Aurora Spine Corporation

Good morning and welcome to the Aurora Spine Second Quarter 2024 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 your telephone keypad. 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 Chad Klaus, Chief Financial Officer. Please go ahead.

Good morning, everyone, and thank you for joining us for Aurora Spine Corporation's quarterly earnings conference call. We look forward to discussing our performance for the second quarter of 2024. Before we dive into the details, I'd like to remind everyone that this call will contain forward-looking statements. These statements involve risk and uncertainties, and actual results could differ materially. For a full discussion of these risk and certainties factors, you are encouraged to read or respond to documents on file with CDAR+, including those set forth in periodic reports filed under the forward-looking statements and risk factors section. Statements made during the course of this call may be considered forward-looking statements within the meaning of Section 27A of the Security Acts 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 that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to risk and uncertainty. and other important factors that could cause actual performance or achievements to materially differ from those projected. The Real Spine does not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. On the 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 may not be comparable to similarly titled measures of other companies. These measures should be considered in addition to and not as a substitute for superior or any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP measures and the most directly comparable GAAP measures in accordance with SEC regulation G can be found in the company's earnings release. We're joined today by Trent Northcutt, our Chief Executive Officer, and myself, Chad Klaus, our Chief Financial Officer. We will present an overview of our financial performance followed by a Q&A session. I will now turn the call over to Mr. Trent Northcutt, President and Chief

Thank you, Chad. Good morning, everyone. I'm pleased to share our results with the second quarter of 2024, which is our pivotal period for Aurora, with notable progress in both our financial performance, the market penetration, our strategic focus on expanding the sales force and targeting underserved markets has yielded strong results as evidence of our significant sales growth and improved profitability. On Wednesday, we issued a press release detailing our financial results Hopefully, you've had a chance to review the news release, but if not, a copy can be found on our website at auroraspine.com, under the investor section or other financial websites. I'd like to discuss some of the financial and operational highlights from the quarter. We reported revenue of $4.1 million. marked the third consecutive quarter of over $4 million in sales, which represents a 14% increase compared to Q2 2023 and a 24% increase year-over-year. The quarter benefited from strong demand in the pain market sector, particularly for the silent PFX and the ZIP51 implant, driven by targeted marketing, training, and product innovation. Our net loss for the quarter was $0.15 million, significantly narrowing the net loss from $0.482 million in Q2 2023 to earnings per share of $0.00 in Q2 2024. Gross margins improved an impressive 62.4% in Q2 2024 in front of 56.9% in the same period last year. The margin improvement is a direct result from the increased sales of proprietary products and the higher profitability participating in markets with favorable pricing dynamics like ambulatory surgery centers. Operating expenses for Q2 2024 were $2.74 million upfront up from $2.51 million in Q2 2023. The rise in expenses was primarily due to the increased commission and travel associated with expanding our sales force, partially offset by reductions in research and development and professional fees. We generated .348 in operating cash flow, reflecting a strong operational performance and effective working capital management from the management team. Notably, siloed TFX grew by 20.4% from Q1 2024 to Q2 2024, reflecting the success of Aurora's expansion into the pain interventional market. The ZIP51 has doubled in 2024 compared to 2023. The robust growth was attributed to the intensified marketing efforts and increased adoption amongst surgeons. Aurora continues to scale its sales team throughout Q2 directly contributing to the sales surge. The additional and new sales professionals is expected to further drive growth as they onboard more surgeons and more customers for Aurora's ecosystems. The company maintained its commitment to excellence by conducting advanced training sessions for top orthopedic neuro and pain interventional physicians showing the clinical advantages of the Zip, the Silo implants. I'll now hand the call over to Chad Klaus for further discussion of the finances.

