TMCI - NASDAQ

Good day, and thank you for standing by. Welcome to the Treace Medical Concepts Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Trip Taylor, Investor Relations.

Good morning, everyone, and welcome to our fourth quarter 2025 earnings conference call. Participating from the company today will be John Treace, Chief Executive Officer; and Mark Hair, Chief Financial Officer. John and Mark will discuss our fourth quarter financial results and 2026 outlook. We will then host a question-and-answer session following our prepared remarks. Our press release can be found in the Investor Relations section of our website at investors.treace.com. This call is being recorded and will be archived in the Investors section of our website. Before we begin, we would like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends as well as our estimated results or performance are forward-looking statements. All forward-looking statements 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. All forward-looking statements are based upon currently available information, and Treace Medical assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings included on our Form 10-K for 2025 filed before market opened today, February 27, and can be found in the Investor Relations section of our website at investors.treace.com for a detailed presentation of risks. With that, I will now turn the call over to John.

Thank you, Trip. Good morning, everyone, and thank you for joining us on our fourth quarter 2025 earnings conference call. During 2025, Treace Medical entered a transformational phase, building upon our leadership as recognized bunion experts and evolving from a Lapiplasty-focused company into a comprehensive bunion solutions company. With the recent commercialization of multiple new bunion procedure innovations, we are now positioned to address virtually 100% of surgeons' current technique preferences for all types of bunion correction, offering 5 best-in-class instrumented systems spanning all 4 categories of bunion deformities. We've been highly focused on accelerating our bunion procedure volume growth while also broadening our technology offerings to increase wallet share and expand our serviceable TAM. Our elevated case volume growth in the back half of 2025 reinforces our confidence that we have the right strategies in place to continue to expand our market penetration and restore top line revenue growth later in 2026 and into the future. We also drove steady improvement in adjusted EBITDA and significantly reduced our cash burn for 2025. Before diving deeper into our expectations for 2026, I want to note that dynamics discussed on our last call that pressured 2025, including case volume growth, offset by headwinds related to broader economic conditions and softer consumer sentiment as well as a product mix shift within our expanded portfolio are still present to begin the year. Given these market conditions, we're initiating our outlook for full year 2026 revenue to be in the range of $200 million to $212 million, representing a decline of 6% to 0% compared to full year 2025. We expect revenue declines to continue until our seasonally strongest fourth quarter. We expect fourth quarter revenue growth will largely be driven by accelerating case volumes, the lapping of the mix shift dynamics as well as the contribution from our planned 2026 product launches. We remain focused on continued improvements in profitability and reducing cash burn in 2026. As a reminder of our progress to date, in 2024, we used $50.5 million in cash and reported an $11 million loss in adjusted EBITDA. In 2025, we used $27.3 million of cash, a 46% reduction versus 2024, and we reduced our adjusted EBITDA loss to $3.9 million in 2025, a 64% improvement over the prior year. We took several actions in 2025 to reduce our operating expenses and cash usage. Many of these changes will continue to benefit us throughout 2026. We, therefore, anticipate that we will again reduce our cash burn by approximately 50% in 2026 compared to 2025, and we're not done. We will continue to identify additional opportunities to drive our top line growth and leverage our P&L in 2026. Now I want to focus on our strategies, the progress we made in 2025 and where we expect to deliver in 2026. To start, let me tell you about our strategies to improve our top line performance in 2026 and beyond. First, we will focus on leveraging our large existing customer base to drive adoption of our new 2025 bunion product launches. Second, we'll continue to build upon our leadership position with Lapiplasty technology, adding new technologies that can attract new surgeons. And third, we will expand our product offerings to grow wallet share and tap into new TAM-expanding procedural adjacencies. To start, I want to give you an update on the new bunion technologies we launched during 2025, their strategic importance and the reception they're getting in the marketplace. We believe our 3 new bunion systems effectively double the accessible market that we have today with Lapiplasty. So effectively driving these deep into the marketplace is a very high priority for us. First, our differentiated Nanoplasty and Percuplasty 3D MIS systems expand our reach into the high-volume osteotomy segment, which we estimate represents approximately 70% of the 450,000 annual bunion procedures performed in the U.S. We estimate that only 10% to 15% of metatarsal osteotomies are being performed using MIS approaches today. And we believe this is largely due to the steep learning curves, high variability of outcomes and lack of attention to correcting the third frontal plane component of the deformity, the failure of which to do so has been associated with an increased risk of bunion recurrence. Our new 3D MIS bunion correction systems offer patients procedures that can result in less pain and fast recovery times with minimal visible scars. Importantly, these are procedures that are quick for surgeons to learn and are highly instrumented to enable a controlled correction of all 3 planes of the deformity to minimize risk of recurrence. We believe this expands the appeal of our 3D MIS osteotomy procedures to both surgeons and patients today and could encourage a much larger portion of the 4.4 million U.S. bunion sufferers to seek surgical treatment over time. Next, our SpeedMTP system, which is designed to serve roughly 20% of bunion patients who have arthritic grade toe or MTP joints as well