Treace Medical Concepts Inc Aktie

Good day, and thank you for standing by. Welcome to the Treace Medical Concepts First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Trip Taylor. Please go ahead.

Good morning, everyone, and welcome to our first quarter 2026 earnings conference call. Participating from the company today will be John Treace, Chief Executive Officer; and Mark Hair, Chief Financial Officer. John and Mark will discuss our first quarter financial results and 2026 outlook. We will then host a question-and-answer session following our prepared remarks.

Our press release can be found in the Investor Relations section of our website at investors.treace.com. This call is being recorded and will be archived in the Investors section of our website.

Before we begin, we would like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events, market trends as well as our estimated results or performance are forward-looking statements.

All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.

All forward-looking statements are based upon currently available information and Treace Medical assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements.

Please refer to our SEC filings, including our 2025 Form 10-K and our Form 10-Q for the first quarter of 2026 filed before the market opens today, May 8, which can be found in the Investor Relations section of our website at investors.treace.com for a detailed presentation of risks.

With that, I will now turn the call over to John.

Thank you, Trip. Good morning, everyone, and thank you for joining us on our first quarter 2026 earnings conference call. Entering 2026, Treace Medical has evolved beyond its foundation in Lapiplasty into a comprehensive bunion solutions company. Building on the strategic progress made in 2025, we've expanded our portfolio with multiple new procedure innovations, which we believe position us to address a broad spectrum of surgeon and patient preferences across all bunion classes.

We expect this breadth of offerings will support accelerated growth in procedure volume, increased wallet share and a meaningfully expanded serviceable market opportunity. We are encouraged by our first quarter performance but remain focused on driving further improvement.

We continue to execute on controllable levers, including continuing to strengthen our sales team, launching meaningful product innovations and adding new accounts and surgeons. Importantly, the sustained mid-single-digit case volume momentum to start the year reinforces our confidence in our strategy to expand market penetration and improve top line growth as we move through 2026.

At the same time, we also meaningfully reduced cash burn as we progress towards cash flow breakeven. I do want to note the dynamics that impacted 2025, including macro pressures on procedure demand and portfolio mix shifts, remain present.

We reported revenue declines of approximately 10% in Q1, and we believe this trend will improve over time as we annualize the launch of the new products we launched in 2025, and we believe we're well positioned to navigate these factors and drive long-term growth.

As such, we're reaffirming our outlook for full year 2026 revenue, which was raised when we preannounced our results on April 9 to be in the range of $202 million to $212 million, representing a decline of 5% to 0% compared to full year 2025.

We expect revenue declines to improve through the rest of the year with revenue growth returning in our seasonally strongest fourth quarter. As mentioned, we expect fourth quarter revenue growth will largely be supported by case volume growth, the lapping of the ASP mix shift dynamics as well as the contributions from our planned 2026 product launches.

Now I'd like to turn to our 3 strategic initiatives to drive top line growth and the progress we've made on these initiatives in the first quarter of 2026. First, leveraging our large existing customer base to drive adoption of the 3 new bunion systems that we commercialized in 2025; second, continuing to build upon our leadership position with Lapiplasty by launching new technologies that can appeal to new surgeon users; and third, expanding our product offerings to grow wallet share and tap into new TAM-expanding procedural adjacencies.

First, let me begin with an overview on the bunion technologies we introduced in 2025, including their strategic relevance and early market reception. We believe these 3 new systems more than double our accessible market relative to Lapiplasty alone, making their successful commercialization and deeper market penetration an important priority as we look to drive incremental growth.

Our Nanoplasty and Percuplasty 3D MIS Systems expand our reach into the high-volume osteotomy segment, which represents approximately 70% of the estimated 450,000 annual U.S. bunion procedures. Today, we believe only around 15% of metatarsal osteotomies are effectively being performed using MIS approaches, largely due to steep learning curves, variability in outcomes and limited correction of the third frontal plane of the deformity, which is associated with higher recurrence rates.

Our 2 3D minimally invasive osteotomy systems are designed to address these challenges with more reproducible, instrumented procedures that can be easier to adopt and are designed to correct all 3 planes of the bunion deformity. We believe this positions us well to expand adoption and drive greater penetration over time across the estimated 4.4 million annual U.S. bunion sufferers.

Now speaking to our SpeedMTP Great Toe Fusion System. SpeedMTP targets the roughly 20% of bunion patients who have developed an arthritic great toe or MTP joint. Additionally, SpeedMTP addresses a separate population of non-bunion patients who suffer from an isolated arthritic MTP joint.

This is a large and strategically important market segment for Treace to participate and to innovate in given that MTP fusion is among the most common foot and ankle procedures performed.

Across our growing base of over 3,300 surgeon customers, we estimate Lapiplasty currently captures about 25% of their bunion-related procedure volume. These 3 new systems are intended to target the remaining 75%, representing a significant opportunity for continued penetration and growth.

Market penetration with these 3 products is increasing. While just 3 quarters into our full launch, we continue to see a strong uptake of our new systems and a corresponding acceleration in our procedure volumes, resulting in market share gains. As of Q1, approximately 35% of our Lapiplasty surgeon user base has incorporated at least one of these 3 new bunion systems into their practice since launch. This represents an increase over the 25% that we reported in the fourth quarter of 2025.

We're also encouraged to see that approximately 30% of our new surgeons who became Treace customers by initially using one of the 3 new bunion systems have also used Lapiplasty technology, which we believe indicates a pull-through to Lapiplasty technologies.

Second, at the same time, we remain highly focused on advancing our leadership in Lapiplasty and expanding its appeal and adoption across a broader surgeon audience. Lapidus Fusion represents approximately 30% of the 450,000 annual U.S. bunion procedures and is the largest segment, where we are the recognized category leader.

And we remain on track to commercialize our next-generation Lapiplasty platform, known as Lapiplasty Lightning later this year. This system offers next-generation 3D correction instrumentation and new SpeedTMT implants.

Lightning Instrumentation is designed to deliver a faster procedure by reducing procedure steps while also offering enhanced precision and enhanced control for the 3D correction, while SpeedTMT implants, as the name indicates, are designed to provide faster fixation application.

Expanding surgeon interest and uptake of Lapiplasty also includes advancing our IntelliGuide PSI technology, the first patented preoperative planning and patient-specific cut guide system for bunion and midfoot correction in the U.S. Together with Lapiplasty Lightning and SpeedTMT, we believe these 3 core innovations position us well to extend our category leadership and drive further adoption in 2026 and beyond.

Now turning to our third initiative, expanding our offerings to more broadly serve our growing customer base. In addition to our 3 new bunion systems, we expanded our portfolio with the addition of new SpeedPlate implants, new sterile instruments and we introduced our first biologics offerings. These additions are designed to enable our sales force to more comprehensively support their surgeons' needs while also increasing access to additional procedures.

With this expanded portfolio, not only are we seeing growth in bunion-related adjacent procedures, but our sales team is now servicing some of their customers' incremental procedures outside of bunions as well. Building on this trend, in 2026, we are launching new technologies aimed at both increasing wallet share and expanding our access to incremental procedure volumes.

Our SuperBite variable pitch compression screw system represents another differentiated technology from Treace. Compression screws are a fundamental fixation technology utilized in foot and ankle surgery. And without this high-volume fixation offering in our portfolio, competitive sales reps have supplied these products where needed in Treace cases.

We announced initial surgeries with our SuperBite screws in April, and we're hearing positive early responses from surgeon users and high enthusiasm from our sales reps in our early commercial experience. Not only are SuperBite screws built with an advanced features based on the latest MIS customer preferences, but they're also designed to save OR time by reducing or eliminating altogether the need to pre-drill before implanting the screw due to their novel self-drilling design.

The strategic addition of SuperBite to our portfolio not only reduce the need for a competitor in our cases, but importantly, they equip our sales force to gain access to a broader range of procedures ranging from the forefoot to the midfoot to the hindfoot and to the ankle.

And complementing our expanded procedure access with SuperBite, we will target improving outcomes for challenging midfoot and hindfoot fusion procedures with our forthcoming SpeedXM Fusion System launch.

SpeedXM leverages our novel SpeedPlate hybrid technology, delivering the benefits of dynamic compression and locking screw stability in a specialized anatomic design to address fusions of the larger bones of the midfoot and the hindfoot. SpeedXM plates are highly complementary with SuperBite screws and/or biologics as these technologies are often used in these larger bone fusion procedures.

Importantly, these new products are serving procedures already performed by our existing surgeon customers in the same setting of care and often on the same day as our surgeons bunion cases. These new offerings leverage our sales force's presence and expertise and we believe can drive greater selling efficiency and impact.

We expect full commercialization of both SuperBite and SpeedXM during Q3, collectively expanding our total addressable market by approximately $300 million and providing access to attractive high ASP midfoot and hindfoot procedures where multiple Treace technologies are often needed.

Our strategy to build a comprehensive, best-in-class bunion solutions platform is gaining traction, supported by encouraging early indicators across the business. We continue to expand our active surgeon base while increasing utilization as adoption of our broader portfolio grows, driving mid-single-digit procedure volume growth in the first quarter, which we believe supports our approach.

Looking ahead, we believe we have a path to accelerating procedure growth and increasing wallet share as we drive deeper penetration with our broadened product portfolio and continue to more comprehensively service our great surgeon customers' product and procedure needs. Combined with disciplined investment, these efforts position us to deliver sustained market share gains, improve profitability and long-term shareholder value.

With that, now let me turn the call over to Mark to review our financial performance. Mark?

Thank you, John. Good morning, everyone. Revenue in the first quarter was $47.2 million, a decrease of 10% compared to the prior year. The decline was mainly driven by the shift in revenue mix towards lower-priced minimally invasive products and lower volume of bunion procedure kits sold.

Gross margin was 79.3% in the first quarter of 2026 compared to 79.7% in the first quarter of 2025. Total operating expenses were $54.6 million in the first quarter of 2026 compared to total operating expenses of $57.5 million in the first quarter of 2025.

First quarter net loss was $18 million or $0.28 per share compared to a net loss of $15.9 million or $0.25 per share in the first quarter of 2025. Adjusted EBITDA for the first quarter was a loss of $5.5 million compared to a loss of $3.8 million in the first quarter of 2025.

Cash, cash equivalents and marketable securities totaled $51.9 million as of March 31, 2026. This represents an increase of approximately $3.5 million from the company's balance sheet of $48.4 million as of December 31, 2025, and compares to an increase of approximately $0.4 million in the first quarter of 2025.

Turning to our outlook for full year 2026. We are reaffirming our full year guidance, which we raised in conjunction with the announcement of preliminary operating results on April 9, and expect full year 2026 revenue to be in the range of $202 million to $212 million, representing a decline of 5% to 0% compared to the full year 2025.

We expect revenue declines to continue until our seasonally strongest fourth quarter. Fourth quarter revenue growth is expected to be largely supported by accelerating case volumes, the lapping of the mix shift dynamics as well as contributions from our planned 2026 product launches.

In addition, we are reaffirming our expectation of a loss in adjusted EBITDA in the range of $4 million to $6 million for the full year 2026 as compared to a loss of $3.9 million in full year 2025. We also expect a reduction in cash usage of approximately 50% for full year 2026 as compared to full year 2025.

Supported by a strong and flexible balance sheet, we believe we are well positioned to continue executing our strategic and growth initiatives for the foreseeable future. With that, I'll turn the call over to the operator to open the line for questions.

[Operator Instructions] Our first question comes from Ryan Zimmerman with BTIG.

This is Izzy on for Ryan. So I just wanted to start on your ASP and mix shift. Mark, it sounded like you are expecting the ASP headwinds to lapse around the fourth quarter, but I was hoping you could speak to that a little bit more and what we can expect moving throughout the year?

This is Mark. Thanks for the question. As we began to talk about at the end of last year and we talked about on our last call, we're really pleased with the launch of our new products. We know that some of these products have lower ASPs and they've been readily adopted by a large portion of our surgeon base.

John talked about how around 35% of our current customer base has already adopted some of these new products at these lower ASPs. So this is the dynamic that we talked about over the last couple of calls. We anticipate to continue to see that until we begin to lap or to have an anniversary of when we made these new products available, it's really in the third quarter of this year.

So some of these dynamics, we fully anticipate to continue. This is the exact dynamics that we talked about. And so we feel like the strategy is working. We're getting these new products to our surgeons. They're utilizing them, and that's just going to have a temporary headwind in the first part of this year, but that will change in the back half of this year.

Appreciate it. And it looks like gross margins came in a little bit higher than Street expectations. So as you guys continue to launch these new products and see the benefits from the products that were launched late in 2025, how should we think about gross margins going forward?

Another great question. We are very focused on gross margins here. Our new products, we really have a goal to launch new products to have consistent gross margins with what we've had historically. Some of these margins do fluctuate from quarter-to-quarter. We benefit in the seasonally strong fourth quarter when we have higher volumes. And there are, of course, lots of pieces and components that impact gross margins overall.

But we're pleased with what we did in Q1. They came in strong, a little bit better than what we had anticipated. So we view that as very positive. So we'll continue to launch new products to keep in line with this range of high 70% gross margins, and we believe that we can continue to do that going forward.

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

Great to see that so many of the folks have adopted these new solutions. I guess what are you seeing once they do? I mean, do they immediately kind of swing the pendulum to their ultimate adoption of the osteotomy solutions versus Lapiplasty? Do they swing too far? Do they work their way towards the ultimate mix? Or how has that tracked from what you've seen thus far?

Ben, it's John. Thanks for the question. We've seen, in general, strong adoption by our customer base with these new products once they get trained on them, do a couple of cases, they tend to be pretty sticky. And we're pleased with the way that's going there.

And it's still early days, but as mentioned, we've got now 35% of our base Lapiplasty customers now using one of these 3 new solutions in their practice, and we're working on getting more of them using 2 and 3. Over time, we want them to be full portfolio of surgeons as we move through time.

We've also seen, and it's early, but some adoption of Lapiplasty technologies with surgeons that came in initially to Treace through using one of those new 3 products. So too early to say what the materiality of that is going to be. We'll maybe comment on that as we get more experience later through the year, but it is good to see that dynamic as well.

Sorry, this is Mark. I think another important point to realize is that as we've offered these new product options, we don't necessarily believe that they're replacing our Lapiplasty procedures as well. We think it's going to be additive and allow them to have more options for the patient needs.

So where that ultimately lands, what that mix ultimately is, it's still to be determined, but we don't necessarily believe, I think, in your question was, is it replacing Lapiplasty. We think it's providing additional options for the patient needs and for those surgeons to address whatever deformity that they see.

I was looking at it. And then as you bring out more and more solutions in the portfolio and once the folks adopt the full portfolio of course, I mean, I guess what percentage or proportion of the foot and ankle cases that are done every year could the current and to be launched in the near future Treace products find their way into? I mean, is it 50%, 70%, 90%? What does that look like?

Yes. Thanks, Ben. John here. It's hard to say the exact percentage, but as we launch products like SuperBite and now we have the broad portfolio that includes MTP Fusion solutions as well as 3 different ways to treat a bunion, 4 different ways to treat a bunion, you're definitely getting into a large -- being able to cover a large percentage of the surgeons' workhorse foot and ankle cases, I would say. And the sales force is pretty excited about that.

The addition of SuperBite, for instance, in the early innings here, they're displacing some competitors that used to sit in the room just to use that compression screw technology. And now they have their own. So I think it's going to be interesting to play out over time, and we do definitely appeal to a much broader base of the surgeons' overall caseload as we work through the year and get these products out.

Okay. And on the SuperBite, how many SKUs are in that? How does that stack up versus competitive offerings on the screw side?

Yes, Ben, we tried to do this in a very capital-efficient and inventory efficient way. As we thought about launching a compression screw system, we didn't want to have high capital, high inventory burden. Traditionally, these systems are -- have a lot of SKUs, hundreds and hundreds, maybe 1,000.

So we've been trying -- we've tried to design this and bring forth a system that, I don't have the exact number of SKUs, but it's probably in the range of 100 or so sellable items in our system, and that makes it very lean and very efficient and something we can manage very well and we can -- providing good volumes to the field so they can really make maximum impact as we get these out.

Our next question comes from Rick Wise from Stifel.

I wanted to dig a little more into the sales cadence outlook for this year, and with your patience, talk about the setup for '27. I mean, it seems like, John, the strategy clearly is visible. It seems to be working. We're in the early days of the strategy becoming increasingly visible.

So sort of a 2-part high level, looking at the farthest kind of question. You beat the first quarter, you beat and raised. As you look at the rest of the year, how do we think about the outlook and your confidence?

I know you want to stay conservative, but if you continue this first quarter pattern in the second and the third, hopefully, in the fourth quarter, is it going to be you're going to do a little better potentially because of penetration? Is it going to happen on -- is it the product side? Is it something to do with your execution? Just help us understand where more of the same could happen as we go through '26.

And I'll ask Mark the tough question. Mark, I know it's hard to talk about '27 in precise terms, but my numbers -- my current numbers have you growing, I'm being cautious 5% next year. The consensus numbers are more like 9% or 10%.

I mean, is 5% to 10% the right way to think about the potential for '27, if you execute well and all these products roll out and you see the trends we're seeing now? It sounds potentially very conservative. Help us think through all that. Sorry for the long-winded questions.

Okay. Thanks, Rick. I appreciate it. I'll take the first one, and then Mark can handle part 2 on future consensus. The way the year lines up is, like Mark said before, we've got some headwinds due to these ASP-related mix shift dynamics related to the 3 new bunion systems that we launched in Q3 last year. As we get to Q3, that headwind starts to abate.

And additionally, in Q3, and increasingly Q4, we're going to benefit from the introduction of our 2026 launches, some of which carry favorable ASPs relative to the 3 products we launched last year, SpeedTMT as well as cases that will combine our SuperBite screws, SpeedXM plates and biologics, those are -- those get us into some higher dollar ASP midfoot and rear foot cases.