Thank you, Trent. I'll take you through some additional financial details. Sales for the six-month period of June, ended June 2024, were $8.05 million, up from $6.48 million in the comparable period of 2023, with a net loss of $0.42 million It is a significant increase from a net loss of $1.145 million in the comparable period of 2023. The decreased net loss is a combination of increased sales and cost controls while we continue to expand the sales force. EBITDA, a non-GAAP figure and a non-IFRS figure, is defined as earnings before interest, tax depreciation, amortization, and stock-based compensation. was 0.11 million compared to a loss of 0.16 million in Q2 of 2023. This marks the fourth consecutive quarter of positive EBITDA. We ended the quarter with 0.52 million in cash and cash equivalents up from 0.37 million at the end of Q1. This increase is due to strong operating cash flow and prudent capital management. And that loss of 0.15 million was offset by a reduction in accounts receivable prepaid assets in the inventory with an increase in accounts payable. The company has increased collection efforts, which can be seen by the reduction of the trade accounts receivable by approximately $300,000. Inventory levels remain steady, and the company has not had supplier delays in replenishing inventory. The company is currently manufacturing ZIP and TFX implants in our facilities along with associated TFX instruments. The company invested $145,000 in instruments and trays in the current quarter. These instruments will support the increased sales of Aurora's implants. The increase in accounts payable is nominal and a product of the increased business. Our related party loan was extended by another year and has a current balance of $2.6 million at the end of Q2. The company issued no shares during the quarter and recorded a $6,500 expense for stock-based compensation. The company issued 130,000 stock options and a million options expired in Q2 2024. I'll now turn the discussion back to Trent.

Thank you, Chad.

To summarize, we are very pleased with our performance. Our strong results reflect the hard work of the team and our commitment to executing our strategy. We're optimistic about our growth prospects, and we're confident in our ability to deliver the value to our shareholders. Operator will now take open calls on the floor.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.

Our first question is from Tom Fettichin with Microcap Connection.

Please go ahead.

Hey, good morning, guys. Thanks for taking my call. Good morning. And nice to see that we had revenues close to $4 million or actually over $4 million two quarters in a row. I believe that's a company record for you guys. So congratulations there. The company's moving in the right direction.

Three quarters in a row.

Wonderful. Yeah, no, there's definitely a trend here. So the year-over-year sales growth for TFX grew from 800,000 last year to 1.7 million this year. Can you speak to what's driving the sales increases is this from just strictly the addition of new doctors from these new director of sales, or is this just a continuation of doctors increasing the usage? So what's the average use per doctor per month, for example, for the siloed TFX? And where do you see this going as we move into the latter half of this year, given we've got so many new sales directors brought on?

Yeah, so directly to the silo allograft and also silo TFX. Silo TFX has already shattered some records for the product. It continues to grow and expand. You can go here into Q3. So it definitely is tied to doctors that were trained. We actually have coverage now in that region, that location, city, that state. We've added more people who can get on a plane or get in a car and drive and get those procedures covered, giving the doctors some support in the field, which was really important to us. Also, the training continued. People sometimes even came back for a second training because time had lapsed. So we gave them confidence that they were able to see that they could see the technique and that they weren't, say, the first ones from last year now to this year because the revenues have really started to – shown strong with TFX. Unit counts are going way, way up. We're even internally looking to build more inventory on that. The cost of those kits is very low, so it's an easy deliverable for us. But getting more implants sold is a top priority, and getting more coverage is a top priority.

How many kits or how many units per doctor do you use that as a metric? are being used per month per doctor. Are you able to hit two yet on average per doctor that's trained?

Well, I don't worry about it if a doctor does one or if he does 10 in a month. There's just going to be those accounts that some do less and some do more. Our goal is to sell as many units as possible. Um, you know, we first targeted, how do we get to the first 25 in a month? How do we get the first 50, 75, and now we're over a hundred implants a month. Uh, you know, and now we're, now we're shooting for the goal of getting to the first, you know, 150 and then it'll be up to 200, um, implants in a month and then consistently hit those marks. Um, you know, I'm not going to, I'm not going to pull out a crystal ball and try to figure out if one doctor can do more or less in a month. There's certain doctors that are very consistent and, uh, We're going to keep finding those doctors that are the most consistent, but we're not going to shy away from anyone who wants to use this once or twice in a month.