as patients who suffer from isolated MTP joint arthritis. This large patient population makes MTP fusion one of the most common procedures performed by foot and ankle surgeons, making it a strategically important area for Treace to target with better solutions and continue to innovate. With our core Lapiplasty system, we believe we've captured 25% on average of our 3,300 customers' total bunion-related procedure volume. And these 3 new systems are dialed in to target the remaining 75%, and we are laser-focused on penetrating that untapped opportunity. And our strategy is working. Just over 2 quarters into the full launch of these new systems, we're encouraged by the rapid adoption and resulting acceleration we're seeing in our overall bunion-related procedure volumes. As of Q4, over 25% of our surgeon base has already incorporated 1 or more of these 3 new bunion systems into their practice, and our Q4 procedure volume growth increased over the mid-single-digit rates we achieved and reported on in Q3. Next, in addition to our new products, advancing our leadership in Lapiplasty technology and expanding its user base remains at the forefront of our strategy. Lapidus Fusion represents approximately 30% of the estimated 450,000 U.S. annual bunion procedures and is the largest dollar segment of the market where Treace is a recognized category leader. As MIS approaches are gaining in popularity among surgeons and patients, we continue to remain focused on advancing our Lapiplasty platform, making the procedure simpler, faster and minimally invasive as demonstrated by our Micro-Lapiplasty platform, which was launched in 2024. In 2026, we plan to commercialize our next-generation Lapiplasty platform known as Lapiplasty Lightning. Lightning combines next-generation 3D correction instrumentation and SpeedPlate TMT implants, which are built upon our proprietary SpeedPlate hybrid fixation technology. Speed TMT is a high-performance implant designed to appeal to an incremental surgeon audience, those that prefer a single plate fixation construct versus our traditional 2-plate or biplanar approach. Lightning Instrumentation is designed to reduce procedural steps, improve efficiency and provide surgeons with greater accuracy and control of their 3D correction. We expect full availability of our Lightning instrumentation and our Speed TMT implants later in the year. Another way we're appealing to more surgeons with Lapiplasty is by advancing the shift towards personalized surgery, leveraging our IntelliGuide PSI platform. IntelliGuide is industry's first and only preoperative planning and patient-specific cut guide system for correcting bunion and mid-foot deformities. IntelliGuide offers surgeons improved efficiency and precision and is particularly helpful in complex and revisional cases. We believe the combination of Lightning, Speed TMT and IntelliGuide position us well to extend our leadership position and attract more surgeon users to our Lapiplasty platform in 2026 and beyond. Now turning to our third strategy, expanding our offerings to more broadly serve our growing customer base. In 2025, we expanded our SpeedPlate and Sterile instrument portfolios with multiple new offerings. We also entered the biologics market with our CortIFuse flowable cortical fiber graft as well as our line of procedure-specific allograft wedges. These new biologic offerings allow our sales force to more comprehensively service our surgeons' needs in their cases. In 2026, we plan to launch additional offerings to grow our customer wallet share and tap into incremental procedure adjacencies. In the back half of this year, we plan to launch 2 new important products that expand our TAM by an estimated $300 million. First, our SuperBite variable pitch compression screw system. This is a very important addition to our portfolio as it equips our sales force for the first time with the most common form of fixation used in foot and ankle surgery. The SuperBite system features advanced design attributes, making it ideal from both minimally invasive and conventional surgical approaches. Next, we will make our first entry into the mid-foot, hindfoot segment of the market with the launch of our new Speed XM Fusion system. Speed XM leverages our SpeedPlate fixation technology, bringing the benefits of dynamic compression and enhanced stability for fusion of the larger bones of the mid- and hindfoot as well as for flatfoot reconstructive procedures. Speed XM is highly complementary with our SuperBite screw system as the 2 technologies are often used in concert along with biologics to stabilize and fuse these larger bones, thus giving Treace great incremental access to high ASP adjacent procedures that we do not serve today. And of course, with all our current and new product offerings, we continue to provide best-in-class education through our BunionMasters hands-on training programs. These events are designed to support surgeons in confidently integrating our procedures and technologies into their practices. And following these trainings to further enable successful patient outcomes for our surgeons, we provide additional initial case support from our fleet of dedicated clinical specialists and ongoing support from our bunion-focused direct sales team, a team that we plan to expand in 2026 with the addition of more experienced foot and ankle sales professionals. Our confidence in the future is grounded in the success we've achieved in the past as well as the early indications we're seeing, which reinforces our confidence that we have the right strategies in place moving forward. We've expanded our active surgeon base from nearly 1,300 users in 2020 to over 3,300 users in 2025, and these surgeons are using more of our products as they adopt our growing portfolio with best-in-class solutions. Fourth quarter procedure volume growth increased over the mid-single-digit rates achieved in Q3, reflecting the strength and effectiveness of our comprehensive bunion portfolio and strategy. As we look ahead, we believe we're well positioned to accelerate our procedure volume growth rates while also growing our customer wallet share and expanding our TAM as we broaden our footprint in the foot and ankle market. We expect these initiatives, combined with disciplined investments, will continue to drive market share gains, improve profitability and shareholder value. With that, let me now turn the call over to Mark to review our financial performance. Mark?

