs, but there will be some price variation depending on the doctor and their practices and what type of economics they use going into their procedures. Our goal is to place DEXA in the hands of doctors that embrace new technology and are looking for something that is better for their patients, and DEXA certainly offers that more. We're very excited about the DEXA overall, and as we initially launched with the DEXA-C, it should be a key growth catalyst moving forward. Regarding our FDA-cleared DEXA Solo-L, which we'll just shorten to DEXA-L, spinal fusion system, which will have a second DEXA product released, is a 3D-printed standalone anterior lumbar interbody fusion device. The DEXA SoloL, part of the DEXA technology platform, is a standalone device for anterior and lateral lumbar interbody fusion, or as the acronym is, ALIF or LLIF, for anterior lumbar interbody fusion or lateral lumbar interbody fusion procedures. And this is the first of its kind. the device for lumbar spine in the world. It's also the first color-coded bone-mimicking structure implant in the marketplace that will help doctors match the patient with the patient's bone quality and density. We are in the process of building inventory for this product and hope to have it used in initial surgeries during the first quarter of 2023. Our goal would be to launch a couple kits in this procedure and then build out more in the second half of 2023. We'll keep investors upgraded and updated on our progress. Summary. To summarize, I'm extremely proud of the team's performance and staying focused on building this company. We're well positioned to take advantage of growing markets with several new proprietary products. We remain focused on penetrating these markets further with a year through continued training, succession, and clinical trials. Looking to the long term, we will be well positioned for success, especially as we have new products, more clinical studies, improving our technology, and teaching more doctors to use Aurora products. We remain highly focused at the opportunity that is in front of us, and we continue to invest in our growth with each of our major platforms. Zip, Silo, and Dexa. I will now turn over the call to our CFO, Chad Klaus, Aurora's spine CFO, and we'll review the third quarter financial numbers.
spk06: Thank you, Chad.
spk05: Thank you. With the number highlighted in detail in the press release, just let me focus on a few of the areas. Revenue during the third quarter of 2022 was $3.6 million, a 26% increase from the $2.9 million of the third quarter of 2021, and a 10% sequential decrease from the $4.1 million in the second quarter of 2022. The improvement in revenues from the prior year was driven by strong use of proprietary products, especially ZIP and solid devices, as well as the addition of DEXA-C. Revenues were sequentially lower due to lower procedure volumes due to extended vacations in the medical industry. First profit in the third quarter was $1.9 million. an increase of 43.2% over 1.4 million in the third quarter of 2021, and a 9.3 decrease from 2.1 million in the second quarter of 2022. Of course, margin was 53.2% in the third quarter of 2022, up from 46.8% recorded in the same quarter a year ago, and compared to approximately 52.6% of revenue in the second quarter of 2022. Gross margins showed continued progress and improvement on a year-over-year basis as more proprietary products are part of our revenue. We believe over time that the margins have the capability to continue to expand beyond these levels, especially if proprietary product sales increase. Total operating expenses in the third quarter were $2.1 million, which is sequentially lower from the second quarter of 2022, which was $2.4 million. due to the completion of some R&D expenditures. As the company continues to make key investments to grow the business, which include new salespeople conducting clinical studies, training sessions, and R&D expenses towards new products, investors should anticipate these levels to remain at these levels in the coming quarters. We do believe these investments will put the company in the proper position for accelerated growth and sustained profitability. Eva Dack, in the third quarter of 2022 was 151,000, improved from the second quarter, which was 96,000, and a loss of 171,000 when compared to the same quarter a year ago. Net loss in the third quarter was 116,000, or zero per basic share and diluted share, and improvement from the second quarter, which was a loss of 160,000, or zero dollars. basic deleted shares and the improvement from a net loss of $368,000 or negative one cent compared to the second quarter of 2021 results. These improvements come directly from sales of proprietary products and lower expenses. Turning to the balance sheet, the company ended the quarter with approximately $650,000 in cash and cash equivalents. We believe these levels are sufficient to fund the company in the coming quarters. Accounts receivable decreased sequentially to approximately $3.7 million from $4.1 million in the second quarter due to improved collections. We believe we are on our way to receiving additional funds in the coming months. We are consistently monitoring our receivables and working diligently to collect in a timely fashion. Our inventories have for now plateaued as we completed building our DEXA-C kits, which are now being deployed. We continue to monitor our expenses and hide controls over our costs. We should have some continued savings from lower R&D expenses. Now that the siloed TFX has been approved, we believe that we have the necessary capital to move the company forward as we improve collections on accounts receivables to improve cash flow from operations. This concludes my comments. I'll now turn the conversation back to Trent.