Perfect. So just to be clear, so you've surpassed 100 siloed TFX unit implants per month. Has that been accomplished for one month, or is this kind of like a newly hit target that's just been hit? It's news to me that you're saying this. That's why I asked.

Yeah, it's a new trend for us. We're up and over the 100 mark, and we know that we'll still feel some up and flows. It'll be higher, it'll be lower, but we know that it's trending every single month upwards.

And would you say that the average siloed TFX is sold? It's returning for $9,000 per unit?

No. Are we running the average on that now, Chad? I think it's

a little over 7,000. Okay.

Okay.

Alrighty. And the other thing that, that comes up just on that is that, um, last year, uh, allograft was, you know, had gone second half of the year had dropped off significantly. It's now, uh, between, uh, you know, six to 8% of our monthly number, uh, is in the allograft where the the TFX is over 30% of the monthly number, but it's nice to see that the allograft number is back and adding on to revenues for the company.

No question. Now, for newer investors who are new to this story, can you speak to the size of the market of the SI joint space? And I only say this because you're hitting new record numbers and Where do you see this going in another year or two with the siloed TFX? Do you think you can maintain this growth rate and potentially double sales year over year in the siloed TFX?

Well, I certainly think that the TFX can continue to grow. The market, based upon some of the SIPhone market estimates out there and then OrthoWorld and some other indicating companies that put data out on the SI joint market, it's a very high They estimate that there's over 279,000 procedures performed. Now, that's a big number, and none of us are there yet. S.I. Bone owns 60% of the market, per their own words. But that means that 40% of the market is people like us that are in that marketplace starting to chip away at it and are moving our way up in units and customers. And our focus has been with orthoneuro and the interventional market. And we do still have a blend. So the market's been evaluated per SI phone as over a billion dollar market estimate. So it's a very large opportunity for everyone involved in the SI joint space.

Incredible. No, that's awesome. Now, you brought on a number of new sales directors. How many new sales directors do you currently have, and how are sales from these members going?

Yeah, we have sales directors in Florida, Texas, Nevada, Illinois, Oregon, California, Arizona, all around the country. So we've got a total of 12 people selling in the field. Um, we've added some, um, additional, like more than one person, you know, in Texas, it's a big state. We've got, uh, what we call TMS territory managers where they access, excuse me, as, um, as sales role case coverage and also in going out to try and get more sales in their area. But they, they don't travel, uh, as broad that they don't, you know, they typically stay right around their area. Like the, the lady we have in, um, In Utah, she'll go back and forth to the border of Nevada and Utah, but up and all around between Salt Lake and the lower part of southern Utah, the southern part of Nevada. So she can make those trips in her car to get that covered. Where our regional sales directors, they can live in Oregon, but they're going all over to Washington, Idaho, down to northern California, northern Nevada, and so forth. So they're traveling around on planes and trains and cars. and we've got more people in the queue to bring in in areas that we need more coverage, and we think that'll have a big impact on sales because we actually have some sales in those areas, but our two VPs of the company, East and West, one lives in Illinois, the other one lives in Nevada, they're traveling all over the place covering cases, trying to identify those people to come up underneath as regional sales directors. Most notably that we added to the company just here at the end of Q2, we added a new VP of Spine, Ron Echols. He's now joining us. He comes from a big company such as NuVasive and Depew Spine. His sole focus is to really put an impact on our spine sales, and he's already hit the ground running. We've already started seeing results from him, which is directly going to be contributing to the Q3 numbers. driving commercial sales.

That's fantastic. So when it comes to bringing on a new member, it takes time to train them and, of course, get them out in the field and have confidence to sell. You know, what's the expected timeframe from hiring to training to the point where you actually start to see sales show up on the earnings statement? You know, is it three to four months? Is that a good guess on it?

