UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification Number) |
(Address of principal executive offices, including Zip Code)
Registrant’s telephone number, including area code: (
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 27, 2024, Treace Medical Concepts, Inc. (the “Company”) issued a press release regarding its financial results for the quarter and year ended December 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
This information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01. Regulation FD Disclosure.
On February 27, 2024, the Company posted an investor presentation, which may be accessed through the Company's investor relations website. A copy of the presentation is furnished herewith as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference herein. The Company expects to use the investor presentation, in whole or in part, and possibly with modifications, in connection with presentations to investors, analysts and others. The information contained in the investor presentation is summary information that is intended to be considered in the context of the Company’s Securities and Exchange Commission filings and other public announcements. The investor presentation speaks only as of the date of this Current Report on Form 8-K. The Company undertakes no duty or obligation to publicly update or revise this information, although it may do so from time to time. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or other public disclosure.
The information furnished under this Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 |
Financial Statements and Exhibits.
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Exhibit No. |
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Description |
99.1 |
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Press Release of Treace Medical Concepts, Inc. issued on February 27, 2024 |
99.2 |
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Presentation of Treace Medical Concepts, Inc. issued on February 27, 2024 |
104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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TREACE MEDICAL CONCEPTS, INC. |
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Date: February 27, 2024 |
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By: |
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/s/ Mark L. Hair |
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Mark L. Hair |
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Chief Financial Officer |
Exhibit 99.1
Treace Medical Concepts Reports Fourth Quarter and Full-Year 2023 Financial Results and Provides 2024 Guidance
PONTE VEDRA, Fla. – February 27, 2024 – Treace Medical Concepts, Inc. (“Treace” or the “Company”) (NasdaqGS: TMCI), a medical technology company driving a fundamental shift in the surgical treatment of bunions and related midfoot deformities through its flagship Lapiplasty® and Adductoplasty® Procedures, today reported financial results for the fourth quarter and full year ended December 31, 2023 and provided 2024 guidance.
Recent Highlights
“I am very pleased with the significant efforts of the Treace team to serve our customers and patients and successfully execute our plans throughout 2023,” said John T. Treace, CEO, Founder and Board Member of Treace. “Our results demonstrate the underlying strength and effectiveness of our strategic investments into our direct sales channel, targeted R&D initiatives, and direct-to-consumer programs. As the fastest growing company in foot and ankle, and with continued strong additions to our surgeon base, increasing productivity of our direct sales channel and a robust pipeline of new technologies fueling our commercial momentum, I’m confident that we have the right strategies in place to continue to deliver industry-leading growth and profitably scale our business in 2024 and beyond.”
Fourth Quarter 2023 Financial Results
Revenue for the fourth quarter of 2023 was $62.2 million, representing an increase of 25% compared to $49.8 million in the fourth quarter of 2022. The increase was driven by an increased number of Lapiplasty® procedure kits sold as a result of an expanded surgeon customer base, increased utilization and higher
Page | 1
blended average selling prices due to increased adoption of the Company’s newer technologies and expanding portfolio of complementary products.
Gross profit for the fourth quarter of 2023 was $50.7 million, representing an increase of 25% compared to a gross profit of $40.7 million in the fourth quarter of 2022. Gross margin totaled 81.6% in the fourth quarter of 2023, compared to 81.9% in fourth quarter of 2022, primarily due to changes in product mix and an increase in overhead costs due to headcount to support the growing business, partially offset by lower royalty rates and a decrease in inventory provisions.
Total operating expenses were $57.5 million in the fourth quarter of 2023, compared to total operating expenses of $44.2 million in the fourth quarter of 2022. Increased operating expenses in the fourth quarter of 2023 reflect strategic investments in the Company’s expanding direct sales channel, investments in product innovation, increased capacity requirements, as well as support for other commercial initiatives.
Fourth quarter 2023 net loss attributable to common stockholders was ($6.3) million, or ($0.10) per share, compared to ($4.4) million, or ($0.08) per share, for the same period of 2022. Fourth quarter adjusted net loss was ($6.3) million, or ($0.10) per share, compared to ($4.4) million, or ($0.08) per share for the same period of 2022. Adjusted EBITDA was $2.6 million in the fourth quarter of 2023 compared to a loss of ($0.5) million for the same period in 2022. See below for additional information and a reconciliation of non-GAAP financial information.
