SIBN - NASDAQ

Good afternoon and welcome to SI-BONE’s Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Saqib Iqbal, Senior Director of Investor Relations at SI-BONE for a few introductory comments.

Thank you for participating in today’s call. Joining me are Laura Francis, Chief Executive Officer; and Anshul Maheshwari, Chief Financial Officer. Earlier today, SI-BONE released financial results for the quarter ended December 31, 2024. A copy of the press release is available on the company’s website. Before we begin, I’d like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or prediction of future events, results or performance are forward-looking statements. These forward-looking statements are based on the company’s current expectations and inherently involve risks and uncertainties. These risks include SI-BONE’s ability to introduce and commercialize new products and indications, SI-BONE’s ability to maintain favorable reimbursement for its products and procedures, changes in payer requirements for authorization of procedures involving SI-BONE’s products, the impact of potential economic weakness on the ability and desire of patients to undergo elective procedures, SI-BONE’s ability to manage risks to its supply chain, the impact of future capital requirements driven by new product introductions and risks to the continued renormalization of the healthcare operating environment. Other forward-looking statements include our examination of operating trends and our future financial expectations, such as expectations for physician training and adoption, active physician, new product and clinical trial enrollment, and are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of risks and uncertainties associated with our business, please refer to the Risk Factors section of our most recent Form 10-K filed with the Securities and Exchange Commission. During the call, management may also discuss certain non-GAAP measures, including the company’s adjusted EBITDA results. Unless otherwise noted, any reference to profitability is in terms of positive adjusted EBITDA. For a reconciliation of these non-GAAP measures to GAAP accounting, please see the company’s full earnings release issued earlier today. Unless otherwise noted, all results are compared to the comparable period in the prior year. SI-BONE disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 24, 2025. With that, I’ll turn the call over to Laura.

