Orthofix Medical Inc. (OFIX) Earnings Call Transcript & Summary

Good afternoon, everyone. I just want to say thank you so much for coming to our first analyst meeting day with the new company, the new Orthofix. And thank you, everybody, for joining online. Thank you, everyone, for coming in person. Today, we're going to focus mainly just on the products and the product portfolio. And then let me just do this slide. So our forward-looking statements, and then I'm going to kick it over to Keith in California to open up.

Thank you, Alexa. And I certainly echo Alexa's comments. I appreciate everyone joining us today. Also want to thank Alexa for not reading that forward-looking statement to all of us. I think that would have been brutally painful. We do it on our calls, but we don't have to do it here. So just kicking things off, and I'm only going to do a couple of slides, and I apologize for my hoarse voice. I caught something a little bit under the weather. So we're going to limit me to just a couple of slides, and then we'll get on to kind of the heart of the opportunity with each individual leader talking about their business unit. But just to remind everyone on what the excitement has been to date with this merger. We are excited not only about the extensive portfolio that now aligns, thanks to the merger, but also, it's going to drive and continue to drive improved clinical outcomes. And we'll talk a little bit about it in upcoming slide how does care continuum continues for the organization, which I'm most excited about. There's large addressable markets, I think we're all aware of in both spine and orthopedics, but I think also the orthobiologic channel as well is -- has a robust opportunity moving forward that we're very excited about. The combination brings an expanded distribution platform, and I think, with some of the opportunities that are going on in the marketplace right now, with other mergers that are ongoing, I think it creates a real interesting distribution opportunity with what I view as the most comprehensive portfolio. The combined company also has a strong cash position and the ability to go after and use thoughtfully a large credit facility that I'm sure you'll hear more from John a little bit later. And then from a perspective, that I'll touch on the next slide, as you look at the leadership team and the depth of that leadership team, this is a group of individuals that have been in and around the orthopedic space, in and around the spine and orthobiologics space. And I think we bring a shared common collaboration and vision to how we want to really drive the company. And I will ask each of the leaders before they start their presentation to give a little bit of an introduction in their background and what they have done in the orthopedic or industry space and how long, of course, with Orthofix and the combined company. As we move to my last slide, when we look at what this high-growth portfolio looks like it's in a very large market opportunity. And I think as you look at the 5 individual segments, whether it's spinal implants, orthopedics, our bone growth therapies, the enabling technology that you'll be hearing more about. And of course, biologics. What I'm most excited about is largely in really all my career participated in medical device in and around that really ended, if you will, or the opportunity ended in the OR, and the experience of getting your implants then partnering with surgeons and being able to change and be a facilitator changing patients' lives, but it really ended in the OR. And that's changed dramatically now with the combined organization, largely because of 2 other -- 2 other groups and that's the bone growth therapies, and of course, the enabling technologies. And what I'm excited about is with enabling technologies, we can be on the front end and helping plan that patient care. We can ultimately be interoperative as we work the plan, if you will, live without radiation. And then, of course, post surgery, we have the ability to participate with bone growth therapies, and we also have the ability to participate, over the long term, with enabling technologies as we look towards follow-up and we look towards some of the planning and decisions that were made interoperatively, how did they impact the ultimate outcome. And this is really a unique opportunity for us as an organization. And I think as we dive deeper with each of the leads, you'll hear more about how we're going to truly integrate this and become a broader continuum of care company. So with that, I will turn it over to Kim.

Dallas, I know a lot of you were at Academy last week, and it's a lot of travel. But I think the air is a little better here than it is in Vegas. So thanks for being here. As Keith said, I am going to be talking about -- why is this not working people? There we go. I'm Kim Elting. I have been with Orthofix since 2016, I've been running the Orthopedics business for about a year. I joined Orthofix, actually as the Chief Legal Officer, and I've had many jobs at the company [ over at ] quality, regulatory, corporate communications and most recently, business development. But I will tell you, this is my favorite job. I think that I finally found the fantastic business to work in. Is somebody else doing these slides for me? Are they being advanced, goes like? Okay. what's going on, Pete? Okay. So my clicker. I now have control. So I'm going to give you an overview of the orthopedics business. With really just talking about what our business is and what it is not, where we focus, where our opportunities are, what our commercial organization looks like? So this is orthopedics by the numbers. This business was started over 43 years ago in Verona, Italy. I'd like to say it's the foundation of Orthofix. When you're here today, those of you who are here in person, you'll notice there's a history wall outside of the lab where you're going to be looking at products. And you'll see that the company started in Verona, Italy, 43 years ago, has gone through a lot of changes over the years, but constant throughout those 43 years has been our orthopedics business. We're very proud of the orthopedics business. We; have a robust family of patents around our products. We're in 68 countries. We have a strong international footprint, very well established. It's a mature business. It's profitable. We've been operating at over 60% gross margin for some time. Most of our sales are what we call direct, through a direct channel. Now by direct, I mean, not only employed sales reps, but also sales agents. The other 40% is through stocking distributors, sales distributors who purchase our product and then resell it. And I'll go through a little more detail on our channel in a couple of slides. We have over 300 employees in orthopedics. A lot of those employees are in Italy. We have a large group of employees in France, the U.K., Germany and in a couple of other geographies. In the U.S., we have a management team. But in Verona, we have all of our R&D, our manufacturing, our marketing leads, and we also have quality, regulatory, et cetera, all in our Verona facility. I'm the first one to go, so I get to work out all the [indiscernible] here. Oh, is that what it is? It's delayed. Okay. Thank you. So when I tell people that we have an orthopedics business, I have to very carefully explain that by orthopedics, we are not everything in orthopedics. We are focused on limb reconstruction and deformity correction. The business has been called XFix over the years. It's been called Extremities, all in an effort to really try to describe what the business is of orthopedics at Orthofix. We've gone away from calling it XFix because we have a lot of internal plating systems and solutions now. So we are experts in limb construction and deformity correction. We address adult and pediatric patients and solutions worldwide. And throughout all of our products, you will see that not only are we innovating in hardware, but also digital solutions, our OrthoNext patient planning procedural planning platform, which I'll talk about in a little bit. So limb reconstruction and deformity correction. We focus in 3 segments. These are products that bridge across all of these focused segments; pediatrics, where we are addressing trauma, deformity correction and reconstruction; foot and ankle, our foot and ankle portfolio is focused primarily on Charcot foot solutions. We do not have, and we don't try to have a full foot and ankle portfolio. We are excelling in where we have fantastic solutions and great products for patients and for surgeons. Specialty trauma, we are experts in external fixation for trauma. I'm going to spend a minute or 2 on this slide because I think it tells a lot about the orthopedics business. As you can see, $82 million of our top line last year came from outside of the United States, $26 million from the U.S. And what's interesting about our business, it is not the same around the world. You can see both U.S. and outside of the U.S., we play in the pediatric space. We have a very strong pediatric portfolio. Outside of the U.S., we have a very strong trauma business. In the U.S., we have a strong foot and ankle business. That foot and ankle business, as I said before, is really focused on Charcot foot solutions. While the U.S., that's where we have the patients who have Charcot foot. Unfortunately, that is a disease state that is proliferating around the world as obesity is not just something we are now enjoying in the U.S., it's something that other countries are also struggling with. So foot and ankle business in the U.S., a lot of our surgeon customers are DPMs who are treating these very hard-to-treat reconstruction problems, the patients with Charcot. Internationally, our sales channel, we have a direct channel. These are employed sales reps in the U.K. France, Germany and Italy, and stocking distributor partners elsewhere. We have a very experienced management team globally, with that sales leadership outside of the U.S. The U.S. sales channel, on the other hand, is what you would see in our spine business and many other spine businesses. It is -- these are sales agents. We call them distributors, but these folks are sales agents. What's interesting about our sales channel in the U.S., they're our agents, but a lot of them used to be Orthofix employees. These are sales partners who have been with this company for a long time, a long, long time. What we have new in the U.S. is we have a brand-new leadership team, management team in sales. This management team has infused a lot of energy into our sales channel. We are adding new sales distributors almost on a monthly clip. This is a sales team that is completely new as of 2022. They are tenured, they are experienced and they are making an impact. So looking at our commercial organization, we have been investing for growth. And those investments are translating into top line growth. The European subsidiaries, these are the 4 countries I mentioned before, U.K., France, Germany and Italy. These geographies account for 43% of our sales. We invested in additional feet on the street in those countries at the end of '21 to beginning of 2022, and it translated directly into a 10% top line growth. We have high market share in these geographies. We've been very successful. We have struggled in Germany, like many other countries have. Germany has had a hard time during COVID and post-COVID. Their whole health care system and infrastructure has been challenging. So we're continuing to rebuild in Germany, but we have seen very solid execution and success across our European subsidiaries. Our stocking distributors, which make up 33%, or did, last year, 33% of our revenue. The investments we made last year were in inventory and set builds. We did this in order to anticipate the addition of new stocking distributors that we have added. That investment was a wise investment, and we have been able to realize 15% growth through our stocking distributor partners. In the U.S. where the remainder of our revenue came from in 2022. As I mentioned before, we have new sales leadership. They are just starting to make an impact. They exited the year very strong. We saw 6% growth in 2022, and they have a -- I will say they have a higher target for this year. And the investments that we made last year, the intention is that they will start to show some more growth in the U.S. We view the U.S. as having -- as the market having the most potential for this business. And it's something that I will be candid. I think Orthofix because it has been -- the orthopedics business because it has been based in Verona and very European-centric, the U.S. has perhaps historically been a little bit of an afterthought. It is not any longer. And it's actually 1 of the reasons why I'm in the position that I am in and I'm sitting here in Louisville is to focus on this U.S. market and focus on this market where we have the most opportunity. So getting into some of the data here. It's difficult to pull together total market in this business given our laser focus on limb reconstruction and deformity correction. But the way we view it, it's a very large market, $1.6 billion that has seen a 7% growth. We've got $108 million exiting 2022, and we saw 11% growth. Business broken out generally according to this pie chart. The limb reconstruction is inclusive of pediatrics, complex trauma making up another significant portion and then foot and ankle. Looking first at the foot and ankle opportunity. Now this market size is somewhat broader than what we're looking at for Charcot, which explains why our market share is so small. But the market growth rate of 7.9%, you can see that our investments in the -- in our Charcot portfolio have been successful in terms of us taking share in that space. The platforms that we are -- that are part of our Charcot and our foot and ankle portfolio, TrueLok, our circular fixation product, and you're going to keep hearing TrueLok because TrueLok is used throughout all of the segments, our ankle hindfoot nail and our GBM and SOLE. So TrueLok being the external solution, AHN, GBM and SOLE being the internal solution. And these are used oftentimes in combination by surgeons who are reconstructing Charcot foot. These are the hardest -- I mean these are the hardest cases to address. And the surgeons who are working with Charcot foot patients, these are patients who oftentimes are told that they should have an amputation. And through the use of our products, particularly the external frames, the circular frames, they are able to salvage the limbs. Fracture management, trauma. Again, you see Truelok there. Galaxy Fixation, this is our pin-to-bar system. And we're going to talk a little bit more about that. I've got a focus on Galaxy Fixation and also excaliber. You can see that we've had some very nice growth in our trauma segment. We attribute this to the investment we made in our inventory and our set builds, particularly around Galaxy. Galaxy is offered in a nonsterile and also a single-use sterile pack, very well suited for the trauma environment. Pediatrics, inclusive of also adult, but primarily pediatrics limb reconstruction and deformity correction. Again, you see TrueLok, the TL-Hex platform, circular fixation. Pediatric plates and nails, and last, but definitely not least, one of our growth platforms, no pun intended, it's our FITBONE intramedullary limb lengthening nail. As you can see, our growth rate here, this is where we believe we have the most opportunity for market penetration, and it really is primarily through FITBONE. So key product platforms. These are the products that you saw in the last couple of slides, TrueLok, Galaxy Fixation and FITBONE, these are the 3 product platforms that we are investing behind, that we are expanding upon and that are used really across our segments with the exception of Galaxy, which really is a trauma solution. But TrueLok used across all 3 segment focus areas. So the TrueLok family. It's been around for quite some time, starting with TrueLok, and when you all, who are here in person, go into the lab, you will see these products in person. But the TrueLok, our traditional TrueLok, external circular frame is a static frame, used to be 1 of the only static frames on the market. There are now a lot of other folks who are coming in with their frames. We believe we have the best frame on the market. And as you look through this whole Truelok family, perhaps you will agree. But our TrueLok -- our basic Truelok system was really the foundation for everything that has come after. TL-Hex is the Hexapod system. And if you see the struts on each side, this allows for multiplanar adjustment for deformity correction, very effective, if you are a clinician addressing complex deformities. TL-HEX Trauma developed for the trauma market, and our latest addition to this product family, EVO. EVO has been incredibly successful right out of the gate. It has clinician and also patient benefits. It is radiolucent. The surgeon can see the fracture. They can see the deformity correction. There's no impairment when they are looking to see the progress of the therapy, completely radiolucent. You can pick it up with your pinky. The patients love this. If they've got to have an external frame on, this is the frame to have. It is extremely lightweight. This is being used, not only in trauma, but also in deformity correction. It is offered in a single-use sterile pack configuration making the inventory burden low, very easy to use, simple to use for the surgeon and the hospital. It's getting great reviews, I will tell you. These are just a few snippets of some of the reviews that EVO is getting, the minimal weight, huge benefit, radio lucency, absolutely revolutionary in their practice. So we're excited about EVO. It's just starting to make inroads in the U.S. Most of our sales have been outside of the U.S. So we're looking forward to what -- how this product does in 2023. Galaxy Fixation. This is our trauma product. Simple to use, easy to maintain for a hospital, single-use sterile pack right off the shelf, perfect for trauma applications. It is every hospital needs a pin-to-bar system. This is a great pin-to-bar system for hospitals to carry. It's also good potentially in a military application and for NGOs to have product on the shelf, ready to use in the event of a need. FITBONE. We acquired the FITBONE technology, the business in 2020. We jokingly say we -- it was the best deal we did during COVID. We closed the deal really at the beginning of the lockdown, acquired this technology from a German company, Wittenstein, who has been a really great partner as we've transitioned the manufacturing, which we just now got CE MDR clearance, and we are manufacturing this product in the Verona facility. FITBONE intramedullary limb lengthening nail, is indicated for discrepancies, limb length discrepancies, femur and tibia. It is the only nail with an FDA indication for pediatrics. This is really important, and this is something that we are very proud of. We are the only company that can market for pediatrics. Now I will tell you, and this is something that we've talked about on calls, I think last year. Our nail is a retrograde nail, meaning it is implanted through the growth plate. European surgeons are very comfortable with this approach, and the nail, as established as over 20 years of clinical history over 5,000 implants. U.S. surgeons have been taught to approach through a trochanteric entry versus retrograde. And this is what they are accustomed to, and this is what the -- this is the procedure that they know. So recognizing that, we have developed a trochanteric nail that we will be introducing into the U.S. market at the end of this year in a limited market release. This is being introduced first in the U.S. And it really is -- it was developed for the U.S. market because surgeons have this preference, this procedural preference. So up until now, FITBONE has not had seen a lot of growth in the U.S., has seen a lot of success outside of the U.S., but it has not yet in the U.S. primarily because of the design of our current nail. That will change. We are going to be doing a lot of training and education around our nail. We believe that it is a viable and very attractive alternative to what is currently on the market. We will also be introducing a bone transport now. There is not currently a product on the market for bone transport in the U.S. So we view this as an opportunity. Benefits of internal limb lengthening versus external. I don't want to say anything negative about frames because you can also do limb lengthening with frames and our circular frames are used for limb lengthening all the time, but some patients prefer to have an internal solution. Our product versus other available products, there's no need for a magnet. This is a product that is done directly with the power source communicated to the receiver. -- and in order to move the nail and achieve the lengthening. So key growth drivers. No surprise. FITBONE is right there. FITBONE, we do believe there's an opportunity for FITBONE through the trochanteric introduction of the trochanteric device and also bone transport. TrueLok EVO. We will continue to drive adoption of TrueLok EVO, Incredible clinician and patient benefits. We will continue to invest in our Charcot portfolio. We believe that we have the best solutions in the market for Charcot foot, and we will continue to develop our products around that specialty area. Similarly, with Trauma solutions, we're not going to pretend to be the trauma company in the U.S. Outside of the U.S., we are -- and we play very strongly outside of the U.S., and we will continue to develop our single-use sterile pack solutions for trauma. Throughout all of these products, we have a common platform, and that is our Ortho next planning software. And this is interesting, and this is something that got both [indiscernible] -- who you'll hear from later, both [indiscernible] and our engineers talking a lot, how do we -- how could we possibly leverage some of the learnings and the developments that we've had with planning with navigation and tying it all together. So we will be working on that in the months to come. And then Orthofix Academy. This is our training and education program, very well established, both online and in person. As you can see, we have a great training facility here. We run huge courses out of the Louisville facility and also out of Verona, training, everything from residents and fellows, all the way through to what we call masters classes for advanced framing. So opportunities for this merger. Everybody says, oh, orthopedics, you guys have nothing to do with the merger. But we see great opportunity with this merger. Biologics are used in our procedures. And SeaSpine happens to have some biologics that are being sold in Europe. So we're spending time working through opportunities there. 7D cross-selling through the European channels. I will tell you, Academy last week, [indiscernible] last week was really interesting. It was the first time that all of our businesses -- for the most part, all of our businesses were in 1 booth. And there was a lot of excitement, excitement from surgeons, from distributors, from all over the world, excited about our biologics, excited about 7D, looking at FITBONE, looking at EVO, looking at all of our products that were there in this booth. So it was a lot of fun. And it just -- it was really the first time everybody was in one place. And it was great to see the customer reaction and the sales reaction. It was terrific. SeaSpine also has a small stature scoliosis system that we are looking at to see if it makes sense to make that available to our Orthopedics sales channel in the U.S. So there are synergy opportunities for orthopedics with the legacy SeaSpine businesses, and we are working very hard to realize those. We're excited about the merger. We think there's just upside for orthopedics in this merger. So with that, I think what Alexa failed to tell everyone is we're going to wait for questions until the end. And so I'm going to run off here and pass it over to Kevin Kenny. He's going to talk about -- are you going to talk about BGT first?