Yeah, it's starting to cut off a little bit of the four-month period, but, yeah, it's between two and three full months that it takes them to get themselves ready. A lot of it has to do with the training part. They pick up pretty quick, and usually we identify people that already know the industry. They know a lot about the technique for an SI or interlamina fusion or what's a lumbar fusion, what's a cervical fusion. They already know some of these things. It's getting to know our systems. And then the second part to that is getting out to their contact list and getting those appointments on the books and then meeting and having those contacts and then having that independent distributor or that particular doctor in that region, then working with them and then that hospital system. One, make sure that we're already on either the national contract or the regional contract or just that facility contract or that surgery center. and that sometimes adds some additional paperwork. So that process just by itself, that's 30 days easily right when you're coming out the door, and then that second and third month is getting those dedications scheduled from the doctor onto our calendar, our surgical calendar, and that's usually how it works.

Okay, okay. And on a go-forward basis after being fully trained, What's the anticipated annual revenues that you set as a goal for each sales director? Would it be a million, million and a half? What's the expected results you expect to see on a go-forward basis?

Oh, well over a million. Obviously, we set everyone with a quota, and some people do as much as $300,000 in a month, and so that's much higher than, say, a million. you know, we're now towards a $3 million territory. Um, some people are right around that, you know, 85, you know, $85,000, $90,000 a month, uh, areas. So now they are that million dollar customer, but they're identifying more customers because they can, they got the bandwidth to pick up, uh, more customers. But the first target of course is to get, get, get into that million dollar mark and then, um, uh, take it above from there.

Perfect. And so far you're finding your, your, uh, uh, new sales directors, they're on the right path. Like you don't see any, um, anyone that is, uh, uh, slumping. Everything's going well there on that front.

Yeah. Well, we had, we had one that just didn't hit the number. So we had to let them go. Um, you know, we appreciated their efforts. Didn't work for us with that particular location. Um, we're already looking to replace that area with somebody who, uh, will even be better for the company. And we wish you shook hands with the other person, wish them well. Um, yeah, we've got, uh, we've, We've got a lot of people on the list, all above the million-dollar mark as a trend in the monthly trend. So we're really pleased. People are really working hard.

Awesome. Now, switching gears a little bit, can you speak about DEXA and how sales are going on this front? I do understand you brought on a new team member that's well-versed in the space. Um, how's it going for, for, uh, for both him, for you and, uh, what, what can we expect moving forward?

Mexico still is, uh, is my, is my darling project. As you guys all know, um, it, it has, um, it has spiked up, uh, this year. I still need more focus on it. Ron Eccles is putting a lot of focus on it. Um, Part of the efforts on that is to get more distribution behind it, getting more people in front of it. We just didn't have the focus on it. A lot of our sales management was focused on silo, silo TFX, and that's why those sales, Zip 51 doubled this year so far, right? So that's where the focus has been. And Ron's job now, he joined us for the second half of Q2. He's already... I strongly believe that our Q1 sales will be beat in Q3. And the product now is on its way to do a million dollars this year and more. And that will then be a direct contribute to cervical sales and then lumbar sales will be based on ortho and neurosurgeons using our newer devices. We also incorporated, it wasn't in a press release. It was more of a marketing release. We've added more lumbar products. It's called Osteo Onyx. I've put some posts out on it, and so has the marketing team. This is going to start to show up here in the Q3 and Q4 numbers as an add-on product in line with our Hydra system. So with Hydra and osteonics and DEXA and Apollo, all that's going to really snowball into, I think, improved and robust spine sales, spine-specific, spine surgeon sales only, all focused on outpatient approaches, so it stays in line with our philosophy of getting more of an outpatient setting, but also some bigger construct procedures, people that maybe have scoliosis, deformity and some other, you know, traumatic injuries to spine. And this will also help embrace us, you know, with the spine and the orthoneurosurgeon, keeping all of us together and focused on training of the interventional doctors in collaboration with the ortho and the neuro. And all of our training programs often have ortho and neuro at these trainings with the interventional doctors. So... It's adding that continuity that we've always wanted, and I think we've done a good job of being thoughtful about the marketplace and being good stewards in the space.

Perfect. Well, and you hit on a couple of topics there. You mentioned lumber. The DEXA-L, the DEXA lumber, when do we expect to see that? Is that going to be rolled out in the second half, or is that going to be a 2025 rollout?