Thanks, Saqib. Good afternoon and thank you for joining us. I am pleased with the team’s execution in the fourth quarter to deliver a record $49 million in worldwide revenue, representing growth exceeding 26%. Fourth quarter revenue in the United States increased by an impressive 28% to $46.9 million driven by strong demand for our innovative platform from now nearly 1,400 active physicians. The outstanding performance in the quarter is an outcome of the team’s focus to build the most innovative medical device platform serving orthopedic, neurosurgical, trauma and interventional spine physicians. Our growth in the quarter was broad-based. The surge in demand in SI joint fusion procedures was further strengthened by the growing interventional spine physician engagement with TORC and INTRA. Granite 9.5 continued to gain momentum, with adoption outpacing all of our previous product launches. TNT, which was launched in the fourth quarter, has been met with impressive adoption and has exceeded our expectations. These early demand indicators give us confidence that each of these solutions can be major growth drivers in 2025 and beyond. Moving down the P&L, we delivered positive adjusted EBITDA in the fourth quarter. Given our healthy operating leverage, we expect to deliver positive adjusted EBITDA for the full year 2025 and expect adjusted EBITDA margins to expand going forward. The inflection in profitability, combined with our asset-light business model, positions us to progress toward our next milestone of generating positive free cash flow. Coming into 2025, we have three key growth priorities. First, implement targeted commercial initiatives to fuel adoption of the expanded portfolio and grow our physician base. Second, increase procedure density by focusing on multimodality physician engagement. And finally, lay the groundwork for the commercialization of our disruptive new products. Now, let me provide an update on our key initiatives as we look to extend our leadership position and drive strong, durable and profitable growth. Starting with commercial infrastructure and productivity, we closed the year with 87 quota-carrying U.S. territory managers as we promoted 5 territory representatives in the fourth quarter. Our territory productivity has nearly doubled in the last 3 years to $1.8 million in 2024. In 2025, we plan to selectively expand our direct sales force to capitalize on the strong procedure demand. As these territories mature, we anticipate surpassing $2 million per territory over time. Our evolution from a direct sales force to a hybrid model has contributed to the territory productivity gains and market penetration. This strategic shift allows us to scale more efficiently while maintaining strong physician engagement. We’ve successfully leveraged the hybrid model for Granite. And as we look ahead, we’re actively pursuing partnerships with trauma third-party agents to facilitate broader adoption and growth for TNT. These initiatives reflect our commitment to optimizing our sales approach and ensuring sustained and profitable market expansion. Moving on to physician engagement, the strong physician interest in the portfolio resulted in a record number of physicians trained in the year. This translated into nearly 2,000 U.S. physicians performing at least 1 procedure in 2024. In the fourth quarter, we had nearly 1,400 active physicians representing 23% growth as we added a record 260 active physicians compared to the prior year period. In the fourth quarter, the number of physicians performing multiple procedure types grew by nearly 40%. Looking at density trends, physicians who performed a case in the fourth quarter of 2024 and ‘23 averaged 5 procedures per physician, which is 30% higher than the overall average procedures per physician in the quarter. Our academic programs remain a key contributor to our active physician growth. In 2024, revenue generated from physicians who were previously trained as residents and fellows grew by 70%, highlighting the outsized impact of these programs on adoption and revenue growth. The pace of our active user growth and increasing procedure density are strong leading indicators of future demand. Turning to innovation. In the last 3 years, we have transformed into a high-growth medical device platform that is consistently delivered in excess of 20% annual revenue growth. We have four product families that are targeting multiple indications across SI joint dysfunction, deformity and pelvic ring fractures. Let me provide insights into the key themes across our platform. First, I’ll discuss SI joint dysfunction. Spine surgeons continue to account for the overwhelming majority of our revenue. Building on the success of iFuse 3D, TORQ has become an essential contributor to our surgeons SI joint dysfunction procedure volume growth. As a reminder, iFuse 3D and TORQ are reimbursed under CPT 27279, which is reimbursed by substantially all payers. Even within interventional spine, most of our trained physicians have embraced TORQ as a preferred solution. In certain instances where the interventionalists prefer an allograft solution, we are seeing success with INTRA, which is reimbursed under CPT 27278. With the increase in physician and ASC facility fees for CPT 27278, effective January 1, 2025, we believe INTRA has potential to drive engagement in select markets where payer reimbursement is defined. Currently, 4 out of 7 Medicare administrative contractors are consistently covering CPT 27278 procedures. Our foresight to train physicians on both TORQ and INTRA puts us in the best position to meet the needs of the interventionalists and their patients. Similar to our surgeon customers, our strategy to provide the most comprehensive set of solutions along with world-class training and clinical support, has made us the preferred partner for interventional spine physicians. Moving to deformity and pelvic fixation, based on the demand in the first 6 months since launch, Granite 9.5 has been a resounding success. Usage in adult deformity procedures has been strong. Traction in degenerative spine procedures is increasing and there is growing interest from pediatric deformity surgeons. With Granite 9.5, we have an opportunity to increase physician engagement as well as drive more procedures per user. Granite 9.5 also has the potential to improve our procedure ASP, as its smaller size provides physicians additional room to stack multiple implants for fusion using two points of fixation. In the fourth quarter, stack granite volume grew by nearly 45% compared to the prior year period. In several of these stack cases physicians are using a combination of Granite 10.5 and 9.5 implants. Within degenerative spine, we are in the early stages of capturing the S1 and S1AI opportunity with our existing physicians who perform SI joint fusion procedures. Granite was awarded transitional pass-through or TPT payment status effective January 1, 2025. We believe there is potential for TPT to play out over time as less severe cases involving shorter construct spinal fusions migrate to the hospital outpatient setting. In finalizing the TPT award, CMS determined that the uniqueness of Granite requires a new device code for hospitals to report its usage in a procedure. Additionally, CMS granted a $0 device offset, which is very important. It allows for hospitals to pass through 100% of the Granite cost they report, receiving that payment in addition to their usual facility fee. With this award, Granite’s full cost is eligible for TPT payment, enhancing Granite’s reimbursement profile and underscoring its unique clinical value in the sacropelvic space. Application of Granite in pelvic fixation remains one of the most exciting areas of focus at Spine Society conferences. We recently hosted the fifth meeting of the Spinal Pelvic Study Group, or SPSG, It’s a consortium of deformity KOLs from the top academic medical centers across the United States. This year, the members are focused on two key areas of pelvic fixation. First is to gather data on the application of fixation at S1. The second is comparing spinal pelvic fixation using Granite with conventional screws. The group has two manuscripts currently under peer review and plans to submit additional papers this year. A recent publication demonstrated a significantly lower incidence of screw failures with Granite compared to rates reported in prior papers for traditional pelvic screws. There were no incidents of breakage and back out for Granite, underscoring its durable integration with bone with low rates of revisions and mechanical failures. The paper substantiates Granite’s value proposition for healthcare facilities, clinicians, payers and patients. Given the physician engagement and the nearly 130,000 target procedures, Granite will be a key revenue growth driver for the next several years. Now I’ll speak about pelvic ring fractures. We are thrilled with the interest from surgeons on our recently launched TNT solution. Designed as a unique anatomy-specific technology, TNT seamlessly integrates into the trauma surgeon’s workflow and allows us to add a new procedure with spine surgeons We are adding to our surgical capacity in 2025 to ensure we can capture this physician demand. Following the breakthrough device designation, or BDD, from the FDA, we are now pursuing a new technology add-on payment, or NTAP approval, for TNT. If approved, the NTAP would take effect in October 2025. TNT holds the potential to become a major growth driver in the future with a TAM of nearly 60,000 target procedures. Finally, I’d like to discuss our exciting product roadmap. With our innovation engine running strong, we have more disruptive product launches on the horizon. Following Granite and TNT, we are excited to share that we have been awarded breakthrough device designation from the FDA for another novel implant system. Since the beginning of the FDA’s BDD program, fewer than 10 BDD products in spine have been commercialized. This will be SI-BONE’s second product in spine and third overall, putting us in a distinguished position as the only public company in our industry to have 3 BDD products. This latest BDD is for a device that has the potential to disrupt the medical device industry by providing more effective treatment for one of the most pressing needs in orthopedic and spine surgery. This new device leverages our core technology and targets our existing call points. This fits into our strategy to build a unique platform to increase procedure density by addressing unmet clinical needs. We are in the early development phase and we’ll discuss applications as we get closer to launch. Finally, 2025 will be an important year for clinical publications. We expect to publish results this year from our STACI study for SI joint fusion, SILVIA and PAULA for pelvic fixation, and SAFFRON for pelvic ring fractures. We believe clinical evidence will be an important catalyst to accelerating adoption and maintaining our differentiated reimbursement. Now, let me comment on the ongoing DoJ investigation. We have a strong compliance program in place that aligns with the AdvaMed Code and OIG guidance. We’re cooperating with the DoJ in a transparent way. We do not have any material updates at this point and do not expect to have significant updates prior to any resolution of the matter. Before I hand it over to Anshul to discuss our financial performance, I want to recognize my colleagues for an exceptional effort in Q4. This is our busiest time of the year, and we’ve laid the groundwork to deliver another stellar year ahead. With that, I’ll hand the call over to Anshul.