BGT.

Wonderful. Thank you, Kevin.

Thank you, Kim. Thanks for working out all the bugs. We tested you because we knew you could handle it. Hey, welcome, everybody. For those on the phone, thank you for joining. And for those who made the trip, it's great to meet you. It's a perfect day for us to provide you a little bit of our strategy and education on the business, but also give you an opportunity to showcase this wonderful new innovation education center that we've built here at Orthofix. We're so proud of it. We put a lot into it this last year, not only for the education room lecture setting we're in here, but an innovation center next door, which is built all around collaboration and innovating with physicians focused on patient care. And then we'll get over to the lab tonight to even touch and feel some of our technologies. So a great day for you to get to know the organization. By way of an introduction, I'm Kevin Kenny. I'm the Global President of the spine units here at NewCo. That entails BGT, Bone Growth Therapies, which I'm going to talk about in a moment, Spine Fixation and Bio as well as Motion, our M6 technology. I have a counterpart on the bio side, Tyler, who you'll hear from shortly, who'll give you a broader view of the bio area, but I maintain all of the sales because it's within 1 channel in the marketplace. By way of background, I've been in the medical device arena for over 30 years. Hard to say that out loud. But I've been very fortunate to be in the cardiovascular space, in the orthopedic space with some really fast-growing companies. One was a strategic and spine, probably the most germane to today's discussion. And in early 2000s, we went on a growth trend where we innovated, and we really revolutionized patient care. It was just a fantastic time to be in spine. I left to go to cardiovascular, but when I saw what Orthofix was developing a strategy, and now under NewCo, got me very excited that there are some elements here that we could replicate. It won't replicate that era, but it's an exciting time to be in spine, and we're certainly on the move, and we're going to do some fantastic things. But this first section I would like to talk to you about is bone growth therapies. By show of hands, how many in the room, is this the first exposure you've had at BGT? Everybody is fairly familiar with it? Okay, wonderful. I wanted to make sure I took it to the right level. This really is one of the crown jewels of Orthofix. I like to call it our most stable and predictable segment in the business. It's very mature, but we've established an unbelievable market-leading position, and I'm going to talk a little bit about that. This slide here is really a summary of that. And to me, it always starts with people. They're our #1 asset, and we have built an unbelievable committed team of people. They have the strongest tenure in the marketplace with over 6.5 years. They're experts clinically, and they have the strongest relationships in the markets that they serve. What's unique about the sales force that I'll share is they're not only calling upon the surgeon who's writing the prescription for the technology for patients in need, but they're working with the entire staff and the entire ecosystem all the way up to fitting and ultimately billing for our technologies. They are an office-based group versus the OR-based implant team that we have. So their relationships and how they work within those settings is just so valuable. Switching to technology we're proud that we had our 1 million patient served and fitted with our device. We are a mature technology for sure. We're proven. We have great clinical evidence and we continue to evolve by making slight enhancements to the technology, frankly, to stay ahead of our competitors. There are 2 groups that focus on our technology. One is the spine team that's calling upon orthopedic and neurosurgeons. And the second is our fracture group, which is more around orthopedics and trauma. I'll show you the 4 technologies we have. There's 2 within each channel. But 1 thing we did this last year so that we could fuel growth was we separated the sales forces. They used to be generalist under 1 group, but we separated them out and we started investing in feet on the street new sales management, development of those managers because we see the opportunities very ripe specifically on that fracture side to really see some nice growth ahead. In addition, we invested behind a portfolio called [indiscernible]. It's a company based out of Italy that also is in our space and has some wonderful technologies. We bought the rights to that so we could take it to the North American market and serve more patients within the channel that we have. In short 12 months, we actually took that technology, went to the FDA and the regulatory path, and I was so pleased this past year that we launched the therapy, and it's now in market. We've started off very, very strong. We have a lot of momentum, and I'll talk about that more here in a moment. Another key differentiator for us is we have this best in industry order to cash group. I have a slide that I'll share with you in just a few that really shows from start to finish of a patient identification up to the payer billing. It's a very unique skill set. There's some domain experience. And we have a group of over 120 people that are focused on this every single day. It's been hard, frankly, for our competitors to catch up with us. It's absolutely a differentiator. As I close down on this first slide, just know, we're #1 in spine. I'll show you the data. We're #3 in fracture, but we're on the move, and we're going to take some share. Let's take a look at the core markets of which we actually compete. First with spine. It's a very competitive landscape with 4 companies. But really, we have indications with adjunctiveness to spinal fusion. So you think about at the time of surgery a physician will choose this because there's comorbidities or challenges with those patients. They'll be that insurance policy for good patient care. If there's a failed spinal fusion, our technology comes into play, and in nonoperative salvage procedures. We're the only ones that actually can do this within the spine space. If I switch over to the fracture market, it's also a competitive landscape with 4 companies, and we have 2 different technologies that are around nonunion and fresh fracture. We've covered the gamut with some of the ads we put into the bag, and we're, once again, growing very rapidly within the fracture market. Overall, bone growth stimulation is a market, it's been growing about 2%. It hasn't been growing in the high single digits, but we think there's opportunity ahead. Orthofix is average -- and some of this is a little pre-COVID because we've had some really challenging comparables in the past few years. But we've been proud we've been taking share and growing about double of what the market average has been. If I give you a quick view of the competitors and the market share, the overall market is $500 million to $500 million. We have a lion's share at 41% followed by [ ZimVie], Bioventus, Feragen, and Innovus, which is a DJO product. If I break it down further on the left, we have the spine BGS marketplace. We are a dominant player with over 50% share, followed by [ ZimVie ] and others. On the fracture side, on the right side, you can see the pieces of the pie. Bioventus is the largest. I will share they have an exogen product, which is approximately $90 million as a franchise. It's a [indiscernible] technology, an ultrasound, low-intensity pulse ultrasound. Our new technology we just took to market with AccelStim is squarely focused on this market, and we think we have a lot of growth ahead, taking a closer look at the technology. Now with the addition of AccelStim, which is an ultrasound-based technology, it complements our PEMF, which is our proprietary signal. That has been the product that has really been the star worth of the organization for many years, but we now have this combined portfolio so we can play in multiple indications. This is a quick view of those indications. Spine on the left and the fracture on the right. The 4 different technologies have different indications covered, and we're very proud of this portfolio because it allows us to serve far more patients. In fact, we're the #1 prescribed bone growth stimulator company in the space. If I separate out and just highlight a few things on the 2 spine products, on the left is the spinal stim product. You could think about this for the lower lumbar area. It's the only BGS device that's both a adjunctive therapy and a nonsurgical treatment for spinal pseudoarthrosis for those failed fusions. On the cervical side, we are the only company that has a cervical indication, the only company in spine. I want to spend a moment just talking about Stim on track. I've mentioned that even though our devices mature, we've been enhancing the technology year after year. We created an app that we were actually recognized for called Stim onTrack. It's an interface with a patient where they can follow their compliance to the therapy and a physician can remote in and understand their compliance to the therapy to ensure optimal care. There's a CPT code related to this, so they can bill, and it's a wonderful tool that we continue to add more and more features to, to make it powerful for the surgeon based on their feedback. Our mechanism of action I mentioned is proprietary, very unique. It has a 360-degree field of our PEMF, which gives this wonderful treatment that I'll show you in a moment, it really is a nice image that demonstrates that. Last point I would make is that we have a NASS, North American Spine Society, coverage recommendation, which we're very proud of. And obviously, there are a lot of physicians that follow that recommendation. This is just a depiction of a 3D model that 1 of our partner customers, Cleveland Clinic, put into play. They wanted to see what our PEMF signal with that 360-degree impact. What would happen here on 3D imaging? And they found that it's more uniform from top to bottom, but the red spots, which is the strongest signal shows that it's really impacting the areas of focus, that lower lumbar area. So this is something other technologies don't have. And we're actually proud that they actually are committed to demonstrating this. If I take a close look at the fracture side, once again, 2 technologies. On the left, we have our Physio-Stim. That is our historical PEMF device, and it was meant for nonunions, so that's our indication. So a patient receives treatment. They don't have a fusion. They have to come back and utilize our device to become healthy and active again. On the right is AccelStim. That's the [ EJA ] product that I mentioned, and that came with a different mechanism of action, but also a new indication of fresh fracture. So think for a moment, we've been calling upon the same doctors, but we could only be limited to those nonunions. This gives us the opportunity to be in the practice more often, get into competitive practices and treat all patients that they're seeing with the need for therapy. I mentioned earlier on the third-party payer group. We call this our order to cash. And if you think just on the far left, a physician identifies a patient, and that's where we get involved with our sales channel. We advanced through the curriculum and the pathway all the way up to billing, but there are steps along the way from making sure it's under contract, making sure there's preauthorization, working with the patients on co-pays, all the way up to fitting. Our sales representatives find themselves in homes of patients. How rewarding is that? We always talk about how we're a patient-centric organization that wants to improve the quality of life and care. And our sales force has a chance to actually touch those patients. It's a very, very rewarding experience, and it's something that we provide tremendous value to that physician's practice and why those relationships and referrals continue to come our way because we are the best at doing it. We're really proud of the OTC group. Let's talk just for a moment about proven clinical data. Since the inception of our technology, all of the data has been very positive. I just pulled 2 that I thought would be most appropriate for the discussion today. On the left, this was our PMA trial, a randomized Level 1 evidence that had a cohort of our PEMF device and 97 on the placebo side, just about equal, and was focused on adjunctive therapy. So when they did receive an interbody fusion, they either received our device or did not. The results were compelling. We had a 99% success rate with our PEMF, and you can see the cohort the control arm was much lower. The technology works. All of the literature and K series and data that's come out since this PMA has been fairly consistent, including independent review. So we're very proud of how our device performs. On the right side, a different study. This 1 had to do with pseudoarthrosis, 100-patient study that actually had an average of 19 months since their fusion and how to be greater than 9 months. By utilizing our device, 67% of them went on to be fused. That's remarkable. Very proud of the clinical evidence on the spine side. Taking a quick look at the Physio side, this is fracture management once again. We took a look at 139 nonunions, greater than 9 months, and they really -- we had a mean duration of 2.6 years. These people have been suffering for a long time. So we put our technology into action, and we found to be really impactful. 80% of them went on to Fuse and -- which was fantastic. And you could see that some of them had significant fracture gaps of which we showed dramatic performance. I'm going to finish with just a brief summary of growth drivers. We have a variety of areas that we're investing in. a few that I've mentioned, a few I have not. But I'm just going to highlight a few. First, we're really big believers in medical education. And as new physicians come out of residents and fellow programs, we need to be out front and center with them, so they understand this technology and what it can do with their patients. So we have initiatives and investments squarely focused here. Expanded indications, I talked about. You're well aware of the path we're on and the investment we've been making. We're always going to continue to listen to our surgeons to make sure that we revise our technology to meet their needs. We'll build on that clinical evidence to make sure that we use clinical studies as a product, as I like to say. That specialized sales force, by separating the 2 was a really important strategic move for us. So you can imagine, we're investing heavily behind that this year. That best-in-class OTC group. We're going to continue to look for more efficient ways to work with our payers and stay ahead of the game. The remote patient monitoring that I mentioned was that app that we've added to the technology. And we believe that we can continue to have the most indications on the market and separate ourselves from our competition. So with that, I think I'll pause. No questions for now, and I'll turn it over to Tyler on the biologics side. Thank you.