And then we also have some new sales reps that are going to be ramping up in the back half of this year. So that's kind of the way we see the year and we're going to keep our heads down. We're pleased with our Q1. We're not satisfied. We got a lot of work to do, but we've got a lot of good things going on with this business as we build out a more robust and diversified portfolio with some new growth channels in it with these different product lines.

Rick, this is Mark. I'll just say John is right on there. We're going to look at this one quarter at a time. We're pleased with the results in Q1. They came in as expected, which is good for our progress during this year. And so I'll start there that it's one quarter at a time and we're going to focus on getting this right this year.

With respect to next year, we have not given any formal guidance with respect to 2027, but I can tell you that we are expecting to return to revenue growth in the fourth quarter this year. So I think it's going to be a little bit early to talk about 2027. It's going to be -- next year will be impacted on what is our momentum as we're exiting this year.

But I think the positive story is that although we did have a decline this quarter, and we may have some revenue declines in the short term here, we believe that we'll have increased momentum with case volumes as well as the top line revenue growth as we're exiting the year.

So before we give formal guidance to next year, we want to better understand that momentum, but we do believe that we're going to be set up very well for next year as we exit -- as we fully anticipate or plan to exit this year with increased revenue growth.

And just one more for me. Maybe, John, you could talk about just the general environment. We didn't hear from Stryker this quarter because of their cyber issues as clearly as we normally would. What's your sense of the market environment? Are consumers behaving as usual? Are doctors -- just is the environment an okay one or as usual or stable? How are you -- what are you seeing -- how are you thinking about that aspect for the rest of the year?

Yes, appreciate it, Rick. When we entered this year, we said that we expected the macro headwind type of dynamics, consumer sentiment related impacts on elective procedures to continue into this year. We didn't really see a reason things were going to be dramatically shifting.

Q1 kind of played out within our expectations, really didn't see any surprises in patient flow and the surgeon activity beyond what we anticipated. We don't have independent data yet to tell us what the overall market trends were for bunions or foot and ankle elective in Q1. But again, it played out as we expected pretty much.

So we're going to continue to focus on our strategies, getting these new products out in full supply, training more doctors and gaining new customers and accounts and work our way through quarter-to-quarter.

Our next question comes from Lilia Lozada with JPMorgan.

The new MIS osteotomy products understandably get a lot of the attention, but I'm hoping you could share some color on how Lapiplasty has trended over the last few quarters. How meaningful of a contributor has the pull-through from Percuplasty, Nanoplasty been to reinvigorating growth in Lapiplasty? And do you see Lapiplasty Lightning as more of an incremental update? Or is it something that could have a material impact on ASP and volumes?

Lilia, thank you for the question. It's John. As we said on our last call, there's been patient and surgeon preference changes to more MIS options and even to more MTP Fusions on some bunion patients over time, MTPs where they might have some arthritis in the great toe joint.

We've seen a great uptick in response to our MTP Fusion offering. It's doing very well out there, and that product does carry a higher average selling price than our -- the average price on our MIS products. So we like to see that.

With respect to Lapidus, there continues to be strong demand for Lapiplasty, where Lapiplasty is indicated in the surgeon's algorithm at this point in time, and we have seen, as alluded to, what we believe to be some pull-through from surgeons that came in new to Treace through one of our 3 new bunion products adopting Lapiplasty.

Now it's early on, and these numbers aren't large yet, but we'll be watching that through the year. And we do believe in the advancements of Lightning and SpeedTMT, more availability of IntelliGuide, these are tools that can help us appeal to more surgeons as we bring those into more force into the market late this year.

Great. And then just as a follow-up, could you talk a bit more about some of the competitive dynamics and your competitive positioning now that you're sort of going more head-to-head with the other ortho players in MIS osteotomy? So are you seeing adoption of these new products primarily from existing Lapiplasty accounts? Are you seeing a good amount of competitive switches? Any color you could share on how that competitive positioning has evolved over the last few quarters would be helpful.

Sure, Lilia. I think it's been -- initially, we probably had more uptake in our existing customer base. But as these products have gotten out in greater supply and the sales reps have become more familiar with them, we train more surgeons on them, more surgeons are using them, they're talking to their peer surgeons about these new MIS systems.

Our instrumentation is fantastic. It really is. It's extremely helpful in allowing these surgeons to do a more reproducible, predictable MIS osteotomy procedure. So as we've gotten more into the market, over more time, we've definitely been seeing more competitive conversions. And our sales team's expertise, our training and the efficacy of these products is what's making it happen.

So we're seeing a good uptake. We're seeing displacement of competitors, not only in the MIS systems, but with our SpeedMTP, too. And that's a big, important segment of the market. So we like what we're seeing across all fronts, both how they're being implemented within our existing Lapiplasty user base and the adoption we're getting from new surgeons and competitive conversions.

And I'm not showing any further questions at this time. And as such, this does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.

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

Good morning, everyone, and welcome to our fourth quarter 2025 earnings conference call. Participating from the company today will be John Treace, Chief Executive Officer; and Mark Hair, Chief Financial Officer. John and Mark will discuss our fourth quarter financial results and 2026 outlook. We will then host a question-and-answer session following our prepared remarks. Our press release can be found in the Investor Relations section of our website at investors.crescom. This call is being recorded and will be archived in the Investors section of our website.

Before we begin, we would like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends as well as our estimated results or performance are forward-looking statements. All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.

All forward-looking statements are based upon currently available information, and Treace Medical assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings included on our Form 10-K for 2025 filed before market opened today, February 27 and can be found in the Investor Relations section of our website at investors.treace.com for a detailed presentation of risks.

With that, I will now turn the call over to John.

Thank you, Trip. Good morning, everyone, and thank you for joining us on our fourth quarter 2025 earnings conference call. During 2025, Treace Medical entered a transformational phase, building upon our leadership is recognized bunion experts and evolving from a lapaplastyc-focused company into a comprehensive bunion solutions company. With the recent commercialization of multiple new union procedure innovations, we are now positioned to address virtually 100% of surgeons' current technique preferences for all types of bunion correction, offering 5 best-in-class instrumented systems, spanning all 4 categories of bunion deformities. We've been highly focused on accelerating our bunion procedure volume growth while also broadening our technology offerings to increase wallet share and expand our serviceable TAM.

Our elevated case volume growth in the back half of 2025 reinforces our confidence that we have the right strategies in place to continue to expand our market penetration and restore top line revenue growth later in 2026 and into the future. We also drove steady improvement in adjusted EBITDA and significantly reduced our cash burn for 2025. Before diving deeper into our expectations for 2026, I want to note that dynamics discussed on our last call that pressured 2025 including case volume growth, offset by headwinds related to broader economic conditions and softer consumer sentiment as well as a product mix shift within our expanded portfolio are still present to begin the year.

Given these market conditions, we're initiating our outlook for full year 2026 revenue to be in the range of $200 million to $212 million, representing a decline of 6% to 0% compared to full year 2025. We expect revenue declines to continue until our seasonally strongest fourth quarter. We expect fourth quarter revenue growth will largely be driven by accelerating case volumes, the lapping of the mix shift dynamics as well as a contribution from our planned 2026 product launches. We remain focused on continued improvements in profitability and reducing cash burn in 2026. As a reminder of our progress to date, in 2024, we used $50.5 million in cash and reported an $11 million loss in adjusted EBITDA.

In 2025, we used $27.3 million of cash, a 46% reduction versus 2024, and we reduced our adjusted EBITDA loss to $3.9 million in 2025, a 64% improvement over the prior year. We took several actions in 2025 to reduce our operating expenses and cash usage. Many of these changes will continue to benefit us throughout 2026. We, therefore, anticipate that we will again reduce our cash burn by approximately 50% in 2026 compared to 2025, and we're not done. We will continue to identify additional opportunities to drive our top line growth and leverage our P&L in 2026.

Now I want to focus on our strategies, the progress we made in 2025 and where we expect to deliver in 2026 To start, let me tell you about our strategies to improve our top line performance in 2026 and beyond. First, we will focus on leveraging our large existing customer base to drive adoption of our new 2025 bunion product launches. Second, we'll continue to build upon our leadership position with lapoplasty technology, adding new technologies that can attract new surgeons. And third, we will expand our product offerings to grow wallet share and tap into new TAM expanding procedural adjacencies.

To start, I want to give you an update on the new bunion technologies we launched during 2025, their strategic importance and the reception they're getting in the marketplace. We believe our 3 new bunion systems effectively doubled the accessible market that we have today with lapiplasty. So effectively driving these deep into the marketplace is a very high priority for us. First, our differentiated nanoplasty and Percuplaty/3D MIS systems expand our reach into the high-volume osteotomy segment which we estimate represents approximately 70% of the 450,000 annual bunion procedures performed in the U.S.

We estimate that only 10% to 15% of Metatarselosteotomies are being performed using MIS approaches today. and we believe this is largely due to the steep learning curve, high variability of outcomes and lack of attention to correcting the third frontal playing component of the deformity, the failure of which to do so has been associated with an increased risk of bunion recurrence. Our new 3D MIS bunion correction systems offer patients procedures that can result in less pain and fast recovery times with minimal visible scars. Importantly, these are procedures that are quick for surgeons to learn and are highly instrumented to enable a controlled correction of all 3 planes of the deformity to minimize risk of recurrence.

We believe this expands the appeal of our 3D MIS osteotomy procedures to both surgeons and patients today and could encourage a much larger portion of the 4.4 million U.S. bunion sufferers to seek surgical treatment over time.

Next, our Speed MTP system, which is designed to serve roughly 20% of bunion patients who have our the great toe or MTP joints as well as patients who suffer from isolated MTP joint arthritis. This large patient population makes MTP fusion one of the most common procedures performed by foot and ankle surgeons, making it a strategically important area for Treace to target with better solutions and continue to innovate. With our core lapiplasty system, we believe we've captured 25% on average of our 3,300 customers total bunion related procedure volume. And these 3 new systems are dialed in to target the remaining 75% and we are laser focused on penetrating that untapped opportunity.

And our strategy is working. Just over 2 quarters into the full launch of these new systems, we're encouraged by the rapid adoption and resulting acceleration we're seeing in our overall bunion related procedure volumes. As of Q4, over 25% of our surgeon base has already incorporated 1 or more of these 3 new bunion systems into their practice and our Q4 procedure volume growth increased over the mid-single-digit rates we achieved and reported on in Q3.

Next, in addition to our new products, advancing our leadership in lapiplasty technology and expanding its user base remains at the forefront of our strategy. Lapis Fusion represents approximately 30% of the estimated 450,000 U.S. annual bunion procedures and is the largest dollar segment of the market where Treace is the recognized category leader. As MIS approaches are gaining in popularity among surgeons and patients, we continue to remain focused on advancing our lapiplasty platform, making the procedure simpler, faster and minimally invasive as demonstrated by our micro lapiplasty platform, which was launched in 2024. In 2026, we plan to commercialize our next-generation lapiplasty platform known as Lapiplasty Lightning. Lightning combines next-generation 3D correction instrumentation and Speedpay TMT implants, which are built upon our proprietary speed plate hybrid fixation technology. Speed TMT is a high-performance implant designed to appeal to an incremental surgeon audience, those that prefer a single-plate fixation construct versus our traditional 2 plate or biplanar approach.

Lightning instrumentation is designed to reduce procedural steps, improve efficiency and provide surgeons with greater accuracy and control of their 3D correction. We expect full availability of our Lightning instrumentation and our speed TNT implants later in the year. Another way we're appealing to more surgeons with lapiplasty is by advancing the shift towards personalized surgery, leveraging our Intelligade PSI platform. Intelligade is industry's first and only preoperative planning and patient-specific cut guide system for correcting bunion and midfoot deformities. Intelliguide offers surgeons improved efficiency and precision and is particularly helpful in complex and revisional cases. We believe the combination of Lightning, Speed TMT and Intelliguide position us well to extend our leadership position and attract more surgeon users to our lapiplasty platform in 2026 and beyond.

Now turning to our third strategy, expanding our offerings to more broadly serve our growing customer base. In 2025, we expanded our speed plate and sterile instrument portfolios with multiple new offerings. We also entered the biologics market with our Cortifuse flowable corticofiber graft as well as our line of procedure-specific allograft wedges. These new biologic offerings allow our sales force to more comprehensively service our surgeons' needs in their cases.

In 2026, we plan to launch additional offerings to grow our customer wallet share and tap into incremental procedure adjacencies. In the back half of this year, we plan to launch 2 new important products that expand our TAM by an estimated $300 million. First, our Super bite variable pitch compression screw system. This is a very important addition to our portfolio as it equips our sales force for the first time with the most common form of fixation used in foot and ankle surgery. The Super bite system features advanced design attributes, making it ideal from both minimally invasive and conventional surgical approaches.

Next, we will make our first entry into the midfoot, hindfoot segment of the market with the launch of our new Speed XM fusion system. Speed XM leverages our speed plate fixation technology bringing the benefits of dynamic compression and enhanced stability for fusion of the larger bones of the mid and hindfoot as well as for flat foot reconstructive procedures. Speed XM is highly complementary with our Super Bite screw system as the 2 technologies are often used in concert along with biologics to stabilize and fuse these larger bones, thus giving Treace great incremental access to high ASP adjacent procedures that we do not serve today. And of course, with all our current and new product offerings, we continue to provide best-in-class education through our bunion master's hands-on training programs. These events are designed to support surgeons and confidently integrating our procedures and technologies into their practices. And following these trainings to further enable successful patient outcomes for our surgeons, we provide additional initial case support from our fleet of dedicated clinical specialists and ongoing support from our bunion focused direct sales team, a team that we plan to expand in 2026 with the addition of more experienced foot ankle sales professionals.

Our confidence in the future is grounded in the success we've achieved in the past as well as the early indications we're seeing, which reinforces our confidence that we have the right strategies in place moving forward. We've expanded our active surgeon base from nearly 1,300 users in 2020 to over 3,300 users in 2025, and these surgeons are using more of our products as they adopt our growing portfolio of best-in-class solutions. Fourth quarter procedure volume growth increased over the mid-single-digit rates achieved in Q3, reflecting the strength and effectiveness of our comprehensive bunion portfolio and strategy.

As we look ahead, we believe we're well positioned to accelerate our procedure volume growth rates while also growing our customer wallet share and expanding our TAM as we broaden our footprint in the foot and ankle market. We expect these initiatives, combined with disciplined investments, will continue to drive market share gains, improve profitability and shareholder value.

With that, let me now turn the call over to Mark to review our financial performance. Mark?

Thank you, John. Good morning, everyone. Revenue in the fourth quarter was $62.5 million, a decrease of 9% compared to the prior year period. The decline was mainly driven by the shift in revenue mix towards lower-priced products. Gross margin was 80.6% in the fourth quarter of 2025 compared to 80.7% in the fourth quarter of 2024. Total operating expenses were $56.3 million in the fourth quarter of 2025 compared to total operating expenses of $55.7 million in the fourth quarter of 2024. The increase reflects restructuring charges and increased litigation expenses in the quarter compared to prior year.

Fourth quarter net loss was $9.4 million or $0.15 per share. compared to a net loss of $0.5 million or $0.01 per share in the fourth quarter of 2024. Adjusted EBITDA for the fourth quarter was $6.2 million compared to $11.1 million in the fourth quarter of 2024. Full year 2025 adjusted EBITDA loss was $3.9 million compared to full year 2024 adjusted EBITDA loss of $11.0 million, a 64% improvement over the prior year. Cash, cash equivalents and marketable securities totaled $48.4 million as of December 31, 2025.

The company's new credit facility provides an additional $115 million of liquidity subject to certain conditions. The company used $27.3 million of cash during the full year 2025, a decrease of 46% compared to $50.5 million in 2024.

Before concluding, let me turn to our outlook for full year 2026. As John mentioned, we're initiating our full year guidance. We expect full year 2026 revenue to be in the range of $200 million to $212 million, representing a decline of 6% to 0% compared to the full year 2025. We expect revenue declines to continue until our seasonally strongest fourth quarter. Fourth quarter revenue growth will largely be driven by accelerating case volumes, the lapping of the mix shift dynamics as well as contribution from our planned 2026 product launches.

Looking closer at the first quarter, similar to prior years following our seasonally strongest quarter, we anticipate Q1 revenue will step down approximately 27% compared to Q4 2025. Then we expect year-over-year growth rates to improve each quarter thereafter. In addition, the company expects a loss in adjusted EBITDA in the range of $4 million to $6 million for the full year 2026 as compared to a loss of $3.9 million in full year 2025. We also expect a reduction in cash usage of approximately 50% for full year 2026 as compared to full year 2025. Supported by a strong and flexible balance sheet, we believe we are well positioned to continue executing our strategic and growth initiatives for the foreseeable future.

With that, I'll turn the call over to the operator to open the line for questions.

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

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

Sure. Danielle, thank you for the question. As we've indicated on past calls, during 2025, our surgeons were reporting deferrals of cases. We believe that made it a softer year and potentially a declining year in overall bunion surgical volume. As you noted, other companies have mentioned the foot and ankle market being soft, particularly in elective foot and ankle procedures in 2025 or even that may have contracted a little bit. Given we've got an increase in our Q4 case volumes versus Q3, I think it really does demonstrate that we're taking share with this new comprehensive bunion portfolio and strategy even in a softer market.