It's been with the FDA for the approval of the device. We wanted to see more of that come out. We're close. We're close. That's all I can say. It's right there. I have a crystal ball with the FDA.

Okay, no worries. And the second one was the Hydra screws. You mentioned on our last call, we could see sales up to $100,000. A month, I believe it was. How's the Hydra screws going, the sales of them?

Hydra sales are not at 100 yet, but with Osceonics, which is another screw, we are past. Screw sales are over 300,000 a month. in sales as a total, and it's going to increase, you know, from there. So the second half of this year, we'll see. It could double.

Wonderful. No, that's great. Now on to SIP, which you did just cover. The sales continue to impress. You know, what are your expectations moving forward? Do you see Aurora doing $1 million per quarter?

as you bring on more doctors clinics etc um is that was that attainable in 2024 or you think 2025 for that i'm still i'm still uh bullish on getting to the first five million dollar quarter um that's that's what our goal is right now is obviously we wanted to get past you know maintain and have a a sturdy floor beneath us which is that four million plus club but for us hitting the five million dollar a month is something that we're absolutely set after to get to um That way we can really, really show everyone that we're way up and over a $20 million written rate company and an over $20 million, you know, average as a company. And we're on that doorstep right now, especially going into the second half of the year. Last year, you know, the coding reimbursement in the SI joint market were a big deal. And that's, you know, when I say market, it's ortho, neuro, interventional. It's everyone. That coding reimbursement seems to be settling, and it has settled a bit. There's still some things that are still rumbling around in the reimbursement markets of SI Fusion, but there's been some things that have been talked about that would make it an even bigger market, and we'll have to see how that plays out. Right now, we're getting great results from the Silo TFX. We're still continuously getting great results from the Silo Allograft system. and we have more and more interventional doctors that are revising old legacy non-fusion interspinous devices and replacing it with our interlamina fusion devices, the Zip51. We are the gold standard, in our opinion, in L5-S1, the lowest part of your spine, with the Zip51 implant. We see this constantly growing. So we've doubled sales on that, and I talked about that last year, how I was going to put a big... So for those of all others, that's something they could earmark on their schedule that says, well, the CEO said they were going to do something to support sales of that product, and we doubled it. So if we continue these trends.

Would you say that Zip 51 sales, you could do a million dollars and a quarter? I know you're trending. I think you're at six. was it, I don't know, 670 or whatever the number was, I can't remember, but in the latest quarter, do you feel you could do $1 million in a quarter from the Zip products alone? I only say that because it seems to be trending. You've doubled your sales year over year, and to double that again, you'd be at $1.3 million approximately. So is that attainable?

Zip sales are already over. In Q1? In Q1, Zip sales were 1.6 million.

Referring to Zip 51, sorry.

Oh, Zip 51, sorry. Yeah, Zip 51. Zip 51.

No, it won't, but it was close. I mean, in Q2 here, Zip 51 sales were $669,000 in sales, and Zip LP was... 820. Yeah, those are good numbers.

Yeah. And I guess from a standpoint of the company breaking out, you've had three quarters in a row around $4 million. Do you feel that Q3 is going to be the month that you actually get a major breakout and you bust through and maybe you get closer to four and a half to five million? Is that what you guys are targeting? Especially now that you just said that. Good. And will you be net earnings positive? I think every investor, you know, they look at EBITDA and unfortunately it just doesn't move the market. Net positive income is something that will move the market. So I guess, will you be net positive earnings or show net positive earnings Q3, Q4, and I think the important question to ask is, do you have the capital, enough cash on hand to be able to see it through the tremendous growth that you're experiencing?

Yeah, we've focused, you know, deeply on making sure that we were running more as an operational-wise, we were focused on controlling the costs, You know, obviously, salespeople and headcount can be expensive, but that's really the cost part of the deal. Let me jump in here.

Tom, we're really close, as you can see. I mean, we've lost a million dollars less this year through six months than we did last year. You know, it's right on the cusp, right? We've controlled our costs. We're, you know, if we get an increase in sales, we could probably... probably see net positive income.