Full-Year 2023 Financial Results
Revenue for the full-year 2023 was $187.1 million, representing an increase of 32% compared to $141.8 million in 2022. This increase was driven by an increased number of Lapiplasty® procedure kits sold as a result of an expanded surgeon customer base and higher blended average selling prices due to increased adoption of the Company’s newer technologies and expanding product line.
Gross profit for the full-year 2023 was $151.9 million, representing an increase of 31% compared to a gross profit of $116.3 million in 2022. Gross margin was 81.2% in 2023, compared to 82.0% in 2022. The decrease in gross margin was primarily due to changes in product mix, an increase in inventory provisions, and an increase in overhead costs due to headcount to support the growing business, partially offset by lower royalty rates.
Total operating expenses were $203.4 million in 2023, compared to total operating expenses of $151.2 million in 2022. Increased operating expenses in 2023 reflect increased investments in commercial initiatives as well as other G&A investments supporting the growing business.
Full-year 2023 net loss attributable to common stockholders was ($49.5) million, or ($0.81) per share, compared to ($42.8) million, or ($0.77) per share, in 2022. Full-year 2023 adjusted net loss was ($49.5) million, or ($0.81) per share, compared to ($38.3) million, or ($0.69) per share for the same period of 2022. Adjusted EBITDA was a loss of ($24.4) million in 2023, compared to a loss of ($25.0) million in 2022. See below for additional information and a reconciliation of non-GAAP financial information.
Cash, cash equivalents, marketable securities and investment receivable totaled $126.2 million as of December 31, 2023. The Company believes it has sufficient balance sheet strength and flexibility to continue aggressively executing on its strategic investments and growth initiatives for the foreseeable future.
Financial Outlook
Treace expects revenue for the full-year 2024 to be $220 million to $225 million, which represents approximately 18% to 20% growth over full-year 2023 revenue.
The Company expects to make significant progress towards Adjusted EBITDA breakeven for full-year 2024 and anticipates Adjusted EBITDA to improve approximately 50% compared to full-year 2023.
Page | 2
An investor presentation for the Company’s fourth quarter and full-year 2023 financial results is available in the "Investors" section of Treace's website at investors.treace.com.
Webcast and Conference Call Details
Treace will host a conference call today, February 27, 2024, at 4:30 p.m. ET to discuss its fourth quarter and full-year 2023 financial results. Investors interested in listening to the conference call may do so by registering. Once registered, participants will receive dial-in numbers and a unique pin to join the call and ask questions. The live webcast of the conference call will be available on the Investor Relations section of the Company’s website at investors.treace.com. The webcast will be archived on the website following the completion of the call.
Use of Non-GAAP Financial Measures
To supplement the financial results presented in accordance with GAAP, this earnings release presents Adjusted EBITDA, which the Company defines as net loss before depreciation and amortization expense, interest income, interest expense, taxes, share-based compensation expense, acquisition-related costs and debt extinguishment loss. As of March 31, 2023, in its calculation of Adjusted EBITDA, the Company began subtracting interest income from net loss as interest income is significant for the full-year 2023. Prior period results for Adjusted EBITDA have been updated to be consistent with the updated presentation as described above. This earnings release also presents net loss attributable to common stockholders excluding the debt extinguishment loss on an aggregate and per share basis (“Adjusted Net Loss”). Non-GAAP financial measures such as Adjusted EBITDA and Adjusted Net Loss are presented in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management uses these non-GAAP financial measures to evaluate the Company’s operating performance and trends, as well as for making planning decisions. The Company believes that Adjusted EBITDA and Adjusted Net Loss helps to identify underlying trends in the Company’s business that may otherwise be masked by the effect of the income and expenses and other items that it excludes in its calculation of Adjusted EBITDA and Adjusted Net Loss. Accordingly, the Company believes these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company’s operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by the Company’s management in their financial and operational decision-making. The Company also presents these non-GAAP financial measures because it believes investors, analysts and rating agencies consider them to be a useful metrics in measuring the Company’s performance against other companies and its ability to meet its debt service obligations.