When it comes to our outlook for 2026, we're increase -- we're expecting that increase in case volume. That's going to be offset by product ASP mix-related headwinds for the first half of the year. That will begin to abate in Q3 as we start to lap the introduction of these lower ASP, higher volume driving 2025 product introductions. Additionally, in Q3, we'll increasingly, as we go into Q4 benefit from the introduction of the new 2026 product launches. These carry a little higher case ASPs, such as our lapiplasty Lightning and speed TMT and the combination effect that we get from our Speed XM, mid-foot plating and Super Bite screws. So we also have some new sales reps that are going to be ramping up in the back half of the year, and we have some easier comps there. So -- we feel good about the cadence. We feel good about the new products we're introducing and the impact they're going to have. As far as the market dynamics go, we're kind of contemplating a similar dynamic to what we experienced in 2025.

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

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

Our next question comes from [indiscernible] LakeStreet Capital Markets.

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

Sure, Ben. Thanks for the question. Yes, the Super bite screw, which have been in development. Typically, our product development time lines are 18 months or so. We've been working with an elite team of minimally invasive surgeons on these as well as our our traditional SAB development team. We've put a lot of work into it. They're very refined. They have some really nice features that make them very high performance. the ability to put this in our sales rep's bag really adds breadth to their line, the ability to control a greater portion of the overall surgical case, and we're excited about this. It's the first time they're going to have one of the most commonly used forms of fixation in the foot and ankle. So it's going to be very synergistic with a lot of the current products they have additive to the case ASPs.

The second product we talked about was the Speed XM. That's our mid-foot plating system. Again, it's been in development for quite some time, very refined, a lot of cadaveric testing. We've had a lot of surgeons put their hands on this. and we're looking forward to rolling it out mid next year. This is perfusing larger bones that are further back in the foot like the talonavicular, the calcaneal cuboid nevicular [indiscernible] flatfoot reconstruction, triple arthrodesis. These are larger bones more on the back of the foot. These are procedure adjacencies that are often related to the union and convenient call points for our sales force. So we're excited that they'll have the ability now to tap into these new incremental high ASP procedures with these 2 complementary technologies.

And you said mid next year?

Coming mid this year.

Okay. And then secondly for me, on the quarter of your surgeons that have tried the new ceotomy solutions -- what's -- what are the ones that they pick up first? How does it kind of fit into their algorithm? Any additional color would be helpful.

Sure, sure. And there's 2 platforms there, Ben, we've got the MTP Fusion system, which is getting a lot of traction. This is the first dedicated offering that Treace Medical has offered into that large space, that large subsegment of bunion patients that the pending patient comes in, they have a painful bump, but they actually have arthritis in the big toe joints. That's roughly 20% of the patients. that surgeon to see for bunion. Then there's an entirely other class of patient that fits for that speed MTP, that MTP fusion that doesn't have a bunion but has big toe arthritis isolated. So -- it's one of the most common procedures performed by our surgeons and now we're playing in that space. The price point is at a premium to the MIS osteotomy products we offer. So we like that, and we're seeing a really good pick up there.

Regarding the MIS products, we have 2. And the way we've been hitting the marketplace and sort of segmenting the user base, if surgeons have not tried minimally invasive bunion surgery before, nanoplasty is a more welcoming and easy step for them because it does not require them to learn how to use a rotary power cutting burr, they can use their conventional saw. We have excellently designed instrumentation that allows them to control the whole procedure, correct all 3 cardinal planes in the bunion deformity and do it in a comfortable and reproducible fashion. So nanoplasty serves that customer group predominantly that hasn't engaged in minimally invasive osteotomy surgery.

The other group the surgeons that have engaged in minimally invasive osteotome surgery and they have some level of proficiency and that's our Percuplasty. So we go after them with our Percuplasty. We have superior screw designs that don't require drilling, so it makes it faster to insert. And our GIG system has just received very high claim from everybody we put it into their hands. That's allowing them to more controlled instrumented procedure, the ability to reproducibly correct all 3 planes of the bunion and do it in a fast and efficient manner.

So you add those -- these technologies to our entire portfolio. And what surgeons are seeing is a comprehensive suite of offerings that are best-in-class, whether they need to use an MTP joint doalapidus or lapiplasty or do a minimally invasive osteotomy procedure for their patients. So we're really well equipped. Salesforce is in a great position now with all these products on all these fronts, and we're driving it forward or driving our case volumes.

Our next question comes from Ryan Zimmerman with BTIG.

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

Ryan, this is Mark. I'll take a first shot at that. We did offer a range this year, and it partly goes to some of these dynamics that John talked about earlier that we saw exiting 2025 that there were some changes in patient dynamics and some -- what we were referring to previously, some macroeconomic headwinds. So there is some uncertainty as we come into this year, so we wanted to make sure that, that range comprehends some of that market uncertainty. So that would probably be towards the lower end of that range to the extent that there isn't some improvement or that some of these dynamics don't improve this year versus last year. So -- or they worsen.

I think on the upside is where we continue to have incremental uptake of our new products. Those that we launched last year, again, we've talked about case volume increases in both Q3 and Q4. We're anticipating case volume increases throughout 2026 as well year-over-year. So to the extent more surgeons are adopting these new cases, these new procedures, and to the extent there's greater uptake on our new product launches that are coming out. John just talked about Super Bite as well as Speed XM. So these are new product launches that are coming out this year. And to the extent there's greater uptake on those and there's opportunities to go to the high end of the range. So right now, we feel comfortable at the midpoint of the range. There are some variables in the marketplace and with our product offering. And so that's where we feel comfortable for now.

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

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

So we're listening to our customers very closely, and we're trying to develop our product line in concert with kind of the path at least resistance for the sales force.

Our next question comes from Rick Wise with Stifel.

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

Rick, yes, great question. It's a competitive marketplace. And a lot of people are trying to play in it, a lot of large competitors, small competitors. We just returned from our largest surgeon conference of the year. The [indiscernible] conference in Las Vegas, huge attendance. Over 2,000 of our most common foot and ankle surgeons participating there. We had a great booth all these technologies were on display. We had very high traffic at our booth. I can tell you our cadaveric training labs that we held at the meeting were oversubscribed and attended beyond what we expected. So I think there's a lot of appreciation for what Treace Medical brings in terms of being bunion experts and being able to help surgeons navigate through the changing landscape of patient interest and what type of procedures they're going to want to be offering in their practice.

So knowing that Treace Medical has this full suite, 5 different categories of best-in-class solutions that can comprehensively serve those surgeons patient bunion needs across the spectrum. I think that's a very comfortable position for surgeons to be with Treace Medical. And our reps know the procedures inside and out. we hold their hands. We give the surgeons excellent training. We reinforced the uptake on the products in the OR with our expert clinical specialists to make sure those first cases go smooth, they get great patient outcomes. And then they're taken care of by very focused bunion direct sales force. So again, a lot of enthusiasm for these products, and we think it's going to continue to build.

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

Rick, we've, for the last several quarters now, talked about our laser focus on profitability improvement and cash management. And -- so we took a lot of steps last year to begin to improve our overall cost structure and our P&L. And a lot of those changes that we made last year will benefit us throughout the full year 2026. So some of those cost reductions, we reported some restructuring charges last year. So that's -- we'll be able to annualize those benefits throughout 2026. We've talked a little bit about a couple of other things that were unique to 2025. We as we've launched all of these incremental mining systems and adjacent products we really hit a high watermark with regard to our medical education, and we really invested in training all of our existing surgeons, and we reached out and did a lot of additional training to surgeons that are -- that had not been Treace customers.

So although we will very much remain focused on medical education and training surgeons, we won't have the same level in 2026 that we did in 2025. So that's going to naturally come down a little bit. We've also talked about some of the natural leverage that comes in our sales force. We've hired a lot of sales reps and as they come off some of their fixed -- they're fixed salaries, there's some natural leverage in the sales organization as well. The other thing is we've talked in the last couple of calls, we've talked a little bit about our DTC efforts and activities and investments. And we are not investing as much as we had historically. And one of the main reasons is really -- what we were doing in earlier days was building brand recognition and brand awareness for both patients and surgeons. But now we've got over -- what we estimate 1/3 of the U.S. surgeons using Treace products last year. So we've got this huge large base of surgeon customers and so we can leverage down some of that DTC investment that we don't believe will impact our top line growth.

The last thing that I'll mention with respect to cash management or cash usage is last year with the introduction of several new bunion systems, we had incremental and higher CapEx or capital expenditures for our instrumentation Treace that we own and we depreciate, but we make them available to our sales reps and to the surgeon to perform these new cases. So that was at a higher level last year. And we don't need to have the same level of capital investment in 2026. So not only is the OpEx when it comes down, you'll see some nice leverage there, but even on the CapEx as well. So the combination of all those things is what gives us confidence that we can reduce our cash burn by 50%, which is significant this year on top of the significant reductions that we just experienced last year.

Our next question comes from Richard Newitter with Truist Securities.

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

Yes, Rich, this is Mark. Let me begin with that, and John may have some additional color. So we are broadening the portfolio. Some of these items that we've talked about have lower ASPs and yet some of these new products and offerings that we're providing really have strong ASPs as well. maybe a slight step down to lipaplasty, but these are strong ASPs, and we'll continue to broaden our portfolio, not only in the finance space, but the adjacencies that John talked about. So there's going to be some of that dynamic -- that overall, the ASPs or the revenue per case may come down from where we've been historically.

As we think about the foot and ankle market, some of the questions already today, and we've talked about it a little bit. We believe that there are some macro trends in 2025 that may be were different from what we've seen historically. Historically, we'd say that the foot and ankle market is somewhere in the mid-single digits and growth rate year-over-year. That's what we've seen historically. And we believe that with our focus exclusively on foot and ankle and with our primary focus on the bunion and that we can and should do at least what the market does and more. And that's because of our product profile, our direct channel sales force that can drive these products and it's our focus. So we believe that we're uniquely positioned in the marketplace to do what the market is doing broadly and then -- so that's what we would anticipate going forward.

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

Rich, John here. I would say, yes, very positive reception to these new technologies. What we're known for is developing really elegant instrumentation that takes challenging procedures and makes them very straightforward for surgeons. And these minimally invasive ways of doing the bunion, they're hard and certainly need help, and we're giving them the tools to be able to get trained and put these into their practice quickly. We already had 25% in just 2 quarters into launching these new technologies, 25% of our 3,300 customers have already used one or more of these new technologies. They have incorporated them into their practice. And we believe that's going to continue to build throughout the year larger percentage of our overall surgeon base using these new technologies and on average, those surgeons embracing more of those 3 new bunion systems as we progress throughout the year.

That's what we're laser-focused on. and we're seeing a very positive reception. I couldn't have been highlighted more than the reaction we just saw at our largest annual meeting of surgeons where we had very high turnout to get hands on with these products in the lab, learn from our top faculty how to employ them into their practice. And we're looking forward to picking up a lot of new users as they return home. So I think everything is going as planned. Our MTP Fusion product is tapping into a market we've never played in before, and we're becoming a pretty quickly here, a very large share player in that space. And I think it speaks to the power of our model and our strategy and the ability of our sales team to execute.

Our next question comes from Lilly Lozada with JPMorgan.

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

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

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

Sure. Yes, some of them are -- some of these products are obviously built to bring on new surgeons that have not been users of lapoplasty in the past. The Lightning instrumentation is going to be new and novel and has a lot of appeal to it. We just had a training on that, an alpha kind of preview training at our [indiscernible] Conference very, very great reception from the surgeons that saw there. and the Speed TMT implant, that appeals to a very large surgeon audience that we have not appealed to before with lapiplasty because this group of surgeons like to use 1 fixation plate versus 2, which has been our traditional -- so we think we can appeal to new users there. And I'm sorry. maybe I lost the other part of your question, Lilly, if you don't mind, remind me or Mark can pick it up.

And maybe Lilly, I'll jump in a little bit. This is Mark. I think our primary strategy has been that we -- to first build a very large customer surgeon base, and we're really proud of the work that we've done that's taken a number of years, and we've really made great strides in increasing this customer's surgeon base over the last 3 or 4 years. Now that we've got this large surgeon base and what John talked about earlier, is that we've really only gotten maybe 1/4, 25% of their cases because they're doing other types of cases, we just have had an offering.

So I think the first opportunity -- strategic opportunity is to add these new products to our existing surgeon base, that's strategy and focus, number one. We know that there's many more bunion procedures that we have not been getting historically, and that's the biggest opportunity for us right now. With that said, and John is exactly right, we strongly believe that in addition to that focus on our large surgeon base, there are other surgeons that have just not really spoken to or become Treace customers and it could be because of their preferences. And in MIS is one example. We just haven't been in the MIS olceotomy space, and now we can play there. So it gives us an opportunity to provide those offerings to our large surgeon base and also reach outside of our customer base to bring incremental surgeons.

But I don't think this year that we're looking to expand in dramatic form outside of our current surgeon base. We will add new surgeons this year. We've already done so and will continue to do so. But I think the bigger opportunity right now is to drive deeper into our existing 3,300-plus customer surgeon base.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Good morning, everyone. I'm Lily Lozada. I'm on the med tech team here at JPMorgan. Very happy to have the Treace team with us here today to kick off Wednesday. John is going to do a bit of a presentation for us, and then we'll jump into some Q&A.

Thanks, Lily, and good morning, everybody. Thanks for joining us today. It's certainly great to be here at the JPMorgan Healthcare Conference and have some time to talk about Treace Medical. Safe harbor disclosures are here. Please refer to our SEC filings on our website for detailed presentations of risks.

Treace Medical is a medical device company with a focused mission to improve surgical outcomes for bunion patients. Since our IPO in 2021, we continue to execute on our strategic plans, resulting in strong market share gains and encouraging adjusted EBITDA progress. With continued gains across our key operating metrics, this reaffirms our belief that we have the right strategies in place to expand market penetration with our differentiated technologies.

We are the bunion experts. In 2015, we pioneered and commercialized the Lapiplasty 3D bunion correction procedure to bring a better solution to surgeons and deliver better outcomes for patients. Our innovative 3D bunion solutions are backed by strong IP, marketed by the industry's only bunion-focused direct sales channel and have established Treace Medical as the largest dollar share player in the U.S. bunion market today.

In Q3 of last year, we transformed our business from a Lapiplasty company to a comprehensive bunion solutions company by commercializing several new 3D bunion technologies into our base of over 3,300 surgeon customers. We're pleased with the adoption we've already seen with these new technologies as demonstrated by our accelerating procedure volume growth in the back half of 2025. With an expanded portfolio and sales force, we anticipate continued case volume growth, and we will maintain focus on operating expenses and efficient capital deployment.

With 1 in 4 adults in the U.S. affected by bunion deformities and such large gaps in treatment success, we believe the bunion market represents one of the most underpenetrated opportunities in medtech today. Bunions are hereditary in nature and progressive. They don't go away, but tend to worsen over time. And this results in roughly nearly 4.5 million Americans seeking medical attention each year for their bunion pain. And we estimate about 25% of those patients are symptomatic surgical candidates. And it's this group of just over 1 million patients that represent our $5 billion-plus U.S. TAM.

This said, less than half of these candidates are opting to have surgery, and we believe this is largely due to patient reluctance due to the downsize of past surgical approaches. Notably, pain, lengthy recoveries and high rates of recurrence.

We believe most bunion surgeries fail before the patient even leaves the operating room. There are 3 planes involved in the bunion deformity and modern research demonstrates how important correcting this third frontal plane is on surgical outcomes, as failure to properly correct it can result in 10 to 12x greater risk the bunion will return. And it's this third frontal or rotational plane that was historically unrecognized and unaddressed in conventional treatments. Until our company and our surgeon advisers targeted it and developed our initial solution over 10 years ago with Lapiplasty.

So with the introduction of the Lapiplasty 3D procedure, surgeons now had a new option, a comprehensive 3D fix for this 3D problem and one that can lead to more consistent and more enduring corrections. Lapiplasty offers proprietary instrumentation and a surgical method that allows surgeons to confidently and reproducibly correct all 3 planes of the bunion deformity in 4 straightforward steps.

Without the patented Lapiplasty tools and methods, this is a very challenging procedure for most surgeons to perform. So Lapiplasty effectively delivered surgeons a paint by numbers approach to 3-plane bunion correction. And this, along with 10 years of positive clinical results and our continued commitment to make Lapiplasty faster, easier and even more reproducible has allowed Lapiplasty to be adopted across the broad surgeon community.

And we've strategically invested in multiple clinical data sets to track and report the results of our proprietary Lapiplasty procedure on patients. Last September, we announced peer-reviewed publication of our positive 4-year interim results from our ALIGN3D multicenter prospective Lapiplasty study. Results demonstrated low recurrence rates, sustained and significant improvements in both pain and validated patient-reported outcome scores. This unique combination of reproducible outcomes and broad surgeon adoption supported by this level of differentiating clinical evidence has made Lapiplasty the gold standard in Lapidus surgery today.

And now that we have a large bunion-focused sales team in place and a growing base of over 3,300 customers, we've transformed Treace Medical from a single technology Lapiplasty company to a comprehensive bunion solutions company. With our broad suite of 3D systems now in hand, we're highly focused on accelerating our penetration into the bunion market and advancing our market leadership position, while also leveraging the foundation we've built within our customer base to introduce additional technologies that we believe can expand wallet share over time.

In 2018, our Surgeon Advisory Board published a peer-reviewed paper describing 4 classes of bunion deformities. As a business, we initially focused our early efforts on driving market share and acceptance across all these classes. That said, it's been our strategy all along to address all 4 of these classes of bunions with targeted 3D corrections, giving surgeons more options to address the evolving needs and expand the base of potential surgical candidates over time.

Here, you see the family of advanced 3D systems we now offer our surgeons to target these 4 bunion classes. As focused experts in this space, this is what we do best, developed highly-instrumented 3D approaches that can truly democratize these challenging procedures to speed adoption across the broad surgeon community.