Thanks, Laura. Good afternoon, everyone. My comments today will be focused on fourth quarter and fiscal year revenue growth, profitability and liquidity. Additionally, all the comparisons provided will be versus the same period in the prior year unless noted otherwise. Starting with revenue growth, our fourth quarter worldwide revenue growth exceeded 26% to a record $49 million. U.S. revenue was $46.9 million, representing 28% growth. International revenue in the fourth quarter was $2.1 million. For the full year 2024, we generated worldwide revenue of $167.2 million, reflecting over 20% growth. Our U.S. revenue grew over 21% to $158.4 million. U.S. revenue growth was driven by a 20% increase in procedure volume growth and a modest improvement in ASP due to procedure mix. International revenue for full year 2024 was $8.8 million. Moving to profitability. Our fourth quarter gross profit increased 35% to $38.8 million. For the full year 2024, gross profit increased 21% to $132.1 million. Gross margin was 79% for the quarter and the full year 2024. Our gross margin was 100 basis points ahead of our original fiscal year 2024 guidance due to our strong ASP as well as the benefit from our initiatives to streamline supply chain to improve lead times and lower cost. In the fourth quarter, operating expenses grew 8% to $44.3 million. For the full year 2024, operating expenses grew 7% to $167.4 million. Revenue-related growth activities were the key contributors to the operating expense increase, including higher commissions, marketing support for new products and research and development investment. In the fourth quarter, our net loss improved by nearly 60% to $4.5 million, or $0.11 per diluted share. For the full year 2024, net loss improved by 29% to $30.9 million, or $0.75 per diluted share. We achieved positive adjusted EBITDA of $1.9 million in the quarter compared to an adjusted EBITDA loss of $4.8 million in the fourth quarter of 2023. This nearly $7 million improvement in adjusted EBITDA highlights the scalability of our infrastructure. Adjusted EBITDA loss for the full year 2024 narrowed to $5.1 million compared to $17.3 million in 2023, representing over 70% improved. Turning to liquidity, we ended 2024 with $150 million in cash and marketable securities. Our total cash usage in the fourth quarter was less than $800,000. With our strong liquidity position and expanding adjusted EBITDA profitability, we are focused on making significant progress towards our goal of achieving positive free cash flow. Finally, moving to our outlook for 2025. We have robust momentum entering 2025. When you overlay the potential impact of reimbursement tailwinds like TPT for Granite and NTAP for TNT in the second half of 2025, we are positioned for another strong year of revenue growth and profitability. In 2025, we expect worldwide revenue of $193.5 million to $195.5 million implying year-over-year growth of approximately 16% to 17%. Our guidance assumes strong volume growth, including incremental benefit from the broader commercialization of products launched in 2024, in part offset by low to mid single-digit ASP impact from evolution of the procedure mix. Based on the current revenue assumptions, we expect 2025 annual gross margin to be between 77% and 78%, and annual operating expenses to grow approximately 9% at the midpoint of their revenue range. Accounting for business seasonality, we expect to deliver positive adjusted EBITDA in the second half of 2025 and full year 2025. With that, I will turn the call over to Laura.