Thank you, John. Good morning, everyone. Revenue in the fourth quarter was $62.5 million, a decrease of 9% compared to the prior year period. The decline was mainly driven by the shift in revenue mix towards lower-priced products. Gross margin was 80.6% in the fourth quarter of 2025 compared to 80.7% in the fourth quarter of 2024. Total operating expenses were $56.3 million in the fourth quarter of 2025 compared to total operating expenses of $55.7 million in the fourth quarter of 2024. The increase reflects restructuring charges and increased litigation expenses in the quarter compared to prior year. Fourth quarter net loss was $9.4 million or $0.15 per share compared to a net loss of $0.5 million or $0.01 per share in the fourth quarter of 2024. Adjusted EBITDA for the fourth quarter was $6.2 million compared to $11.1 million in the fourth quarter of 2024. Full year 2025 adjusted EBITDA loss was $3.9 million compared to full year 2024 adjusted EBITDA loss of $11.0 million, a 64% improvement over the prior year. Cash, cash equivalents and marketable securities totaled $48.4 million as of December 31, 2025. The company's new credit facility provides an additional $115 million of liquidity, subject to certain conditions. The company used $27.3 million of cash during the full year 2025, a decrease of 46% compared to $50.5 million in 2024. Before concluding, let me turn to our outlook for full year 2026. As John mentioned, we're initiating our full year guidance. We expect full year 2026 revenue to be in the range of $200 million to $212 million, representing a decline of 6% to 0% compared to the full year 2025. We expect revenue declines to continue until our seasonally strongest fourth quarter. Fourth quarter revenue growth will largely be driven by accelerating case volumes, the lapping of the mix shift dynamics as well as contribution from our planned 2026 product launches. Looking closer at the first quarter, similar to prior years, following our seasonally strongest quarter, we anticipate Q1 revenue will step down approximately 27% compared to Q4 2025. Then we expect year-over-year growth rates to improve each quarter thereafter. In addition, the company expects a loss in adjusted EBITDA in the range of $4 million to $6 million for the full year 2026 as compared to a loss of $3.9 million in full year 2025. We also expect a reduction in cash usage of approximately 50% for full year 2026 as compared to full year 2025. Supported by a strong and flexible balance sheet, we believe we are well positioned to continue executing our strategic and growth initiatives for the foreseeable future. With that, I'll turn the call over to the operator to open the line for questions.

