SI-BONE, Inc. (SIBN) on Q1 2021 Results - Earnings Call Transcript

Operator: Good afternoon, and welcome to SI-BONE's First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. We will be facilitating a questions and answer session towards the end of today’s call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Matt Basco from the Gilmartin Group for a few introductory comments. Matt Basco: 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 March 31, 2021. And a copy of the press release is available on the company's website. Laura Francis: Thanks, Matt. Good afternoon, and thank you for joining us. Before we get into the details, I'd like to take a moment to thank all the health care workers who continue to work relentlessly, especially those who are administering the COVID-19 vaccine to help reduce the spread of the virus and allow society to return to normal. I'd also like to officially welcome Anshul Maheshwari, our new CFO, who is joining us on today's call. Anshul is an experienced financial executive with an impressive record of building high-performance teams to scale global health care and manufacturing organizations. I'm very excited to be working with Anshul and know that he will be a great addition to our team. Anshul Maheshwari: Thanks, Laura. I'm excited to be joining SI-BONE at such a pivotal time. I look forward to partnering with the entire SI-BONE team to continue to execute on our growth and value-creation strategy, deliver innovative and differentiated products to surgeons and improve patients' lives. I'm also looking forward to developing strong relationships with the investment community and hope to see many of you at upcoming investor events. Now turning to the financials. Our first quarter total revenue of $20.4 million increased 22% compared to the prior year period. U.S. sales of $18.8 million, which accounted for approximately 92% of total revenue for the quarter increased 23% compared to the prior year period. International revenue of $1.7 million increased 10% compared to the prior year period. Although procedure volumes were negatively impacted by persistent COVID-19 headwinds and extreme winter weather conditions in parts of the country in January and February, we ended the quarter with a record March as COVID-19 cases started to decline. Similar to what we experienced in the third quarter of 2020, we believe March procedure volumes benefited from an increase in rescheduled cases from November through February. Gross margin for the first quarter of 2021 was flat compared to the prior year period at 89%, as higher cost of operations to support the growth of the business were offset by lower inventory write-downs. Operating expenses increased 11% to $29.8 million in the first quarter 2021 as compared to $26.8 million in the prior year period. The increase was driven by higher sales and marketing costs related to increased sales hiring, research and development expenses for new product development and increased stock-based compensation expense. Our operating loss was $11.6 million in the first quarter 2021 as compared to an operating loss of $11.9 million in the prior year period. Laura Francis: Thanks, Anshul. I'm excited to become the CEO of SI-BONE during this period of inflection in market development for the company. I greatly appreciated the support and enthusiasm of our employees, Board and investors since the announcement in January. I've been with SI-BONE for 6 years, and I say without hesitation that it's been the best experience of my career. Jeff Dunn, now our Executive Chairman, blended vision, and grit to lead us through the early stages and challenges of building a new market. Tony Recupero, now our President of Commercial operations, has been my thought partner since joining the company. Understanding from his experience with and other companies, how to build a market and rapidly expand a sales team in our space. Anshul will bring a new perspective to our leadership team, positioning us to accelerate our capture of the multibillion-dollar sacropelvic solutions market. Anshul and I look forward to meeting our investors to discuss our market development plans. I'll now turn the call over for questions. Operator? Operator: Our first question coming from the line of Bob Hopkins with Bank of America. Your line is open. Bob Hopkins: Laura, a place to start, it sounds like the strong March bookings you guys talked about on the last call turned into strong March revenue. And so I was just wondering, is it -- what we've seen from some other companies that maybe March was around 40% of the total quarter given the slow start to the year. Is that a rough way to think about what happened to you guys in March? And did you continue to see decent trends in the month of April? Laura Francis: And in terms of how the quarter developed, we had talked about January and February being impacted by COVID cancellations. But then, as we mentioned, actually seeing a record March. And in terms of the -- how we're looking at that, we think that a couple of things happened in March. First of all, we were not hindered by cancellations due to COVID. But in addition to that, we benefited from some of those rescheduled cases. We've been fairly open about cancellations that we saw in the month in November, December, January, and abating a little bit in February. So we think that March really accounted for both of those -- the increases that we saw in March were a result