Well, good afternoon. And I'm Tyler [indiscernible] for those of you I haven't met I joined SeaSpine in 2015 just after the spin-out from Integra. And I've been in orthopedics and spine for over 33 years like Kevin getting a little up in the edge there. Prior to joining Sepon, I was with NuVasive and led their orthobiologics group. So I apologize in advance. I'll use orthobiologics and biologics interchangeably. If that confuses you just gave me a pass. And secondly, I've been in orthobiologics for 15 years. Today, we're going to talk about the biologics. And what's unique from the rest of the businesses is that we're integrated business. We start from R&D, creating the formula and hand it off to an integrated manufacturing and everything in between, quality, purchasing, supply chain, et cetera. And as Kevin said, we are integrated with the sales force because 70% of our market is within spine. So it makes synergistic sense. You all have been following either Orthofix, or SeaSpine for years. So I'm not going to go into a lot of detail on the products and features and benefits. What I'm going to focus on is how these 2 products are synergistic. You hear the comment, we're stronger together. It's more than a mantra, and I'm hoping to demonstrate that today. So specifically, when we talk biologics, we define that as bone grafting solutions that aid in healing. And again, biggest market is in spine, but you see these applications, as Kim mentioned, all over the body, dental, foot and ankle, trauma, spine. Our opportunity is to leverage our core competency and get into those markets with procedure-specific solutions. So we're going to focus on the U.S. market. 95% of our combined revenues for biologics were in this space. But Kim mentioned, there's a big opportunity overseas. We're not going to talk about it today because we have limited time, but it's not to suggest that we're not focused on it. Because of our integrated business, we have a cost advantage that allows us to compete overseas in these more cost-sensitive markets. And that is a big opportunity for us going forward. So I'm going to focus on the $2 billion U.S. market. It's growing about 2% to 5%, and we'll go into the different market segments that make up that. We're going to focus on the 4 primary markets: growth factors, cellular allografts, DBMs and synthetics. Why? because they're interchangeable. Like it or not, they overlap with each other based on procedures, based on patient risk based on price constraints. And so it's how we will differentiate ourselves in those space with science and data. And you'll hear me talk about that. I think what's really the power of this organization is combining our 2 entities and the heart of SeaSpine historically has been the R&D team. And that's where we've really made our mark by developing products based on science, differentiating them with data, and influencing the market through education. So this is that $2 billion market, broken down. And again, 90% of it roughly are in those 4 major segments, growth factors, starting on the top right is the highest price. And again, you know the players. We haven't historically been able to compete with these directly. But through the CG Bio and the combined entity and the capital available, we hope to compete with those directly in the future. But our goal is to have leading products in every category. So when you get into the cellular allografts, we have that. We're the #2 player with Trinity with over 15 years of experience. And as we'll go through, is the most heavily studied the most clinical data most differentiated product on the market. DBMs. That is the fastest-growing segment for the last 2 to 3 years. We were #2 at legacy SeaSpine prior to the merger, and now we have an even more compelling portfolio. And as we go through all of these 3 things, you ask, how are these complementary? I think as you look through each segment, what we're trying to do is provide different products across all segments, but even within those at different price points, different performance and different procedure-specific solutions to maximize patient outcomes. So now with the combination, this is another example where we're actually strengthening our position and our offering for our customers. Synthetics. This is a market where at SeaSpine, we've been losing market share since I joined. We've declining double digits. We have a next-gen ceramic coming out in the fall, but we also, through the integration with Orthofix, now have a bioactive product. So over the next several years, the goal is to have a leading product in this category as well. So as you recap it, we have leading products, #2 in 2 out of the 3 largest biologics bone substitute market segments. So products initiatives, and I won't really touch on the commercial channel because Kevin is going to touch down on that next. But let's kind of recap why we believe we're stronger together. Leading products in every portfolio, 2 out of the 3 today, I hope to get to 3 to 4 with the opportunity to compete in the transformational and growth factor space in the future. Why is that important? It changes the way we sell to go from evangelical promoting DBMs or cellular grafts to more consultative. In the future, we'll also have the opportunity to do that same thing with synthetics. I think game changer from how you approach the surgeon. Even though we both lead with science, it comes across as biased. When you have leading products in every category, it really facilitates the selling process. So when you look at that, it translates to customer access, start with the GPO and IDN. Because we have had leading products in both categories, we now have greater access, not only for biologics, but for the entire portfolio. We've drafted off our #2 DBM position at SeaSpine. And really, we draft off of their success because of the compelling spinal implant portfolio. But to get access, we did that through DBMs. Now we have leading products in 2 of the 3 largest categories. And so as GPOs and IDNs begin to limit access, we now have a place at the table that we think we can continue even when they reduce the number of approved suppliers. We're differentiated by science. As I said earlier, and I'll talk about in our product development, we start with a very disciplined R&D process. And we believe we have the best products, but that's not enough. You have to invest in the data. It's peer reviewed to differentiate yourself in a crowded space. And if you have those elements, broad products, approvals, differentiated by science, then you can deliver consistent growth. And we've done that at SeaSpine, and we will do it on a combined basis. And perhaps most relevant to this group is operational leverage and capital efficiency. This is very synergistic with the rest of the business. Why? It's the most along with BGT very profitable but very capital efficient. We don't have to buy sets. When we innovate, we sell through the entire lot, we don't have an E&O experience. And that is really kind of harnessed by the 2 business models, which ironically are synergistic, SeaSpine, vertically integrated, as I talked about before. And if you've been covering SeaSpine, you know that we have been able to contribute significantly to the increase in profitability and gross margins. Why? we can easily scale add volume without adding any significant capital investment. MTF is another very different business structure. It's a marketing fee structure. It is the most capital efficient that you can have. Now the disadvantage is you don't get all of the revenue recognition, but you don't have any of the expense. So between these 2, we really contribute to the profitability of the organization and positive cash flow. In addition with the MTF relationship, we get access to the market leader in tissue processing. They are by far the largest tissue bank in the U.S. and they specialize and lead in aseptic processing, which is their strength. And that's also obviously required for Trinity in the cellular graft market, where we have not historically competed nor did we have the capabilities in Irvine. So again, that's how these pieces really fit together. So now let's shift to our product development process. So here, what you have is a depiction on 3 pillars that are competing when you develop products. For biologics, you have to balance these 3 competing variables, activity, strong bone forming capacity, delivery, efficiently deliver and completely fill the surgical site, and that's procedure-specific, location, optimize and maintain post-app positioning, what we say it's our version of ADL. What are some examples? What's the best forming, most successful product in Biologics, Infuse. That's an extreme of a product that can really grow bone well, but when it was first launched, migrated, wasn't controlled and caused ectopic bone formation and complications. Go to the other extreme, great handling, you can mold it. It's really good. It can be delivered. But a lot of those products, historically, the DBMs, as an example, had tremendous amount of carrier up to 70% to 80%. What's the problem? Displacing the active component, great handling, but doesn't have great bone-forming capacity. So these are the pillars that we use to not only position our products in the marketplace, but as tools for product development. It's understanding the procedure requirements, for example, an MIS open versus open spine procedure is completely different requirements, even a lateral or an ALIF interbody is completely different than a TLIF. And if you don't understand that, and you're not an integrated business, develop great products, but not great procedural solutions. And that's where we really differentiate ourselves. We have 7 PhDs on our team. Nobody else in the industry can match that. We have 2 of those are on our marketing side. We have a host of R&D engineers and also the other scientists to really complement that, but this is where, I think, combined, and you say, okay, well, what's the advantage? The advantage is we have outstanding engineers as we'll go through the data that can help design and lead simple studies that will evidence our products across the board, including those sourced through MTF. So now let's talk about our largest product family as a company within the biologics space DBM. A little refresher, DBMs are sourced from human tissue. We take an example of cortical bone. If we put that cortical bone and place it in a muscle pouch, it wouldn't grow bone [indiscernible]. What happens when you transform it when you deem in it now becomes growth factors that are available to the body and it drives bone formation. Two traditional ways that we manufacture them. DBM particles and DBM fibers. And you can see the DBM particles for illustrative purposes here. And you see that they're still pretty tightly wound. And I would say, this is what most companies offer. But what we do and what has allowed us to become the #2 DBM player is our Accell bone matrix, and that's here. So we take tissue from the same donor, we process it traditionally either as fibers or DBM particles. And then we take a portion of that from the same donor because you can't mix donors in the U.S. And we process ABM. What's ABM? High surface area DBM. It's still a DBM, but if you compare the image on the right to the image on the left, you see something that's fluffy, very open porosity. Why does that matter? The open porosity releases the growth factors faster than the tightly wound DBM particles. Think about it this way, rock candy in your mouth, put that on. It's -- you get the flavor of sugar, but it lasts for hours, at least minutes, maybe not hours, a little exaggeration here. When you combine these, the cotton candy portion of it is gone immediately, right? It's the same thing with Accell. When we combine Accell with DBM, we get a biphasic release of growth factors. The ABM is immediately, those growth factors are available in the first week. And if you look at this graph, you see growth factors on the Y-axis, time on the lower horizontal access. So why does that matter? The ABM signals the body immediately, activates the healing cascade and then the DBM gives you sustained release, another