There are limitations related to the use of non-GAAP financial measures such as Adjusted EBITDA and Adjusted Net Loss because they are not prepared in accordance with GAAP, may exclude significant income and expenses required by GAAP to be recognized in the Company’s financial statements, and may not be comparable to non-GAAP financial measures used by other companies. The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented below.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, the Company’s belief that it has the right strategies in place to continue to deliver industry-leading foot and ankle growth and profitably scale its business in 2024 and beyond; the Company’s belief that it has sufficient balance sheet strength and flexibility to continue aggressively executing on its strategic investments and growth initiatives for the foreseeable future; the Company’s revenue guidance and revenue growth rates for full-year 2024; and the Company’s expectation of significant progress in Adjusted EBITDA
Page | 3
for full-year 2024 compared to 2023 and expected rate of Adjusted EBITDA improvement. Forward-looking statements are based on management’s current assumptions and expectations of future events and trends, which affect or may affect the Company’s business, strategy, operations or financial performance, and actual results and other events may differ materially from those expressed or implied in such statements due to numerous risks and uncertainties. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could cause actual results or other events to differ materially from those contemplated in this press release can be found in the Risk Factors section of Treace’s public filings with the Securities and Exchange Commission (SEC), including its Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 8, 2023, and its Annual Report on Form 10-K for the year ended December 31, 2023, which is expected to be filed with the SEC on February 27, 2024, and its subsequent SEC filings. Because forward-looking statements are inherently subject to risks and uncertainties, you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements speak only as of their date and, except to the extent required by law, the Company undertakes no obligation to update these statements, whether as a result of any new information, future developments or otherwise. The Company’s results for the quarter and year ended December 31, 2023 are not necessarily indicative of its operating results for any future periods.
Internet Posting of Information
Treace routinely posts information that may be important to investors in the “Investor Relations” section of its website at www.treace.com. The Company encourages investors and potential investors to consult the Treace website regularly for important information about Treace.
About Treace Medical Concepts
Treace Medical Concepts, Inc. is a medical technology company with the goal of advancing the standard of care for the surgical management of bunion and related midfoot deformities. Bunions are complex 3-dimensional deformities that originate from an unstable joint in the middle of the foot and affect approximately 67 million Americans, of which Treace estimates 1.1 million are annual surgical candidates. Treace has pioneered and patented the Lapiplasty® 3D Bunion Correction® System – a combination of instruments, implants, and surgical methods designed to surgically correct all 3 planes of the bunion deformity and secure the unstable joint, addressing the root cause of the bunion and helping patients get back to their active lifestyles. To further support the needs of bunion patients, Treace has introduced its Adductoplasty® Midfoot Correction System, designed for reproducible surgical correction of the midfoot as well as its Hammertoe PEEK Fixation System designed to address hammertoe, claw toe and mallet toe deformities. The Company continues to expand its footprint in the foot and ankle market with the introduction of its SpeedPlate™ Rapid Compression Implants, an innovative fixation platform with broad versatility across Lapiplasty® and Adductoplasty® procedures, as well as other common bone fusion procedures of the foot. For more information, please visit www.treace.com.
To learn more about Treace, connect with us on LinkedIn, Twitter, Facebook and Instagram.
Contacts:
Treace Medical Concepts, Inc.
Julie Dewey, IRC
Chief Communications & Investor Relations Officer
jddewey@treace.com | 209-613-6945
Page | 4
Treace Medical Concepts, Inc.
Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
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Three Months Ended |
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Twelve Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenue |
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$ |
62,212 |
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$ |
49,769 |
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$ |
187,118 |
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$ |
141,838 |
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Cost of goods sold |
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11,469 |
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9,021 |
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35,181 |
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25,532 |
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Gross profit |
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50,743 |
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40,748 |
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151,937 |
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116,306 |
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Operating expenses |
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Sales and marketing |
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39,924 |
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30,090 |
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140,894 |
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104,567 |
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Research and development |
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4,152 |
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3,749 |
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15,440 |
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13,584 |
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General and administrative |
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13,449 |
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10,406 |
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47,031 |
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32,999 |
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Total operating expenses |
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57,525 |
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44,245 |
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203,365 |
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151,150 |
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Loss from operations |
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(6,782 |
) |
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(3,497 |
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(51,428 |
) |
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(34,844 |
) |
Interest income |
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1,709 |
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753 |
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6,726 |
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1,313 |
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Interest expense |
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(1,304 |
) |
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(1,311 |
) |
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(5,167 |
) |
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(4,398 |
) |
Debt extinguishment loss |
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— |
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— |
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— |
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(4,483 |
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Other income, net |
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96 |
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(357 |
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342 |
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(403 |
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Other non-operating income (expense), net |
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501 |
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(915 |
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1,901 |
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(7,971 |
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Net loss |
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$ |
(6,281 |
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$ |
(4,412 |
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$ |
(49,527 |
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$ |
(42,815 |
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Other comprehensive income (loss) |
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Unrealized gain (loss) on marketable securities |
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$ |
311 |
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$ |
(27 |
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$ |
190 |
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$ |
(27 |
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Comprehensive loss |
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$ |
(5,970 |
) |
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$ |
(4,439 |
) |
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$ |
(49,337 |
) |
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$ |
(42,842 |
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Net loss per share attributable to common stockholders, basic and diluted |
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$ |
(0.10 |
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$ |
(0.08 |
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$ |
(0.81 |
) |
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$ |
(0.77 |
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Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
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61,699,336 |
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55,558,364 |
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60,852,153 |
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55,276,834 |
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Note: A change in presentation has been made within the Statement of Operations and Comprehensive Loss for the three months and twelve months ended December 31, 2022, reclassifying $0.7 million and $2.0 million of surgical instrument expense from cost of goods sold to sales and marketing expense to conform with the current year’s presentation. Please refer to supplemental materials related to quarterly 2022 results available on the Company’s investor relations website.