Our new Nanoplasty and Percuplasty 3D MIS systems target the high-volume osteotomy segment of the market, a segment that we estimate represents 70% of the 450,000 annual cases in the U.S. And then we have our new SpeedMTP system, which targets roughly 20% of bunions who have arthritic great toe or MTP joints. MTP fusion is one of the most common procedures performed by foot and ankle surgeons, making it a strategically important procedure for Treace to serve and to innovate in.

Prior to launching these 3 new systems, we estimate we have captured about 25% on average of our 3,300 customers' total bunion-related volumes. In 2026, we are laser-focused on penetrating the remaining 75% of their cases by leveraging our expanded portfolio of targeted solutions. And we're encouraged by the early uptake we're seeing. Just 2 quarters into full availability of these systems, we're already seeing mid-single-digit bunion procedure volume growth.

At a high level, a key component of our innovation strategy involves making our 3D bunion procedures less invasive, resulting in less pain, quicker recoveries and minimizing visible scarring. We believe this not only makes our procedures more attractive to patients today, but more appealing to an even larger number of the nearly 4.5 million U.S. bunion sufferers in the future.

Surgeon and patient interest in MIS bunion surgery is high. And from a patient's point of view, you can see how much more appealing a Treace MIS approach would be to a traditional open osteotomy. That said, today, there are some real rate limiters to expanding this emerging segment of the high-volume osteotomy market, specifically steep learning curves, high variability of outcomes and lack of attention to correcting this third or frontal plane component of the deformity with current MIS options.

As a result, we believe that only around 10% to 15% of the estimated 300,000 metatarsal osteotomies are being performed with MIS approaches today. But this is changing. Treace Medical is now a driving force in this segment and pioneering the future of MIS bunion surgery with a full suite of advanced 3D technologies to meet the evolving needs and preferences of surgeons and patients.

Our Percuplasty and Nanoplasty systems are performed through poke holes or tiny incisions and provide a unique experience for the surgeon, a highly instrumented procedure that allows them to dial in all 3 planes of the bunion deformity with the control and the confidence that they need. And we've complemented these with our own MIS Power System. This is the console and handpiece that powers the high -- the single-use cutting burrs that are used in the Percuplasty procedure and can also be used across a wide variety of other MIS procedures throughout the foot.

MIS is on the rise, and we believe we are well positioned to win in this space. During 2025, we've already enabled hundreds of first-time MIS surgeon users as well as experienced MIS users using competitive products to confidently introduce our advanced suite of 3D procedures into their practice, and we're only getting started.

Since 2015, our company has been hyper focused on evolving our Lapiplasty technology, making it easier, faster and minimally invasive with our Micro-Lapiplasty option. We estimate Lapidus Fusion represents about 30% of the estimated 450,000 annual bunion procedures in the U.S. today and represents the largest dollar segment of the bunion market, a market where we are the recognized leaders.

And in 2026, we plan to commercialize our next-generation Lapiplasty platform known as Lapiplasty Lightning. Lightning combines next-generation 3D correction instrumentation with new implants based on our novel SpeedPlate hybrid fixation technology. Lightning not only reduces steps for a faster procedure, but importantly, it provides surgeons greater accuracy and greater control over their 3D correction. We performed our first case using Lightning technology successfully last week, and we look forward to full commercialization towards the end of 2026.

The age of personalized surgery is here, and we continue to innovate and expand surgeon access with our IntelliGuide PSI platform, industry's first and only preoperative planning and patient-specific cut guide system for bunion and midfoot corrections. Not only can our IntelliGuide technology offer a personalized treatment, it streamlines procedures and gives surgeons greater confidence and control, particularly in more challenging or revisional deformity corrections.

While focused on deeply penetrating into the bunion market, we've been strategically adding complementary technologies to allow our sales force to tap into adjacent procedures and more fully service their surgeons' needs over time. During 2025, we expanded our SpeedPlate and sterile instrument line with multiple launches in both of these categories. We also introduced the company's first biologics platform.

In 2026, we plan to add new offerings into these categories and commercialize our Percuplasty SuperBite line of compression screws, arming our sales force with another bread-and-butter fixation platform so they can more fully service their customers' needs in their cases.

All of these technologies are designed to wrap around our core bunion-related procedures. We believe this allows our sales reps to bring greater value to their customers while also creating greater selling efficiency and scalability.

Speaking now to our go-to-market strategy. First, we are focused on addressing foot and ankle surgeons most frequently performed high-volume surgeries with a comprehensive suite of best-in-class procedural solutions. And we provide surgeons with excellent education and hands-on training on these technologies through our bunion masters training events. This enables our new surgeons to be well equipped to confidently incorporate our procedures into their practices.

And then our surgeons are supported by the expertise of our clinical specialist employees and our bunion-focused direct sales team, a team that we will continue to expand in 2026 with the addition of highly-experienced foot and ankle sales reps. We believe our focused approach and our passion and commitment to helping our surgeons achieve better and better outcomes for their bunion patients is a key differentiator for our company and a reason why so many surgeons embrace Treace's products.

Our goal is to increase our rate of penetration into the $5 billion-plus U.S. bunion market by leveraging our comprehensive portfolio and our focused sales team while also adding complementary technologies to increase customer wallet share over time. We've made significant progress towards this goal by increasing our surgeon customer base from nearly 1,300 active surgeons in 2020 to over 3,300 active surgeons in 2025, a 21% CAGR in surgeon user growth over the past 5 years. And our surgeon customer base, on average, uses more of our products each year as they choose to treat more and more of their patients with our growing portfolio of best-in-class technologies.

All of this has driven our bunion market penetration to nearly 8% of all surgical bunion cases in 2025, doubling our penetration over the past 4 years. And while we're building this position in the market, we've also made significant progress on improving our profitability. We are confident that we have a great business model, which will enable us to sustain strong gross margins and scale our operating expenses.

In 2024, we improved adjusted EBITDA by 55% year-over-year, putting us in a much stronger footing, and this improvement remain a core focus in 2025, where we again do expect profitability in Q4 and strong year-over-year improvements.

In addition, for 2025, we expect to see a significant reduction in cash usage. And we also strengthened our balance sheet by securing a new debt facility in the fourth quarter of 2025, giving us more flexibility to support and accelerate our commercial plans.

As the leader in the largest and most unpenetrated segment of the foot and ankle market, we have now transformed our company from a single technology player to a diversified and comprehensive 3D bunion solutions portfolio company. We've seen positive customer response and uptake on our new technologies with strengthening procedure volumes in the back half of 2025, a trend that we expect to continue in 2026 as we continue to gain market share. We have a robust R&D pipeline behind this plus additional drivers we expect to continue to fuel the company's growth in the years to come.

Thank you very much for your time. Appreciate being here. I think we'll now take some time for Q&A.

So you preannounced fourth quarter results earlier this week, so maybe we can start there. Revenues came in at $62.1 million to $62.5 million, which is a little bit ahead of where the Street was. So any color you could share on some of the revenue drivers that drove the results in the quarter and what trends looked like exiting 2025?

Sure. Well, the drivers in Q4, we saw continued robust uptake of our new technologies. Obviously, it's a busy time of the year for bunion surgery, even if it was a little dampened compared to expectations. Our 3 new technologies continued to drive higher adoption from Q3 and into Q4. So we saw good penetration there.

In Q3, we had about 20% of our overall 3,300 surgeons that have used 1 or more of these 3 new technologies. We built upon that in Q4. So we're really pleased with what we saw there. And it was just good execution. It was right where we thought it would -- well, where we thought it would land, where we communicated, and we're pleased with it, and we'll continue to build on that for 2026.

Maybe we can talk a little bit more about underlying foot and ankle market trends. There was some softness over the course of 2025. We heard some of your peers say that they saw trends improving around the time of the third quarter earnings call. So how did that look exiting 2025? I know it's typically a seasonally stronger quarter for you, but how have demand trends looked compared to years past?

So during 2025, we saw variability in patient scheduling, a little softer patient demand here overall. And Q4 is always our largest volume quarter. So we didn't see the lift that we would expect to see going into September and October, and that kind of carried through into Q4. That said, we're pleased with seeing the procedure volumes increase we had. We had mid-single-digit procedure volume growth in Q3, and we did a little better on the procedure volume growth rate in Q4, but still in that mid-single-digit range.

But as we head into 2025, it's one of those variables that we're watching and how the patients will respond, macroeconomic environment, consumer sentiment, some of these things are playing into the mix. Yes, other companies commented on softness in either certain segments of the foot and ankle market during 2025 or the overall market. And we think there was a patient dynamic at play in terms of their decisions to ultimately undergo surgery during that year.

2026 is a big year for you as you focus or as you shift from being focused on purely Lapiplasty to adding 2 pretty meaningful new products to the portfolio. So can you share some of your early insights and learnings from the rollouts of Nanoplasty and Percuplasty? What's physician feedback been like? And how has uptake trended relative to your expectations?

Yes. The response to these 3 new technologies, we have 2 technologies targeting the largest segment of the bunion market, 70% of the bunions being. And this emerging trend of MIS, it's early on in terms of enabling surgeons to get great results. So as we expose surgeons to these new MIS technologies in our training labs, they were very excited about what our instrumented technology can do for them. They're used to really struggling with these procedures or having high variability.

They came in -- they saw in the lab a procedure that they can take and incorporate into their practice and instead of having a 40 case learning curve, have 2 or 3 cases and they really got this instrumented jig system down. That's what we're so great at. That's what we did with Lapiplasty. It was so successful is take this challenging procedure and give instrumentation that allows them to do it reproducibly over and over again. So we saw that play out.

And to the extent there were maybe some decisions along the way where a surgeon decided to treat a more moderate bunion instead of a Lapiplasty, they want to try a Nanoplasty. It was new. It was from Treace Medical. They've seen it. So we had some of that during the rollout, too. But the reaction has been great.

The SpeedMTP is another category we haven't played in, in the past. It's a high-volume procedure performed by foot and ankle surgeons, MTP fusion. Treace is now a player in that space. We've leveraged our differentiated SpeedPlate fixation technology and instrumentation to make a really, really great system, and we're converting competitors in that space today, and the sales force is having a great time with them. So those 3 technologies, we're having great results. Surgeons are responding in a very positive way, and we'll continue to drive that really hard during 2026.

So with the addition of these 2 new products, it really rounds out the portfolio and puts you on more equal footing with some of your larger peers that have had larger bags of ortho products to sell. So where have you been seeing demand coming from? Is it largely just like conversion from Lapiplasty to Nanoplasty and Percuplasty within existing accounts? Or are you seeing wins in entirely new accounts and switches from competitive products?

Yes, we're seeing both. Our 3,300 surgeon customers, on average, we have 25% of their cases with Lapiplasty. So we're going in there, and we're filling these gaps. We didn't get MTP fusions before. Now we're getting MTP fusions from our customers. We didn't get their osteotomies before. Now we're winning some of their osteotomy business with these MIS technologies.

And we're bringing in a lot of new surgeons into the funnel that want to do MIS that they're looking at the different companies and what they offer, and they're looking at what Treace offers and trying it in the lab and they're saying, that's the one I want to use. So we're kind of winning on both fronts, introducing new surgeons into Treace. And once they start using one of our MIS products, they get open to using some other products. And we've seen some of these new surgeons come in to Treace using MIS, adopting our SpeedMTP, and then using Lapiplasty for their Lapidus cases. Every surgeon needs to do Lapidus one time or another and for a certain range of their patients.

So as we bring more surgeons into the fold using this broad portfolio, it gives us an open door to address all their procedures for the first time with procedures that are all best-in-class in each of their categories.

Despite the growing preference for MIS osteotomy, Lapiplasty is still a really great product. So how do you see Nanoplasty, Percuplasty, Lapiplasty like fitting into the portfolio? Like what role does each of them fill? And how should we think about the mix of your business looking over time?

Yes. A lot of surgeons have their own algorithms and from their training programs, we have a lot of surgeons in our 3,300 customer base that just won't do an osteotomy. They'll do a Micro-Lapiplasty, they'll do something minimally invasive maybe on the Lapiplasty or Lapidus side. So some of them have an algorithm that says, most of my patients are going to be treated with a Lapidus procedure. Other surgeons, most I'd like to do with an osteotomy and avoid Lapidus where I can.

So having this bag allows us to sort of fit their own mental and training algorithms and let them choose which of our technologies they want to apply to their patients. So we think that puts us in a really strong position.

Correct me if I'm wrong, but I think the market historically has been 70% or so osteotomy and the balance Lapidus. Is there any reason that at least on a volume basis, your business won't look similar?

Today, it is -- that's a possibility down the road. We need to see how that will play out. Again, you have certain preferences within our surgeon base towards what concentration of Lapidus technology they're going to use on their patients and then you have that other end that's more osteotomy biased. So it could shift a bit over time, but we'll just have to see how that plays out.

The great news is these are good ASP products. They're winning in their spaces. They're getting great reviews from our customers. Our sales force is very excited about these technologies. We're seeing a lot of highly experienced reps from other companies now that Treace has this broad bag wanting to come join Treace. So that's a great opportunity for us to continue to build that sales team strength over time and bring in new customers.

Maybe we could dive a bit deeper into each of the key levers of the revenue model: surgeon adds, price and volume. How should we think about the implications of these new products on price? Historically, you had been seeing nice consistent increases in price year-over-year as you've added more products to the portfolio. So to what extent can additions of ancillary products offset the mix headwinds from the MIS osteotomy products? And how do we think about ASP on a blended basis?

Mark, do you want to jump in?

Yes. So there's -- as John showed in the deck, there's a lot of complementary industrial products, and we continue to release those. There are a lot that we continue to release. And these are sterile instruments that are used, single use in a Lapiplasty case or other types of procedural cases. So that's always helpful. There are items that are designed to assist the surgeon and make the technique, the surgery a little quicker. So we'll continue to do that and add.

So when we think about overall, though, we are seeing a trend that there are lower ASPs for some of these minimally invasive procedures versus the ASPs or the revenue that we're generating per case for Lapiplasty. So there is a difference. It is lower. So overall, it will probably bring down the average for the company.

But what we're seeing is, and John mentioned it, that we're seeing a nice uptick in our case volumes. So we believe that we can attract more surgeons and more of their cases. Specifically, when we think about that from a case volume perspective, we've talked over the last few years that on average, we're getting only 1 in 4 or about 25% of our surgeons' cases. Now we really have the opportunity to really push into that other 75% that we haven't really been successful in because we just didn't have those products. And so we really think that, that case volume is really going to drive and really help that overall positioning from a revenue perspective.

But as you mentioned in your question that these other products do have lower ASPs. But we're getting the cases that we didn't get in the past. So for example, the MTP cases. Those are cases where patients come in, they have some kind of bunion, but the surgeon says, hey, I can't do a Lapiplasty or a Lapidus or I really can't do an osteotomy, I need to do something else." Well, now we've got a procedure there. So that's an incremental case that we can pick up that's going to help our overall revenue.

Yes. You had a pretty meaningful bump in reimbursement last year. To what extent does that create any cushion for price? And what sort of impact did you see that have on uptake?

Yes, good question. When that happened, we were a little cautious in our commentary. I think as you will recall on that in terms of what type of tailwind that might create and that we need to watch it a little bit. A lot of our procedures in the hospital outpatient setting because other procedures are done along with the Lapiplasty we're already at that elevated level. The ASC was a big, big change kind of going up 100%.

So at the end of the day, it's a decision at the facility level, whether they're going to use a higher-end technology or not. We did -- we have heard about around the edges, some use of SpeedPlate technology maybe in ASCs a little bit more, but the material impact wasn't really there. The way we view it, though, it's the big win is for the patient because more patients now have an opportunity to get their Lapiplasty or high-end bunion procedure done in an ASC setting, which is definitely a lot more patient friendly. I think all of us would admit than maybe going to a hospital. So that's kind of the way we see it.

You talked about the big potential with these new products really being the tailwinds to volume. So maybe we could dig a little bit deeper into that. How should we be thinking about volume growth from here given you're going from targeting just 1/3 of the bunion procedure TAM to tripling that essentially. So do you think we can see an inflection in volume growth from here?

I'd say that's certainly our aspiration, our goal. We'd like to build upon that, but we also want to make sure we're measured in how that can translate in 2026. We're still dissecting data from Q4, as you can imagine. And looking at the user trends and the mix trends and what segments were driving the volume. And -- but yes, we aspire to really trying to ramp that procedure volume growth as high and as quickly as we can.

And that's absolutely what our commercial team is focused on. They've done extremely well. Think about what -- as a company, what we've been able to do primarily as a single product company and to get and to drive nearly 1/3 of all the surgeons in the U.S. using that technology. And so that's what the commercial organization is focused on is saying we can go to our surgeon customers and say, look, we have and what's shown here on the screen, we have all these solutions for you.

We can be agnostic and we can go to our surgeon customers and say, what's best for your patient. And we believe that we absolutely can pick up incremental volume as a result of that. So that's what we're focused on this year. The first place where we're going to start is looking at our large surgeon customer base and continue to expand on that volume. And then we're going to pick up additional surgeon customers as well. But that's the aspiration. That's the goal. That's the focus for this year.

Just on the topic of like surgeon adds, that's the last lever of the model. How much of a focus is expanding the surgeon base versus going deeper into existing ones? And where do you stand in penetrating the overall surgeon opportunity?

Maybe I'll start with that. So I think given the priorities, one, we're really proud that we have 1 in 3 surgeons in the U.S. that are using Lapiplasty and Treace products. So that's a great place to start. It's so much easier to work with and introduce new products to your existing customer surgeon base. And so that's going to be our primary focus.

With that said, these new procedures -- these new products allow us to approach surgeons that maybe they're more osteotomy biased. Maybe they have a bias more towards MTPs or something else that we haven't offered previously. So we're going to continue to add new surgeons, but I think the primary focus is to really offer and get more of our surgeon base using more of our broad portfolio.