[Operator Instructions] our first question comes from Danielle Antalffy with UBS.

We've heard from a number of players over the course of 2025 that the foot and ankle market was seemingly unusually soft. And I followed you guys for a long time. This has been a relatively high-growth market. John, I'd love to hear your thoughts on what's going on in this market. And as far as your guidance goes, the overall market itself, what's reflected from a growth perspective? Do we return back to normal, continued softness here? Anything you can say to that?

Sure. Danielle, thank you for the question. As we've indicated on past calls, during 2025, our surgeons were reporting deferrals of cases. We believe that made it a softer year and potentially a declining year in overall bunion surgical volume. As you noted, other companies have mentioned the foot and ankle market being soft, particularly in elective foot and ankle procedures in 2025 or even that may have contracted a little bit. Given we've got an increase in our Q4 case volumes versus Q3, I think it really does demonstrate that we're taking share with this new comprehensive bunion portfolio and strategy even in a softer market. When it comes to our outlook for 2026, we're increased -- we're expecting that increase in case volume that's going to be offset by product ASP mix-related headwinds for the first half of the year. That will begin to abate in Q3 as we start to lap the introduction of these lower ASP, higher volume driving 2025 product introductions. Additionally, in Q3, we'll increasingly, as we go into Q4, benefit from the introduction of the new 2026 product launches, these carry a little higher case ASPs, such as our Lapiplasty Lightning and Speed TMT and the combination effect that we get from our Speed XM mid-foot plating and SuperBite screws. So we also have some new sales reps that are going to be ramping up in the back half of the year, and we have some easier comps there. So we feel good about the cadence. We feel good about the new products we're introducing and the impact they're going to have. As far as the market dynamics go, we're kind of contemplating a similar dynamic to what we experienced in 2025.

Okay. Understood. That's helpful. And I'm just curious, as far as the scaling of the biologics portfolio that you talked about, how that will impact operating margins? I know you guys are committed to EBITDA positive, but just curious about any nuances there.

Danielle, this is Mark. Thanks for the question. Yes, we're excited that we continue to expand our product offerings. And so that's just going to be another product in our bag that our sales reps can now provide to surgeons who are looking for those biologic solutions. And so we've got good margins on those. We don't think that it's negatively going to impact us at all, but to provide additional revenue going forward into 2026 as we have this new offering. So I don't think there's anything negative about it at all. It's all upside for us as we have this broader portfolio.

Our next question comes from Ben Haynor with Lake Street Capital Markets.

First off for me on the products expanding the TAM, can you maybe share a little bit more about those, how long they've been in development? Any experience of the folks that have had their hands on them yet? Any additional color there would be helpful.

Sure, Ben. Thanks for the question. Yes, the SuperBite screws, these have been in development. Typically, our product development time lines are 18 months or so. We've been working with an elite team of minimally invasive surgeons on these as well as our traditional SAB development team. We put a lot of work into it. They're very refined. They have some really nice features that make them very high performance. The ability to put this in our sales reps bag really adds breadth to their line, the ability to control a greater portion of the overall surgical case, and we're excited about this. It's the first time they're going to have one of the most commonly used forms of fixation in the foot and ankle. So it's going to be very synergistic with a lot of the current products they have, additive to the case ASPs. The second product we talked about was the Speed XM. That's our mid-foot plating system. Again, it's been in development for quite some time, very refined, a lot of cadaveric testing. We've had a lot of surgeons put their hands on this, and we're looking forward to rolling it out mid next year. This is for fusing larger bones that are further back in the foot like the talonavicular, the calcaneocuboid, naviculocuneiform, flatfoot reconstruction, triple arthrodesis. These are larger bones more in the back of the foot. These are procedure adjacencies that are often related to the bunion and convenient call points for our sales force. So we're excited that they'll have the ability now to tap into these new incremental high ASP procedures with these 2 complementary technologies.