Page | 5
Treace Medical Concepts, Inc.
Balance Sheets
(in thousands, except share and per share amounts)
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December 31, |
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December 31, |
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2023 |
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2022 |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
12,982 |
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$ |
19,473 |
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Marketable securities, short-term |
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110,216 |
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61,779 |
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Accounts receivable, net of allowance for doubtful accounts of $980 and $735 as of December 31, 2023 and December 31, 2022, respectively |
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38,063 |
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29,196 |
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Inventories |
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29,245 |
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19,330 |
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Prepaid expenses and other current assets |
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7,853 |
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3,624 |
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Total current assets |
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198,359 |
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133,402 |
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Property and equipment, net |
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22,298 |
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15,338 |
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Intangible assets, net of accumulated amortization of $475 and $0 as of December 31, 2023 and December 31, 2022, respectively |
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9,025 |
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— |
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Goodwill |
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12,815 |
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— |
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Operating lease right-of-use assets |
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9,264 |
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10,138 |
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Other non-current assets |
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146 |
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146 |
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Total assets |
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$ |
251,907 |
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$ |
159,024 |
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Liabilities and Stockholders’ Equity |
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Current liabilities |
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Accounts payable |
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$ |
11,835 |
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$ |
8,668 |
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Accrued liabilities |
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10,458 |
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6,216 |
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Accrued commissions |
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10,759 |
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7,356 |
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Accrued compensation |
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7,549 |
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7,666 |
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Other liabilities |
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4,432 |
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339 |
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Total current liabilities |
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45,033 |
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30,245 |
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Long-term debt, net of discount of $992 and $1,289 as of December 31, 2023 and December 31, 2022, respectively |
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53,008 |
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52,711 |
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Operating lease liabilities, net of current portion |
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15,891 |
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15,539 |
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Other long-term liabilities |
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37 |
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— |
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Total liabilities |
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113,969 |
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98,495 |
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Stockholders’ equity |
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Preferred stock, $0.001 par value, 5,000,000 shares authorized as of December 31, 2023 and December 31, 2022; 0 shares issued and outstanding as of December 31, 2023 and December 31, 2022 |
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— |
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— |
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Common stock, $0.001 par value, 300,000,000 shares authorized; 61,749,654 issued and outstanding as of December 31, 2023; 300,000,000 shares authorized; 55,628,208 issued and outstanding as of December 31, 2022 |
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62 |
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55 |
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Additional paid-in capital |
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271,973 |
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145,221 |
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Accumulated deficit |
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(134,247 |
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(84,720 |
) |
Accumulated other comprehensive (loss) income |
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163 |
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(27 |
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Treasury stock, at cost; 1,218 and 0 shares as of December 31, 2023 and December 31, 2022 |
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(13 |
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— |
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Total stockholders’ equity |
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137,938 |
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60,529 |
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Total liabilities and stockholders’ equity |
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$ |
251,907 |
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$ |
159,024 |
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Page | 6
Treace Medical Concepts, Inc.