Thanks, Anshul. Looking ahead, we are excited about 2025. I am more confident than ever in our ability to deliver another standout year. Over the long-term, with robust procedure demand, growing physician base, and a steady cadence of unique product launches, we have all the elements in place to extend our track record of delivering strong revenue growth and expanding profitability. With that, we are happy to take your questions. Operator?

Thank you. [Operator Instructions] Our first question comes from Craig Bijou with Bank of America. Your line is open.

Good afternoon. Thanks for taking the questions and congrats on a strong finish to the year. I wanted to start with maybe some of the growth drivers. And obviously you guys are getting growth from a number of, or in a number of different ways, your legacy SI joint procedures, then Granite 9.5 and now TNT. So when we think about the growth that you guys saw this year and then looking ahead to ‘25 and beyond, I know you don’t give specifics, but is there I guess I was hoping to hear maybe a little bit on the contribution of each of those and how we should think about that contributions?

Thanks for the question, Craig. Appreciate it. And you are right, the fourth quarter was a great quarter for us. We have really hit records across all of our KPIs. And in certain cases, we exceeded our own internal estimates when it came to physician demand, for example, from Granite 9.5 and also TNT. And the record performance in the quarter and for that matter, for the full year 2024, it reflects the growing momentum we have consistently seen in the business for the last several quarters. So delivering 26% worldwide revenue growth is outstanding. It was led by our U.S. revenue growth at 28%. And you are asking about the different growth drivers. We really saw strong momentum across all of our procedure types and also call points as well. So in our prepared remarks, I talked a fair amount about our SI joint fusion business and the drivers there being our core business with our surgeons, with iFuse 3D as well as with TORQ, but also that interventional has provided a nice incremental growth driver there as well with adoption primarily of TORQ, but also with INTRA too. The introduction of Granite 9.5 was an important driver in our deformity business, degenerative business, overall pelvic fixation. And we just continue to see a lift as we penetrate that very large market opportunity in the U.S. of around 130,000 procedures. And then, as I said before on TNT, we, we actually didn’t perform our first case until the end of September. So we were actually surprised at how rapidly we saw an uptake of TNT, especially given that we were in the beta launch phase at that point with limited inventory and limited instruments and trays out in the field. But what we’re doing right now is getting more surgical capacity in the field with all of those new products that I just mentioned, so, our intra product for interventionalist, our Granite 9.5 product as well as our TNT product as well. So as I said really broad-based performance across the portfolio. And what I would say is what’s exciting is that the 2024 growth drivers are likely to get stronger in 2025 because of the numerous product launches that we had in 2024. And it gives me this confidence that we are positioned to deliver another standout year. And it really makes me confident that we have all the ingredients to deliver top-tier MedTech revenue growth for a prolonged period of time.