And you said mid this year or mid next year?

Coming mid this year.

Okay. Maybe I misheard you. Sorry. And then secondly for me, on the quarter of your surgeons that have tried the new osteotomy solutions. What are the ones that they pick up first? How does it kind of fit into their algorithm? Any additional color would be helpful.

Sure, sure. And there's 2 platforms there, Ben. We've got the MTP fusion system, which is getting a lot of traction. This is the first dedicated offering that Treace Medical has offered into that large space, that large subsegment of bunion patients that the bunion patient comes in, they have a painful bump, but they actually have arthritis in the big toe joint. That's roughly 20% of the patients, that surgeons see for a bunion. Then there's an entirely other class of patient that fits for that Speed MTP, that MTP fusion that doesn't have a bunion, but has big toe arthritis isolated. So it's one of the most common procedures performed by our surgeons. And now we're playing in that space. The price point is at a premium to the MIS osteotomy products we offer. So we like that, and we're seeing a really good pickup there. Regarding the MIS products, we have 2. And the way we've been hitting the marketplace and sort of segmenting the user base, if surgeons have not tried minimally invasive bunion surgery before, Nanoplasty is a more welcoming and easy step for them because it does not require them to learn how to use a rotary powered cutting burr. They can use their conventional saw. We have excellently designed instrumentation that allows them to control the whole procedure, correct all 3 cardinal planes of the bunion deformity and do it in a comfortable and reproducible fashion. So Nanoplasty serves that customer group predominantly that hasn't engaged in minimally invasive osteotomy surgery. The other group are the surgeons that have engaged in minimally invasive osteotomy surgery and they have some level of proficiency, and that's our Percuplasty. So we go after them with our Percuplasty system. We have superior screw designs that don't require drilling, so it makes it faster to insert. And our jig system has just received very high acclaim from everybody we've put it into their hands. That's allowing them the more controlled instrumented procedure, the ability to reproducibly correct all 3 planes of the bunion and do it in a fast and efficient manner. So you add these technologies to our entire portfolio and what surgeons are seeing is a comprehensive suite of offerings that are best-in-class, whether they need to fuse an MTP joint, do a Lapidus or Lapiplasty or do a minimally invasive osteotomy procedure for their patients. So we're really well equipped. Sales force is in a great position now with all these products on all these fronts, and we're driving it forward and we're driving our case volumes.

Our next question comes from Ryan

Can you hear me okay?

We hear you loud and clear, Ryan.

Great. Maybe with -- starting with the guide, both for Mark and John. When you think about what's embedded in the high end and the low end of the guide, what is the toggle? Or what are the variables that you've kind of embedded in the guidance that get you to the low end, that get you to the high end? How much of that is market dynamics versus maybe product mix shift? If you can kind of deconstruct that a little bit, I think that would be appreciated.

Yes, Ryan, this is Mark. I'll take a first shot at that. We did offer a range this year, and it partly goes to some of these dynamics that John talked about earlier that we saw exiting 2025 that there were some changes in patient dynamics and some -- what we were referring to previously as some macroeconomic headwinds. So there is some uncertainty as we come into this year. So we wanted to make sure that, that range comprehends some of that market uncertainty. So that would probably be towards the lower end of that range to the extent that there isn't some improvement or that some of these dynamics don't improve this year versus last year. So -- or they worsen. I think on the upside is where we continue to have incremental uptake of our new products. Those that we launched last year again, we've talked about case volume increases in both Q3 and Q4. We're anticipating case volume increases throughout 2026 as well year-over-year. So to the extent more surgeons are adopting these new cases -- these new procedures and to the extent there's greater uptake on our new product launches that are coming out. John just talked about SuperBite as well as Speed XM. So these are new product launches that are coming out this year. And to the extent there's greater uptake on those, then there's opportunities to go to the high end of the range. So right now, we feel comfortable at the midpoint of the range. There are some variables in the marketplace and with our product offering. And so that's where we feel comfortable for now.