There's a lot of moving pieces this year. They're moving in different directions. I know you haven't guided, not expecting you to, but how should we interpret what all of this means for growth this year?

Yes. For growth this year, we've been talking about in Q3 of last year, Q4 of last year, this mid-single-digit case volume growth. We believe that, that case volume growth will continue into 2026. And we're working through with our commercial organization and with our surgeon customers, what that mix is ultimately going to be. You mentioned that, that mix is shifting this year.

But we think overall that it's going to be additive because of our new products, so we will drive that commercial volume and success, that case volume. And so that's what's going to -- we believe will continue throughout this year. And it's going to come and we believe that it can be in all of these categories of our products. The MIS is just beginning. We believe that's going to be a strong place for us and SpeedMTP as well is going to be strong.

John, in your presentation, you talked about adding on to the sales force. On the third quarter call, you also talked about using distributors in certain markets to launch these new products. So maybe we could dig into your commercial organization a bit more. What does the direct versus distribution strategy look like from here? And any implications in terms of what that means on like price and margins going forward.

Sure. Great question. We started the company using 100% independent sales agent model, and we evolved that over time. And at the IPO, we took the opportunity to really build out the direct sales force, ramp that into the high 70s to 80% of our revenue mix, and we're around [ 70% ]. 3/4 of our revenue coming from the direct channel today. There's just certain geographies and areas and expertise within the independent sales network that makes sense. And we continue to partner with those groups, and they've proven they can drive the business, and we'll continue to have that mix and blend within our channel. But predominantly, that mid-70s type of direct sales mix is kind of the right blend for us, we believe.

And we've already targeted some additional areas and territories throughout the U.S. where we can add some of our direct sales reps in those territories. So we'll continue to add this year in targeted areas where we believe that we can gain more volume.

We've talked a lot about MIS osteotomy. Maybe we could talk about some of the other new products that you're rolling out. You talked about Lapiplasty Lightning. So maybe we can start there. Can you remind us what exactly makes Lapiplasty Lightning different? And how should we be thinking about the impact that this has on Lapiplasty? I know there's a big shift to MIS osteotomy. You had previously talked about Lapiplasty really climbing up there in terms of penetration. And so do you think that Lightning is something that could reinvigorate growth in this portion of the business?

We certainly do. We're leaders in this space. We're the lead innovators in this space, and we're committed to having the best technology. We want to be the best technologies on all fronts of ways to treat the bunion. And Lightning is pretty exciting in that it's a culmination of years of observation and learnings, and we have a design team that's really dialed into how do we make this procedure quicker, easier, give you more control over the ability to move the bone in 3 planes. And then how do you improve upon the fixation options.

So speed -- I'm sorry, Lapiplasty Lightning instrumentation, it reduces steps for a faster procedure and gives surgeons more control over how they can move the bones and then they can put on their implants faster. And we have an implant technology that's going to, we believe, appeal to a new surgeon audience as well. Some surgeons like to use a certain type of fixation construct, and we don't have that fixation construct today. So between the improvements in the instrumentation and the new implant technology, we think this can appeal to a broader surgeon audience as well.

Is it fair to assume that this comes at a premium to -- is it mini? Was that the last version of Lapiplasty?

Micro.

Micro. Okay.

Well, the implants are the sale, the item we sell. So it's going to be a similar sale. But the instrumentation, it's just going to demonstrate our commitment and give our surgeons, our current users that next generation to make them even better and better and more proficient and then appeal to a new surgeon audience as well.

Maybe we can shift gears a little bit, talk about the P&L. You were really close to adjusted EBITDA profitability, and you still aren't that far off. But how should we think about what these like strategic changes and product changes, the implications that they have in terms of profitability and like how you think about balancing, reinvigorating growth and driving profitability at this point?

Yes. So first and foremost, I think it's important to realize that all of these new products still have the great gross margins that we have and that we've historically had with Lapiplasty. So all these new products are not going to limit that profitability at that level. So that's great news. We will continue to have high 70%, close to 80% gross margins across the business, across all these product lines, which is fantastic.

As we think about profitability, we definitely made an encouraging improvement in bottom line adjusted EBITDA in 2025 versus 2024. We haven't given the final results there, but we guided back in November, and we guided to strong improvements in 2025. So we'll have more to talk about how the full year ended a little bit later.

But as we think about 2026, there's going to be some natural ways where we will have some leverage on the P&L. We're very focused on improving profitability as well as reducing our cash burn in 2026. We made strong improvements in 2025, again, from what we talked about on our last earnings call, at least 30-plus percent improvements in adjusted EBITDA and 40% to 45% improvements in reducing our cash used in 2025 versus the prior year.

So there's new opportunities that we have in 2026. Some of them we've already put in motion in 2025, and some of the changes that we made in our overall cost structure. There's some things that we did in 2025 that will -- we won't need to repeat in 2026. So it's going to be some natural leverage. And that's -- as we introduce and rolled out all these new products, we definitely needed to have the capital for all the instrumentation. So now we've got all that. So we will -- that will be an opportunity that we can -- we won't need to invest as much into our surgical instrumentation in 2026. So that's going to be beneficial in our cash usage.

And then there's some of the medical education. We leaned in really heavy in 2025 to really get the word out on all these new products that are coming. Now we are still very focused on medical education. We think that's a core value to the company and what we do for surgeons. We believe that it's incredibly useful and essential for their success. So we will continue to educate surgeons, but not at the same level. So there's going to be some natural benefits that we're going to have in 2026 versus '25.

With that, we're almost out of time. So maybe we can wrap it up there. Thank you, John and Mark, for being here, and thanks, everyone, for listening in.

Thank you.

Thank you.

Good afternoon, everyone, or I guess it's still morning a little bit, but welcome to the UBS Healthcare Conference Day 1, and happy to introduce Treace Medical. With us here today, we have John Treace, CEO; and Mark Hair, CFO. I'm Priya Sachdeva, one of the med tech analysts here at UBS, and looking forward to a great conversation with you guys.

Sounds great. Thanks, Priya. Great to be here in this beautiful location. We love your meetings. They're always in great spots.

Nice spots and not too far for you guys at least. But yes, maybe just to kick off, we can give a little bit of an overview of Treace and your guys' product offering.

Sure. Treace Medical was founded and developed the Lapiplasty Bunion Correction System. We've been advancing that technology for the past 10 years. We've achieved over $200 million in annual revenue based largely on that platform technology. And now we're in a transformative phase where we're developing new solutions for different types of abundant indications, and we can talk a little bit more about that.

Yes. Maybe a good segue from there is just talking about current portfolio and some of your new innovations and offerings, and how that's filling the gap for surgeons versus products on the market today?

Sure. And we, over the past several years, started looking at bunions and looking at sort of 4 different categories of bunions, and diving deep into those with our surgeon design team and our engineers and developing solutions that could put more focus on those 4 different areas.

If you think about Lapiplasty's position in the market, it was this broadly versatile technology that could apply to a wide range of Bunion deformities. And what we found over time was many surgeons would adopt that technology for the vast majority of their bunions. Others would adopt it for a partial or a portion of their bunions. And if you look at our 3,100 surgeon customers, the average user uses Lapiplasty on about 25% of their bunions, we estimate. So that means there's 75% of bunions we're not getting to with our current solutions. So the 4 categories of bunions that we looked at, we've got the mild to moderate bunions. We've got the moderate or more severe bunions. We have bunions that have a mid-foot deformity component to them. And then we have bunions with great toe joint arthritis.

So the goal was how do we get after faster penetration into those 4 distinct market areas. We knew Lapiplasty could serve the broad group, but most surgeons kind of decided to put Lapiplasty more towards the severe side of bunions. And so we said, let's get after the more mild to moderate bunions more aggressively. So to do that, we designed 2 minimally invasive osteotomy solutions. These are best-in-class instrumented systems that can be quickly adopted in the surgeon's practice. And it solves a big challenge with current minimally invasive osteotomy solutions. Osteotomies are 70% of the procedure market today. And so it's the largest volume segment that we're not diving deep into. So surgeons struggle with minimally invasive osteotomies today. We developed 2 great solutions for this market. Then there's the part of the market that's the big toe fusion market. The big toe Fusion market represents about 20% of overall bunions, we estimate. We've had no product solution for that category. Now we do with our SpeedMTP great toe Fusion System.

So as we take a step back, now we're well equipped to go after all 4 categories with targeted specialized solutions and dive deeper in the 75% of cases that we're not getting to today.

Yes. I want to jump in and kind of talk about how we drive that penetration higher and how these products are bringing a new offering and all the innovations. But I think before we get there, you guys did report earnings last week. Would love to just maybe level set kind of the dynamics you saw in the quarter that prompted the guidance lower and things like that. Just help us parse through all those dynamics and where are you from here?

Sure. We were a little surprised as we got into the quarter seeing continued softness in demand for Lapiplasty, and really, really the driver of that's just more interest around these minimally invasive osteotomy solutions. So as we went through the quarter, we saw that shifting. And we also had an underlying softness in the relative patient demand market. So when you cast that forward, we saw it through the summer, we saw it through September. We saw it in October. And by October, we had to decide we're just not -- we're not tracking at the same rate. So we had to make an adjustment and take down our number for Q4.

Yes. I mean I know it's hard to kind of take out that crystal ball and think about market sentiment and where to from here. But if you could maybe compare to historical periods of some type of market weakness or a change in patient appetite, what do we need to see to kind of move forward? And how are the new product offerings kind of helping us to also move forward from that?

Yes. I think we're seeing some really good underlying signs of vitality. Like in Q3, we had more mid-single-digit bunion procedure volume growth. That was great to see despite relatively flat revenue growth if you exclude that stocking distributor stocking order we had in the quarter. That was encouraging, and we continue to see that volume increasing as we go through October and into Q4.

Yes. And I know that there's a little bit of an ASP dynamic that's kind of offsetting that growth, right? So maybe just trying to understand at what point do we reach -- when do the curves cross to start moving beyond that headwind? And maybe walk us through that because mid-single-digit growth is very encouraging, but...

Yes, it is. And we're learning through Q4. We're going to need to get through this quarter and see how this mix shift occurs. The newer procedures and products are at a lower average selling price than our Lapiplasty. So that's putting that dampening on it that I mentioned that we continue to see during Q3 and into early Q4. So we're going to need to see that play out. But today, we have 20% of our current customer base that's adopted one or more of our new technologies. So we're seeing traction with our existing base of surgeons. It's just now we want to train these surgeons, get them more up to speed on our new products and get more of them using 1, 2 or 3 of our new technologies into their practice, so we can go from that 25% to 50% of their practice over time or more. That's what we're focused on doing.

Yes. Can we talk about utilization maybe between those -- maybe the newer physicians that are adopting versus existing accounts that are now getting new products? Like what are we seeing from a difference in growth within these 2 subsegments of your user base?

Well, we're seeing a couple of things. We've got the existing surgeons that are adopting new procedures, which is great to see. We're also seeing new surgeons come on board to Treace Medical because the [ beauty ] traditionally is a Lapidus fusion company, and they weren't really that much into Lapidus Fusion. Now we have these new bunion technologies that are more appealing to them. So we are bringing on some of those into the fold. They're adopting our new products, and we're finding some of them are actually adopting our legacy Lapiplasty and Adductoplasty products, too. They're just not adopting those at a rate that's fast enough to make up for the softness on the other side with Lapiplasty right now.

Got it. When you think about a high-volume account, what does that look like from a growth perspective? And maybe early feedback that you're hearing from these accounts that have high utilization?

It's still a little too early to tell. We're watching the mix shift in these procedures. And we certainly know today, we have surgeon groups that are doing more volume with us than they were before. But we need to let this play out another quarter. Q3 was our first quarter of having this full portfolio fully available. And we learned something there, and we're learning more in Q4, and we'll have better details around that as we go forward.

Got it. Maybe just at a high level, like what are surgeons saying today that they're using new products? What are we hearing from a benefit perspective? And I think another dynamic that's interesting is it seems like from our checks, like training is a little bit easier, too, with the new product offering. So if we could talk about that and what that's contributing to growth as well.

Yes. We've had very strong demand for our Bunion Masters training events. This is where the surgeons get introduced to not only our existing, but the new products as well. And the response of these products is absolutely fantastic. Surgeons are recognizing how easy they are to use relative to traditional minimally invasive osteotomy solutions. Traditional minimally invasive osteotomy solutions can take 40 to 50 cases to get up to speed with. We've got systems that they can go do in a lab and go do a couple or 3 or 4 cases and be up the learning curve and comfortable doing it in their practice. So the response we're getting from surgeons and the uptake we're getting on these new products is great. It just needs to happen faster so that we can overcome the ASP difference between a Lapiplasty case and these new products.

What drives that, the time frame? Or how do we get over the barriers that are still existing today from a market perspective and then from a Treace's perspective?

I think from a market perspective, we continue to train these surgeons and get them using these new products. We reinforce our sales team, and continue to build upon that. And then we also launch additional products that can tap other adjacencies and add procedural volume. We've got a couple of nice new products coming out next year. We've got a new compression screw system that's going to give our sales reps a more fortified portfolio around the surgeons. And then we have Lapiplasty Lightning and new forms of our SpeedPlate technology that will continue to feed and fuel that growth around that surgeon as a customer.

Got it. When you think about the competitive moat for Treace, I mean you have all these great innovations coming to market next year. How do we think about Treace versus competition today? And how is the sales force kind of utilizing that when they're on the ground?

Yes. It's -- we obviously have a pretty strong patent position, broad and deep in our Lapiplasty technology. We continue to file patents on our other technologies. We are enforcing our patents. We've been actively doing that out there. But our big advantage in our best defense is a really strong offense, and it's our rapid innovation. We don't pick a lot of products to get involved in. We pick a few, but the few we pick, we design them really, really well so that surgeons will really appreciate them. And then we spend time training them properly on them. So they feel confident with them, and we send them the clinical specialists for their first cases, and then they're handed off to a sales rep that's highly experienced in these products. So what we're known for is really caring about the surgeons experience and outcomes once they embrace our products. And I think if we continue to do that and be faster and better, that's going to play well for us long term.

Got it. Thinking about your guidance for next -- for this quarter, just thinking about as we head into 2026. I know not asking for guidance, I would love if you could give it to us today, but just the run rate in terms of a market perspective, how should we be thinking about what upside to 2026 could look like or maybe the drivers and tailwinds of potential upside to where -- the Street is in terms of numbers today?

And maybe I'll start and John can add a little bit to it. I think it's a great question, and we talked a little bit about it last week on our call that as we were watching and observing this nice uptake on our new products, we did have case volume increases, and that's what drives the underlying business. So I think that is strong, and we're very encouraged by that.

Some of that momentum that we saw in third quarter is -- it's early days in Q4, but we saw that same momentum coming into Q4 and in some respects, even increasing. So we want to feel that. We believe that our surgeons are, in fact, adopting these new products. And we're also -- just like John said, we're bringing in new surgeons that really hadn't been focused as Treace Medical as their solution to bunion products. So we're bringing in new surgeons. We're providing new products to our existing surgeon base. And so we need to get through this quarter as we learn about this mix dynamic. But at least what we view as very fundamental momentum in the overall penetration. And maybe for a short period of time, we're going to have this penetration growth rate outpace our revenue growth rate because of this mix shift, and we're selling some new products at lower prices.

So right now, we're not really talking about 2026. It's -- we've had the full complement of all of our expanded portfolio really started in July. So we're 4, 5 months into it. We're learning a lot in Q3. We're learning a lot more in Q4. This is our largest volume quarter out of every year is in Q4. So we'll be a lot more informed as we come out of the quarter. And then when we have the fourth quarter earnings call, we'll be better prepared to talk about how we see the dynamics in '26.

Understood. I want to maybe pick apart that penetration dynamic in the total addressable market. How is that shifting with -- in terms of the TAM with these new product offerings? And maybe give us a refresher on what the total addressable market is and penetration today and where it can go?

Yes. We talked about the 1.1 million symptomatic surgical candidates as the base and 450,000 procedures being performed, a $5 billion U.S. TAM, $2.3 billion on the procedures. We're going to be learning. We're not saying the TAM has shifted at this point in time. We base that off of an average $5,000 selling price at a certain point in time, and we're going to see how this mix shifts. If we need to update the TAM based on that as we go into next year, we will. But for now, we see it pretty stable.

It's a big market. These patients aren't going away. They have a chance to decide if they want to have their surgery within a given year or wait until the next year and try to delay it a little bit, and we saw some of that this year. And it was surprisingly chronic throughout the year, and it lingered into Q4 as well, and it was one of the reasons that we had to take our number down.

So the market is still there. The patient base is still there. 4.5 million Americans, we estimate still seek medical attention for their bunion pain every year. 450,000, we estimate are getting surgery. But the market is not going away. We view Lapidus as about 30% of that overall market. And our penetration in that market is pretty strong. We're probably the lead share player in the Lapidus market, a single company player. So Lapidus has strong preferences from some surgeons, and there are defined indications where every surgeon needs to continue to do a Lapidus. And that's why we're going to continue to invest with Lapiplasty Lightning and other innovations in that space. It's where we started from. We're the lead innovator there, and we're going to continue to address that market.

Yes. I mean I think it's interesting. The patients are still there, right? And so what are you seeing from like is it a delay because of financial incentives like in this era of the big beautiful bill? Are people just kind of a wait and see? Do physicians have a backlog? Trying to understand the appetite here and how that shifts.

Yes. What we saw this year was surgeons were telling us their patients are moving their scheduling. They're not wanting to have the surgery earlier in the year, and they were pushing out. Usually, that means they compress up really hard into Q4. But as we got into September, where we would normally see a lift, we didn't see the lift we're looking for. And as we had in October, we didn't see a typical lift in October. And we think that tells us that patients were continuing to defer into Q4, and that was not an expectation that we had.