Statements of Cash Flows
(in thousands)
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Year Ended December 31, |
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2023 |
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2022 |
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Cash flows from operating activities |
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Net loss |
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$ |
(49,527 |
) |
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$ |
(42,815 |
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Adjustments to reconcile net loss to net cash used in operating |
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Depreciation and amortization expense |
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5,352 |
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2,133 |
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Provision for allowance for doubtful accounts |
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434 |
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411 |
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Share-based compensation expense |
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17,352 |
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|
|
8,111 |
|
Non-cash lease expense |
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|
2,461 |
|
|
|
2,522 |
|
Amortization of debt issuance costs |
|
|
297 |
|
|
|
244 |
|
Gain on fair value adjustment to derivative liability |
|
|
— |
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|
|
(173 |
) |
Debt extinguishment loss |
|
|
— |
|
|
|
4,483 |
|
Loss on impairment of long-lived assets |
|
|
— |
|
|
|
346 |
|
Accretion (amortization) of discount (premium) on marketable securities, net |
|
|
(1,406 |
) |
|
|
(126 |
) |
Other, net |
|
|
205 |
|
|
|
25 |
|
Net changes in operating assets and liabilities, net of acquisitions: |
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|
||
Accounts Receivable |
|
|
(9,301 |
) |
|
|
(11,039 |
) |
Inventory |
|
|
(9,848 |
) |
|
|
(8,769 |
) |
Prepaid expenses and other assets |
|
|
(1,210 |
) |
|
|
(668 |
) |
Other non-current assets |
|
|
— |
|
|
|
(146 |
) |
Other liabilities |
|
|
(119 |
) |
|
|
3,076 |
|
Accounts payable |
|
|
3,167 |
|
|
|
4,612 |
|
Accrued liabilities |
|
|
7,528 |
|
|
|
7,125 |
|
Other, net |
|
|
40 |
|
|
|
— |
|
Net cash used in operating activities |
|
|
(34,575 |
) |
|
|
(30,648 |
) |
|
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
|
|
|
||
Purchases of available-for-sale marketable securities |
|
|
(169,865 |
) |
|
|
(63,409 |
) |
Sales and maturities of available-for-sale marketable securities |
|
|
120,024 |
|
|
|
1,729 |
|
Purchases of property and equipment |
|
|
(11,458 |
) |
|
|
(14,838 |
) |
Acquisition, net of cash acquired |
|
|
(20,000 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(81,299 |
) |
|
|
(76,518 |
) |
|
|
|
|
|
|
|
||
Cash flows from financing activities |
|
|
|
|
|
|
||
Proceeds from interest bearing term debt |
|
|
— |
|
|
|
49,651 |
|
Proceeds from interest bearing revolving debt |
|
|
— |
|
|
|
3,850 |
|
Debt issuance costs |
|
|
— |
|
|
|
(989 |
) |
Payments on interest bearing debt |
|
|
— |
|
|
|
(33,893 |
) |
Proceeds from issuance of common stock from public offering, net of issuance costs and underwriting discount of $7.5 million and $10.6 million |
|
|
107,527 |
|
|
|
— |
|
Proceeds from exercise of employee stock options |
|
|
1,869 |
|
|
|
2,187 |
|
Taxes from withheld shares |
|
|
(13 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
|
109,383 |
|
|
|
20,806 |
|
Net decrease in cash and cash equivalents |
|
|
(6,491 |
) |
|
|
(86,360 |
) |
Cash and cash equivalents at beginning of period |
|
|
19,473 |
|
|
|
105,833 |
|
Cash and cash equivalents at end of period |
|
$ |
12,982 |
|
|
$ |
19,473 |
|
|
|
|
|
|
|
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
5,167 |
|
|
$ |
4,398 |
|
Operating lease right-of-use assets obtained in exchange for new lease liabilities |
|
$ |
— |
|
|
$ |
15,300 |
|
Operating lease right-of-use asset and lease liability adjustment due to lease incentive |
|
$ |
(22 |
) |
|
$ |
3,615 |
|
Noncash investing activities: |
|
|
|
|
|
|
||
Unrealized (gains) losses on marketable securities |
|
$ |
(190 |
) |
|
$ |
27 |
|
Unsettled matured marketable security and receivable from broker |
|
$ |
3,000 |
|
|
$ |
— |
|
Noncash portion of internally developed software |
|
$ |
(11 |
) |
|
$ |
— |
|
Page | 7
Treace Medical Concepts, Inc.
Reconciliation of GAAP Net Loss to Adjusted Net Loss
(in thousands, except share and per share amounts)
(unaudited)
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net loss |
|
$ |
(6,281 |
) |
|
$ |
(4,412 |
) |
|
$ |
(49,527 |
) |
|
$ |
(42,815 |
) |
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt extinguishment loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,483 |
|
Adjusted net loss |
|
$ |
(6,281 |
) |
|
$ |
(4,412 |
) |
|
$ |
(49,527 |
) |
|
$ |
(38,332 |
) |
Per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
(0.10 |
) |
|
|
(0.08 |
) |
|
|
(0.81 |
) |
|
|
(0.77 |
) |
Adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt extinguishment loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.08 |
|
Adjusted net loss |
|
$ |
(0.10 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.81 |
) |
|
$ |
(0.69 |
) |
Weighted average common shares outstanding per share attributable to common stockholders, basic and diluted |
|
|
61,699,336 |
|
|
|
55,558,364 |
|
|
|
60,852,153 |
|
|
|
55,276,834 |
|
Treace Medical Concepts, Inc.