spk04: Thank you, Chad. Before we open the call for questions, I'd like to include that we continue to make improvements initially to make sure that we remain on track for sizable revenue growth. In the interim, we are in the midst of improving our sales team. Especially now, we've had several new products take the company to the next level. We're also working on moving into a new office to accommodate all of our employees, putting everything underneath one roof. and operating in an internal training lab to host medical professionals with our sales team at our office. While there are some near-term costs for these improvements, we believe it would be beneficial for the long term. We obviously have more work to do, but the company is in a solid position to capitalize on IP improvements. We've stabilized the past two years. It is truly amazing to see the opportunity our organization can grow We are highly successful in creating new proprietary products, and now it's time to demonstrate that we can scale the company on a commercial side of the business. I appreciate everyone's patience and believe that we are on the early stages of reaping the rewards of our efforts. So as far, we are very pleased with the progress of these initiatives and very excited about the remainder of the year and beyond. And with that said, operator, we are
spk06: Ready to take any questions.
spk01: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Tom with MicroCap Connection. Please go ahead.
spk03: Hey, good morning, guys. Congratulations on another successful quarter. Want to dig into the doctor vacations, how that impacted sales, and have sales rebounded since?
spk04: Yeah, the two parts. Hi, Tom. Two parts of it. Yeah, we have seen getting the procedures that we're drawing the most. a new revenue for the company, which was like silo and getting the zips back on track. Those came back because many of those doctors who went out on holiday came back and now are doing those procedures. The hesitation that I have on the Q4 is the T code or the category three code with the posterior allograft systems and that coding reimbursement, that there was a concern there for a bit And that ran all through, you know, late spring, early summer, all the way up until current day. The conversation was out there in the field. And then, indeed, they made the announcement that they're going to, and I don't have the date off the top of my head, but they made the announcement that they're going to move the allografts into a Category 3 T-code. But with that, it didn't change anything. the economics behind it. So there wasn't anything that really told the doctor that they were going to lose money or they wouldn't make any money or they shouldn't do the procedure. There was nothing that said that. It just said that they were going to add that modifier to that code, that category three would be added to the coding reimbursement. So with that said, since no one has been affected directly by any type of financial impact under the procedure, we see that it's kind of steady with that, but there's been that pause where we've seen some doctors that we would say that would do six of these a month now are looking at this like, well, maybe I'll just do three and see where it falls in the beginning of the year because they're not going to make any additional announcement of any major announcement until July of next year on the Allograft system. And then just let me just add to that because it's important to note that we have submitted the silo TFX and we do not believe the silo TFX will be affected by the category three code because we believe it falls within a different guideline of SI joint fusion. This actually would turn into a real winning opportunity for Aurora because it would be kept in the same reimbursement codes as SI bone and electronics and others of that category. So we're, you know, we're seeing this as a, as a mixed blessing, mixed opportunity. And we think that it could be really, really substantial for us, especially that we're making good progress on getting the TFX instrumentation, um, uh, completed so we can initiate our first alpha procedures with the TFX. I realized I answered a much bigger question to your question, initial question, but in Q, in Q4, I remain, you know, um, positive that we can pull some numbers together for the Q4. I am going to be affected this week in sales because we do a lot of surgery in upstate New York. And as many of you know, they moved the whole NFL football game to a different state because of that. So this week is going to be tremendously slow on top of the Thanksgiving holiday. But hopefully we can make this all back up this week.
spk03: All right. Can you tell us about the DEXA sales? You did 10% of entire company sales were from DEXA C. How many kits were handed out? What did that equate to? Was it four kits that equated to 10% of the entire sales or was it 10 kits? How many kits were outstanding?