Yes. Okay. That's very helpful, Mark. And John, you've added a lot of products over, say, the last 18, 24 months, if you will. Historically, the sales force was a Lapiplasty focused sales force, right? And it was kind of like a tunnel vision. It was that segment of the market. How do you balance the focus of the sales force? And you're adding a lot of these products. There's pushes and pulls on pricing dynamics with those products as a result of that. I'm just curious kind of, is there a risk of dilution in terms of focus in the sales force? And just your general thoughts on kind of how you balance those dynamics with all the products you're adding?

Yes. Thanks, Ryan. Really insightful question. We've done a lot of work with our sales team for the past over a year now, getting them ready for this, getting them trained. These technologies aren't technologies necessarily they're having to push or force their products and technologies that our customer base is desiring and kind of demanding. So the way we look at it is we keep them focused on that bunion sweet spot. And then as the surgeons have adjacency procedures that they want to serve with our product line, we have them to serve them. And that's why the SuperBite screw line is so important. Speed XM is so important and the next-generation technologies we're bringing out with Lapiplasty are going to be very important as well. But we find that these are the types of products that our sales force's customers are wanting from Treace Medical. Speed XM is a perfect example. They love the SpeedPlate technology, and they're asking us, can you develop this for these other larger bones? And I could use them with your new screws that are coming out. So we're listening to our customers very closely, and we're trying to develop our product line in concert with kind of the path at least resistance for the sales force.

Our next question comes from Rick Wise with Stifel.

John, you highlighted -- I think your words were something like you can now address 100% of the bunion opportunities or bunion-related opportunities with the broadened pipeline. I'm just curious how you're seeing with what you already have and what you're expecting competitively. How does this -- how is your broader product line, how does the expanding sales force, this repositioning of the company, how is it affecting competitive dynamics? And is this really going to -- I'm not asking it skeptically. I mean, it's got to shake things up a little bit.

Rick, yes, great question. It's a competitive marketplace, and a lot of people are trying to play in it, a lot of large competitors, small competitors. We just returned from our largest surgeon conference of the year, the ACFAS Conference in Las Vegas, huge attendance. Over 2,000 of our most common foot and ankle surgeons participating there. We had a great booth. All these technologies were on display. We had very high traffic at our booth. I can tell you our cadaver training labs that we held at the meeting were oversubscribed and attended beyond what we expected. So I think there's a lot of appreciation for what Treace Medical brings in terms of being bunion experts and being able to help surgeons navigate through the changing landscape of patient interest and what type of procedures they're going to want to be offering in their practice. So knowing that Treace Medical has this full suite, 5 different categories of best-in-class solutions that can comprehensively serve those surgeons -- patient bunion needs across the spectrum. I think that's a very comfortable position for surgeons to be with Treace Medical. And our reps know the procedures inside and out. We hold their hands. We give the surgeons excellent training. We reinforce the uptake on the products in the OR with our expert clinical specialists to make sure those first cases go smooth and they get great patient outcomes. And then they're taken care of by very focused bunion direct sales force. So again, a lot of enthusiasm for these products, and we think it's going to continue to build.

And Mark, maybe you could expand on your cash flow outlook comments. Obviously, you've done a great job reducing your rate of cash burn, and you seem to have a lot of optimism you can make a significant dent in cash burn in the year ahead. Better sales will help mix, I'm guessing. But talk us through the initiatives that you're contemplating incrementally for 2026 and why we shouldn't be concerned that this is going to limit the company's ability to -- on the marketing front or sales expansion front to get the sales growth side of the job done.