We did do a large cohort survey of surgeons, and they were telling us, and this was done in October that year-to-date through October, the average of that group thought their procedure volumes were down 7%. We did a similar survey earlier in the year, and they talked about more optimism. So more optimism going forward, but more reality when they look back. So I think there's something there with consumer sentiment this year. It's been protracted. There's been a lot of anxiety on the consumer. And I think that plays into along with higher deductible insurance plans. I think that plays into how patients are deciding to have their surgery. For an elective deferrable bunion procedure, we track that patient demographic. It's a very narrow defined patient demographic. And so what other companies are seeing in foot and ankle broadly or orthopedics broadly don't necessarily apply to that demographic.

Understood. Yes. And I want to think about parsing out outside of these headwinds, some of the positive tailwinds into next year. And so I think about the new product offerings and a more comprehensive toolkit for your sales reps. Another thing that's a common trend across med tech right now is the shift to ASC. So understanding how that could potentially impact your business and what that could mean from a growth perspective. Understanding that there might be some delay from a patient sentiment perspective, but should that normalize, what does that impact look like for you guys?

Yes. We're -- bunions are elective day surgery. They're not inpatient. So we do surgeries in the hospital outpatient setting, and we do them in the ASCs. Our product configuration is actually really well designed for the ASC. We have sterile implant kits and very small low-cost instrumentation trays, and that works very, very well. We have a menu of different price point fixation kits and systems, so we can accommodate the different needs there.

And last but not least, the reimbursement in the ASC for the Lapidus Fusion code basically doubled in the ASC setting as of January 1. So we were asked, is that going to be a big tailwind for you guys? Are you going to see a big strong uptake in Lapiplasty because of that? We were reluctant to give it too much bullishness at the time. But I think the big win is for the patient because going to a hospital is a little different feel than going to some of these ASCs that feel a little bit more like a spot and warm and comfortable for the patient. So I think the big win is for the patient to be able to get a Lapiplasty procedure there and more potential to use better technology in that ASC.

Do you have a percentage of how many procedures are being done in the ASC setting today?

We haven't broken that out, but we have said the -- more than the majority is the hospital outpatient. Now there are some hospital-owned freestanding centers. Some are ASCs that are hospital majority owned. And then there's just the pure private ASCs. So...

From a sales rep perspective, is there a different approach to the ASC setting versus traditional hospital setting? Or is there anything on that side that you guys are doing to kind of drive adoption in that setting?

We're definitely -- we have strategies to continue to move the ball forward in the ASC. Definitely, I think most companies do these days. And we continue to work that. We haven't seen a difference in our sales reps per se, but our national accounts team and others that work with them, they're equipped and working on those.

And a lot of us -- the strategy with the sales rep is to be really close to these surgeons. And surgeons commonly are performing these cases at 1, 2, 3, 4 or more facilities. So to the extent they appreciate and understand all the value that our products are offering, it's kind of independent of the facility where they're doing the surgery. We believe that those relationships and our products performance will just have that surgeon bring a Treace rep kind of to wherever they happen to go. And it may be more in the ASC setting. We haven't seen a dramatic change in that. We've always had some of the ASC. We've had, like John said, more in the hospital setting, but we just want to be that one-stop shop. If it's going to be a bunion case, tell me where the procedure is going to be performed, and we'll be there ready for you.

Got it. Yes. From a sales force perspective, do you guys feel like you're at a place confident that this is a sales force that will get you to the growth that you're looking for? Is there expansion on the horizon? Just trying to think about where we are at sales rep capacity today.

Yes. We're always looking for opportunities there, Priya. And I think the thing we have noticed is since we came out with this broader platform of best-in-class bunion technologies, we've been getting a lot of inbound calls from highly experienced tenured foot and ankle sales reps from other companies across the space, and they see the opportunity here. They know Treace is known for excellence in bunion surgery, and they see the breadth opening up. It's not just one product anymore. And so we're talking to them and some we're able to bring on, some are not, and we'll keep doing so.

That sounds. I mean, should I become a foot and ankle sales rep? But that sounds great.

We can help you with that if that's your goal. We can help you.

Maybe a few for you, Mark. Just thinking about the new product offering and contribution to margin. What should we be looking for over the next years as it becomes more of a percentage of what you're selling?

Yes. I think history would show that even as we've been introducing these new products, they're really at the same gross margin level. So they're very healthy gross margins. We anticipate seeing that. We've been in the high 70% gross margins. We anticipate being there. That's our goal. That's our objective. Even with introducing these new products and often what happens is when you begin introducing them, you just don't have the economies of scale initially. So third quarter, we still have very comparable gross margins in the second quarter, and we're anticipating a slight increase in the gross margin as we come into the fourth quarter as well.

So over time, we've got some great people at the company that are looking for opportunities to decrease the costs. That's always part of our DNA is to ensure that we're getting improved costs in our products and cost reductions. And so we'll continue to look for that. And as we have more economies of scale that we'll be able to ensure that we have these strong gross margins going forward. So these new products are not a headwind to us from a gross margin perspective.

Okay. When you think about as you start to scale, what could the potential contribution look like? Or what's maybe a peak gross margin that we could look forward to?

So I think we haven't given a lot of information about that, but I -- we believe that we can and should be in the high 70% gross margin range. And these new products are in no way a headwind to that. So we continue to have very innovative products. They're complementary. We design them to have strong gross margins, and that's going to continue to be our plan and outlook going forward. And until -- if there are some changes, we don't see them yet, but that's the objective.

Got it. I think you guys mentioned on last week that the new guidance includes cash burn reduction. And can you just talk about some of those operational levers that you're pulling to kind of reduce the cost there and how to think about that going forward as well?

Yes. So I think there's a couple of things. One is we've talked about this year that we've been really focused on the strength of our balance sheet, reducing cash burn, and we've done that. So we've talked about having a reduction of about 45% or so, using 45% less cash this year versus last year. And so we've been very proud about that. We think that's the right trend and trajectory. And so throughout the company, we've continued to look, especially this year for ways to reduce costs throughout the organization. We actually reported a restructuring charge in Q3, meaning that we've taken some steps in the third quarter to ensure that our costs are better aligned. And we've taken some steps in the fourth quarter, and we'll continue to look for levers to do that.

So we're focused on driving the top line for all the ways that John has talked about here about with our new product portfolio and the sales reps, all that commercial organization. We're looking for improved profitability, and we're looking for ways to reduce that cash usage as well in 2026.

Yes. Just thinking about path to profitability, of course, it will come as we start to grow the top line. But as we parse through the remainder of the P&L, just thinking about what gets us there and what you would characterize as maybe most important to get towards profitability?

I think the first and foremost is we're looking to drive the top line. We're looking to penetrate into the market and to get stronger relationships with our surgeon customers with this broader portfolio. So I think that's our primary focus. Strengthen Lapiplasty, add these new systems. Secondly, there are ways that we can improve profitability. And so we've started to do that. I think we've made a lot of progress this year compared to last year from an EBITDA perspective, from a cash burn perspective, and there are more levers that we will take and utilize as we go into 2026. So I think that's the way we're thinking about it, drive the top line, improve that profitability throughout the middle of the P&L. And that ultimately is going to reduce the amount of cash that will be required this year or next year, 2026.

Got it. When we think about capital allocation priorities, just maybe give us a quick little refresh on debt paydown versus other opportunities and things like that.

So we've got a great relationship with a lender that we have. We entered into that debt facility back in 2022. We've got a term loan. We've got a revolver. We haven't drawn on anything since 2022. And we'll continue to think about the strength of the balance sheet as we think about that capital allocation. But we talked about last week, and we continue to say that we have strengthen the balance sheet right now to continue to drive the top line and do what we need to do as a company. So we'll continue to evaluate our opportunities along the way, but we feel good about the strength of the balance sheet right now.

And then I might pivot back for a second and think about where we are from a market penetration perspective today and thinking about clinical data that sometimes is helpful in driving broader market penetration across all of health care, right? Thoughts there, is that something that you think is priority in terms of spend going forward to just help drive awareness and adoption? Or is there other areas that you think should be a focus to help drive further penetration?

We've invested pretty heavily in our ALIGN3D study to demonstrate the effectiveness and patient outcomes with Lapiplasty. We just reported 4- and 5-year results on that study. The results speak for themselves. It's a great procedure, and it has great outcomes.

Our newer systems, it is in our DNA to provide clinical outcome support for them. We think it's the right thing to do for the patients, for the doctors and for the company to continue to invest in those. But the big spend, big investment item is kind of behind us, and these are a little more spend light that we have going forward.

One thing we've always done and we're kind of known for is direct-to-consumer advertising and making sure we get the word out to patients, make the patients aware that there are new bunion treatments and new options for them, and we'll continue to modify our approach there and do it in a more efficient and effective way going forward, but still having that as a component to maybe help with the commercial execution.

Just maybe in the last 5 minutes here, I do want to ask, when we think about where the stock is today, just maybe trying to understand maybe some of the disconnects versus share price today and what you think the fundamental growth story of Treace is just to make sure we talk about where you think we don't know where we want it to be, but just think what the biggest disconnect between the Street and investors versus your view today?

Well, it was a disappointing quarter. So I can absolutely understand why we are where we are. And we're going to do things about this. Like we said, we're going to get the ramp-up going with these new products and get the volumes going and get the top line reestablished. We're going to continue to build on our execution on our commercial channel. And then as Mark said, we're going to do the right things on the P&L to make sure we got the right profile going forward. But we'll have to let things develop over time and see where that stock price can go. It's -- we've got to go prove some things. And if we do that well, then that will move along with it.

Yes. I guess in that vein, when you think about the next 12 to 18 months, what are the most exciting opportunities? Or what you guys are most excited about for the Treace story?

I think the most exciting thing is this new portfolio we have, this broader portfolio, these products work so well, and they're getting such a positive reaction from surgeons. Our sales reps enthusiasm is way up. We're seeing the volume growth at really nice levels and continuing there. And we're just getting started with getting into our 3,100 customers and then the opportunity to bring on more new customers and have them use our legacy Lapiplasty and Adductoplasty products, too. And then continuing to launch new additional opportunities to drive more procedure volumes, more adjacent procedure growth and letting the sales force develop along with that and driving it forward. It's a really exciting time despite the numbers and the feeling on the street at the doctor level and the sales force level, commercial team level is very high right now. So I think that's what's got us most excited that we're going to see a real transformation here in Treace Medical from being a one product technology company to playing across a broader range in a very high-volume segment of the market and continuing to drive increased adoption, increased penetration and grow that share so we can become the biggest procedure share player in the bunion space.

Yes. I did just get a question from the line talking about topic du jour over the last few months has been AI and leveraging of AI in healthcare. And I don't know if you guys have any thoughts on broader market implementations of AI that could be a benefit to Treace or anything internally that you guys are working on?

Well, one thing we are doing, and we didn't talk about this technology today, but we have a technology called IntelliGuide, and this is patient-specific instrumentation. So we take a patient CT scan, run it through software manipulations, which incorporate AI, and it kicks out a basically diagnostic, a pre-op plan for that surgeon that they can see what 3-dimensional changes they're going to make in all the bones and then produce an actual cutting guide that is specific to that patient that the doctor can use in surgery and put it on, make their cuts, pull the bones together and everything is corrected the way they want to. So we're using AI there, and we have another project that's going to be an app-based X-ray tool for doctors that lets them calculate the angles and measurements that they need to make to plan their surgery, and that's another area we're using it. Mark, operationally, I think we're not a real AI-heavy company operationally, but...

For the patients and the surgeon solutions, it's really those that we can have a patient-specific diagnostic plan and Cut Guides instrumentation specifically for them developed through this software. I think that's largely where we're focused as well as providing over time, tools to surgeons that they don't -- that can support their decisions in how to treat patients. So it's really those 2 things that what we're doing for the surgeon base and for ultimately our patients so that they can have great outcomes.

That's super cool. I have 10 seconds left. But in terms of incorporation and workflow, like is this something that's easy to implement?

It is. It's easy to implement on the internal R&D side but also workflow for the surgeon. This cuts steps, this saves time. They can do complex mid-foot reconstructions that they were intimidated by. They can do complex bunion fixes and reconstructions that are intimidating saving steps, saving time and increasing the accuracy. And if you're a patient, who doesn't want something that's personalized to them. So we think there's tremendous opportunity with that technology going ahead. We're the only company at this point in time that I'm aware of that has a mid-foot correction and a bunion correction patient-specific solution. And that's pretty exciting.

That's incredible. Sounds very exciting. Well, we went a little bit over, but thank you both so much for being here and for a great conversation today.

Thanks, Priya, for having us.

Good afternoon, everyone, and welcome to our third quarter 2025 earnings conference call. Participating from the company today will be John Treace, Chief Executive Officer; and Mark Hair, Chief Financial Officer. John and Mark will discuss our third quarter financial results and updated 2025 outlook. We'll then host a question-and-answer session following our prepared remarks. Our press release can be found on the Investor Relations section of our website at investors.treace.com.

This call is being recorded and will be archived in the Investors section of our website. Before we begin, we would like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends as well as our estimated results or performance are forward-looking statements.

All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon currently available information, and Treace Medical assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings, including our Form 10-Q for the third quarter of 2025 filed after the market close today, November 6, and can be found in the Investor Relations section of our website at investors.treace.com for a detailed presentation of risks. With that, I will now turn the call over to John.

Thank you, Trip. Good afternoon, everyone, and thank you for joining us on our third quarter 2025 earnings conference call. In our press release issued this afternoon, we reported third quarter revenues of $50.2 million, representing 11% growth over the third quarter of 2024 and a 49% improvement in adjusted EBITDA versus the prior year.

We also provided some color on the market dynamics we have seen and are continuing to see and our revised outlook for the full year. Before I get into details on our results and outlook, market dynamics and the execution of our strategy, I wanted to take a moment to recognize one of our directors, Richard Mott, who has chosen to retire from our Board for personal reasons. Rich has made significant and valuable contributions to Treace Medical throughout his time as a director, and we appreciate the expertise, insights and guidance that he's provided to the Board and the company. We wish him all the best, and he will no doubt always be a friend here to Treace Medical.

Turning to our performance. Throughout the year, we've discussed what a transformational time this is for Treace Medical as we continue to focus our strategy to evolve our business from a single technology Lapiplasty company to a comprehensive bunion solutions company. Building upon our flagship Lapiplasty and Adductoplasty systems, we have developed and commercialized 3 new bunion correction systems this year. We believe we're now positioned to address virtually 100% of surgeon preferences for bunion correction with 5 best-in-class instrumented systems spanning all 4 classes of bunion deformities.

And these are further bolstered by expanded commercial availability of several other new technologies to broaden our footprint in the foot and ankle market. To support this expanded portfolio of products and extend our customer relationships, we brought on a Chief Commercial Officer earlier this year, and we recently appointed a new Senior Vice President of Sales and have added leading foot and ankle sales experts to our sales team.

We expected our growth to accelerate each quarter through 2025 and particularly in the second half, given our new solutions and ability to target a broader base of surgeons. Successful execution of our strategy helped drive revenue growth in the third quarter. However, we also benefited from sales to a limited number of stocking distributors that we don't expect to recur at the same levels in future quarters. At the same time, we experienced pressure on Lapiplasty volumes as surgeon and patient preferences continue to shift towards minimally invasive osteotomies.

In addition, we're seeing broader economic conditions and softer consumer sentiment leading to a greater number of deferrals of elective bunion procedures. These headwinds have continued early into the fourth quarter, which, as you know, has historically been our strongest period of the year. Given these market dynamics, we are revising our outlook for the full year. We now expect 2025 revenue to be in the range of $211 million to $213 million, representing growth of 1% to 2% compared to full year 2024. As the founder of this company and a large shareholder myself, I'm disappointed in our results and that we are not growing our top line the way we'd anticipated for the year.

I would like to provide some additional color on the drivers of our updated outlook as well as our focus areas as we move forward. First, I'd like to talk to our product portfolio and what we are seeing in surgeon and patient preferences. With our broader portfolio of products, we have now become a one-stop shop for all bunion needs with customers who use Lapiplasty technology already and have established relationships with their Treace sales reps.

Our new bunion technologies have also allowed us to attract a new audience of surgeons, those who currently prefer metatarsal osteotomy procedures for the majority of their bunion cases versus our Lapiplasty solution. With our 2 differentiated 3D MIS osteotomy solutions as well as our new SpeedMTP Great Toe Fusion system, we now have multiple opportunities to appeal to this surgeon audience. We are also seeing interest from some of these new surgeons adopting our flagship Lapiplasty and Adductoplasty solutions as well.

During the third quarter, we experienced mid-single-digit case volume growth versus the prior year. However, case volume growth was still below what we originally anticipated, and it was largely driven by our 3 new bunion systems, which have lower ASPs relative to Lapiplasty. While we believe this volume growth demonstrates that we are capturing a larger relative share of available bunion procedures, our system sales mix is shifting away from Lapiplasty which as a higher ASP system impacts our overall revenue levels.

Further, as we ramp up with our expanded portfolio of products, we are not yet seeing a level of adoption on Lapiplasty from new product surgeons that would offset other pressures on the Lapiplasty line. That said, we continue to believe we can achieve increased adoption over time. Second, we believe in addition to the change in mix, macroeconomic conditions and consumer sentiment are impacting our case volumes. In October, we conducted a survey with a cross-section of our surgeon customers and the responses to date have indicated that on average, their bunion surgical volumes year-to-date through October had decreased approximately 7% compared to the same period last year. This is consistent with what we are hearing from hospitals and surgical centers, which are reporting that outpatient elective surgeries are being deferred, particularly for commercially insured patients and the more elective the procedure, the more likely they are to be pushed out.