Got it. Thanks. Thanks, Laura, for that. And just following up, I wanted to ask about guidance and the 16% to 17% growth for ‘25, it’s slightly lower than what you guys have guided to over the last couple of years. And even when we look at your 2-year stack growth, you guys are kind of – you guys are in the mid-20s, so very strong and higher than that 16% to 17%. So maybe just help reconcile, is there anything that we’re not thinking about when we think about ‘25 or how did you approach your guidance this year?

Yes, Craig. Good afternoon. Happy to take that call, that question. So as Laura talked about a lot of the tailwinds in the business, so we are actually feeling quite great about the business coming into 2025. She talked about the product side momentum. When you think about entering the year with a formidable trained physician base, had over 1,400 docs perform a procedure in the fourth quarter, addition of more surgical capacity on the products that we rolled out in 2024. And then there is the additional reimbursement enhancements like TPT for Granite and the potential for NTAP for TNT there is a lot of good momentum coming into the year. So feels good about the business. Now, that said, we don’t want to get ahead of ourselves. And while we are confident that we will capitalize on the demand for solutions across all our markets as we progress through the year, we want to grow into those opportunities as we go through the year because some of them will have an impact as we progress through the year, whether it’s the reimbursement tailwinds or the impact of rollout of surgical capacity. So, I think we took a very balanced approach to setting expectations based on the tailwinds we have in the business. We did make a couple of assumptions in our guidance, the first one being ASP. As I have said in my prepared remarks, we have assumed low to mid-single digit ASP decline just based on the evolution of the procedure mix. Certain procedures use fewer implants, and we have incorporated that. But obviously, we have demonstrated that we are able to do better than that through execution for the last couple of years. So, that was an assumption. The other assumption is there is one less procedure day in the year, and there is some FX headwind that we have incorporated as well.

Thanks for taking the questions.

[Operator Instructions] Our next question comes from David Turkaly with Citizens JMP. Your line is open.

Good evening and yes, congrats. Congrats on the quarter and the year. Laura, I just wanted to get your thoughts on sort of the competitive landscape. We hear a lot and it doesn’t seem to be impacting you much, but certainly there could be some disruption out there in the spine world. So, I would just love to hear your current thoughts on anything that’s changing from a competitive standpoint.

Thanks for the question, Dave. And yes, we are thrilled with how we performed in the fourth quarter. And if you see the acceleration of the growth that we saw, it hopefully will put people’s minds at ease about the long-term sustainability of the growth in our business. And we are competing in SI joint fusion as the market leader in the space and that’s working really well for us. It’s working with our historical surgeon base and it’s also working very well on the interventional side too. So, we really are in a different category of company in terms of our products, so the extensive product portfolio that we have at this point that meet the needs of different physicians and different patients as well. But in addition, it’s the educational approach that we take, whether I am talking about professional education or if I am actually talking about our commercial sales force who is incredibly knowledgeable about the prevalence, the diagnosis, the anatomy, as well as the treatment of these particular patients. And then finally, helping to support from a reimbursement perspective as well, and quite frankly, having most of the clinical data in the space itself. So, we are competing really well, as you can see, based upon the results of the numbers that we continue to generate. And as I have said earlier, I really think that we are just getting started with launching three different products in 2024 and starting to see the momentum really taking hold in the fourth quarter bodes very well for 2025.

Thank you for that. And I just want to clarify a point. I think you might have said that the number of docs using multiple products grew by 40%. I don’t know if that is what you said. I am just curious as to what the mix is, like what percent of your active physicians are doing that now, if you could share that.

Dave, we don’t share what percent of active docs are doing that, but the 40% increase in the number of docs doing multiple procedures is a very important metric for us because it highlights sort of the ability to drive density of the portfolio across the call point. The other statistic that I would share is, and we do share this normally, is the number of adds that we did in the quarter. Almost half of those adds were docs that did multiple procedure types in the quarter, so again, a really good metric for us. As Laura said in the prepared remarks, one of our priorities from a commercial revenue growth perspective is driving physician density. And so the expanded portfolio is allowing us to do that and it’s starting to reflect a little bit in our numbers, it’s early days, but we are pretty pleased with that.