analogy, you need to start a fire, you need kindling. But if you use kindling, it would burn out immediately. So you combine it logs. That's the analogy here. But by combining ADM we activate the body's healing cascade quicker and then you have the sustained release of traditional DBMs to complement it. So the goal is not only to have best-in-class DBMs, but within each class a variety of price points and procedural requirements. DBM Putties, despite the growth in fiber-based DBMs are still the bulk of our sales. Why in volume, because also handling requirements. If a surgeon wants to mix this, the carrier mix it with autograft or a synthetic bone substitute, it adds in handling. So it also is really facilitates MIS approaches where you need to be able to deliver it percutaneously. On the top, you see our Accell-based products, OsteoSurge 300, also known as Evo3, OsteoTorrent. Both of these come with and without [ tensalis ]. Their premium price in that biphasic release really commands a premium in the marketplace. We also have traditional more valued products, legacy from Orthofix and OsteoSparx from C-Spine. So what you're beginning to see is we are not going to only offer leading products, but all the various price points, procedural requirements. DBM Fibers, the reason that the DBM market has been the fastest-growing segment of bone substitutes is because of fibers. And there's a couple of reasons. One is the value proposition, and also the cost of this product. If you look at the image in the center under OsteoStrand, you see that magnification that they're all interconnected. These little fibers act like spaghetti when hydrated and you can look at the image on the right, and you see it, it has like [ crab-meat ] consistency. Why does that matter? We had good handling without having to dilute it with a carrier. So we have more active components. Again, think about that activity, delivering location. Now not only does it stay there, but it's also flowable. it's going to resist migration, but not at the expense of a carrier, which dilutes the active component and when the carrier is gone, can lead to gaps. So we offer OsteoStrand and OsteoStrand Plus. Plus is with Accell. We also have a very complementary portfolio for Orthofix MTF. Fiber Fuse is another DBM fiber product with cancellous chips. So again, appealing to different surgeons different preferences, different procedures. We also have the fiber fuse strips, which are strips made of fibers and they're placed in the posterolateral gutters, they're compressor resistant in holder shape. Again, procedure-specific, many options for our customers that are well positioned. But I want to tell you how we also develop Strand Plus because I think it's the scientific rigor that we've approached it. And when we developed it, it was because of this data from Scott Boden. Scott is a leading investigator published this paper 20 years ago, and the fibers were patented in DBMs until about 2017. What his data showed is by taking rabbit bone from the same rabbit and creating fibers and particles so they were matched and then devitalizing it. So basically, when you -- the other secret on demin process, is it has to be very exact. You don't remove enough of the mineral, then the proteins aren't available. If you over demin, it's basically like overcooking a steak. You can have a great product, but now it's ruined. Here, what they did is they intentionally killed the proteins and tested it for conduct activity. And what you see is that particles get 0% fusion in this posterolateral rabbit model, but fibers get 35%. Why? It's because they're conductive. So if I go back to that picture and you look at it, they're all interconnected. That's the conductive matrix. Think of it like a trial in your garden trucks. So here, the fibers had 91% fusion when they are active on the right versus 60% when deactivated or 58. If you take 35 and 58, it's almost exactly that difference. So fibers are more expensive to manufacture, because don't have the inexpensive carrier, and they also are conducted. So we were able to take this data and our own competitive data and go out and really kind of carve out that premium market. That's why the market is growing is that we demonstrate improved product efficiency, and we did it through a very disciplined R&D approach. So what we did, we didn't just develop fibers. We took multiple geometries, different lengths, different ways, tested them, combined them and said, which ones give us the best handling, which ones give us the best conductive outcome, which ones give us the best inductive, that's how we develop and launched Strand Plus and Strand. The other part of this is we didn't just stop there. Every 3 weeks, Strand Plus, we tested against them. The other beauty of this is that DBMs are where you lose it. They go on initially at times zero, they're black. But when they mineralize and when they fuse, there's some black to one. And so when you show a clinician this image, it's very apparent you see strand on the far left, robust fusion throughout and also mature cortices on the outer edge. As you look to the center, the one immediately to the right it's not even mineralized at all. Third one is clefts in the middle. If it's not bridging bone from TP to TP, from the bottom to the top, it's not fused. However, in the middle, you see Grafton for Medtronic, pretty good, very good fusion actually. And so who are the top 2 players in DBMs, C-spine legacy [indiscernible] today and #1 is Medtronic. And there is data to support that. If you look on the top right, you see, why is osteon kind of radio dense, it's because it has cancellous chips. But when you look at it, it's too has not really matured. And when we look at the data from the study, which has been published and presented at NASS, it was the best paper 1 of 13 in 2020 at NASS. You see fusion from 100% to 0. So it is sensitive, and you see everything in between. C-spine, Medtronic are statistically similar. But the rest, there is a statistical difference, not to suggest that you're going to get 100% fusion in a human, but if you can -- it does tease out the inductivity, the difference between these different products. So why is that? This is all the factors that we tested. And when you look at it, all these products will actually handle and feel the same or similar, but they're not. And it's all these variables that we try to individually optimize. Do they make a difference individually? Yes. But collectively, by optimizing all these different elements, that's how we get better products. That's the benefit of an integrated manufacturing and R&D team. And the last thing I'll point out is the Lot release testing. Everybody tests their product. The question is what's your acceptance criteria. Every student gets passed, does that mean they can read? No. It's the same thing with products because we're starting with a very variable human tissue. So no matter how well you control your process is, no matter what, there's variability, and we reject 8% to 10% of our fiber donors. We're proud of that because what we're trying to do is deliver the best, most consistent product that's going to help patients. And I would challenge you to ask the other tissue banks, what's their rejection rate. It's funny. One of our competitors posted an article or an advertisement that shows a picture of what they would accept. We would reject that donor. So the conclusion, at NASS is DBMs aren't the same, and we've demonstrated that. And now when you go into cellular graft, it's the same concept. They're not all the same, and Trinity is the #2 player because of its quality. If you use ABL, it's a fiber-based allograph. I just demonstrated the advantage. Number of companies still offer a particle base, and it's the MTF advantage. They really do an outstanding job of controlling donor quality and their processing. We've also innovated last year with the first -- I guess, to step back, I think all of you know it, but as cellular graft is an autograft alternative. It is all 3 elements of bone-forming capacity of autograft. Osteoinductive and Osteoconductive, and the differentiator is it's osteogenic maintains viable cells. VIRTUOS was released last year and is the first product to have a shell-stable cellular allograft that is lyophilized or drive, all these other products need to be stored at negative 80. And that's another example where we're going to invest and partner with MTF to really evidence that data and differentiate ourselves in the marketplace. Where we see the opportunity is we have not had access to a good cellular graft. So there are those customers that we have not been able to crack with C-spine. Now we have a great opportunity. And I do hear excitement of working with distributors on some conversions recently. And I think you will see this segment rebound and as we take more share. And here's the data there, Trinity has as a competitor by far the most clinical data available on the market, 10 years, 350,000 patients treated, excellent safety record. And most recently, we just published a paper on over 200 lumbar patients with 98% bridging bone defined by CT. That is compelling data. Now transitioning to synthetics. So this is an area, again, we've been losing share. We've been declining sales. And fortunately, Orthofix has launched Opus BA bioactive. That will allow us to play in the premium, but we also have another product where we will launch later in the year that will have data showing bone growth in a muscle pouch, compete with [indiscernible] from NuVasive. So once again, what we're trying to do is develop leading products, different price points, different performance characteristics in all of the major segments, procedure specific. It's not enough to have a big DBMs, you've got to be able to deliver it. OsteoBallast is a great example of a product that has a 100% DBM, it's contained in a resorbable mesh bag, and it competes with Medtronic's Magnifuse. We're the only 2 companies with this type of product out there. I will tell you, developing the bag, you have to do it externally, obviously, is not easy. But it is a big advantage because that allows the surgeon to deliver posterolaterally elegantly, efficiently. It's compressive resistant and it resists migration, which are the 2 problems with posterolateral fusion, North Star, taking a similar concept of improving cervical facet fusion by creating a controlled defect. And again, this is navigated also by [indiscernible]. Lastly, we have, through the integration, both the disposable and reusable graft delivery system, options for our customers. And I think we've established a strong reputation at C-spine and really leading with science and data. And you see a lot of these papers. We had 2 vesting papers at NASS. And that's where we've led. We have a paper that's been stood the test of being an industry-sponsored and published in [indiscernible]. I think that's a testimony to the elegance, the simplicity and also the strength of our investment in science. But when you collect all these products and you put them on the compendium, you see product and performance on there in price. As I went through exhaustively we have products in every category. The only company that's close to us is Medtronic. They have Infuse. We want to compete with Infuse. We now have the marketing strength. We have the capital available to do that. And we also have the license that we announced last year with CGBio. So that's our goal, is we have 2 of the 3 largest segments covered, we're going to go to 3 or 4 over the next 1.5 years. And ultimately, over the next 5 to 7 years, the goal is to challenge [indiscernible]. And so in summary, our goal, leading projects, hospital access and distributor access. The combination of biologics with this final implant and VGT and 7D is a compelling distributor recruiter tool, but it's also a compelling IDN and GPO value proposition. Scalable manufacturing, we can double our volume with very minimal capital investment, and that translates to profitability, and cash back to fund all these efforts that you're going to hear about today. So with that, I'm going to turn it back over. I guess, actually, we have a break.