Yeah, and I say this because I know you're close, and I know you've gotten more expenses with the additional sales directors, et cetera. And I know the market today, if you look at any microcaps, they're being rewarded for showing positive net income, and that's the reason why I ask this, because I know others are listening in on this call, and they want to hear kind of from the horse's mouth that... profitability is something that management is very keen on, and important that is. And that's the reason why I asked.

The board wants to be profitable, and they've said it over and over again. And we've continued this year to control our costs, even while adding people to the sales force to increase their sales. And it's paying off. I mean, a million dollars less than lost this year so far. And, you know, if we get two big quarters coming up, net positive income is a possibility, yes.

Okay. And you have enough cash on hand to reach profitability, no need to raise any additional capital?

I don't think we need to raise any additional capital. So I'll update you a little bit on what we've done recently. I actually hired a support person who just collects money. for the company. His whole job is to collect money. And as you can see, our cash balance is up from Q1 to Q2. And I think our cash balance will be up again through Q3. So he's doing a very good job of collecting some older stuff. Lindsay sent me some details this morning. It shows our DSO is down 20 days, or I think it was 20 days, from quarter to quarter. So we're collecting. We have cash in the bank. I don't think we're going to be raising money.

Perfect. There's no plans. We're not talking to anyone about raising money. Okay, good, good, good.

And maybe you can dig into the accounts receivables since we're on the topic. I know you did have some older receivables. You've mentioned this in previous calls that you have been collecting. Of the receivables that you have, You know, it appears as though most of those receivables are newer now. Can you elaborate on kind of like what your receivables look like, what the percentage of receivables are, say, beyond 90 days, but are being paid, and what the expected payout is from a new client that you bring on, whether it be a doctor, clinic, or so forth. You're expected to get paid in 90 days, but what's the average payment for most of these clients that you bring in?

Most of, so we sell our build at net 30, some ask for next 60 or something like that. You know, our day sales outstanding is I think 88 days right now. But the majority of the customers pay in the 30 to 60 over range. So they'll pay us within 60 days in surgery normally.

Perfect.

Perfect. Okay. And the older accounts receivables, percentage-wise, you know, of the total sum, is it a small proportion now? I know a year ago it was quite a bit larger, but maybe you can elaborate on that.

It's gone down significantly. Even after the close of Q2, it's gone down even more significantly. So, I mean, I don't have the... specific numbers in front of me, but it's been a significant reduction in everything over 90. You know, the 60 to 90 is way down because we're collecting. Things aren't rolling from the 30-60 into the 60-90 anymore because we're collecting. Yeah, we're in a lot better place with our receivables right now.

Perfect, perfect. No, I appreciate that. Back on to the business, the previous call You had mentioned about performing surgeries through Veteran Affairs or selling into Veteran Affairs. How has that gone? Has further training occurred? Have you witnessed any sales during the quarter?

Do you expect to see more sales as we go throughout the balance of the year?

Ask the question again because I kind of missed it.

It skipped on my end, my earpiece there. Ask it again. Sorry.

Sure, no problem. I was asking about Veteran Affairs, how sales are going, if you're still training with Veteran Affairs, and what we can expect for the balance of the year through Veteran Affairs.

Yeah, we are. We've actually got our first, we got a bulk purchase from Navy Balboa, so San Diego. They put in their first order for multiple units. They have to get through those units, but yeah, we've already got, uh, they're looking for, uh, they, they, they went forward with the approval, bought a few implants and now they're getting those patients scheduled on the books. And then they've already said as, as you put in one implant that they would, you know, then want to replenish and replenish. Uh, so this we've gotten started there and yes, there's more, um, VA facilities that are, that we're close to getting approval in. And maybe Balboa is a big military hospital and some other military facilities. in the country. We've done some surgeries, not a lot, but it's a process there. They move much slower, but once they get started, they're really great accounts, and we're optimistic about it, but it's hard for us to measure right now. We don't have a forecast built into it yet. We're just still trying to work through the process on it. It's contributing some decent numbers to the company.