spk04: Roughly about four kits out there. But now we'll have up to 40 kits available completely in everyone's hands with some extra, you know, say 35 will be out in the field or 30-plus will be out in the field with a couple, you know, five or more in the office to be able to maneuver as needed. But the sales team is moving those kits into position with a couple of key people, especially the – we had nine surgeons come to San Diego for a DEXA review, round table review with a blend of ortho and neuro doctors and all nine of those accounts are receiving their DEXA inventory and we're working with their hospital to make sure we're approved at their facility for the pricing and approved onto the hospital contract itself because it's a newer product and it's now finally in their hands and sometimes the hospitals don't allow you to get approval on the products until it's actually available. And so now that it's available, We have some work to do on it, but that's part of the process. We plan on keeping those kits all out in the field all through fourth quarter and going into the beginning of the year. We're encouraged by that. It can be a real revenue generator for us.
spk03: Would you say, on average, a doctor – I know we discussed this in a different call – that an average practice would use 10 such device products in a month per doctor? Is that something you're seeing off of the four doctors currently right now?
spk04: Yeah, it won't come off that. It won't change that. It's definitely the ability to do 10 procedures, not including levels. I'm just talking about procedures. 10 is very fair, yeah, per set. Okay. One particular facility actually has really good pricing that we know of, and they're going to actually give it to their entire facility educational department so it's not just one say one doctor the whole department's going to be using the system and that's uh we're really proud about it we're not going to say who it is because uh competitor wouldn't like it but we're going to we're definitely going to benefit from that wonderful and and on average a device implant for dexac is 3 000 is that fair to say approximately It is now. For right now, that price will definitely be adjusted because if you look at, you know, like an HCA cervical price can be as little as, say, $800 per unit, but we're not running to all the HCA facilities. We're going to different facilities because it's new technology and it's not old technology. We're trying to stay away from that older price technology. We're trying to stay on new technology track line.
spk03: Okay. How many kits do you think are plausible to have out in the field for 2023 of the DEXA-C?
spk04: Well, plausible would be if all 40 of the kits are turning and we can't keep the product on the shelf and I have no problems with double down on the inventory. There's no reason why we wouldn't. It's a very high volume procedure. and with really high success rate. It's got a plus 90% plus success rate, and we think we just made it better. So with that said, we plan on bringing all those kits out, and if I have to put 80 sets in the field or 140 sets in the field, I'll do it.
spk03: Okay. Now you've got your DEXA-L, which is the secondary DEXA line, our DEXA product that's, uh, we'll be coming on out, uh, Q1, you'll be starting your, your beta rollout. Is that correct? And, uh, do you, do you feel you'll have the similar success, uh, as you've seen with DEXA C?
spk04: I do. Uh, I do. It has a really, uh, really strong price point. You know, we, it's an average selling device of over $6,500 per unit. And, um, uh, so it has a very low cog, very high yield. And, um, a lot of procedures because it competes in the world of pedicle screws and pedicle screws is a, you know, 48 to 52% of all revenues of all spine companies. So it's the, it's the mega product. And if we can get, you know, get some people as excited about the cervical and we'll use the cervical data that we're coming out with and, uh, in the biomechanics data and, uh, in a, uh, a single arm multicenter study with the, with the DEXA-C, uh, and the write-ups that we're getting from these physicians using the cervical, and we'll apply that right over to the lumbar and start talking to more and more doctors about the success that they're having with cervical, that they should carry this over to their lumbar practice. And some doctors do a very high volume of lumbar procedures where they could do, depending on the doctor, of course, but they could do multiple procedures in a week and they can do this procedure, use the DEXA-L technology, and they can roll the patient over from an anterior position, roll them over onto a prone position, and actually back up this patient and use the ZIP implant in conjunction with the DEXA-L implant. So now we could... The doctor is able to do a double billing on that where they can bill for anterior and posterior work. They call it a spine 360 procedure. And then Aurora can actually bill for the DEXA-L and for the ZIP separately. So that would change that pricing from, say, a $6,500 procedure to a, you know, $10,000, $12,000 procedure or more. Wow, wow. Now, with the new workloads of DEXA-C,
spk03: And, of course, DEXA-L coming and potential of, you know, we've seen billing code changes. Do you feel in, you know, Q4 and even in Q1 moving ahead that DEXA-C will by far make up any lost sales that you could potentially see or slow down in sales in Q4 coming ahead?