Yes. The good news is we're running slightly ahead of schedule and about 15 minutes. So I have the break tentatively scheduled for us to come back here at 4:20. So we're going to go ahead and adhere to that, and we'll take about a 30-minute break. There's refreshments over here for everyone in-house, the restroom is right around the corner. And thank you, business presence. It's really nice to hear from you guys as well. I mean, John and Keith are great, but it's really nice to hear from the rest of our bench. So we will be back at 4:20 for everyone online, and we will take a short break. [Break]

Okay, everyone. Thank you so much for hanging in there. Next up, we have Kevin Kenny coming back, and he will talk to us about spinal and [ fib].

Thank you, Alexa. So let me preface my presentation to say that we have not yet developed a full strategic plan and frankly, we're about 2 months into this great merger. And maybe I'll share a little bit of what I've been focused on and what my initial impressions are. First and foremost, we said, "Hey, let's keep business as usual and maintain patient care, don't drop a ball with our surgeon community. So I'm really pleased 2 months into that. We have been very successful on that. We've kept both entities running smoothly, while we work to integrate in different areas. We also have had an opportunity to start creating what I would say, this new organization for best-in-class. I was having dinner with the surgeon on Friday night, he said, how are you feeling about things? Because you must be having a lot on your plate and I said, absolutely the case. But he said, what you think about the new entity and what are your observations and surprises so far. And I said a couple of things. One is the wealth of talent on both organizations to put together in a combined team is like nothing I've seen in my career. I also looked at the DNA of both organizations. And while they were very much at different times in their strategy in deployment from innovation and new technologies and enabling technology, they were so similar to what we were trying to do at Orthofix. So we're all talking the same language. We have a lot of harmony and now we're just trying to get through a couple of these early phases so that we can execute and really deliver what we all know we're capable of. So let's take a quick look at that, and I'll share with you a few things. First, we put together a fantastic executive commercial leadership team already. They're in place with over 150 years of spine experience, with that comes clinical expertise, relationships with physicians, and relationship with the channel. So this group, as you meet them and see them and see the results that they're going to have on the field, it's outstanding. Second, we just finished this last week the integration of our sales channel. So we definitely had some overlap. You'll hear a little bit from Beau about some of the synergies and where we're at in the integration, but we were able to build a structure with the best AVP's, best area sales directors, and best regional managers to the frontline sales manager. We've done it really what is most tailored for the market. We have some that are just fixation focused, some only bio and some that are hybrids. That's really driven sometimes by the players that they're competing with, the skill sets they have and once again, tailored for the market, but we're in place. We launched that last week. We have the maps and it was a lot to accomplish in 2 months, but we're there. Talking about the technology, if I were to put together 2 bags that were complementary in spine, I don't think I could have chosen 2 better ones. On the Orthofix side, we have the BGT technology. We have M6, we have some great fixation products. On the C-spine side, they have what I would say would be a more market relevant, more competitive bag because they've launched 60 new technologies in the last 4 years. So it's taken us up to a market competitive bag, you add on there the biologic offering and enabling technology that Beau going to talk about shortly, and it puts us in such a competitive advantage that I'm not sure there are many strategics that have what we have to offer today. Why is that important though is because as a strategic, having worked for them, they're hard to move. We like to say we think big and act small. And we want to be swifter and we want to attract talent, get people who want to come work for us because we're the up-and-coming organization. So I'll talk a little bit more about that in the presentation. But this bag is compelling, and it's going to allow us to attract those strategic distributors that are larger in size and they're going to have less of a transactional type of relationship with us. We feel great about the portfolio today, but we're not going to stop. We have quite a bit in both pipelines that are going to leapfrog some of the technology we have or really differentiate and take us down some different procedural approaches. So that investment is going to continue. It's in the DNA of both organizations. And lastly, we have to ensure that we have great clinical outcomes. That means making sure our sales leadership, our sales channel through distribution and our surgeons have the proper hands-on in didactic training to make sure that we have optimal outcomes. So we're spending a lot of money in our medical education environment. Let's just take a look at our core end high-level view of the markets. First, in the U.S., most estimated it was a 3% to 4% growth last year. I think it's a tough comparable. A lot of softness from COVID from year prior, even with the first quarter was impacted. And we won't fully know until all the publics come out and we can piece together the map. But let's just call it a 3% to 4% market. C-spine on the other hand, grew 21% last year in fixation. Look at the dramatic difference in the share gains and progress that was made. That's remarkable. We're more concerned about capturing share than we are about the market growth rate, which you'll see here in a moment. There's so much opportunity for us to make, hey, so to speak. On an OUS side, I think everyone in the room knows that C-spine had pulled out of the European market due to the cost and the lack of profitability because of the regulatory changes. We, as Orthofix, we're staying within market, but we weren't too deep in the investments. So right now, it's a perfect time to relook at the strategy and decide what we look like on a go forward. So I'm not going to focus much on OUS today, other than I would also share, we have a really nice business outside of Europe, on both sides of the business. We have a presence in Australia, in Latin America, the Middle East and even the Far East with some biologics. So we have some growth opportunity ahead. We have a really nice OUS business, and it's going to continue to be part of our future. The question still is just germane towards Europe. Taking a look at the global competitive marketplace. I think everybody knows this very, very well. Once again, global, over $10 billion market, you can see the market leaders in Medtronic. Interestingly enough, Globus and NuVasive together are going to become the #2 player. That may sound great on the surface. We personally think that's a great opportunity for us to take advantage of disruption. The last large 2 spine companies to put themselves together Johnson & Johnson, DePuy Synthes, historically had some challenges. So I don't want to speak for their strategy in that organization. I just know we believe we can take advantage right now because of the size of our entity and how fast we can be to actually take some share because if you look at our combined share only at 2.3 global and a little over 3% in the U.S., it doesn't take much of this pie for us to be very successful. Let's just talk for a moment about the combined bags. Once again, not a strategy that's been set, but from my view, what are the strengths right now of this combined organization. Let's start with the interbody, if you think about materials, anywhere from allograft structural graphs through tissue banks to peak to 3D titanium to expandables to stand-alone, through some proprietary surface materials that help facilitate bone growth, we have a fantastic portfolio. I would put this up to anybody's in the industry right now. So we feel very, very good about this. We actually have some overlap in a couple of segments, but for the most part, it's very complementary. Enabling technology, I'm not going to steal Beau thunder because he is the world renowned expert at this, having developed it. But every salesperson in the market wants the next enabling technology that can get them into competitive practices and gives them something incredibly relevant to sell. Think about what we're doing with 7D, we're changing the workflow. We're making it a safer technology for both the patient and the physician. It's a key enabling technology. And if you listen to our earnings, which I'm sure most did, Keith had pointed to the placement program we have. And when we do place these into new practices or existing, we actually can tie up a lot of the fixation business for years to come, and it's a huge growth driver. So we're excited about this and working with Beau's team. When we think about cross-selling, the energy right now across the channel on the Orthofix side, it's real. We've had so many physicians coming to this facility and the first thing asked about is the 7D Flash technology, enough where we didn't plan on it initially, but there's one in our lab, so we went out and bought one here in the first couple of months. We installed it and Beau going to have it ready to actually give a demonstration and we're bringing in groups of physicians, frankly, from some of the largest practices in the local area or even getting on planes to come in and see us because this is central to their decision-making for their patient care. So it's an incredibly exciting time for us right now, and we just feel like we're just getting started despite that there's 100 of these places worldwide. Let's talk about M6-C. This is our cervical disc. And I'll share that we are incredibly proud of the fact that it is still considered the next-generation technology. And that's despite the fact that there's 75,000 of these implanted worldwide in the cervical area, and 20,000 in lumbar discs. As a refresher, we launched this technology in Germany many years ago because the pathway to the U.S. was a little bit onerous and then there was a patent infringement situation with Synthes. Orthofix was very fortunate to buy this technology from Spinal Kinetics. We launched it coming up on our fourth year of anniversary, and we are still proud that this is the best technology in the market because it mimics the natural disc, both in movement and progressive resistance, and we have great outcomes with this, we right now have such a leadership position and a responsibility that we're involved in a 10-year ID study. We're working on real-world evidence so that we can establish what a clinical results look like when they're 10, 12, 15 years out, survivorship and cervical discs doesn't exist today. It's not known because they've only been in the U.S. marketplace for 15 or so years. So very different from the orthopedic side where they can predict how long a hip lasts or how long a knee lasts, we're still learning from this relatively new space. So with that, we actually launched an expert panel and showed our leadership to the industry by bringing some of those folks from the orthopedic side, and they have learned so much about technology and bone remodeling and clinical relevance and what's the source potentially of infection. And that group has come up with a classification system ongoing remodeling. They're writing papers. They're educating the marketplace on it right now, and we're going to continue to sponsor this closer or from a far because we think the responsibility to the industry is to figure this out. So M6 was a huge growth driver for us, and we're so excited now because the new C-spine side, the new channel is going to gain access to this technology. From a market rate, it's still anticipated to grow double digits over the next few years because in some ways, we're still getting started. We're only 30% penetrated from the available market. You can look at that and probably suggest that some of it was the emerging technologies, but some of it was reimbursement-driven. And you also had an ACDF that, frankly, is the gold standard with really high results. So some surgeons weren't motivated to change their clinical practice. As data gets collected and we show that not only is it beneficial the index procedure, but over time, you're going to avoid adjacent level disc disease, the value proposition of patients becomes compelling. So we believe through market development, the entire industry can drive up CDR usage of technology and M6 can do very well. Competitors have come out with new disks, and we welcome into the market for those reasons because the more we can invest behind this and educate together, the more we can all benefit. Let's talk for just a moment about our cervical portfolio. I would stack this up to any cervical portfolio in the marketplace. We have not only up at the top left, a posterior cervical with North Star that was launched this last year or so, that's incredibly -- doing incredibly well in the marketplace. We have stand-alone. We have the M6 disc. We have a fantastic ACDF plate. And we also have, what I mentioned earlier, the only cervical device for a bone growth therapy. Nobody has that. So map this to any of the strategics, map this to anyone close to us, and there's going to be some gaps. We're also proud of the fact that it's going to be tailored very well this portfolio towards all settings, whether it's hospital, outpatient hospital or the ambulatory surgery center which we all know has had rather dramatic growth rates as some of these simple cervical procedures transition. [ Tyler ], you did a great job on the biologics portfolio. It's compelling. It's comprehensive. We have leadership in different categories. And outside of the large companies starting with an M. We're in a really, really good position. We know this because the phones are ringing off the hook right now for access to the portfolio. So we want to grow. We want to get it in the right hands, and we want to also tie to our strategic distributors wherever we can. The great thing about biologics is we're working on increasing ample supply and then it's a quicker conversion for us when we get this new organization really humming along because with contract access, you can convert an entire segment almost overnight. It's not going through that same evaluation period and building sets and trying to chip away over time. We're a big player in biologics right now. I'm sure that's coming across to everybody on the call or in the room today. Key growth drivers for the spine business. We absolutely are integrating procedural solutions and work closely on implants, biologics and how can we change the workflow and tie it to 7D. There's something very, very significant here where we can change the paradigm and others, we're going to have a hard time following. So we're spending a lot of intellect on that and a lot of investment. We have that rapidly growing portfolio. I mentioned the 60 technologies that were launched at C-spine. We have the same thing going on here at Orthofix. We have fueled that innovation machine, and it was just starting to bring some products out, there is more on the way, and we're now going to rationalize between the portfolios, what makes the most sense that we can't leapfrog. I mentioned that cervical leadership. I talked about bringing the bags together. Clearly, we want to improve those optimal outcomes that we will talk about here shortly with 7D, commitment to training and education, integration with biologics. So let me say this in closing, probably the most important down here is the ability to attract surgeons and new channel partners that want our portfolio and they want to commit to our future. We have never been in a position like we are now, and we're just going to pick the right partners. So there's a tremendous opportunity ahead, especially with some of the unrest on other mergers, and we're going to try and maximize that. So high-level view, growth drivers. I'm going to turn it over to Beau and ties to 7D.