Okay. And two more from me, and then I'll open up to other members and whatnot. But is there anything that maybe that you didn't mention that, say, for example, that you want to implement with the company, add or change as we move forward, whether that be new staff members that you still want to bring on or – Is there anything of significance that we can expect as we move into the second half of the year from a staffing perspective that can open doors?

I think with Ron and the more regional sales directors that are out there, new distribution channels are going to be opened, so it's going to expand us into some new areas. that we're not in currently, and we're able to actually pick up a couple of some new distributors. Some of you may have read the market, ASCII Labs, which was a European company, is pulling out of the United States and sold off one of their major products, which was their disc replacement product. They sold it off to another spine company here in the U.S., so they're going to cease operations in September. And we've already... been in contact with those existing distributors that are here in the U.S. to take a closer look at Aurora's products, and we see that as an opportunity that could come our way. A couple of new distributors were not selling us and they were selling Ascolab, now would look to sell our devices. So there's some channels out there that are opening, and also the consistency of weekly Sales in spine is a big focus of mine personally, and Matt Goldstone and Ron Echols is here in the Q3. And with osteonics and with Hydra and with DEXA, that's going to be one of our big goals is to get those orthopedic, those neurosurgeons to utilize these products for us. And I think you'll see a big jump and a spike in that category in the second half of the year.

Perfect. And last but not least, I think the one commonality I've heard from shareholders is they'd love to see you, whether it be at investor conferences or whether they would see you even just getting interviewed on a more regular basis. I know at the moment you don't have an IR team in place, maybe bringing in an IR team after reaching profitability. Is that something we can expect to see from you guys moving forward and maybe in the second half?

We remain really close with Lithium Partners and Adam Lowenstein. We're still really close with them, and we haven't been pursuing other IR firms because we have a good relationship with them. And, yeah, I have had some invites to participate at some events, and I'll look into getting out there and putting more out. I am going to talk to... I think it's, uh, was it alpha wolf, uh, you know, in Las Vegas and, and he does that video broadcast. And so I might do a second half of the year. We did a broadcast last year on that. So I might do another one of those, uh, if he'll, if he'll be back and, um, and want to get some more, uh, stuff out there. We've, we've really, as I know, and I know time you follow it a bit is we've, we've continuously keep our foot on the throttle, uh, for, uh, marketing and getting information out there on what we're doing with our products. And more and more doctors are posting about us than ever before. And we see it in the analytics from Google and LinkedIn and Instagram that we've added nearly 1,000 more people following us just this year alone. So those are all steps and indicators in the right direction and getting as much of the word out there. I think that's something that we lacked on last year, and we improved on that this year in multiple folds in that aspect.

Perfect, perfect. Well, thank you for taking my questions, guys. I appreciate it, and congratulations on a good quarter. Look forward to the second half.

Thank you. Again, if you have a question, please press star, then 1. The next question is from Lindsay Leeds, a private investor. Please go ahead.

Hi. Congratulations on a strong Q2. Let's go back to the siloed TFX average selling price. Quoted earlier in the call around a little over 7%. Do you see continued pressure on that pricing, or are we reaching a point where we expect that to stabilize? I think that price is stabilizing.

Yeah, I think it's stabilizing. That's the question. It was at such a high mark, how sustainable would it have been to stay there? I don't know. what the other people are saying, you know, as far as our competitors, but I think that the price is now starting to settle and we see that settle, you know, that price point because we're, we're very, um, uh, focused on the outpatient surgery center. So it's a good collaboration with us and the members who own those surgery centers that they're running a profitable business. They're getting a great product. something that fits well within that pattern of that surgery center. And so, sure, in certain locations we'll get more. Certainly government pricing is higher. Even the HCA facilities around the country, which is the largest in the country, even their price point is palatable to us because there's such a high volume possibility of it. So, yes, to answer your question straight, I think it's settling at that good price point.

Okay. You talked earlier that ambulatory surgery centers, they help support your gross margin. Can you elaborate on that a little bit?