spk04: I really do. And in fact, that was one of the things that we were during the summer when we were getting the sets, you know, ready and queued up is that we, we talked about the T code and the category three code and what, you know, how is that going? You know, what was that looking like and how is that slowing down on top of some of the vacations and why people were just taking a pause and procedures doing well, patients doing well on the, on the posterior SI procedures, but this T code made everyone kind of think a little bit. So for us, we said, well, Look, cervical codes haven't changed, and reimbursements haven't changed, and cervical procedures are increasing. So we said that since we're going out to brand-new customers, many of these doctors that are using the DEXA-C, these were brand-new customers for us because we have another cervical device in our portfolio, which is called Discovery, and that Discovery implant is still widely being used. in our company. So we are trying to work with the doctors that are not using our discovery implants and that want to use the new DEXA-C implants. And again, this will also lead to new DEXA technologies for doctors to try as we go along.
spk03: As for doctor training and increasing the amount of doctors selling your products, How is that going? How many doctors did you train this quarter? What do you plan on training for the balance of 2022? And for that matter, how much for full year 2023, how many do you plan to train?
spk04: I don't know yet. I'm just going to answer honestly on that. I don't know how many we plan on for training next year. We want to see... you know what the how the excitement is for the dexa sorry for the uh silo tfx we think it's going to be quite um extensive we think a lot of people are going to really want to be trained on this product we would add it into our current protocol of training education which is uh doctors would come in for the zip the silo and the silo tfx training it'll be part of a comprehensive training one of the things that we're considering doing is we want to add to that training because we've been essentially just kind of feathering it in as an overview but not initially as a topic um on full like a full breakdown didactic session but breaking down a full didactic session on dexa technology as an introduction to some of the pain interventional doctors that don't normally follow you know osteoporosis, osteopenia as a part of their practice, but to give them an education on implants that are better suited for bone density and density-driven implants such as DEXA implants. And adding that as part of an overview, obviously you don't need a cadaver lab to teach cervical implants. The implants are intuitive and so the doctors don't need Surgical training on that. And same with the ALIF because the procedure has really been known now, so there's no cadaver lab needed for the ALIF DEXA implants. But an overview might be important. So as far as what the head count is going to look like, maybe Chad knows how many we did this quarter. So I'm not sure how many we've done this quarter, but I want to say it was north of 20 doctors in, say, Q3 to current date. But it could have been even higher than that. They got trained on ZIP and silo implants. But we started to narrow the trainings because we were watching the Category 3 coding. So we slowed some of the trainings down a little bit just to make sure that in case there were some major changes that really affected the coding and reimbursement to the point where they weren't going to do the procedure. We didn't know that for a fact. that they weren't going to do that until mid-summer as it was being sorted through with the AMAs and the CPT code reimbursement and rough committees and so forth.
spk03: Well, you've got 60 monthly purchasing doctors as of our last call. Do you feel it's plausible to double that number from now during the end of 2023 to 120?
spk04: Well, so that's a fair question. You know, part of that was, you know, the numbers that we had that were Zip and Silo and current customers, here's the group of doctors that we were already working with and physicians and surgeons we were working with. Now with DEXA, you know, these will be some brand – some of these will be brand-new doctors that never used our system before. So this would be – this would improve that monthly headcount of users in our – daily sales report and quarterly sales report. Also, there's a lot of doctors out there that we obviously do not work with, and we think that that number will really help Aurora because it will help us once we get the TFX out and available because we're being contacted pretty regularly through our salespeople. When is the TFX going to be available? Because I'll start switching to that. And these are current users of other competitive systems. So we're going to be able to pick up a new, you know, a very robust, well-trained group of doctors that are already using competitive products. And we couldn't be more excited about that because we'll have, we think, the best implant available for them with all the latest technology. technology that's going to give them that extra feeling of fixation and ease of use and get their patients back up on their feet and out the door.
spk03: Would you say that the Silo TFX will provide at least the same results as Silo did per doctor per device product sold per month? Well, doctors, can we expect to see similar numbers on a silo TFX as we saw out of the silo for 2022 for 2023? And of course, with the new product rolling out and of course, newer doctors coming on board, do you expect to see sales growth surpassing what we saw in 2022?
spk04: I think TFX will outperform silo by a multiple of 10x. I think it's going to blow silo out the door. Okay. Will you discontinue silo as a result? No. Not unless the coding tells us that it's not going to be used anymore, but we don't see that happening. So we think it'll just be nice. It'll be nice to have options. Some people like fish. Some people like chicken. They'll be able to have an option here, right? We'll give them that option.