Rick, we've, for the last several quarters now, talked about our laser focus on profitability improvement and cash management. And -- so we took a lot of steps last year to begin to improve our overall cost structure and our P&L. And a lot of those changes that we made last year will benefit us throughout the full year 2026. So some of those cost reductions, we reported some restructuring charges last year. So that's -- we'll be able to annualize those benefits throughout 2026. We've talked a little bit about a couple of other things that were unique to 2025. We -- as we've launched all of these incremental bunion systems and adjacent products, we really hit a high watermark with regards to our medical education, and we really invested in training all of our existing surgeons, and we reached out and did a lot of additional training to surgeons that are -- that had not been Treace customers. So although we will very much remain focused on medical education and training surgeons, we won't have the same level in 2026 that we did in 2025. So that's going to naturally come down a little bit. We've also talked about the -- some of the natural leverage that comes in our sales force. We've hired a lot of sales reps. And as they come off some of their fixed salaries, there's some natural leverage in the sales organization as well. The other thing is we've talked -- in the last couple of calls, we've talked a little bit about our DTC efforts and activities and investments. And we are not investing as much as we had historically. And one of the main reasons is really what we were doing in earlier days was building brand recognition and brand awareness for both patients and surgeons. But now we've got over -- what we estimate 1/3 of the U.S. surgeons using Treace products last year. So we've got this huge large base of surgeon customers, and so we can leverage down some of that DTC investment that we don't believe will impact our top line growth. The last thing that I'll mention with respect to cash management or cash usage is last year with the introduction of several new bunion systems, we had incremental and higher CapEx or capital expenditures for our instrumentation trays that we own and we depreciate, but we make them available to our sales reps and to the surgeons who perform these new cases. So that was at a higher level last year. And we don't need to have the same level of capital investment in 2026. So not only is the OpEx going to come down, and you'll see some nice leverage there, but even on the CapEx as well. So the combination of all those things is what gives us confidence that we can reduce our cash burn by 50%, which is significant this year on top of the significant reductions that we just experienced last year.

Our next question comes from Richard Newitter with Truist Securities.

I have 2 questions. Maybe the first one, just a little bigger picture. I appreciate that you see mid-single-digit case volume growth. There's a lot of cross currents with mix shift. And I doubt those are going to go away because you're going to continue to have to evolve the portfolio and the marketplace is going to continue to be increasingly competitive. So the bigger picture question against that backdrop is what's the end goal here? Or how do you see your kind of sustainable longer-term normalized growth rate when you layer in some sense of normalcy on the bigger bag, a more productive sales force with that bigger bag? And is this a mid-single-digit grower sustainably longer term, just given where all the macro headwinds are maybe get some share gains that offset? Is this a high single-digit sustainable grower now? Just trying to get a sense for kind of where you're headed realistically longer term? And then I have a follow-up.

Yes, Rich, this is Mark. Let me begin with that, and John may have some additional color. So we are broadening the portfolio. Some of these items that we've talked about have lower ASPs and yet some of these new products and offerings that we're providing really have strong ASPs as well. Maybe a slight step down to Lapiplasty, but these are strong ASPs, and we'll continue to broaden our portfolio, not only in the bunion space, but the adjacencies that John talked about. So there's going to be some of that dynamic that overall, the ASPs or the revenue per case may come down from where we've been historically. As we think about the foot and ankle market, some of the questions already today, and we've talked about it a little bit, we believe that there were some macro trends in 2025 that may be were different from what we've seen historically. Historically, we'd say that the foot and ankle market is somewhere in the mid-single digits and growth rate year-over-year. That's what we've seen historically. And we believe that with our focus exclusively on foot and ankle and with a primary focus on the bunion that we can and should do at least what the market does and more. And that's because of our product profile, our direct channel sales force that can drive these products, and it's our focus. So we believe that we're uniquely positioned in the marketplace to do what the market is doing broadly and then some. So that's what we would anticipate going forward.

Okay. And then I'm just curious relative to your original expectations when you made the strategic pivot, if you will, what felt like a strategic pivot to us to the MIS osteotomy versus Lapiplasty. Macro developments aside, how is that strategy playing out relative to kind of competitive conversions or trialing that maybe are coming back? Is everything progressing according to plan, notwithstanding some of the mix and macro kind of externalities?