Yes. And overall, our physician engagement and record trainings translated into 23% active physician growth. So, we added a record number of active physicians, ended the quarter with 1,400 active physicians and actually had almost 2,000 surgeons in the United States do at least one procedure in 2024. So, you can see the base, the customer base that we have built and how powerful that base actually is as the surgeons and physicians start doing multiple procedure types. So, it provides a huge opportunity for growth both in terms of continuing to grow the physician base, but also the number of procedures per physician.

Got it. Thank you.

[Operator Instructions] Our next question comes from Matthew O’Brien with Piper Sandler. Your line is open.

Hey. This is Phil on for Matt. Thanks for taking our questions, and I will echo everyone else’s congrats on the great fourth quarter and end to the year here. Two on margins for me, firstly, on gross margins, expected 77.5% as the midpoint. Why might that take a step back this year compared with 2024? And then, similarly back in 2021, 2022, you had gross margins well into the 80s. Any color on where this metric could go in the long-term?

Yes. No, happy to take this question. At 79% gross margins for the year, we are really proud. We do believe these are industry-leading gross margins and ahead of where we expect it to be in 2024. Now, in terms of 2025, similar to the assumptions that we have in our revenue guidance, just trying to be thoughtful there, we have taken the same philosophy on our gross margins. So, when you think about our gross margins and what’s included in that assumption is the ASP impact from the procedure product mix that we said. We have assumed about low to mid-single digit ASP decline just because of procedure mix. We have obviously done better than that, but that’s incorporated in there. There is also the onboarding of additional surgical capacity, so that leads to higher depreciation. So, that’s incorporated in there, and then we have got some depreciation of capitalized software that we have been working on for the last couple of years to reduce some administrative burden in the field. Now, in terms of what it does not include is, some of the things that we have been working on very diligently to offset some of these gross margin pressures. Some of that you saw in 2024 around streamlining of the supply chain to lower the manufacturing cost of our existing products. We are working to continue to improve trade turns in the field so that we can get more usage out of those assets, and also looking at reducing the cost of our trays and through optimization of design. Again, from our perspective, we want to – we feel very comfortable about the gross margin profile of the business. And we think over the medium-term, sort of that 60%, 76% to 77% is where we should be.

So, that’s helpful. And then one final one on OpEx, just hoping to get your take on, outlining 9% growth in OpEx this year compared to the 7% this past year, slight decel on the top line, is that a lot – is a lot of that baked into increased payout for reps? And then second parter, again, you were able to pass a lot of the top line upside to the bottom line in 2024. Any chance we could see a little bit more of that in 2025?

Yes. Again, similar to strong top line growth, industry leading gross margins, we are actually quite proud of our strong operating leverage in the last few years that we have demonstrated. We are going to continue to invest in initiatives that are crucial to continue to deliver that sustainable growth Laura talked about. A lot of that is in R&D. We are going to selectively expand our commercial sales force as well and investing in clinical trials as well. So, specifically in 2025, if you look at the midpoint of the guide and you look at the OpEx guidance on that, you have got sort of a 1.75x to 1.8x leverage, which is quite healthy. We are expecting to invest in R&D. It’s going to be a bit more elevated, as you heard on the call. Laura highlighted yet another BDD device that we are working on. So, we are going to continue to invest in innovation to create new market categories. We do expect sales and marketing and G&A to go up, but we do expect leverage to be there from that place as well. And when you think about beyond 2025, we do expect revenue growth to continue to outpace OpEx growth rate. Now, it may vary in terms of how much leverage you can get depending on the level of investment you need in new product launches, but again, pretty healthy operating leverage in the business.

Absolutely and congrats again.

Thank you.

[Operator Instructions] Our next question comes from Caitlin Cronin with Canaccord Genuity. Your line is open.

Hey guys. Congrats on a great quarter and year. I guess just to start off, just thoughts on Globus’ intent to acquire Nevro. Have you felt about Nevro that there is competition in the interventional space from them? And what do you think about Globus’ potential to also leverage this call point?