spk03: Okay. Okay. Moving on to the zip, you've received the FDA approval for the lumbar, zip lumbar. Will we see that in 2023? When do you expect that will start to roll out? You know, I've had to move that.
spk04: You're talking about the zip flex?
spk06: Yeah.
spk04: Yeah. So just because of the – I think because of the excitement of DEXA and DEXA-L – We've also, you know, we've been, you know, we've been letting the cat out of the bag in a fun way that, you know, we're also working on once we get the TFX out and running and get it really going. We already have the study protocols being put in place, IRB submission. So we're going to a multicenter study. The very first, you know, week of trials that we do with the TFX will be in starting in a multicenter study. And it's no secret that once we get the TFX out and running, we're going to – we've already been working behind the scenes to make the TFX into a DEXA implant. So that'll give us, you know, our third implant that'll have – it'll be what we call DEXA-fied, and it'll be the only, you know, the only game in town. So we think that's going to be a real win for us. And so with all that said, my focus has been – Let's stay on track with the ZIP multicenter study. Let's see where the silo goes. We've got the TFX that we need to roll out, and we've got DEXA-L that needs to roll out, and with the TFX being converted over to a DEXA portfolio, I think that the ZIP flex, although it's a pet project of mine for sure, and same thing with Laszlo, our chief technologies officer, but I think it's better suited for us to to push that back towards the end of the year and see where we're, we're appalling to the priorities. Once we get the other priorities in line, because we're not in a, in a big R and D phase in the company anymore, we're more in getting the implants that we'd worked so hard on the last number of years to get them out and commercialize and shows real successful numbers, because then we can build off those numbers right into some, some future technology. And we do, we have a nice portfolio behind the scenes. We don't talk about that. That's, keeps the pipeline full, but I want to execute on these implants. So Zipflex is definitely going to take, it's going to be pushed back another year for us because it's just not, it's not ahead of the real priorities.
spk03: Okay. Now you spoke about margin expansion in the press release. What sort of margins could we see as new, newer proprietary technologies, implants are released?
spk06: So one of the,
spk04: The conversations that's happening, and again, I don't speak for any of these committees. I'm only a participant in the coding and the reimbursements like the rest of the vendors, but they're saying that the coding could increase in posterior lateral SI fusion and that there could be some modifications to it that actually allow the facilities to go bill from, say, you know, $15,000 to as high as like $22,000, $24,000. So that would be a significant increase, obviously, and if that's the case, then that's where that would come from. And this is something that was presented by coding reimbursements that have had, you know, physician consultants that are not affiliated with ARAR. They're part of a committee that's trying to find the right balance of what the coding reimbursement needs to be for these new technologies.
spk03: Last question is, moving forward, looking at Q4, yes, course coding has played a bit of an issue with doctors' confidence, but do you feel we're back on track, and do you feel that we could see $4.5 to $5 million this quarter? Is that realistic?
spk04: It's too soon for me to tell. I'm pausing on it only because I just want to see how this folds out for the rest of November, but I do plan on having an early December call that I'm going to be scheduling with Adam because I want to keep investors in the light so that way they're not sitting back guessing on it. I've made some changes. I wasn't pleased with some of the business strategies. And so I made a decision to, uh, part ways with my, um, um, my vice president of sales, um, mostly on the spine side. So I parted ways, uh, with him and I'm adding some new sales talent in some areas that I feel like we needed to focus on. The rest of the team is completely intact and engaged and, uh, you know, excited and bullish about what we're doing, but I needed to get a focus back on some of our spine technologies versus our pain technologies. And I wanted to get back on track with that. So if you'll bear with me and let me come back to everyone in December, I will put that call together through Adam, and then we'll get back out to everyone after we close out in November.
spk03: Okay. Thank you, guys.
spk06: Appreciate it. I'll let others jump in.
spk01: As a reminder, if you have a question, please press stars and one to be joined into the question queue. This concludes our question and answer session. I would like to turn the conference back over to Trent Northcutt for any closing remarks.
spk06: Thank you for joining us.
spk04: We appreciate your time and interest in Aurora Spine. We're very excited about what's ahead of us in 2022 and beyond. We look forward to speaking with many of you in the weeks ahead. And if any of you have any questions, please feel free to reach out to Adam at Latham Partners, and we'd be happy to schedule any follow-up calls. Thanks again, everyone. Have a great rest of your day.
spk01: Thank you, everybody. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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