Reconciliation of GAAP Net Loss to EBITDA & Adjusted EBITDA
(in thousands)
(unaudited)
|
Three Months Ended |
|
|
Twelve Months Ended |
|
||||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net loss |
$ |
(6,281 |
) |
|
$ |
(4,412 |
) |
|
$ |
(49,527 |
) |
|
$ |
(42,815 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
(1,709 |
) |
|
|
(753 |
) |
|
|
(6,726 |
) |
|
|
(1,313 |
) |
Interest expense |
|
1,304 |
|
|
|
1,311 |
|
|
|
5,167 |
|
|
|
4,398 |
|
Taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Depreciation & Amortization |
|
1,769 |
|
|
|
917 |
|
|
|
5,352 |
|
|
|
2,133 |
|
EBITDA |
$ |
(4,917 |
) |
|
$ |
(2,937 |
) |
|
$ |
(45,734 |
) |
|
$ |
(37,597 |
) |
Share-based compensation expense |
|
5,872 |
|
|
|
2,470 |
|
|
|
17,352 |
|
|
|
8,111 |
|
Acquisition-related costs |
|
1,674 |
|
|
|
— |
|
|
|
3,996 |
|
|
|
— |
|
Debt extinguishment loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,483 |
|
Adjusted EBITDA |
$ |
2,629 |
|
|
$ |
(467 |
) |
|
$ |
(24,386 |
) |
|
$ |
(25,003 |
) |
Page | 8
Fourth Quarter 2023 Earnings Presentation February 27, 2024 On solid footing for sustained top-tier growth 1 EX-99.2
This presentation may include forward- looking statements. All statements other than statements of historical facts contained in this presentation, including statements regarding our future results of operations and financial position, strategy and plans, industry environment, potential growth opportunities, and our expectations for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would,” or the negative version of these words and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. These risks and uncertainties, many of which are beyond our control, include risks described in the section entitled Risk Factors in our filings made with the Securities and Exchange Commission (the “SEC”), including our Form 10-K for the year ended December 31, 2023, and our subsequent SEC filings. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. No representations or warranties (expressed or implied) are made about the accuracy of any such forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presentation may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this presentation to conform these statements to actual results or to changes in our expectations. This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions, and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. By attending or receiving this presentation, you acknowledge that you will be solely responsible for your own assessment of the market and our market position and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of our business. Forward-Looking Statements 2
Non-GAAP Financial Measures 3 To supplement the financial results presented in accordance with GAAP, this presentation presents Adjusted EBITDA, which the Company defines as net loss before depreciation and amortization expense, interest income, interest expense, taxes, share-based compensation expense, acquisition-related costs and debt extinguishment loss. As of March 31, 2023, in its calculation of Adjusted EBITDA, the Company began subtracting interest income from net loss as interest income is significant for the full-year 2023. Prior period results for Adjusted EBITDA have been updated to be consistent with the updated presentation as described above. Non-GAAP financial measures such as Adjusted EBITDA are presented in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management uses these non-GAAP financial measures to evaluate the Company’s operating performance and trends, as well as for making planning decisions. The Company believes that Adjusted EBITDA helps to identify underlying trends in the Company’s business that may otherwise be masked by the effect of the income and expenses and other items that it excludes in its calculation of Adjusted EBITDA. Accordingly, the Company believes these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company’s operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by the Company’s management in their financial and operational decision-making. The Company also presents these non-GAAP financial measures because it believes investors, analysts and rating agencies consider them to be a useful metrics in measuring the Company’s performance against other companies and its ability to meet its debt service obligations. There are limitations related to the use of non-GAAP financial measures such as Adjusted EBITDA because they are not prepared in accordance with GAAP, may exclude significant income and expenses required by GAAP to be recognized in the Company’s financial statements, and may not be comparable to non-GAAP financial measures used by other companies. The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are included at the end of this presentation.