Yes. Caitlin, thanks for the question. So, we have been competing with Globus for many years at this point. And with the best commercial sales force, educational and advocacy infrastructure, as well as our comprehensive product portfolio, we are clearly the market leader for sacral-pelvic solutions, and that’s across surgeons and interventional spine physicians. So, we feel really good about our position. And as I said, Globus already has an SI joint solution, SI-LOK, and if you look at the last few years with the addition of TORC, we not only maintained our market leadership position, but we increased our overall market share. So, given our successful history, for us, the deal doesn’t impact our strategy. If anything, it substantiates our strategy to expand our platform with the addition of differentiated and anatomy-specific solutions that can serve both surgeons and interventional

That’s great. Thanks. And then, just one more on the novel implant product. Any more color on the timeline of when that could come to market? Is that one year away, multiple years away?

Yes. Thanks for the question. We are really excited about this third breakthrough device designation. What we are trying to do is help understand that we are a category creator at this point. Our customers recognize us already as a category creator. But we think it’s important to share this sort of information with Wall Street and investors as well, given our ability to identify unmet clinical needs and innovate with breakthrough devices. So, with the most recent BDD, we are the only public company in the industry to have three BDD solutions, and it really puts us into this distinguished position, and it’s cementing our position as a category creator. Given the uniqueness of the solution and the huge market potential, we are holding the details close. As I have said, we are in the early development stages. We have a lot of work ahead of us to get regulatory clearances and then get to commercialization. But we are not including anything in 2025 for this particular product. But we will talk more as we get closer to launch.

Awesome. Thanks so much.

[Operator Instructions] Our next question comes from David Saxon with Needham & Company. Your line is open.

Great. Good afternoon, Laura and Anshul. Thanks for taking my questions. Congrats on the quarter as well and especially getting to EBITDA profitability. I wanted to maybe start with guidance and maybe if you could just talk about expectations for the cadence of revenue and expectations for seasonality. I think in 2024 first quarter was down kind of low-single digits sequentially. So, is that a good starting point as we think about first quarter of ‘25 or do you think it will be any better or worse?

Hey David, this is Anshul. Thanks for the question. As you know, we don’t think about our business on a quarterly basis, we think about it on a multi-year basis, and focus on delivering strong long-term growth and sustainable growth. When you think about it from a modeling perspective, though, first half historically has accounted for around, I would say, 47% of our annual revenue. And when you look into the sequential trends between Q4 and Q1, which is mostly normal industry seasonality, you sort of see a decline of high-single digits from Q4 to Q1. This year, there is also one less day, as we said, that we incorporate in our guidance, so that will hit Q1 as well, and that will have impact on the sequential decline from Q4 to Q1.

Okay, that’s super helpful. Thanks for that, Anshul. And then maybe this is for Laura. Just on the Granite NTAP, I think that expires, I believe, this October or at least later this year. So, can you just give an update on kind of the work you have been doing to get a new code for that for premium reimbursement? Do you think that could be in the ‘26 fee schedule or might it take longer? Thanks so much.

Sure. Happy to answer that. So, we have submitted our application with CMS to reassign those cases with Granite to a higher paying code, basically, to reflect the higher cost of the case. And we already have that data and the NTAP usage and the payment data is compelling. But we will know more in this next quarter if CMS considers our application acceptable when they release the proposed inpatient rules for next year. But we will know about that by the middle of the year David and it should be at the same time as the NTAP expires, that we would have a potential change in the code.

Great. Thanks so much.

[Operator Instructions] Our next question comes from Richard Newitter with Truist Securities. Your line is open.

Hey, this is Felipe Lamar on for rich. Just quickly, if you could walk us through the profit ramp cadence through 2025, I think it would be helpful to get an idea. Thanks.

Yes. No happy to – again, as I have said earlier, we expect OpEx growth rate at the midpoint to be about 9% versus a revenue guide of 16% to 17%. So, it’s a really good operating leverage. Consistent with prior years, we do tend to see a little bit more spending in the first half of the year. We have got a national sales meeting. We have got additional activity in terms of physician education that goes on in the early part of the year. So, we do expect to be adjusted even on negative in the first half of the year. But given the momentum in the business, we do expect to be profitable on an adjusted EBITDA basis sort of in the second half of the year, more geared towards the fourth quarter, which should allow us to be adjusted EBITDA positive for the full year 2025 and then going forward in 2026 and beyond.

And just given that you are EBITDA positive now, I guess in this quarter, and as you are approaching free cash flow positive, how are you thinking about the tradeoffs going harder at that profit acceleration versus just staying more of a top tier revenue growth trajectory? Thanks for taking the questions.