Third, I'll touch on the timing-related impacts of our strategy to shift our contractual arrangements with a limited number of distributors. With a new commercial leader and a new product portfolio, we have evaluated our selling strategies and saw an opportunity to enter into stocking relationships with certain key distributors, which we believe better positions us competitively in those markets.

In the third quarter, in particular, we had a greater-than-expected benefit from this change. We recorded approximately $6 million in stocking distributor sales within the quarter, with approximately half of this amount being above our plans as our distributor partners responded positively to the availability of our new products and build inventory ahead of Q4 bunion season.

While we are already seeing replenishment orders from our distributor partners, this pull forward of approximately $3 million in sales creates a headwind for us in Q4 as we do not expect this benefit to recur at the same level. Looking forward, we plan to continue to execute our strategy with a focus on driving continued market share gains, accelerating our top line growth and delivering improved profitability in 2026. To do this, we'll continue to train more of our 3,100-plus current customers on our new systems while also focusing on adding new surgeon customers. In Q3, 1 quarter into launch, over 20% of our surgeon customers have already adopted one or more of our new bunion technologies.

As a technology and innovation leader in the space, we expect we will drive increased adoption of our best-in-class portfolio, tapping into more cases and expanding our procedure volumes with our surgeons. We are already seeing encouraging traction on this front with continued enthusiasm around our new systems and high attendance at our surgeon training events.

Next, with a focus on strengthening our sales team's presence and procedural opportunities with surgeons, we plan to continue to deliver a robust pipeline of new innovations expected to impact 2026. To highlight a few, our new Lapiplasty Lightning platform. This next-generation instrumentation is designed to further increase the precision and speed of the Lapiplasty 3D correction. As a reminder, Lapidus fusion, though lower volume than osteotomy, remains the largest dollar segment in the bunion market today. We have been the pioneers and leaders in this segment, and we are committed to advancing our technology leadership and bolstering our competitive position in this market.

Next, our Percuplasty compression screw system, which incorporates the innovative design features of our MIS Percuplasty screw implants into a new line of compression screw implants. This provides our sales team a new core fixation technology, which complements our SpeedPlate platform. We believe the addition of this new system will further strengthen our sales team's ability to serve more reconstructive procedures throughout the foot and ankle.

And we'll continue to offer new procedure-specific SpeedPlate implants and problem-solving sterile instrument designs, opening up incremental procedure opportunities, serving more procedures and helping our surgeon customers achieve better results. And with new commercial and sales leadership, we plan to continue to build upon the capabilities of our already strong sales team, adding experienced foot and ankle sales professionals with deep knowledge and credibility in the market to deliver increased productivity and impact in 2026 and beyond.

Treace is known for innovation and helping surgeons deliver greater patient outcomes. As we move forward with our growing portfolio of offerings alongside of our Lapiplasty solution, we expect our sales team to be better positioned to more broadly service existing customers and onboard new surgeon customers. Finally, while we navigate this period, we are already taking action to control what we can control with respect to our organizational cost structure and plan to evaluate levers as we move forward. We have a scalable business model and are focused on improving profitability and adjusted EBITDA and reducing our cash burn in 2026. With that, let me now turn the call over to Mark to review our financial performance. Mark?

Thank you, John. Good afternoon, everyone. Revenue in the third quarter was $50.2 million, an increase of $5.1 million or 11% over the prior year period. Growth was mainly driven by an increase in bunion procedure kits sold compared to the prior year. Gross margin was 79.1% in the third quarter of 2025 compared to 80.1% in the third quarter of 2024. Total operating expenses were $55.4 million in the third quarter of 2025, an increase of 8% compared to total operating expenses of $51.3 million in the third quarter of 2024. These increases reflect increased medical education, surgeon training events on our new bunion systems, restructuring charges and increased litigation expense in the quarter compared to the prior year.

Third quarter net loss was $16.3 million or $0.26 per share, an increase in our net loss of 6% compared to a net loss of $15.4 million or $0.25 per share in the third quarter of 2024. Year-to-date, net loss was $49.6 million, a decrease of 10% compared to a net loss of $55.2 million for the same period in 2024. Adjusted EBITDA loss for the third quarter was $2.6 million compared to $5.1 million in the third quarter 2024, a reduction of 49%. This represents significant progress towards our improved profitability goals. Year-to-date, adjusted EBITDA loss was $10.1 million, a decrease of 54% compared to a loss of $22.1 million in the same period last year.

Total liquidity as of September 30, 2025, was $80.6 million, comprised of $57.4 million of cash, cash equivalents and marketable securities and $23.2 million of availability under the revolving loan facility as of September 30, 2025, compared to $90.7 million at the end of Q2. Compared to the prior year, cash usage decreased in the third quarter 2025 and year-to-date by 17% and 58%, respectively.

Before concluding, let me turn to our outlook for full year 2025. As John mentioned, we are revising our full year guidance. We now expect full year 2025 revenue to be in the range of $211 million to $213 million, representing growth of 1% to 2% compared to full year 2024. In addition, we now expect a loss in adjusted EBITDA in the range of $6.5 million to $7.5 million for the full year 2025, reflecting a 32% to 41% improvement over the prior year. We also expect a reduction in cash use of 43% to 47% for the full year 2025 as compared to the full year 2024. Supported by a strong and flexible balance sheet, we believe we are well positioned to continue executing our strategic and growth initiatives for the foreseeable future. I'll now hand it back over to John for some closing remarks.

Thanks, Mark. As we close today, I would like to reiterate that we are not satisfied with our results and that we are not delivering the growth we had initially planned for the year. However, looking ahead, we believe we are strongly positioned to drive market share gains with our new products, innovation pipeline and ability to leverage our dedicated commercial organization. We remain a recognized leader in the market, and our team is focused on increasing our top line growth, improving profitability and delivering value to shareholders. With that, let me now turn the call over to the operator to open the line for your questions.

[Operator Instructions] Our first question comes from the line of Lily Lozada with JPMorgan.

Can you talk a bit more about the softness in the core Lapiplasty business and how you're thinking about that trending from here? If there is a growing preference for MIS osteotomy, do you think this is something that can turn around eventually? What could get this to return to growth if doctor preferences have just been shifting elsewhere?

Lily, John here. Yes, it's a great question. There's definitely a trend towards popularity of minimally invasive osteotomies, yet there is a segment of the market that is the Lapiplasty or Lapidus domain where you have the more significant bunion deformities, where we started in that market and built our business around that. Now we're going to go capture share in the minimally invasive osteotomy market and the MTP fusion market. These are significant volume opportunities for us. And right now, we're getting good market share penetration. We're taking competitive share in that arena, but it's coming at a lower price point.

So the success we're having on the ground and in the surgeons' practices is not translating to the top line. That said, the reason we are doing this is we believe we can capture more customers and bring them into Treace and get them wherever they relegate the Lapiplasty procedure to for the Lapidus segment. Every surgeon has to do Lapidus at some point. There are deformities that are really severe or they're unstable and they have to use a Lapidus product there.

So it's always going to be there. We just have to get more surgeons on board, and we're doing it using our new product technology and then pulling through the Lapiplasty. But to date, the Lapiplasty gains we're getting from those new customers aren't enough to make up for the softness overall that's coming at the trade-off of minimally invasive osteotomies to Lapidus.

Got it. That's helpful. And then I know it's still early, but I'm hoping you can share some thoughts on what this all means for next year. By my math, the guide implies fourth quarter sales down 10% or so or 6% if you adjust for that pull forward that you called out. So is that how we should be thinking about at least the first few quarters of 2026?

Lily, this is Mark. I'll take that one. We're not providing guidance for 2026 at this time, and we plan to provide an update at our fourth quarter earnings call. But with that said, we're navigating a change, this transition that John talked about, and there are a lot of reasons why we are very optimistic. John talked about being the leader in the space, and we're growing case volumes. I think that's a really important point to focus on. Our case volumes increased in Q3 versus the prior year, and we fully anticipate for additional case volumes in Q4 as well.

So we've really been encouraged by the reception of these 3 new bunion systems. And we've got more innovation coming that should impact 2026 as well, of course, our strong commercial organization. So we look forward to providing an update about the progress at our Q4 earnings call.

Our next question comes from the line of Ryan Zimmerman with BTIG.

This is Marie Thibault on for Ryan this evening. I wanted to sort of follow up a little bit on the shift in preferences. I would like to understand -- I know that this has been sort of an ongoing shift, but has there been some sort of acceleration that you've seen away from Lapiplasty? A little curious why this has sort of become a bigger issue here, I guess, in the second half of this year.

And then as part of that, trying to understand sort of a good reaction to the 3 new bunion technologies, very encouraging to hear. Is that something that could be accelerated? Is that a focus for the sales team to sort of drive those products a little faster and partially offset some of the shift away from Lapiplasty?

Yes, Marie, John here. Definitely, there is a trend with the minimally invasive osteotomy and minimally invasive foot surgery. That's why we're here. And we're playing in that market with some really novel technologies, our Percuplasty System, our Nanoplasty System. And then there's another segment of the market that's the great toe fusion, and that can be about 20% of the overall 450,000 bunions. So these are -- osteotomies are 70% of the market procedure-wise, Lapidus is, call it, 30%. We're playing in all of these spaces now, and we're using the tools we have and extracting market share in our minimally invasive procedures while we work on next-generation Lapiplasty, and that will be there as a driver going forward for us as well.

And what was the second part of the question that I missed?

Is the sales force focusing on these new products?

Yes, they are. Yes. Sorry about that, Marie. They absolutely are, and they're using it to drive greater penetration, greater engagement with their surgeons. We're seeing really solid uptick with the new products. And we think that opens the door to present Lapiplasty to more surgeons and our Adductoplasty solution. So they absolutely are, and we're doing really well on that front. And that's why we were talking about the procedure volume growth mid-single digits in Q3 that we expect to continue through Q4. And if we can accelerate that, you do reach that point where the top line starts to grow again, and we'll be back on track.

Okay. Sure. That's really helpful. And then a follow-up here. You mentioned taking action to control what you can control. Any specifics that you can give around where you might be able to find some efficiencies on the P&L, things to kind of offset the little bit of a lower top line?

Yes, this is Mark. So we have been and will continue to take actions to control those things that you said, that we can control. If you look at the financials, we had reported a little somewhat of a restructuring charge already in Q3, where we've looked for opportunities to change -- make some changes in the organization and the cost structure, and we'll continue to evaluate levers as we move forward.

Fortunately, for us, we have a very scalable business. We have high margins, and we're focused on driving the top line and improving profitability. So it's definitely going to be an area of focus for us.

I'm showing no further questions at this time. This does conclude the question-and-answer session. Thank you for your participation in today's conference. This does conclude the call.

I think we've got somebody -- I think we have somebody in the queue.

We have someone now? We are sorry about that. We have Jayna Francis with UBS.

Just wondering, how would you plan to recoup some of those deferred procedures when you're going into next year? And then the second one would be just the puts and takes to 2026 qualitatively since we appreciate you're not giving quantitative guidance?

Jayna, this is John. Yes, the deferred patients into next year, our approach is now we have a lot more ways to get at the patient population and whether that's a little lighter or a little heavier. But going into next year, if we will get a little bit of improvement in consumer sentiment, we continue to get our sales team more familiar and more engaged with these new products as well as Lapiplasty. I think we set ourselves up really nicely to capture a larger share of more patients coming back into the front and having surgery.

[Operator Instructions] All right. I'm showing no further questions at this time. This does conclude the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good morning, everybody. We're going to go ahead and get started. Thanks for joining us today for Treace Medical's Investor Day Event. I'm John Treace, CEO and Chairman of the company. And it's really great to be here with all of you at the NASDAQ market site in beautiful New York City.

Our disclosure is here for today's event. Here's our agenda. We've got an outstanding lineup of highly experienced foot and ankle surgeons here today. These are surgeons that all share a common passion of making bunion surgery better for their patients and also helping enable other surgeons across the country do the same. I think you're really going to enjoy these talks. You're going to get a ton of information about these new innovations, how they're advancing the standard of care and how they're going to help advance Treace's leadership in the bunion market.

From the company here today, we have Sean Scanlan, our Chief Innovation Officer. We have our CFO, Mark Hair; and we have our Chief Commercial Officer, Gaetano Guglielmino, present as well. I thought I'd start off with a little background on Treace Medical, why we exist, what's made us successful to date and why we're so excited about the future we have ahead of us. This is a company that from the start in 2014 has been driven by a focused mission, a passion for improving outcomes for bunion patients. And in doing so, we went from a napkin sketch to over $200 million in revenue with essentially one patented bunion procedure that largely changed the way that bunions were evaluated and treated.

And now in 2025, with an established commercial team in place and a large customer base, we're entering the next growth wave of the company, launching our best-in-class comprehensive bunion solutions portfolio. Bunions are a really big problem, and they can become painful lifestyle-limiting deformities for a significant portion of the affected population. And we believe the shortcomings of prior surgical procedures in the past, resulting in high recurrence rates and high patient dissatisfaction rates has been a rate limiter to surgery.

This said, we believe there's a significant opportunity to expand beyond the 1 million symptomatic surgical candidates as we develop even more effective solutions for surgeons, solutions that can bring faster recovery, improved cosmesis, more enduring corrections for patients and then communicating the benefits to the clinical community. And we believe there's a real opportunity for us to double the business in the years ahead. We're currently around 3% penetrated in the symptomatic surgical candidate base. And with the technologies that we have today and those in our future pipeline, we believe we just need to get to 7% to 8% to achieve that milestone.

Our company was founded on this realization that the vast majority of bunions had this overlooked, underappreciated third plane involved in the deformity and the negative impact that the failure to correct for that frontal plane, that third plane can have in driving high recurrence rates. With recurrence rates cited in the peer literature as high as 60% and 70% plus with traditional two-plane surgeries of the past, you can see why a breakthrough like Lapiplasty being the first ever instrumented system to allow a comprehensive three-plane bunion correction to be performed in a reproducible, repeatable manner fills such a significant gap. And that's what led to the adoption of this technology by nearly 1/3 of all bunion surgeons by 2025.

And since our first Lapiplasty cases in 2015, this company has been hyper-focused on iterating and evolving our designs, constantly making them more reproducible, faster, less steps for surgeons and more recently, minimally invasive. And it's this iPhone product development model that we've employed and then supporting our surgeons with great training and differentiating clinical evidence that's made Lapiplasty the gold standard for 3D Lapidus today.

And now we're applying this successful model to address different categories of bunions with highly specialized solutions that can accelerate our penetration into the market. If you look at our over 3,100 surgeon customers today, with Adductoplasty and Lapiplasty alone, we believe we penetrated about 30% of their total bunion volume. And here in Q3, we're launching three new systems, our Nanoplasty and Percuplasty 3D MIS osteotomy systems and our SpeedMTP Great Toe Fusion system. These three new offerings address significant volume segments, giving us greater access to the untapped 70% of our surgeons' cases while also allowing us to appeal to a much broader surgeon audience.

And we're leveraging platform technologies to bring even more breakthroughs to market, like our market-leading SpeedPlate fixation technology and our first-to-market IntellGuide PSI technology for bunion and midfoot deformity correction. And today, we're announcing the initial introduction of our new Percuplasty MIS power system. This is a power system that powers the single-use cutting burs that are used in the Percuplasty procedure, but can also be applied to a variety of other minimally invasive foot and ankle procedures.

This specialized new addition to our line cements our commitment to becoming the one-stop shop for all of our customers' surgical bunion needs. You're going to hear more about all these exciting technologies and innovations and even more coming up next from our surgeon experts and Sean Scanlan. We've got an incredible panel of surgeon experts here today to help out. Dr. Decarbo, Easley, Johnson, and Kaplan. Thanks again so much for being here to help educate this audience on these exciting technologies, the impact they're having on your patients and on your practices.

And with that, I'm going to turn the floor over to Dr. Will DeCarbo. Will?

So the green, is that what you advance with?

Go green.

All right. Fair enough. Thank you, John. Well, I appreciate being here. My name is Will Decarbo. I'm from Pittsburgh. My brethren will be here in about 4 days. That may or may not make you excited with the jets and the stealers. So the return of Aaron Rodgers, but we'll get through it together.

In any event, my charge here is to talk about Lapiplasty and Adductoplasty, two of our flagship and main procedures and founding procedures with this. And again, just like John said, we're super excited about this technology, not just for today, but tomorrow, we continue to iterate this. As it was stated previously, when we look at bunions, there's over 130 different ways to treat a bunion. And the way we looked at it from a company standpoint at Treace, there's not one good way.

Early on, we understood this, and we understood that triplane issue that we'll speak about again, I'll show you the slide that John presented as well. But in 2018, we proposed a classification system that kind of revolutionized the thought process behind what we're seeing when patients present with a "bunion" because there were four distinct categories of patients that presented with bunion. There's mild-to-moderate, mild-to-severe metatarsal adductus and arthritis. And the arthritis is really branched into two components or two buckets. There's arthritis with the bunion and then there's a primary pathology of arthritis of the first MTP. The SpeedMTP, which Dr. Easley will talk about, covers both of those, and we'll go over that with you.

One of the things that we wanted to do was to create a system. It was a philosophy change in an instrumented system in order to address each of these four subcategories, if you will, of "bunion" or midfoot, forefoot deformity. And then with that followed what we feel is a best-in-class fixation options, and we'll discuss that. For the mild-to-moderate, we have Nanoplasty and Percuplasty. You'll go in-depth on that with Dr. Kaplan and Dr. Johnson.

For the mild-to-severe, we have Lapiplasty. That was our flagship procedure and really the springboard into these other technologies and these other midfoot, forefoot deformities. Metatarsal adductus, we'll discuss and then the SpeedMTP for the first MTP fusion, which Dr. Easley will go over. And the bottom, as this does the intraoperative C-arm as well as the cartoon drawing just shows you the power of this system. So what we want is reproducible, consistent triplane results with fixation that is best-in-class. And that's where we think we've landed, and that's what we're excited to present here today.