of those particular items. In terms of what we actually saw in April. April continued to show strength, however, a little lower than March, given that March was a high watermark for the company overall as a business. So as I said, the scheduling of cases is dependent on several factors. And COVID-19 has increased some lumpiness in the month-to-month trends. But with that said, as the risk of COVID-19 continues to subside, we remain confident that the demand for our solutions will continue to drive steady volume growth throughout 2021. Bob Hopkins: Okay. So I assume then from the sound of it that maybe March was a little bit better than 40% of the total quarter, just given your comments there, is that roughly fair? Laura Francis: I would say that it's in the range of what you just mentioned. Bob Hopkins: Okay. And then are there -- and I hear you on the trends in April. But just generally, as you look at all of your geographies right now, are there any that are concerning you or going the wrong way? Or do you see kind of broadly speaking, general momentum across the board? Laura Francis: For the most part, we're seeing the momentum across the board. There are still pockets, for example, whenever we see news reports about COVID surges, for example, in Michigan, we do tend to see results that would be consistent with those challenges. And so that's part of the reason why we're guiding in the way that we are for the year to continue to stick with our current guidance and just be cautious through the second quarter of this year as COVID works through the system. Bob Hopkins: Right. That makes total sense. And then last, really quickly on iFuse-TORQ, I think you're calling it. I understand you're not -- so you're not -- are you modeling any revenue for that in the guidance? And when will that be kind of rolled out to the sales force? Laura Francis: Yes. We did put a little bit of revenue from TORQ into our expectations for 2021, but a small amount. What we really want to do is to give it time to grow into those numbers. And so that's the way we've actually approached it. In terms of the launch, the launch has been completed in the U.S. So we actually got clearance in February, and then the U.S. launch occurred in April. So that product is available to our surgeons at this point in time. Operator: Our next question coming from the line of Kaila Krum with Truist Securities. Your line is now open. Kaila Krum: Congrats to Laura on your new role and Anshul for joining a great team. It sounds like you guys had a -- of course, it sounds like you guys had a great end of the quarter, strong performance through April, but out of an abundance of caution, you're maintaining your guidance. First, is that is that right? And second, if trends continue to persist like they have in March and April, where do you think the revenue could end up for the full year 2021? Is it crazy to think you guys would be growing in the mid-30s or higher? Laura Francis: It's a great question. And as you said, Kaila, what we're doing is we're being conservative given that we're coming out of this period and point in time. And as I said, we also do expect that there may be some lumpiness as well in the development of the return of the business. And so for all of those reasons, that's how we're approaching our guidance. With that said, we are really excited about the long-term opportunity for iFuse with these headwinds eliminated. We're very excited about Bedrock and its continued development in adult deformity. And then the new TORQ product, we're pretty excited about 2 both in trauma as well as in primary SI Joint Fusion. So we have a lot of different opportunities and tailwinds that could really catapult us this year. I don't want to speculate on what those numbers could look like at this point in time, but we're excited about the potential in a lot of different areas. Kaila Krum: That makes a lot of sense. Laura. And then just a follow-up on TORQ. It sounds like you guys have about $40 million in sort of potential low-hanging fruit to go after and then $350 million in incremental opportunities. So first, is that the right way to think about it? And then second, do you see any reason why this couldn't be a $5 million to $10 million product in 2022? Or how do you see this thing sort of scaling over the next 12 to 24 months? Laura Francis: You are looking at it in the right way. The $40 million is the opportunity that we have in the primary SI joint fusion market, and we are already starting to see some of those competitive conversions at this point, and we just launched the product last month. So we're excited there. What's equally exciting is seeing some of these trauma cases come in as well, given that that's a different call point. We thought that it may have taken a little bit longer for us to actually see more of the potential in the trauma market. But given the product and the different features of the product, it does seem to be resonating more quickly than we thought in that adjacent market. So excited about both. And I think both present great potential for the business now and into the future. Operator: Our next question coming from the line of Drew Ranieri with Morgan Stanley. Your line is now open. Drew Ranieri: Just, Laura, I know you've talked about the surgeon training being a great toll for driving adoption. You've talked historically about moving from 3 cases to 4 cases. But as you've trained some of these