All of our procedures, you know, we're not a big trauma company. So trauma, you know, big surgeries should be at big hospitals. And if you're coming in for your elective SI fusion or your cervical fusion, or your low back lumbar fusion, an outpatient setting might be best for you. And more doctors are opening up surgery centers than ever before. I think surgery centers constantly have been growing. I'm not in the surgery center business of opening surgery centers, but the stats show me online that more surgery centers are opened up every year across the country. And I just think that that's the future, especially for elective procedures.

Okay. Any chance that you could give us kind of a mid-quarter update on where accounts receivable are, or would you rather not say?

Chad touched on it, but Chad, go ahead, if you want to give him an update. Collections are strong.

I haven't looked at specific numbers in a couple of days, but what I was telling Tom earlier are over 90 years and way down from last year, like $800,000 or $900,000. So our collections have been strong in the beginning of Q3 here. The person I hired to collect, he actually was just in at the tail end of Q2, so most of his work and good work is going to show up in Q3.

Okay, awesome. Very happy to hear that.

You and me both. Yeah, everybody was very happy with that, yeah.

So I guess, you know, I'm hoping that, let's say, reducing the accounts receivable maybe frees up another 500K or a million dollars as we're driving down the, you know, days of sales outstanding. With that additional funding sitting on your balance sheet, is there any chance that you can ramp up your Salesforce growth? I guess I'm wondering if we set a goal to double the Salesforce in the next year, what would be the hardest part? Would it be recruiting? Would it be financing it? Or would it be training? I'd like to understand that.

Well, recruiting, I think there's, you know, finding talented people is always a challenge, but it's also within our wheelhouse. It's not so far out of bounds. We also have contacts with great recruiting resources, people that do this for a living. We don't actually – we have contracts with people, but we're not paying anything on those contracts unless they actually place people for us. Most of this has been word of mouth and – and people who know each other in the industry. Financing them, obviously, we have a budget that we're running to tighter than ever than we've run in years past, making sure that our goal was to be profitable and still remains to be that goal. So if it fits the model of the budget, then we add those people in. We offer fair compensation and great upside in sales commissions with the company so that the people who would want to join us could make a great living and have a real solid platform to work off of. We're one of the rare interventional companies, especially the size that we are. It's actually a publicly graded company. We offer the full medical benefits and 401K and cover expenses and all the things that people who were looking for a sales job are looking for, and we think we offer that. We'll be able to fund it as long as it fits within our budget. And the board's always said if the sales are there, we'll make it work to get what we need, the resources we need to get to add on to continue to grow. And we're still targeting trying to get towards $20 million this year as a company and exceed that. And then where we land this year, we'll certainly set the mark and the budget mark for 2025.

Okay, awesome. So it sounds like maybe we have a shot at $5 million in Q3. It's not a slam dunk, but a window of opportunity?

Yeah, it's not a slam dunk, but certainly what we've already done in the second half of the year has been quite strong. It's directly springed off of, you know, we had to show growth in Q2. You know, we, that was our goal. We, we, we knew it. We, we said we must show growth. And not only did we show growth, uh, but we also showed balance to make sure that we're, you know, uh, we had some uptick, but that was because of hiring more salespeople. And we're going to continue to, you know, hire the right salespeople, but then hit a, hit a stride with that. And when certainly all who are on board with us, because we only departed with one person and we added a person. So, um, those strides are being hit and it's already reflecting in Q3.

Okay. Thank you.

I think that's all the questions I have. Thank you so much and congratulations on a strong quarter and the trajectory here. I'm very pleased.

Thank you. Thanks, Leslie. So are we.

This concludes our question and answer session. I would like to turn the conference back over to Trent Northcutt for any closing remarks.

Thank you. I'm queuing up this again. Sorry, I clicked off here. I'm glad I lost the link here.

Okay, well, we just wanted to summarize that we're pleased with our performance for the quarter.

The strong results reflect the hard work of our team and the commitment of our executive management. We are optimistic about growth prospects and are confident that we'll be able to deliver value to the shareholders. And so thank you, everybody. Thank you, everybody.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.