So a couple of words to start, we've heard about today, cross-selling, complementary growth drivers, synergistic. Hopefully, you've enjoyed learning how that has affected the other business units. And my name is Beau Standish. I'm the President of the Enabling Technologies Group, and I'm really excited to share my passion for what we've developed to date and also where we're taking the technology over the coming years, not only in spine but as we think about the bigger picture across the entire organization. I'd like to start with the mission. What gets me up and what gets me excited every single day to drive innovation. It's quite simple. I have 2 jobs. The first being, I always want to improve patient outcomes. The second being, I want to make those operating procedures as efficient as possible, and we have that ability when we can fully integrate a full product offering. Thinking about the commercial organization, from the Enabling Technologies group, we do have a direct sales force in the United States, but we work with distribution partners externally, OUS. And what's really exciting about the merger is we've achieved fantastic results outside of the U.S. with the 7D system with a very, very small team, about 2.5 equivalent people. That's not just a really short person. What we want to focus on is averaging and leveraging what we can with the orthopedics one. That division has a very established footprint outside of the U.S. We never had that access to expertise before. We have a very talented clinical team and sales team that have extensive skill sets when it comes to capital sales. And we have a technology that not only works in a particular operating situation, but across the entire gamut of those operating theaters. We are stronger together, integrating with the product lines and identifying cross-selling opportunities where we're going to talk about that today, it's not just a capital equipment sale. It can be across different ways of how to try to deploy that technology in the operating system. And as I mentioned before, that footprint across the U.S. is quite diversified, and we're planning to keep that for the New technologies across the globe. So the why? Why do we have the Enabling technologies where we were first focusing with this technology on the spine market. And it comes down to this image. Here's what we call an axial view, so cutting through the center of my body, looking at a vertebra, and you're seeing in real time where a tool in relation to that patient spine. But up until now, all of the existing technologies have suffered from too much radiation requiring the linkage to an intraoperative radiation emitting device, can have challenging workflows, adding tens of minutes to a procedure. A lot of the newer technology can add $1 million to $2 million to try to acquire just too expensive to navigate this spine and also accuracy issues. What happens if that patient moves in the operating room, or if there's an alignment adjusted, which happens all the time in spine as you're instrumenting to regen itself. Well, we saw this as a new vision for spinal navigation. And it's all built off of this field of study the way that we are differentiated from what currently exists in the marketplace off of something called machine vision. Now machine vision isn't exactly a consumer-grade phrase just yet, but I guarantee everyone knows what that is. That technology is used in self-driving vehicles. There are cameras on the outside of the car, constantly interrogating in full 3D what's going on to be able to make decisions on the next steps. What we've done is we've applied that imaging technology. We've put it into our navigation unit, which also is duplicated as a surgical light. And rather than looking for a pedestrian crossing the road, or speed sign, we're identifying anatomy automatically, where is bone, where is soft tissue, where is the spinous process in a lamina, such that we can take that registration process from our competitors, which require ionizing radiation, here, we're using just visible light, and it takes only seconds. And for those of us who are on site today, we'll be doing a demo with the technology after the presentations. So here's an example of that 3D image that's acquired by the 7D Flash system. Now this image is acquired and actually about 3/4 of one second. It's been processed, and it's matched to a preoperative data set. And the whole process takes less than 30 seconds, where we're using no intraoperative radiation. Everything here is visible light. So when we go into the lab, we won't have to put on leads in order to use our technology. Some of the advanced features thinking where can we use modern algorithms, modern technology to push the science forward is we have the first one Flash Fix. This what you're seeing here is the most emotional component of any navigated procedure. What happens if the reference room is bumped or if the patient is moved, something that happens on a very routine basis. With any other technology, as you can see in the video, registration accuracy is lost. And now the surgeon has to make a decision do I start the registration process again, which take tens of minutes, expose everyone to more radiation -- or can we do something like with the 7D Flash system automatically understand what has moved and by how much and correct that interoperatively almost instantaneously, extremely powerful. Moving a step further in deformity, here we see an image where we have an axial view that actually looks like a sagital view because the deformity of the spine is such that the visualization is very difficult to interpret. Here what you're seeing is slicer, we can adjust the obliqueness of that slice at any time the procedure, so you can always achieve a true axial image in that patient's anatomy. Finally, on the far side flash trajectory. We have video feeds that we can leverage that are taking those 3-dimensional images. And the Flash trajectory we're now using augmented reality. We're overlaying truly pertinent information on those video feeds at the surgeon's fingertips when needed. And let's think of it as a virtual K wire that you can see where to put a tap or a screw. So the strength of the system, we just learned that radiation safety profile, we're second to none in the world when it comes to that, no intraoperative radiation. Because we're leveraging advanced algorithms, and advanced imaging technologies we have very fast efficient workflows, and I'm going to share some of the clinical results we've achieved to date, low cost. We're also agnostic. Another way to think about is we're an open source technology. You can use the flash system with any system on the market. Opportunities. You've heard the other groups talk about their business units, the cross-selling that excitement, whether it's with the Orthopedics group in the U.S. or OUS, the Implant Group, the Biologics Group, tons of opportunities here where we can bundle these technologies together. We also have experienced that every time a flash system is installed in a hospital, we may not have any implants or biologics there but every time we put one in, we continue to get product pull-through as the surgeons get exposed to the entire product offering. And then finally, as I mentioned, that OUS market is just ripe for the technology to continue to go internationally. Now we have that infrastructure in place to support that growth. When we think of the other aspects of the system itself, here I've identified the markets we can currently address with the types of procedures that we support, we have 3 different major product offerings. The FLASH Spine, that's an open procedure, deformity, everything to a mini open about 3 centimeters. We now have our fully commercial FLASH Percutaneous module that allows us to access that fast-growing percutaneous market. And we're not limited to just spine. The technology is ubiquitous across multiple platforms. And here, we also have a fully approved cranial module for our neurosurgical colleagues, whether they are going in to do a biopsy or a tumor resection. So truly cross-platform and all of the tracked [indiscernible] that go along with the technology. As we expand and provide more clinical utilization, we now have preoperative planning. We can understand and we can drop in here, we have our [ true dimensionalized ] screw. Here's some of the Mariner product line from Legacy SeaSpine. The surgeons use this to understand how many screws they're going to put in a procedure. What is that alignment going to look like, even things with identifying and aligning the tulip heads. We also do interbody measurements, where you can get a sense of what type of interbody am I going to put into the patient's anatomy, those different sizes. And the beautiful thing of the system is that we're already fully approved to work with all the legacy Orthofix implantations. So we are currently doing cases with our Orthofix implants, our SeaSpine implants from one case to the next being able to switch back and forth at will. Product releases. So we've been very active across the entire organization on introducing new products that are truly addressing those 2 things I spoke about earlier, how do we improve operational efficiency while improving patient outcomes, and we're not stopping. The bigger picture here is as part of a larger organization, every time we do a software release or a new tool deployment, it's just more complex because there's more products to consider as we launch that technology into the marketplace. Talking about the clinical aspects of using the FLASH system, we have an extensive library of peer-reviewed journals, and we're going to touch upon a couple of those results to date. The first being radiation reduction. This was done by a group in Australia, where they were comparing ours to their incumbent navigation system, and we reduced it by 96% per procedure, the amount of radiation exposed to the patient and the operating room staff and the surgeons themselves. The next one, because our procedures are shorter, we're not talking just registration, the registration time. We're talking skin to skin. We have another journalist in preparation where we reduced the blood loss by 44%. This is the standard of care there with fluoroscopy and free hand when the FLASH system was used in this pediatric cohort reducing blood loss by 44%. The registration time itself, how -- what is it required to set that technology up in the operating room, on the far right compared to intraoperative 3D Fluoro CT systems, we were 15x faster during the registration itself. And probably the most important is we've just had an article come out in print that on average, skin to skin when using the 7D FLASH system compared to free hand and fluoro, we're reducing that procedure time by 63.6 minutes, significant, significant time savings. Typically, when you have an enabling technology, you want to improve some metrics, but it comes at the detriment of typically longer procedures. We're not experiencing any of that. Some of the customer feedback to date is the concept of radiation is becoming so common in discussions with the operating room staff, the nursing unions, the radiation safety, the patients, the surgeons themselves, and we're reducing that radiation. Centrally there, talking about shorter stays because of the beneficial impact of the system. And finally, on the far right, working in the ambulatory center because we're at a cross point that can be consigned or bundled together with implants, Biologics for that ecosystem. So really addressing the entire market. Looking at that stronger together and the complementary aspect of the FLASH system and Enabling Technologies group, we are in 15 countries now with continued plans for expansion globally. We're over 104 systems installed, a very rich patent portfolio to protect the underlying innovations. And comparing '22 to '21, we had a 40% increase in the overall global footprint, so U.S. OUS. So the technology is being adopted very, very quickly. We also have a great team that's combined and consists of R&D done in Toronto along with our U.S. team primarily focused on sales and support. As we think about from an organizational point of view, that goal of the pathway to profitability, we have the ability, we have that market pull-through of our direct sales force in place, both in the Enabling Technologies group, working with their own sales expertise, leveraging that strong OUS footprint, those post-merger relationships. You heard Kevin talk about the excitement from the surgeons coming to see the technology in the Lewisville facility or the Carlsbad facility or in our [indiscernible] facility. That is also as important for the distribution networks. They are the key holders, the gatekeepers to getting access to the surgeons, and they are as excited for the technology as the surgeons themselves. And then finally, being very creative with having as many different ways that a technology can be acquired by hospital is so important for that pathway to profitability. So our key growth drivers, we've spoken about radiation safety, the cost point, the ease of use, everything I've spoken about today is surgeon-driven from the operating room. You do not need 1, 2 or 3 different people to be in there to operate the technology for the surgeon. Pipeline integration, we're already fully integrated with our implant lines across the merger company, low acquisition costs and then very flexible pathways for acquisition. Thinking about where our footprint is today, this is an important slide. We have the ability to get into the major teaching [ luminary ] sites from the clinical merits of the technology. Our biggest market is at 1 to 2 busy private practice surgeon who historically was a non-navigator using purely fluoroscopy. We're growing very quickly in the pediatrics market because of that reduction in radiation and looks -- less time with the operating procedures. And also the ASC market, we've been able to enter those. There are different ways that we can acquire the technology. Even here, we're trying to be innovative so you're not just relying on the capital sale. We have different discussions you can have with the hospital system, everything from capital leasing to spend shifts or what are called earn-outs to even Software as a Service, SaaS model for the hospital to access different budgets within the hospital ecosystem and fee per use. As we mentioned, we're super proud to place that 100th unit of the technology just before the end of the year. And here's a map of where we are, and there'll be more orange regions here even as we get to the end of Q1. We're now in Latin America, we're in Australia, we're in Pacific. We are in -- also continuing and continue to expand into the European market. So shifting now to the last part to talk about the technology and where we're taking it. Well, we have that balance, how do we continue to achieve that strong clinical experience, but we need to maintain that edge on having market-making innovation. Well, we are doing both. Coming out in the foreseeable future is the extension of that planning platform for the whole percutaneous module, continuing to integrate additional procedures, example, inclusive of navigating interbodies and different procedures such as TLIF or even the architecture for our single-position lateral. Thinking about the market-making innovation, we have our insights suite with the planning. And the key thing here is that part of this merger that is complementary, we can leverage the OrthoNext technology, where they already have preplanning. We can take that and apply it to the spine world quite efficiently, things like rod bending, predictive analytics. And so we are continuing to spend and focus on that market making. What I'm really excited to share with you, and this is the first time we're showing this publicly anywhere, is this concept of the camera technology. So IR tracking. When you're tracking an object, you have these cameras. Every single navigation company on the planet uses one of these IR trackers, they track the little marker spheres of the tools. And it's only used to track instruments. Well, we came to the market, and we said, "Well, can we do more? We want to be able to image in 3 dimension [ instantaneously ] acquiring millions of points, integrate augmented reality views." But quite frankly, the entire industry is underutilizing the camera technologies that exist today. And so we thought, can we leverage our systems to do more? Well, if you can come up with new tracking algorithms, if you can come up with new camera designs, we absolutely are excited to share our next generation of products. And welcome to what we're calling the LiveTrack camera. Now this is a bit of a blueprint on the right, but this is in preproduction where we are showing it in its physical form at AANS in just about a month in a bit. Historically, we've been taking camera components, and we have been Frankenstein-ing them together to be able to meet the needs of what the technology can do. We've now internally developed that camera system from the ground up internally. So we maintain the ability for the tracking, we maintain the ability for 3-dimensional imaging, but we're able to do new things. We can now do things like QR code tracking. The overall footprint is smaller. We're also having the ability to develop things like low-cost disposables, even shifting that financial model, increasing the overall per procedure revenue from a capital acquisition. And our first product that we're launching is called the FLASH EVD. This is for the external ventricular drain market. Using the technology first, we're now starting to exit the operating room and starting to support procedures in the intensive care unit. This unit itself is small, mobile, coming with all of the modern technologies you'd expect like touchscreen. From turning on to getting to navigation mode, you're now less than 1 minute for this procedure. External ventricular drain, the procedure itself, it's a very, very wide procedure, and it's where you have to put a catheter to someone's brain to reduce swelling. There are approximately 60,000 procedures of these done per year in the U.S., another 60,000 done external to the U.S. We're focusing on these neurocritical care units, going towards that business model of a per procedure revenue with significant annual revenue opportunities. So why is this even more exciting than that? What you've learned today as the merger company, we have different product lines. We have a whole orthopedics group. This smaller technology will be the spearhead to be able to bring navigation and advanced imaging technologies to more of our product lines over the coming years. So with this LiveTrack, it allows us to do and access 2 ways that a company grows: new product introduction and also geographic expansion. We now have the expertise to create these sterile products. These are little elements that are essentially manufactured by the thousands of dollars per particular on BOM cost. QR code tracking, the same thing that we all were using when we're using -- trying to get menus using our phones during COVID. That is now going to be part of our tracking technology. And we control that entire vertical integration, not even relying on the IR spheres anymore. It also lays the framework for frameless navigation, where you don't have to have things attached to the body itself and truly exciting on where we are bringing the overall innovation. So on the end here, and getting ready to pass this over to John, with the idea of we have the cross-selling opportunities, we have the complementary aspects that the organization, the synergies where all of us are trying to focus on operating in now, and we truly are stronger together. So I'm looking forward for people who are here to come to the lab afterwards to get some demonstrations and also looking forward to answering any questions. And I'll pass it over to John for finishing up.