surgeons in the near-term with the simulator, are you seeing any difference in utilization from surgeons that are using the simulator versus more traditional methods? Laura Francis: Yes. It's a good question. It's a little early to know the answer to that question, Drew. But suffice it to say, we're pretty excited about the simulator and the opportunity that it presents. We have 24 simulators in the field at this point last year. And we -- by the way, 21 of those are in the United States and 3 of them are in Europe. Last year, we had 4 simulators in the U.S. and 1 in Europe. So we have very significantly increased the potential with the simulators and the ability to train surgeons. And given that we have 7,500 target surgeons and only 1,600 of them have been trained and performed 1 procedure, it gives us a lot of opportunity to pretty rapidly grow the number of surgeons. In addition, our active surgeon numbers per quarter, it was a little less than 600 again for the first quarter, and that compares to that 1,600. So there's 1,000 that are inactive. And we're actually seeing a lot of surgeons who have been in active, being trained with the simulator, too. So we're really excited about the potential with the simulator and think that it is going to help us to convert and newly train a lot of these surgeons. Drew Ranieri: And with the simulator, the new trauma product also has an application or the simulator also has an application with the new trauma product? Or would that be rolled out at a future date? Laura Francis: It actually is going to be rolled out at a future date. So we're in the process of doing some software work with the simulator in order to get TORQ to work with the simulator as well. But expect that shortly. Drew Ranieri: Got it. And then just one last question on gross margin guidance. I think looking at the presentation, it was 85% to 89%. You just did closer to the high 80s this quarter. But just can you help us frame the low and high end, is that kind of just all mix driven, but I would love to get your thoughts there? Laura Francis: It is -- there's really 2 factors that are at play here. And one of them is just the impact on ASP over time. So I think we have said in the past that we want to make sure that we are competitive in the marketplace in terms of pricing. On average, our pricing of our core iFuse product has been declining 2% to 3% per year. We did see some acceleration of that last year because of a move from outpatient hospital primarily to more in the ASC setting where there is more competitive pricing pressure. And so that's a factor. And that's the first factor. The second one is the product mix that you just mentioned. So Bedrock and trauma applications on average are using 2 implants versus the 3 that are used in primary SI joint fusion. And so you're getting a price there of a little over $6,000 for those particular cases versus a little over $9,000 for our core iFuse product. Operator: Our next question coming from the line of Dave Turkaly with JMP Securities. Your line is now open. Dave Turkaly: Congrats on the hires as well in terms of the sales force. I guess if we look at sort of the split, I'd love to get any color. Are the CSS people being promoted and that's driving some of the adds to the direct sales part, I guess, your thoughts on sort of the trends in those 2 areas? And are they both -- are you adding a bunch? Or are some of the people getting promoted? Laura Francis: Yes. Very good question. So it's a mix of both. On average, I would say that the positions that we filled for the TM role, around 50% of them have come from promotions from the CSSs and the other 50% have been outside hires. So this is exactly our strategy, where we obviously have a pretty rapid growth strategy in terms of our sales force. And so the idea is that we hire more junior reps CSSs that when they're ready to be promoted in a particular territory, is ready to be split if we can, we'd like to promote those people, if not higher, from the outside. The other thing to just take into consideration is it's been very important for us to build our sales management structure as well. And so we actually promoted a couple of people from TM to a regional sales director. And actually, one of our regional sales Director became an Assistant Vice President, too. So there's a lot in those numbers, David, that you're looking at, but you're correct that a big part of the funnel for the TM role is coming from the CSSs. Dave Turkaly: Got it. And then as a quick follow-up, that slide show from last time, where you did talk about the competitors having something in the ballpark of $40 million. And so as we look at that comment you made on this call, are you saying that the competition, the other players in this market are primarily doing trauma cases today, and that's how you're looking at their business? And I guess, if that's true. Laura Francis: No, that's not the case, David. So let me make sure to clarify, there's 2 different market opportunities with TORQ. So the first 1 is actually trauma, which is around a $350 million market. It's targeting trauma surgeons, and it is getting a pelvic ring fractures, both high-impact and low impact. And that's a completely new and adjacent market, and that's not a market that the historical SI joint fusion competitors are operating in, at least not from the perspective of their SIJF products. So that's the larger opportunity. The second opportunity