Treace Medical Concepts, Inc. Pure-play medical device company focused on the surgical treatment of bunions and related deformities 57 US PATENTS1 80 US PENDING PATENTS Growing FY 2023 revenue of $187.1 million (+32% YOY growth) 5-year revenue growth CAGR of +60% Just getting started 10 new product launches in 2H 2023 and 2024 Clear line-of-sight to near-term profitability – driving towards Adj. EBITDA breakeven for FY 2024 and cash flow positive in 2025 Strong cash & liquidity position – no current need for equity financing 4 Fastest-growing company in foot and ankle, one of the fastest-growing segments in Orthopaedics² Hyper-focused Patent count as of 2/27/2024 TMCI estimate based on other publicly-traded peers participating in the foot and ankle market
4Q and Full-Year 2023 Results Summary 5 $ in millions, except % 4Q’23 Y-Y Change FY 2023 Y-Y Change Revenue $62.2 +25% $187.1 +32% Gross Margin 81.6% -30 bps 81.2% -80 bps Net Loss $(6.3) -42% $(49.5) -16% Non-GAAP Adjusted EBITDA¹ $2.6 +663% $(24.4) +2% Added 164 surgeons in 4Q’23 and ended 2023 with 2,855 active surgeons, +20% compared to prior year and ~29% of the estimated 10K U.S. surgeons performing bunion surgery Sold 9,665 Lapiplasty® procedure kits in 4Q’23, (+15% compared to 4Q’22) and 29,675 Lapiplasty® procedure kits in 2023 (+20% over 2022) Record blended average selling price of $6,437 in 4Q’23 (+9% over 4Q’22) and $6,306 in 2023 (+10% over 2022) Surgeon utilization increased to 10.4 kits in 4Q’23 and 2023, up from 10.3 kits in 4Q’22 and 2022 Direct Sales Reps totaled 227 reps at YE 2023 vs. 168 reps at YE 2022 (+35%) ~82% and 81% of revenue mix came from direct channel in 4Q’23 and 2023, respectively The Company defines Non-GAAP Adjusted EBITDA as net loss before depreciation and amortization expense, interest income, interest expense, taxes, share-based compensation expense, acquisition-related costs and debt extinguishment loss.
4Q 2023 Key Messages 6 Revenue YoY growth of +25% in 4Q’23 and +32% in 2023 above high-end of previous guidance range Positive Adj. EBITDA of $2.6 million in 4Q’23; Adj. EBITDA margin improved 460 bps in 2023 vs. 2022 Results demonstrate underlying strength and effectiveness of strategic investments into direct sales channel, targeted R&D initiatives and direct-to-consumer programs Initiated commercialization of several new technologies, including the SpeedPlate™ fixation platform, Hammertoe Fixation System, and LapiTome™ and RazorTome™ sterile instruments Presented three-year interim data from ALIGN3D™ study at ACFAS Annual Scientific Conference demonstrating sustained, positive results post-Lapiplasty® 3D correction Driving towards Adj. EBITDA breakeven for full-year 2024 and positive cash flow in 2025 Confident we have the right strategies in place to continue to deliver industry-leading foot and ankle growth and profitably scale our business in 2024 and beyond Miranda Lapiplasty® patient
Strong presence at ACFAS Annual Scientific Conference 7 View Press Release View Clinical Presentations
Taking Bold Steps to Capture the Market (1) 4-year CAGR reflects Q4 2019 to Q4 2023 (2) Active Surgeons perform at least one Lapiplasty® procedure in trailing 12 months 30% 4-year CAGR in Active Surgeons¹ Early in utilization curve: nearly 40% of surgeons added in last two years 30% Approaching using Lapiplasty® procedure bunion surgeons Increased experience leads to increased utilization 2,855 ~29% 2023 Surgeon Base Penetration Active Surgeon Users² 1,783 2021 997 2019 ~18% ~10%
Increased Experience Leads to Increased Utilization 9 Years Using the Lapiplasty® System # of Cases per Surgeon Last Twelve Months Average Surgeon Usage1 Data as of December 31, 2023. Active Surgeons perform at least one Lapiplasty® procedure in trailing 12 months. The usage in this chart represents the average surgeon utilization rate for the last 12 months. More than 12 months must have elapsed from the date of the surgeon's first use for the surgeon to be included in the year 1 column. Usage shown excludes our Surgeon Advisory Board members.