That’s a great question. So, if you think about our execution over the last few years, we have not created growth for profitability. We have had north of 20% cumulative annual revenue growth rate in the U.S. even higher than that. Part of that has been driven by our disruptive products the category created that – category creation that we have undertaken as a company just the adoption or by surgeons. And that has translated into the operating leverage in our business. So, our focus remains to continue to make investments in the business that can get top line growth to accelerate. But we feel very good that with revenue growth rate exceeding OpEx growth rate, that you should continue to see the adjusted EBITDA expand and adjusted EBITDA margins improve with each passing year.

Thank you.

[Operator Instructions] Our next question comes from Kallum Titchmarsh with Morgan Stanley. Your line is open.

Great. Thanks for taking the question. Just on reps and kind of alluding to the fairly busy period of late in spine and pain, lots of headlines typically with that comes movement. So, curious whether you feel like you could be seen as a beneficiary here? And I guess on the topic, just help bridge some of those productivity targets for us between, better utilization in existing customer accounts versus potentially expanding into some of those untapped accounts out there today? Thanks.

Yes. Happy to answer that question, Kallum. So, we have had really strong progress with our sales force over the last couple of years. We have remained relatively consistent in terms of the number of territory managers that have been in place as well as our more junior reps as well. And a lot of the leverage has actually come from third-party agents. And those agents have been heavily involved in our Granite sales, and this has resulted in our sales rep productivity moving from less than 1 million to around 1.8 million at the end of this last year. So, what do we expect going forward, as we said, given our growth rate, we will continue to selectively add territory managers over these next couple of years. We are assuming that we can actually get to rep productivity of over 2 million, and that’s a combination of the territory managers work themselves with the support of the more junior reps and also with the hybrid model that we are working with third-party agents on. In terms of disruption with the sales force, other sales forces, I think what you are saying is does that provide an opportunity for us to bring in top talent. I would say the short answer is, yes. As we continue to add to our sales force, we are hiring some of the best people in the industry with a variety of different backgrounds. So, it can be spine, it could be interventional, it can be trauma. Those are the sorts of people that we are hiring externally. And then also given that we have a significant number of junior reps, that has provided a pipeline in order to elevate them and promote them to the territory manager level, which as I had mentioned in the fourth quarter, the five additions that we had to our territory manager ranks, those actually were all internal promotions. So, we have a lot of opportunity to grow the base of our representatives, but also gain leverage as well over the coming years.

And then, Kallum, on your question on density versus growth, coming into 2025, while we expect the number of active physicians to grow at a healthy clip, we are also focused on that deeper cross-modality engagement with physicians. As I have said earlier, and Laura said in the prepared remarks, we are in the early stages of growing density. We believe that Granite 9.5 gives us the opportunity to accelerate procedure density. Majority of the procedure volume of our physicians performing SI joint dysfunction is degenerative spine procedures. With 9.5, we have the opportunity to work with them on degenerative spine procedures at the end of the sacrum. And then similarly, but to a lesser extent, some of our spine surgeons also see pelvic fractures. And with TNT, we have the opportunity to work with them as well on fracture fixation. So, while we have seen the pockets of success already, we again, don’t want to get ahead of ourselves on the pace of improvement in density. So, when we think about our guidance for the year as well, it assumes the active physician increase will remain a key growth driver in 2025 with density being a potential nice upside to that.

Great color. Thank you. And I will try for one on the CID and I appreciate you can’t give much color here. But any insight you can give us on the request so far from the DOJ and whether you have had to adapt any of your existing practices in response to that? Just curious how collaborative that process has been so far. Thanks a lot.

Yes. Thank you. So, as we mentioned on the call, we don’t have a material update to share. We are cooperating with the DOJ in a transparent way and we intend to continue to do so. As we also previously shared, we believe the government is most focused on our conduct of field-based education events, especially those involving NEOs [ph] and physician speakers and any physician remuneration more broadly. And as and when we have material updates on this, we will make sure to share it with all of our investors.

Appreciate it. Thank you.

Thank you.

And I am not showing any further questions this time. I would like to turn the call back over to Laura for any closing comments.

Wonderful. Thank you all for your participation in today’s call and we look forward to seeing you at upcoming non-deal road shows and investor conferences.