is the $40 million of sales that our competitors are doing, and that's exactly the market that we're talking about right now. And that is primary SI joint fusion. That our competitors are targeting with their particular products. And we, quite frankly, think that we have leapfrog their products in terms of the capabilities and technical aspects of TORQ, and it's going to be an opportunity for us to basically get low-hanging fruit. Operator: Our next question coming from the line of Brendon Folkes with Cantor Fitzgerald. Your line is now open. Brendon Folkes: Congratulations to everyone on their new appointments. Apologies if I missed this, but could you say what percentage of your sales were in ASC setting this quarter? And maybe how you envision playing out longer term? And then just any sort of impact on gross margin we should think around if that number is or is that delta is quite big in between now and peak? Laura Francis: And in terms of sales and ASC's, they continue to increase and we're getting up close to 20% of our sales now being in the ASC environment. And as you may recall, just before the pandemic, that number was around 10%. So it's a pretty significant increase in a fairly short period of time. The way that I've been looking at ASCs is simplistically around 50% of our surgeons are employed by hospitals. And so I was assuming that, that business would remain at hospitals. The other 50% tend to be surgeons who are in private practice. And then I was simplistically just saying, let's assume we can get half of those working in ASC's. So the total ASC opportunity would come out at around 25% of our sales. What I'm hearing is that the opportunity may actually be even larger than that. So from the perspective that hospitals are pushing more into the ASC business as well and surgeons who are in private practice, really seeing the benefits of ASC. So at the end of the day, we're agnostic as to where the sales actually go. We have a great solution for hospital inpatient, hospital outpatient as well as ASCs. And so we want to make sure that we're just meeting the needs of our surgeons and their patients. In terms of the gross margin, it does have a little bit of an impact on the gross margin just because the ASP in the ASCs tend to be a little bit lower. And once again, that 85% to 89% number that we've provided is taking into consideration the impact of that as well as some of the new products that we put out. Operator: Our next question coming from the line of David Saxon with Needham. Your line is now open. David Saxon: I guess, first one -- yes, and congrats on your new role. First one is just on TORQ. I was wondering if you have any clinical data or if you're planning on something similar to what you've done with Bedrock and SILVIA? And then kind of related to that, can you just give an update on SILVIA enrollment and when we could expect some -- to see some data from that? Laura Francis: Yes. Yes, good question. So thus far, we have not collected clinical data on iFuse-TORQ implants, but we have performed biomechanical and animal testing. And it shows a lot of different benefits to the product. So from a fixation perspective, 1.6 times stronger than trauma screws, around 2 times greater insertional TORQ versus SI joint fusion competitors. In that fixation from a compression perspective, just a stronger compression compared to trauma screws based on the testing that we've done. And then on the Fusion side, there's approximately 3 times more surface area for bone-in growth versus our competitors and trauma screws, just designed to allow from our Osteo integration versus our competitors in trauma screws. It's a 3D printed cancellous bone like surface that facilitates Osteo integration and then also has a fenestration structure that allows for bone through growth and we're seeing that through a sheep study. So a lot of work that's been done more on the biomechanical and animal testing to help support the product. David Saxon: Okay. And sorry, could you just give an update on SILVIA as well? And then I have one more follow-up. Laura Francis: Great. So SILVIA continues to go well. So obviously, this is for our Bedrock product and showing the benefits of our product in RCT. And so we continue to see enrollment in SILVIA and expect for that to continue to enroll throughout the year and hope to have results out shortly thereafter. David Saxon: Okay. That's helpful. And then just with the continued hiring, I think you'll have about 15 hires planned for the balance of the year. And all these investments that you're making direct-to-patient marketing programs, et cetera. How should we think about OpEx, just the cadence through the balance of the year? Laura Francis: So you get a picture of what we've been trying to do. So from a sales hiring perspective, we did grow from, I believe, it was 64 TM to 75 just in the first quarter alone. So pretty rapid growth there. We can -- we plan to continue on getting to 90 TMs by the end of the year and 60 clinical support specialists. We're making significant investments in sales hiring. But also in surgeon training, we've been talking quite a bit about TORQ, and we will be making additional investments in new products. You also mentioned clinical trials and SILVIA, that's an important area. And then there's also the digital and direct-to-patient marketing. From a digital and direct-to-patient marketing perspective, as I mentioned earlier on the