Blended ASP Market-capturing momentum A Step Ahead Revenue growth driven by increasing surgeon utilization, new surgeon users and higher blended average sales prices (BASP) BASP expansion driven by next-gen Lapiplasty® technologies and complementary product usage $17.7 2018 $39.4 2019 $57.4 2020 $141.8 2022 $94.4 2021 $187.1 2023 Revenue ($Millions) Increasing blended ASP for each procedure kit sold Growth % over prior year 2021 $5,398 5% 2022 $5,753 7% 2023 $6,306 10% 10 Tom Lapiplasty® patient
“The biggest thing from Treace since Lapiplasty®” “Total game changer” Fixation Platform, a giant step forward SpeedPlate™ - a new standard for foot and ankle fixation for Lapiplasty®, Adductoplasty® and BEYOND. We expect it to fuel continued revenue growth and new surgeon additions. SURGEONS SAY: 11 SpeedPlate™ Implants shown in Lapiplasty® and Adductoplasty® procedure
“I’d like the slowest recovery possible” Through continued refinement and innovation, the Lapiplasty® procedure can now be performed through a micro 2cm incision Lapiplasty® Procedure ~7cm Incision; 2015 Mini-Incision™ System ~3.5cm Incision; 2021 Micro-Lapiplasty™ System ~2cm Incision; Q1 2024 Uses SpeedPlate™ fixation with premium ASP …and other things no patient ever says 12
Building on our strengths 13 Powerful Future Pipeline REDPOINT™ PSI TECHNOLOGY Pre-operative planning and patient-specific cut guides Strengthens market leadership position and competitive differentiation First to U.S. market with FDA-cleared PSI solution for bunion and midfoot deformity correction NEW TECHNOLOGY PLATFORM Pre-Op Planning & 3D Printed Cut Guide Patient-Specific Cutting Guide Coming in 2H 2024 Expected to: Drive further penetration into bunion market Attract new physicians Fuel higher utilization rates Final Correction
Coming in 2H 2024 Mini-Adductoplasty™ System 14 MTA: Metatarsus adductus (1) American College of Foot and Ankle Surgeons Website (2) Nix S, et al. J Foot Ankle Res 2010; Sep 27:3:21 (3) Aiyer AA, et al. FAI 2016; 37:165-171 (4) Aiyer AA, et al. FAI 2014; 35:1292-1297 Designed to be performed through ~50% smaller incision Leverages SpeedPlate™ technology for fixation DESIGNED TO FURTHER REDUCE INCISION SIZE AND TISSUE DISSECTION ~
Meaningful leverage opportunities to drive profitability Continued focus on operating expense leverage & management Scalability of business Technology-enabled efficiencies Adj. EBITDA margin improved +460 bps in 2023 vs. 2022 The Company defines Non-GAAP Adjusted EBITDA as net loss before depreciation and amortization expense, interest income, interest expense, taxes, share-based compensation expense, acquisition-related costs and debt extinguishment loss. Driving towards Adjusted EBITDA breakeven in 2024 and cash flow positive in 2025 15 Total available access to liquidity, including debt facility, is ~$190 million Solidly on Pathway Towards Sustainable Profitability¹ Jen Lapiplasty® patient
Full-Year 2024 Guidance 16 Guidance range communicated on 2/27/2024. The fact that we include these projections in this presentation should not be taken to mean that these amounts continue to be our projections as of any subsequent date. See slide 2 entitled “Forward-Looking Statements” for more information. Guidance (as of February 27, 2024) Full-Year 20241 Revenue $220 million to $225 million Guidance range represents 18% to 20% growth vs. prior year Adjusted EBITDA Company expects to make significant progress towards Adjusted EBITDA breakeven for full-year 2024 Anticipates Adjusted EBITDA to improve ~50% compared to full-year 2023
Solid footing, setting the pace Differentiated technology and innovative procedures backed by compelling clinical evidence Positioned to deliver sustainable, strong ~20%+ revenue growth in 2024 and beyond Driving towards Adj. EBITDA breakeven for full-year 2024 and free cash flow positive in 2025 Fastest-growing company in foot and ankle one of the fastest-growing segments in Orthopaedics¹ Multiple growth drivers: + new surgeons + surgeon utilization + new products + sales rep productivity + BASP increases TMCI estimate based on other publicly-traded peers participating in the foot and ankle market
FOR ADDITIONAL INFORMATION, PLEASE CONTACT: www.treace.com NASDAQ: TMCI Julie Dewey, IRC jddewey@treace.com 209-613-6945 18 Chief Communications & Investor Relations Officer
GAAP to Non-GAAP Reconciliations 19