Rich, John here. I would say, yes, very positive reception to these new technologies. What we're known for is developing really elegant instrumentation that takes challenging procedures and makes them very straightforward for surgeons. And these minimally invasive ways of doing the bunion, they're hard and surgeons need help, and we're giving them the tools to be able to get trained and put these into their practice quickly. We already had 25% and just 2 quarters into launching these new technologies, 25% of our 3,300 customers have already used one or more of these new technologies, have incorporated them into their practice. And we believe that's going to continue to build throughout the year, larger percentage of our overall surgeon base using these new technologies. And on average, those surgeons embracing more of those 3 new bunion systems as we progress throughout the year. That's what we're laser-focused on, and we're seeing a very positive reception, couldn't have been highlighted more than the reaction we just saw at our largest annual meeting of surgeons where we had very high turnout to get hands-on with these products in the lab, learn from our top faculty how to employ them into their practice, and we're looking forward to picking up a lot of new users as they return home. So I think everything is going as planned. Our MTP Fusion product is tapping into a market we've never played in before, and we're becoming a pretty quickly here, a very large share player in that space. And I think it speaks to the power of our model and our strategy and the ability of our sales team to execute.

Our next question comes from Lilly Lozada with JPMorgan.

I'm hoping we can go back to some of the assumptions underpinning the guide. It sounds like you have to get past these Lapiplasty and mix headwinds and have strong uptake in MIS osteotomy to get back to growth in the fourth quarter. So to what extent does a rebound in the fourth quarter and the guidance for the year rest on meaningful share capture in MIS osteotomy. I appreciate you don't provide specific guidance by product, but any color on what the guide assumes in terms of how successful MIS osteotomy is and how Lapiplasty volumes are trending relatively would be helpful.

Lilly, it's John. Thanks for the question. I'll take a shot at this, and Mark can maybe chime in as well. We have some assumptions for -- that are built into our guide, both low and high end on uptake on our MIS osteotomy platform, our MTP fusion platform, how Lapiplasty and the new Lapiplasty products such as Speed TMT are going to perform. And then, of course, the new products we're bringing out starting in the middle of the year, the SuperBite screws and Speed XM. So all of those are built in. We have assumptions for them. We believe they're reasonable and achievable, and we're going to progress through the year, and we're trying to be prudent. And to the degree we can do better, we'll do better. But we're sticking to the plan for now and executing on it.

Great. And then just as a follow-up, can you talk about how the rollout of these new products affects how we should be thinking about your strategy penetrating the market deep versus wide. It sounds like there's a cohort of docs that maybe just never gravitated towards Lapiplasty and these new products give you something to offer them. So should we think about new surgeon adds trending higher than in years past? And is that more of a focus now than before?

Sure. Yes, some of them are -- some of these products are obviously built to bring on new surgeons that have not been users of Lapiplasty in the past. The Lightning instrumentation is going to be new and novel and has a lot of appeal to it. We just had a training on that, an alpha kind of preview training at our ACFAS Conference, very, very great reception from the surgeons that saw there. And the Speed TMT implant, that appeals to a very large surgeon audience that we have not appealed to before with Lapiplasty. Because this group of surgeons like to use one, fixation plate versus two, which has been our traditional. So we think we can appeal to new users there. And I'm sorry, maybe I lost the other part of your question, Lilly, if you don't mind reminding me or Mark can pick it up.

And maybe, Lilly, I'll jump in a little bit. This is Mark. I think our primary strategy has been that we -- to first build a very large customer surgeon base, and we're really proud of the work that we've done. It's taken a number of years, and we've really made great strides in increasing this customer surgeon base over the last 3 or 4 years. Now that we've got this large surgeon base and what John talked about earlier is that we've really only gotten maybe 1/4, 25% of their cases because they're doing other types of cases, we just haven't had an offering. So I think the first opportunity -- strategic opportunity is to add these new products to our existing surgeon base. That's strategy and focus number one. We know that there's many more bunion procedures that we have not been getting historically, and that's the biggest opportunity for us right now. With that said, and John is exactly right, we strongly believe that in addition to that focus on our large surgeon base, there are other surgeons that have just not really spoken to or become Treace customers and it could because of their preferences. In -- MIS is one example. We just haven't been in the MIS osteotomy space, and now we can play there. So it gives us an opportunity to provide those offerings to our large surgeon base and also reach outside of our customer base to bring incremental surgeons. But I don't think this year that we're looking to expand in dramatic form outside of our current surgeon base. We will add new surgeons this year. We've already done so and we'll continue to do so. But I think the bigger opportunity right now is to drive deeper into our existing 3,300-plus customer surgeon base.