Thanks, Beau. It's always hard to follow both, his excitement in the [ coolness ] of 7D. So I'll do my best with the accounting and finance stuff. Thanks. Well, I'll also try to do something that I'm not really known for is being brief because this is not meant to be a financially oriented discussion, so I'll keep the closing comments quickly before we turn it over for Q&A. But hopefully, everyone in the room and those on the webcast got a sense of the genuine excitement that the leadership team of the combined company has. I can't -- I lost track of the number of times we talked about cross-selling and revenue synergies, right? And that's not something that's typically associated with a spine merger. And hopefully, you all got a sense of the confidence we have in our ability to grow and leverage these cross-selling synergy opportunities, but also that we're able to mitigate and manage across the revenue dissynergy risk that comes with a spine merger. And as Kevin showed in his chart, right, with less than a 3% combined market share in the Spinal Implants market, where you got the greatest revenue dissynergy risk, you wouldn't expect there to be a lot of synergies of companies -- dissynergies of companies of that size. And as we went through the portfolio today and all the opportunities, I'm really excited about the cross-selling revenue upside that we can leverage as a combined organization. And hopefully, that came through in the presentation today. But the combined company is now a $700 million company with a diversified and complementary business and product portfolio with a much larger and broader commercial reach globally. That's something I'm really excited about coming from the SeaSpine side because so -- a little percentage of our revenue was coming from outside the U.S. We're excited to be able to take advantage of the larger commercial outreach that Orthofix has globally. So last Monday on our earnings call, we gave revenue guidance for 2 periods for 2023. It was $166 million to $170 million for the first quarter of 2023 and $743 million to $753 million for the full year 2023. Those represent high single-digit growth rates over the pro forma combined SeaSpine and Orthofix 2022 revenue base after adjusting for anticipated classifications to conform SeaSpine's revenue recognition reporting to that of Orthofix. So again, hopefully, that reinforces the confidence that we have not only to manage the revenue dissynergy risk, but also take advantage of those cross-selling opportunities on the revenue synergy. And I keep adding to the count of talking about synergies, but that's the message we really want to drive home. This is not your typical spine merger of 2 behemoths that creates a revenue dissynergy risk, but rather it's an organization full of complementary technologies that can create lots of pull-through across the different sales channels. So we obviously have a much broader commercial reach, and I think the economies of scale that we're going to get from this organization is one of the value drivers of the merger beyond the top line growth opportunity. We've talked about $40 million of OpEx synergies that we can get from the economies of scale. And I think as we talked about on the call last Monday, we're well on track to achieve those $40 million of annual synergies by the end of year 3. And that's just the operating expense synergies. The supply chain efficiencies that -- the ability to potentially reduce our cost of goods from consolidating suppliers and rationalizing systems, as Kevin talked about, those aging systems become inefficient to manage. And if we can take the best of the portfolio from both companies and leverage that, we can improve gross margin over the long term. We should also be able to get supply chain synergies from lower inventory and CapEx investments because we're not investing in 3 pedicle screw systems and 4 cervical systems. We're picking the best of from both companies and focusing on those growth systems. And therefore, we're just deploying those sets and managing those newer, more robust systems. And sunsetting those older systems become more efficient -- inefficient and costly to maintain over the long term. So that $40 million of synergy is just focused on OpEx. It doesn't count potential benefits for the cost of goods sold line or the supply chain side around inventory investments and CapEx investments, which should be more efficient as we rationalize those systems. So at the risk of being redundant and repetitive, I can't drive this point home, but hopefully, everybody leaves this discussion with a better sense of all the different sources of growth that we've got from this combined organization. I'm not going to repeat them all, but every person that came up today talked about cross-selling opportunities and synergies, and we intend to leverage every one of those opportunities over the coming years. So I'm really excited about all of these sources of growth from all the different business units. And I'll wrap up with just a summary of the new Orthofix, right? We're going to benefit from the multiple aspects of our broader commercial strategy and sharing best practices between the 2 companies, right? In a lot of ways, we're very similar. And I think that was a pleasant surprise as we got deeper into the integration. We do a lot of things the same way. We have a lot of common IT platforms like Oracle R12 that reduces the complexity and the time line to integrate some of those core foundational information system. So I'm excited about leveraging the larger scale of the business and taking advantage of those revenue synergy opportunities and the cost savings we're going to get from the economies of scale, the combined organization. So we appreciate everybody who was able to join us here in person today. And for those of you who were on the call and hopefully, your takeaway is you're just as excited about the opportunities as hopefully everybody conveyed in our presentation today. So at this point, I can turn it over for questions.

Yes. So we're going to do live Q&A for those who are here in the Lewisville office. [Operator Instructions]

Matt Blackman, Stifel. John, since you're up there. Just give us a sense of when we think about integration mileposts in 2023, can you maybe map it out a little bit for us? It sounded like the sales force, you've gotten them together, you've sort of figured out that piece. What's next? What is sort of the next things you need to tackle here as we think about some of the pressure points as you move through 2023?

Yes. I mean a lot of the headcount synergies, right, those discussions have taken place, and we've identified the leadership team and had those conversations. And there's a lot of operational synergies that we're going to get from the combined organization. And the teams are pretty far down the path of mapping out what those opportunities are. And now the next stage is to really move into the execution phase, right? We've spent a lot of time for the past 3 months, in particular since the closing, but tried to get a head start ahead of the closing on what we thought would be some obvious operational synergies. And the commitment from the organization again is more than $40 million of synergies by year 3. And I think our expectation for 2023 is to at least implement more than half of those synergies. We won't get the full benefit in calendar year 2023 because a lot of those synergies really won't become effective until probably the second half of this year. But I think 2024 will be the year where you see the biggest contribution because you get a full year benefit of the headcount and operational synergies these teams have been working on. But I'm really happy as we've gone through all this that the thesis around the source of the $40 million-plus operating expense synergies is intact based on the models we put together before the closing as part of the due diligence. And the groups are diligently working towards that. And I think there's been great collaboration in finding opportunities to achieve that. So our confidence level is high.

And then maybe just another question on that. Just any color you can give us your conversations with distributors, whether it's sort of recruiting new ones or [ coaxing ] them to move to more exclusive relationships, just how those conversations are going, certainly now with the portfolio? It sounds like you're ready to go out and sell. Just any color you could give us there?

Do you want to check that over to Kevin? You're probably closer to the conversations with distributors.

So I'll tackle that one, so probably at the tip of the spear. What I would share is that, first, the channel is incredibly excited to have access to both portfolios. In the Orthofix side, we have what we would call our strategic distributors, our largest, most committed that have infrastructure and revenue. But many of them had to take on competitive lines for some of the products we didn't have so they could tuck them in and create a complete bag. So right now, we're building inventory and working towards giving them that. And there's a rather robust list of targets there that they've put their hand in the air and said, that SeaSpine stand-alone cervical, as an example, I will replace my other line that I buy from another competitor, get it to me as fast as you can.

And that's [indiscernible].

Yes. For those of you who didn't hear the -- yes.

And I assume to get after those incremental opportunities, you have to build sets, which has some lead time, and that's something that may emerge more visibly to us as we exit 2023, that opportunity to gain more share with these distributors.

Yes. So the revenue guidance we provided in the call last week does not assume a lot of that synergy happens this year, you're right, because of the lead time to purchase and deploy those sets. We're having ongoing discussions with suppliers to try to reserve machine time so that we can get in the queue ahead of purchase orders and reduce that lead time. But you're right, the most meaningful impact of those opportunities aren't going to happen until the fourth quarter of this year, but then you have obviously a full benefit in 2024.

Ryan Zimmerman, BTIG. So a couple of questions. I'm going to bounce around a little bit. So it will be applicable to variety of leadership.

You get to check it [indiscernible].

Yes, that's fine. So number one, as I think about adjusted EBITDA margins, the Legacy OFIX had adjusted EBITDA margins kind of hitting -- topping down near 20%. As we think about the integration, the company over time, how do you see those margins progressing? I mean they've come in since 2018, 2019. As you think about kind of your model internally, John, where should we expect EBITDA margins to go? Where do you think they top out at relative to maybe Legacy stand-alone OFIX now with SeaSpine involved? And I have some follow-ups.

You're going to be disappointed in my answer, but I'm just not prepared to give any kind of long-term guidance beyond what we provided on the revenue line. Because as Kevin said, right, we're building an operating plan for this year, and then we have to work on the longer-term strategic plan. So I just -- I don't want to get ahead of ourselves. So sorry to duck the question, but I'm going to duck the question.

Okay. All right. Well, let me ask then on some product questions. So Beau, you talked about extra ventricular drain units. This is not a market that SeaSpine or OFIX have historically gone after. Are we going to see a build-out of a separate sales force for this? I mean, I know there's some neurosurgeons that may use Legacy product, but that is certainly a different segment.

Great question, Ryan. And so part of the Enabling Technologies Group is we have our own direct sales force. And our call points are spine surgeons, orthopedic and neurosurgeons. So the neurosurgeons are the use case for the EVD product line. So we already have that sales channel in place. We're just giving another reason to go into the hospital to talk to surgeons about the technology itself.

Okay. And then separate for maybe Kevin on BGS. I mean that's a market that hasn't really grown much more than a few percent a year. You talked about some new indications. If I think back years ago, when Brad was maybe running the company, there were some clinical trials in shoulder and knees on Stim. And just curious kind of where you think you could take Stim longer term beyond the existing markets today.

Well, Ryan, great question. And I would share this, in the short term, it's crystal clear that we can grow the fracture side of the business. And that's why we bifurcated the sales force. [ But ] I mentioned -- you're right, the spine side has been relatively flat, and it's been more of a market share capture from each other. But the fracture side has compelling growth ahead because not only do we have a Physio product, but now with the AccelStim, I made mention that look at the EXOGEN market for Bioventus. We have about a $90 million franchise that has been proprietary to them. We now have a competing technology. So that's part of our plan. We have many physicians that wanted to have a fresh fracture indication that we didn't have with our older technology or our current one. It was a nonunion. So that in itself is where we've been investing heavily. There's other products in the [indiscernible] portfolio that we bought access to for North America, and we're prioritizing those right now. We really wanted to get one to market that was the largest. This was it. And it was the fastest pathway for us with the FDA. Now we did hire a new scientist that came in, and he's very intrigued on regenerative medicine and how do we take our bone growth stimulation and work with Biologics and consider preclinical work in different areas. So we do have some longer-term thoughts, I would say, that we think we could drive behind. But from the annual operating [ line ] in the next couple of years, we have plenty of growth ahead just with the fracture side and capturing share on the spine side.

Kyle Rose, Canaccord. I guess just continuing on the theme of BGT, I think the launch of the fracture [indiscernible] and the EXOGEN, whatever, next-gen knockoff, call we want, and the whole [indiscernible] PMA application there, I guess, what gives you confidence that we're not going to see other market entrants? I mean, look, we saw [ Theragen ] come in, and they have the [ EBI 2.0 ]. You have [ EXOGEN 2.0 ]. What makes you think that we're not going to see either down-classification from a regulatory perspective or new entrants come in that make that right to win harder?

Well, I think the pathway we took is a pathway others could take for sure. The question is, are they going to develop the technology or find a worldwide partner like we did. Because if you have to go out and create that technology and come to market, that's very different than drafting behind the prior work. So we felt we had a first-mover advantage to come to market and we have the expertise in this building, of which being BGT experts, we can actually continue to progress and grow. So others could come in this space, but I think they're going to have to compete with 2 rather large sales forces.

And is the internal expectation that you'll see any competition from a spine perspective or a Physio-Stim kind of next-generation product from a smaller player? Or is there anything from an IT perspective that would block things there?

There are 4 major competitors. One is a small one, [ Theragen ], that was the newest on the scene. But really, nobody has gained the traction or growth ahead because of the machine we built from OTC and the channel and all those kind of competitive advantages. So could folks enter the market? Yes. But I think they have to look at the barrier to entry to compete.