call, we are putting our toe in the water is the way I would describe it. We are doing testing in various markets. And we want to make sure that we very clearly understand the ROI on those investments prior to really pushing in a significant way in that area. So I would say that the sales hiring, surgeon training, new products, clinical trials, we are pushing very hard on. And on the digital and direct-to-patient, we are just continuing to evaluate that as the way I would put it. So you're going to continue to see growth in our operating expenses throughout the year, and those investments are intended to accelerate our growth more into 2022 and beyond, given that a lot of these investments that I just mentioned, it takes around 12 months for them to have a significant impact. But we expect expense growth is going to outpace revenue growth in 2021 and that it will lead to a larger loss this year compared to last year. Operator: Our next question coming from the line of Kyle Rose with Canaccord. Your line is now open. Kyle Rose: And I apologize, I've been jumping between calls. I just had a few housekeeping questions on our end. One, I guess, could you just help us break out how many docs were specifically trained in the quarter, I think you gave the simulator numbers, I didn't know if there was anything incremental there just given the focus on TORQ? But then also, what the overall account base was in the quarter? And then lastly, I'll just ask them all upfront, was -- how we should think about the pricing of TORQ relative to traditional IFuse's and Bedrock? I know that you've kind of talked about year-over-year, your price declines just given more Bedrock usage, but help us understand how that dynamic changes with TORQ as well? Laura Francis: And you're very efficient. In terms of training, we do not typically provide training numbers. And so instead, what our target is, is to train as many surgeons as possible, but what we would like to speak about is the number of active surgeons. So in the first quarter, we finished with 583 active surgeons. So very similar to where we were at the end of Q4. And just as a reminder, it is how many surgeons performed at least 1 case during the quarter. So we do think that, that number was muted by the impact of COVID. But overall, we're continuing to train surgeons, and we believe that an increase in the number of active surgeons is going to drive the growth in 2021, in addition to an increase in additional procedures per surgeon. In terms of the pricing of TORQ, it's actually very similar to the price of iFuse 3D. So in those cases where TORQ is being used for primary SI joint fusion. There are typically 3 TORQ implants that are being used, and the pricing is in that approximately $9,000 range. In the case of trauma, there are typically 2 TORQ implants that are being used. And so on average, you're talking a little over $6,000, very similar to our Bedrock applications. Operator: I'm showing no further questions at this time. I would like to turn the call back over to Laura Francis for any closing remarks. Laura Francis: I just want to say thank you to all of you for your time today. Anshul and I are looking forward to meeting with many of you this month, we'll be at the Bank of America and the Truist Investor Conferences, and we also have a number of individual meetings. So we look forward to meeting you in each of those different places. Have a great evening. Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.
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SI-BONE Inc. (NASDAQ:SIBN) Maintains Positive Outlook with Cantor Fitzgerald's "Overweight" Rating

SI-BONE Inc. (NASDAQ:SIBN) is a leading medical device company specializing in minimally invasive surgical implants for the sacroiliac joint. Known for its innovative iFuse Implant System, SI-BONE competes in the orthopedic sector, focusing on solutions for joint-related issues.

On August 11, 2025, Cantor Fitzgerald reiterated its "Overweight" rating for SI-BONE Inc. (NASDAQ:SIBN), indicating confidence in the company's growth potential. At the time, the stock was priced at $15.68. This rating suggests that Cantor Fitzgerald believes SIBN will outperform the average market return, encouraging investors to hold the stock.

SI-BONE's financial performance in the second quarter of 2025 supports this positive outlook. The company reported a worldwide revenue growth of 21.7%, reaching $48.6 million. U.S. revenue saw a 22.8% increase, totaling $46.4 million. These figures highlight the company's strong market presence and ability to expand its revenue base.

The company's operational improvements are also noteworthy. SI-BONE achieved a positive adjusted EBITDA and reached a cash flow breakeven point, indicating financial stability. The gross margin improved by 80 basis points to 79.8%, and the net loss was reduced by 31.2% to $6.2 million. These metrics reflect effective cost management and operational efficiency.

SI-BONE's strategic initiatives are further bolstered by regulatory support. The Centers for Medicare & Medicaid Services (CMS) confirmed the New Technology Add-On Payment (NTAP) for procedures involving iFuse TORQ TNT, effective October 1, 2025. This will provide an additional payment of up to $4,136, enhancing the company's revenue potential. Additionally, CMS proposed the continuation of the Transitional Pass-Through Payment for Granite, further supporting SI-BONE's financial prospects.