Okay. And then, Beau, I know you said you're not giving long-term numbers. But when the deal was announced, you did give some long-term targets: $1 billion in combined revenues, year 3; double-digit growth, the whole way there. And you've given us this year, call it, $750 million. That leaves a $250 million jump all for years 2 and year 3. How should we just think about maybe the puts and takes of what that gap looks like? And then just kind of help me understand the revenue synergies and dissynergies, the $25 million and $20 million. That's just for year 1, right? That's for the -- so how should we think about the synergies and the dissynergies when we think about years 2 and 3 to get to that $1 billion target?

Yes. I think from a revenue dissynergy perspective, I think the greatest risk is year 1 because obviously, that's where you integrate the sales channel, you integrate the distributors, integrate the sales leadership team. And probably a lot of people are familiar on the spine side, that revenue is sticky, right? So the results we've seen in the fourth quarter since the deal was announced, right, I think there was initial concern over, hey, is that going to disrupt the sales channel on either company. And I think the results the 2 companies put up for Q4 speak for themselves. That didn't happen. What we talked about on the call last week and the guidance we gave, the results we're seeing year-to-date gave us the confidence to put out those guidance numbers, even though it's still early because we're not seeing the dissynergies come to fruition because we are mitigating them, right? And that's the sales team being out in front of it, being transparent, having conversations. And there's opportunities for smaller organizations to become part of bigger organizations. That's something they see, and the combined portfolio is attractive. So we're just not seeing those big revenue dissynergy risk materialize so far. And I think that's an encouraging sign because if they were going to happen, I think they would have already started happening or we would have gotten a lot of chatter about them happening. And we're just not seeing that yet. Longer term, getting to the $1 billion market we talked about when we announced the deal, hopefully, you got a sense from the business unit presidents today. There's growth opportunities across the board, whether it's in existing channels like spine and the disruption that larger mergers might have and the opportunities that have come our way with the product portfolio, both -- the combined companies can bring to the market, right? And now with a completely full bag because there were gaps, I think, in each company's ability to be a full-service provider, those gaps have been filled. We're generating historically high teens growth on the legacy Orthobiologics business for SeaSpine, and combined company is still double-digit growth. The Spinal Implants opportunity is very large. Kevin talked about new opportunities in -- those new indications in BGT, which is the largest revenue piece in the portfolio to drive growth. Kim has really done a great job with the Orthopedics business, and the results of the innovation that they've already started were evident in the growth rate in 2022 and in the expectations for growth in 2023. So the 7D technology, right, that opens doors across everything, including Orthopedics and pulling through Biologics through the Orthopedics channel. So it's all those pieces that we hopefully put together for you today that shows that the growth isn't just going to come from one place, right? We're not putting all our eggs in one basket, but there's lots of opportunity. And then Beau talked about the EVD opportunity, moving into a new channel for the 7D technology outside our core sales channel right now. So there's lots of opportunities that hopefully are very obvious to everybody as we go through the different portfolios. That growth is not just going to come from one place.

Jeff Cohen from Ladenburg. I just had 3 quick random questions. So firstly, on AccelStim, can you talk about nonspine and number of SKUs now? And any plans for '23 on more SKUs, different locations [indiscernible]? And secondly, if anyone could talk about 2-level M6 and where the company is now. And then thirdly, Beau, if you could expand upon your commentary about neuro sales force and neurocritical getting to different departments of a hospital facility or ICU.

So question one was on the BGT side, AccelStim, number of SKUs? Kevin, can you fill that one?

I want to make sure I understood the question, Jeff. We have 4 technologies right now and 2 in spine: 1 is lumbar, 1 is cervical. Nothing's being added to this year. We still compete in the market with those. On the fracture side, we have Physio-Stim, which is our traditional PEMF technology. And then we added the IGEA AccelStim. So it's one product. We're going to work on next generation for those in advance, but that's really all the SKUs that we have this year. So the bag today, we can sell.

Are you like looking -- is there like supply chain complexities in that business [indiscernible]?

AccelStim and various [ joints ].

Second question, I think, had to do with M6 2-level. We're progressing on sites. We actually have a strong focus on it right now. We have 2 arms in that: the ACDF and the 2 level. I don't know what we've said publicly on percentage enrollment, but we're constantly bringing on new and working with existing. So I'll let Beau comment based on what we've said publicly for completion of that or at a future time.

Yes, I don't know that we've committed to when that's going to be completed. So we'll provide more time -- more information on that when we can.

I'll ask you [indiscernible].

So we haven't put a time frame out for when the M6 study -- M6 clinical study is going to end, but it should be normal clinical study time frame, 5 years or so. And we just started enrolling, I think, in the summer of last year. So we still have a ways to go on that, but we're just in the process still of enrolling, following up with patients and -- just in process.

And then your third question was for Beau on...

Yes. So in general, with the EVD platform for the neurocritical care unit, the first thing is it is a cranial procedure. So reimbursements are in place for navigation. And the procedure itself has an extremely high infection rate and extremely high misplaced catheters. Up until now, after we spoke with many of those neurocritical care units themselves, navigation technology has just been too expensive to apply to that neuro -- to the ICU itself. With the new technology we have, we're coming in at a fraction of the [indiscernible] for the underlying kit, the underlying imaging, and now we shifted to a small disposable per case. I think I can't help the sales side of me, but it's really important that becomes the platform for different areas to expand in across other business units as well.

Matt Blackman from Stifel. I don't know, Kim, are you still here? I had a quick -- I have a question for you before you sneak out. You mentioned the new management to the Orthopedics franchise in the U.S. What are they focused on? Clearly, there's an opportunity, as you mentioned, to accelerate growth of that franchise to similar rates perhaps that you're seeing outside U.S. So what's the focus? Are they ready to effect change? How quickly could we see that inflection? Is it reorganizing the sales channels? Is there a disruption before there's improvement as it required new products? Just give us some sense of how you accelerate that business that looks more like the trajectory you see in other geographies.

So the sales leadership team that is now in place in the U.S., very strong foot and ankle pedigrees across the board. There is not any disruption that's happening. What is happening is they are identifying the areas that are underpenetrated or were not even there and identifying and signing on new distribution. And they're doing it very successfully due to their experience, their knowledge, their network that they have. So really, really pursuing the areas where we excel: foot and ankle, the Charcot Foot solutions that we have, and also the other focus they have is pediatrics. So we are actively identifying new distribution and sales talent to pursue our pediatrics opportunity. We believe we have the portfolio. We've just never exercised really the initiative to go after pediatrics. So we're actively engaged in training and educating orthopedic pediatric surgeons, getting our portfolio in front of more of the pediatric facilities. We're -- one of our best partners is right down the street, Texas Scottish Rite. We've been working with them for decades. An incredible institution, and we're very proud to have developed some of our key technologies, our circular frames, with surgeons there. And so it's really incumbent upon us now to take that experience and leverage it with other pediatric facilities. And we're very excited about the opportunity. And we've got the right team in place for the U.S.

And then just one final one for me for Tyler on Biologics. I don't even know if this is the right way to ask this question, but is there a way to sort of talk about what the attachment rate for Biologics was for SeaSpine versus Orthofix? Is there something that can be learned from one team from the other or no, fairly similar? I'm just curious about how successful each of the teams were pulling through the Biologics portfolios and if there's anything that can be learned from one side to the other.

When you say attachment, do you mean just being -- can you clarify?

Yes. Just -- you're using some hardware that's a SeaSpine, and you're pulling through a biologic and that same for SeaSpine.

Well, I think when you look at the numbers, the attachment rate is high, right, just for both companies because we have the #2 position in DBMs. We have the #2 position in Trinity. And the average procedural sale is about 20%, right? So I don't know that I can answer quantitatively that...

But they're both high? Just curious if there was a disparity, if there's something we've learned from one team versus the other.

I think we both sell outside of our core channel pretty effectively. With the strength of our Spinal Implants portfolio, we've been able to do it better simply because I think we have a more competitive product. And as Kevin described, they were earlier in the product rejuvenation cycle. And so we just had a better offering to leverage.

Yes. I mean it's not quantitative, but qualitatively speaking, I'm excited to have Trinity in the bag, right, because if it's a surgeon preference between DBM cellular grafts or whatever, our -- kind of stop saying [indiscernible]. SeaSpine Legacy's ability to grow the Biologics revenue high teens is highly correlated to the market share we were taking on the Spinal Implants side with DBM, right? Now with Trinity in the bag, where we weren't able to convert distributors to the Biologics, but we got the [indiscernible] business in those cases where -- it was because we didn't have a cellular graft, now we have a cellular graft, right? And same goes for Orthofix, where they didn't have a mature DBM product, and it was groups that were wedded to DBMs, we now have the best of both portfolios in the bag. So it's not quantitative. And because like Tyler, I can't figure out what the attachment rate is, I just know that it's high. And it's going to get even better now that we've got the bag full with the best cellular graft in the market and best DBMs in the market.

And just to kind of clarify, too, it's difficult to quantify because we have a lot of direct purchase customers on both sides. And so you can't tie [indiscernible] for a procedure like you can in Spinal Implants. There's a high percentage of our revenue that isn't tied to a charge sheet for a surgeon.

The $40 million in cost savings, so you guys have already made some leadership changes, operational changes, et cetera. I'm going to ask my first question in another way. I mean, if you can't give me adjusted EBITDA margins, that's okay. How much do you think you've knocked off relative to that $40 million in the first year? And what is the ramp in savings over the next 3 years?

Yes. I'm confident we'll have identified more than half of that by year 1. We won't have realized it all in year 1, right, because we're only going to get half the year benefit for most of those initiatives to start paying dividends between headcount -- redundant headcount eliminations and the operational synergies. So in 2023, you'll see -- the numbers we're rolling up is, we'll probably see close to 3/4 of that in the 2024 numbers. And then obviously, by 2025, you'll have the full benefit of the $40 million.

I'm going to ask another layer of the question asked earlier, which is just about the jump off of the $250 million. I mean that implies a 15% growth rate in years 2 and 3. Is it fair to -- should we be thinking about that in a ratable like frame of mind? Or is it going to be more back-end loaded towards 2025?

I think the growth rate should accelerate over time, right? Orthopedics is now starting to find its footing and growing like it did in 2022. The development -- the product development programs that Kim talked about, right, should add to that growth in 2023. Spinal Implants, the opportunities for growth from the organic activities that Legacy SeaSpine was doing and the opportunities, I've been part of the discussions within the combined company and what Orthofix was going after should create another year of really good growth in 2023, but I think the bigger growth trajectory for Spinal Implants should be 2024, just because the lead time that -- the question Matt asked, the lead time around Spinal Implants sets. We likely won't have those to really meaningfully impact anything other than Q4 this year. But with the opportunities we're seeing, just organically, but also with the other merger activities in the space, I think creating more opportunities, those, I think, you'll see a much bigger growth rate in 2024 because not only will we be able to harvest that upside opportunity, but we'll actually have the sets to satisfy it, right? And that's the one thing we're being really cautious of is we don't want to make commitments we can't fulfill because then that's just going to create more frustration and cost us opportunities. I think the Legacy SeaSpine group had been very successful in some of the larger conversions we had because when we committed to something, we delivered it, right? And we didn't move as fast as we would have liked to knowing the opportunity was there, but that was intentional because it's like we have to make sure we have the sets because we can't miss a surgery. And we know that the distributors we've onboarded in the past 1 year, 1.5 years that have really helped transform the Legacy SeaSpine business. They're our best ambassadors to attract the next distributor, right? If their onboarding experience is flawed and painful and frustrating, they're going to tell that to their friends. And that's why we want to -- as [indiscernible] have that revenue growth, we want to make sure we're buying the sets ahead of the demand so that we satisfy them immediately and 100% from day 1 because like I said, they're going to be our best ambassadors to attract the next distributor. And with the lead times what they are, it's going to be a Q4 situation. So that's -- I think 2024 is kind of a step up, particularly in the Spinal Implants side, to get to that $1 billion rate.

Anyone else? Going, going.

Well, again, thank you all for attending either in person or on the phone. We hope it was informative and you guys have a sense of the genuine excitement that this leadership team has for where we can go. I know I'm really excited and -- I was excited when we announced the merger and as we went through the due diligence and as we've gone through the closing and now deepening the integration, I'm even more excited. And I think I speak on behalf of the entire leadership team to say we're very excited with the opportunities ahead of us, and we look forward to sharing the results of those execution with everybody as we move forward. So thanks.