The Lapiplasty, as said, our flagship procedure, one of the aha moments, and John kind of touched on this, was the frontal plane. The frontal plane has been described since the '50s. But until Treace Medical concepts, nobody has really come up with a dedicated way to assess it and a dedicated way to fix it, and that's what we've done. The transverse plane is kind of intuitive. So the cartoon drawing here where you see the bump, we can understand that there's a transverse plane deformity, and that's the prominence. And what's really interesting about it is there's a common misconception and that's a growth or a bump and you can just shave off a bunion.

The reality is the midfoot joint is unstable, and that allows that bone or that metatarsal to drift out of alignment, creating that prominence, and then the big toe kind of deviates to the lesser toes, and that's the deformity you see. So the transverse plane, you can see that any lay person can see it. The sagital plane, the metatarsal actually elevates. And you get a glimpse of this on radiographic analysis when we look at this, but the frontal plane was really the key. The literature bears this out. When you look at work by Kim or Okuda, if the frontal plane deformity is not addressed, there is anywhere from 10 to 12x the likelihood of recurrence or patient dissatisfaction. So this really is almost the missing link, so to speak, of bunions. And what Treace did was develop systems that take into account this triplane correction that's instrumented each time for this.

We tried to take an approach that simplifies the process. So all of our options come down to 4 or 5 steps. And you can see through guided instrumented systems that created not only consistent results, but what it did was it took the variability of the surgeon out of it, good day, bad day, and where you train. We were talking outside here with some of the investors and really bunion surgery depended on where you train, what part of the country you train, what was prominent in that area, and then that's what surgeons did, not necessarily the best option for the patient. And what we wanted to find was the best option for the patient that's consistent and this triplane correction is what we came up with.

In 2015, we started with an open technology. So we were around a 7-centimeter incision in order to use all the instrumentation in order to get this done. As we develop an understanding for not just the pathology, but also the instrumentation, we were able to take that incision smaller and smaller. And really one of the main thrusts of this, how can we get the same triplane anatomic correction through a smaller incision. And it's the iteration of the instrumentation in order to do that. So as we started with 7 centimeters for Lapiplasty, we now can go to a Micro-Lapiplasty through a 2-centimeter incision. We believe this is very important for a lot of reasons.

The morbidity of surgery is something across the board, whether it be general surgery, vascular surgery, any part of orthopedics. The amount of damage caused to the body, the deconditioning is really powerful and it really matters. With the advent of these smaller incisions and minimally invasive surgery, we're doing less scarring, less deconditioning of the patient. So this is really a great iteration to start us moving forward. And then we'll talk about the fixation last. It will be a dedicated slide because as we went into instrumentation that allowed us to do these procedures through smaller incisions, we needed complementary fixation in order to fit through that procedure.

The Micro-Lapiplasty for Lapiplasty was the first advancement in this MIS technology. And two main things came out of this. One, what we call an external positioner. And so instead of that cup being put on the bone, we were able to do it on the outside of the skin. That alone lengthened the incision by several centimeters off the bat and then the cut guide. The cut guide was narrowed on the transverse plane and thin. And what this allowed with a percutaneous approach, just the width of the saw to get in to make the appropriate cuts. Once we did that, complementary products came out because now we had to retrieve the bone out of that joint in order to create the fusion. And so we have LapiTome, RazorTome, and then SpeedRelease.

And these are instrumentations that complement the MIS surgery because when you're working through a 2-centimeter incision, that visibility and that ability to get the bone out that you just cut is critical. So we developed this. And then lastly, which will be coming up, we'll show a dedicated slide is SpeedPlate. The SpeedPlate technology is really unique. I'll save it for the slide on this, but why this was developed is because as we went through these smaller incisions, we need an implant to fit through these smaller with the same load to failure and cycle to failure as the traditional plating. At this point, we've had thousands of patients treated. We had published papers. We had the data. So we needed to recreate those same results through a smaller incision and all this instrumentation helped to do that.

You'll see several instruments here like an incision guide and some release tools that we'll talk about. But what we noticed early on is to do these procedures through the smallest incision possible, you had to really know where you were anatomically on the foot because that incision mattered. If you want to go through a 2-centimeter incision and you're 0.5 centimeter off over top of that joint, well, by definition, you're already at 2.5, and that wasn't the goal. So for this and Adductoplasty, we have incision guides for this. So dedicated instrumentation in order to do the same triplane anatomic correction at the tarsometatarsal joint, you can see the size of the guide. So that became the rate-limiting step is how do we do the same procedure through this and it developed into this system. That leads us to SpeedPlate.

The SpeedPlate technology is really fantastic. Mark will talk about the SpeedMTP. This is where this kind of comes from for the first MTP fusion. But the idea was not only did we need an incision smaller, we needed fixation to fit in that incision. And then for efficiency, how do we get this plate and 4 screws in is one monolithic structure. And then what was developed was 4x that act as those screws that go in all at once, and then we lessened that to a 2x SpeedPlate and then a MicroQuad. All that is, is to create the stability we have with BIPLANAR plating with traditional plates and screws, but allow that circumferential stability.

This is very unique because it functions as a plate. It goes in with the ease and efficiency and the compression of a staple, but it really is designed off of our traditional 4-hole plate -- or I'm sorry, yes, 4-hole plate and screws. It does not contain nickel, and it's anatomically contour. The anatomic contour allows us to be placed on the bone segments where we want it without impeding into any of the soft tissue structures like the tendons, without impeding into the surrounding joints. So this has really been a iteration that has transcended Lapiplasty, Adductoplasty, and first MTP fusion. These plates are even used in hindfoot, midfoot fusions, fractures, these sorts of things. So this is really good.

When we look at our triplane correction through a small incision, you can see the pre-op, the post-op, and then the clinical image. And again, the goal was triplane correction like we had through a smaller incision. You see the incision there, the lack of length on the incision, the lack of swelling within that area. If you compare and contrast this to our traditional open, you see on the right side, there was a traditional open incision with maybe 7 centimeters. And then we have our 2-centimeter Lapiplasty. And besides this skin, obviously, you have the less trauma to the tissue. The x-rays, what I want you to focus on for one reason. We wanted the same triplane consistent approach through a small incision, and we were able to capture that with Micro-Lapiplasty. So that's really the key to this.

So that is Lapiplasty in the iteration through Micro through the 2 centimeter. As we move on, metatarsal adductus, metatarsal adductus is a very important condition with bunions. We'll get into the statistics in the subsequent slide. But one of the things we realized as we were able to dial down what we call intermetatarsal angle or corrected deformity of the big toe, we were getting down to 0 to 4 degrees. And there was a subset of patients that even if we got down to 0, they still had a deviation of their toe. And it looked like clinically, they still had a bunion. And this is a subset of patients that's called metatarsal adductus, and I'll show you a slide on this.

In a traditional bunion, just the bone behind the big toe called the first metatarsal is deviated out of alignment. And for that, we have three offerings of triplane correction, Nanoplasty, Percuplasty, and Lapiplasty. With metatarsal adductus, the two midfoot metatarsals, the second and third also deviate with the first. And that creates an entire midfoot deformity and you can see you can make an argument with the space between the first and the second metatarsal, the long bone behind the toes, is not really increased. But yet they have a clear deformity and a clear bunion. So we needed a system in order to do a triplane correction with consistency in order to fix that.

Before Adductoplasty with Treace Medical, this deformity was just overlooked for the most part. There was no consistent way in order to correct this. So you can see that the deformity in the foot, both radiographic and clinically, still persists. And what that does, that leads to very dissatisfied patients to say the least. The number one question that we got is, well who needs Adductoplasty? When we do it? Who has metatarsal adductus that we needed? And we came up with a system called a Plumbline. We published this in 2023, the second half, that's not on here is very famous. Thank you Sean.

But the idea of this is a we took a line from the medial midfoot bone called the cuneiform and extended that laterally where the first metatarsal would line up to the cuneiform in a corrected position, and if that line did not touch or cut into the second metatarsal that's what we call Plumbline negative. That means we have enough room to correct that first metatarsal with Nanoplasty, Percuplasty, or Lapiplasty. In contrast to that and this is the animation going over. In contrast to that, you see the foot to the right with metatarsal adductus, we draw the same line and extend it and it crosses into the second metatarsal. And this is very intuitive. Patients understand this immediately. Most importantly, other surgeons understand this immediately.

And if you look, if I correct the first metatarsal into its anatomic alignment, the first and second metatarsal compete for the same space. So we physically do not have the room in order to do it. So we have to consistently move the second and third metatarsal out of the way, and then we can go forward with the first metatarsal for its anatomic alignment, hence, the birth of Adductoplasty. And what that came out of 4 steps, just like the Lapiplasty where we prepare the joint, cut the joint, compress the joint, and fixate the joint. And again, this takes a very complex midfoot deformity that had no real consistent answer, and it made it streamlined and consistent with the results.

Just like everything else, this started out as a full open procedure, about 7 centimeters. And then over time, as we learned from doing the procedure and understanding instrumentation, we can get this down to a Mini-Adductoplasty through 4 centimeters. And a lot of times, that could even be 3.5. That is my take, not Treace Medical. So what we realize is we don't have to cut both joints at the same time, and then you can see the instrumentations.

Just like every iteration of the instrument or the system, instruments followed to complement the procedure. We have to have a robust release between what's called the base of the third and fourth metatarsal, hence, the TriTome, which is a single-use instrument, and then there's multiple guides. And what's unique about the Adductoplasty is we also have single and double, no deformity of the midfoot, just primary arthritis. So we have a guided system to fuse in isolation, the second and/or second or third just for midfoot arthritis, which is also very common. You saw the SpeedPlates at the end.

The incision guide is a consistent theme. We have to be in the right spot. So we know that our incision stays within the boundaries of the length that we want. You see the guide was reconfigured. So it's the same transverse plane and cut angle. It's just reconfigured in order to cut one side at a time, and then you can see the results. And the idea is the less trauma to the surgeon, you have a 3.5, 4-centimeter incision, a 2-centimeter incision that handled a very complex midfoot deformity. And it handled it with a guided system with minimally invasive approach to it. So really fantastic, and you can see how the skin heals and how the foot looks afterwards.

So those are our two flagships, so to speak, procedures of Lapiplasty and the iteration of such and Adductoplasty and its iteration, and then my fellow colleagues will go over the rest of the systems. But I appreciate your time and attention to this. Thank you.

Now am I introducing Mark? Okay. Dr. Mark Easley from Duke. He's not limping. He had knee surgery.

All right. Thanks, yes. I'm Mark Easley, I'm at Duke, and I'm with my colleague, Jonathan Kaplan, who's here as well. And I'll try to talk to you off this thank you slide. Is there something, I just advanced and it's good. Yes. All right. So bunions are very common. I think you've got that. And what I'm going to talk to you about is arthritis or when the white shiny surface starts wearing away on the big toe joint.

So I'm looking at the category. Will already showed you this, but I'm looking at the category that's all the way down at the end there. So that one there, where we're talking about what do you do about this arthritis? And you think, well, arthritis, you have knee replacements and joint replacements. Well, for the big toe joint, we're not there yet. So what we typically do is a fusion or mending the joint together and you think, wow, you're going to fuse that joint together and how is somebody going to walk? How -- if you don't move your big toe joint. That's what we're going to talk about. It's a very common problem.

So there are tens of thousands of bunion surgeries done in the U.S. every year. And this problem is a close second. So arthritis of the big toe joint, there's thousands and thousands of these operations done, these fusions of the big toe joint. So what is Treace Medical going to do? I wasn't one of the founding surgeons to work with Treace. I actually approached them and said, "I'm starting to do your operation. I love what you do. Could I somehow be involved?" And they invited me to be part of the team because it's the right way to do it. And what I want to emphasize today is that all of these instruments you'll see and these cool products, and they are important, but what Treace does really well and the surgeon advisory team does, it's really the philosophy of how to do the surgeries.

And if you look at other products on the market, they typically roll these out with the screws and the plates and say, okay, have at it. What Treace does much better, in my opinion, that's why I joined the group or asked to join the group selfishly, was it's a philosophy, right? It's like the surge where they teach you how to do the techniques. Nobody teaches surgeons how to do surgery better than Treace Medical. And I am a consultant with other companies, too. This is hands down the best approach to teaching surgeons how to do the techniques. And oh, by the way, we have some great instruments too, to make that better. So that's the distinction there.

But we're going to talk about arthritis, the big toe joint. So you can have a bunion just like Will eloquently just showed you and talked to you about, but you can have it with arthritis. So Will or the others can make that toe as straight as they want and then cosmetically, it will look nice, but it's going to be incredibly painful because it's grinding bone on bone. We don't want that, right? So that's when we talk about doing a fusion. Now there's a whole another category, which I mentioned, and that is the toe is straight, but it has arthritis.

Again, incredibly common problem, tens of thousands of these done every year in the United States. And unfortunately, not done exactly perfectly, but that's called hallux rigidus, just a stiff big toe, right? So this year, there are studies done that show that if you are -- have a stiff big toe joint, you're very debilitated, but there are also studies that show if you fuse that joint and make it pain less, even though it's stiff, you're still incredibly functional. You can play sports on a big toe joint. You can run on a big toe joint that's fused. So it's not as though you're going to debilitate these people as long as the toe is put in an anatomic position.

So Will just talked to you all about the triplanar correction. These same principles apply to the big toe joint fusion. I don't think surgeons fully understand that, but Treace and the team really teaches that well and then provides you with instrumentation to do that surgery well. So this is a patient walking down -- you've been to the doctor's office, just walking up and down the doctor's office here. And you can see that it looks pretty natural, right? And you could even have this patient do some exercises or run, if you want, but it's really hard for me to tell that, that big toe joint has been fused.

So as long as it's put in the right position, the surgeons taught how to do this properly, and you have instrumentation to make it fused reliably and have them be able to walk on it right away because it's stable fixation, then you'll be very natural and be very physiologic. The competitors are out there. Look at this. This is all over. MTP joint fusion is a very common orthopedic procedure. We do this on a very common basis along with bunion surgery. The problem is sometimes the -- or often the implants are very bulky. They are not necessarily taught the technic.

Everybody knows how to say, yes, a common procedure, but there's some subtleties to it that need to be taught properly so it's done correctly. And so mistakes can be made. The toes put in the wrong position, that's symptomatic and a problem. The plate is too bulky, it's symptomatic. There are ways around that. So what really what Treace does is take a common problem. Well, one, you learned from Will, here's a problem that hasn't been defined. 130 bunion surgeries. We got to make this reproducible and more consistent.

In this year, yes, a very common operation, but what Treace does well is innovate and make it better and make it reproducible. I work with residents and fellows, people that I train. Every one of them says, "My God, this SpeedMTP, it is so easy and intuitive and it's reproducible," and that impresses upon me. I just showed it to them one time and said, this is a system I'd like to use.

In addition, there are other instruments like Will showed you that make the operation easier that the competitors, yes, maybe they have some of these, but usually have to scramble in the operating room to try to find some of these things. These all come in the kit. So ways to make it easy to expose that joint it's already stiff. So it's easy to work in that joint -- ways to smooth the surfaces because it comes with bone spurs, right? It's arthritis. It's going to make bone spurs.

And then you have a system with that SpeedPlate concept, SpeedMTP and a way to target screws so they don't interfere with one another, the way the times work so that the plate continues to compress to make it more stable and then a way to add screw fixation to pull the plate down to the bone and make this incredibly stable construct that allows the patient to walk on it right away. Yes, they have to protect it some, but it's not as though they have to get a knee scooter or they have to be laid up in bed. They can get right back to their activities and for 6 weeks have to protect and then they can get going on this.

Again, here are some of the instruments with it, but it's the same speed plate technology applied to the big toe joint. That's unique in the system in the competitive market. And it's the principles of the technique and then having instrumentation to put this implant in properly and then have it work for you. And it's low profile. So seek here, there's arthritis. So sorry about the graphic pictures. But if you look here, it's bone spurs, you get the idea. We can smooth those down. This FeatherRasp idea, it can be applied anywhere, but really slick tool to make this easier, so you can contour exactly the bone that has spurs on it, so the plate and the instrument -- the implants can sit perfectly anatomically on the bone.

And then a targeting device, if you can imagine, if you're putting 4x in a bone, a little bone and just a big toe joint, and then you have two screws go in and you want to put one extra screw in for fixation, something is going to collide, right? And you just don't want that to happen. You don't want to slow down the process. You want to be longer in the operating room than you need to. It's a targeting device, so that never happens, make it a lot easier for you.

So you can see here, sorry, pretty graphic. I know, but it could be worse. It could be worse. But this is what we do, okay? So we're sharing with you with what we do. But it's a way to make it easier to get into the joint. You see this little tool here. It's really -- I mean it's a medical art, right? So it's actually -- this is artist work. And that way, these instruments can say this is actually one of my surgeries.

So you can see here where everything sits nicely because we've contoured it perfectly. We've positioned -- we taught the technique how to get the toe in the right position. And then it just -- it's step by step, it's real quick to drop these in. And then here's the implant, sits in very nicely. And you can actually -- it's so stable. You can actually we're carpenters, you can hammer this in place and then drop these extra screws and they give it really a nice fixation. So good, all right. Just -- you just have to be patient, we'll get through it. And you can see here, this is in the operating room, then you can see how stable that is. In other words, it's stable, you can go right away and walk on this, not dance on it, but you're going to go walk on it right away because it's stable. And here it is in the process of -- it's nice, it's low profile, low contour. And you can see around that implant to make sure the bone is healing the way you want it to without it being obscured by the hardware.

Here's a bunion surgery. So bunion surgery, again, some other techniques. Not that that's wrong. It's just that sometimes those don't work, and this is how we salvage it with the same operation where we do a fusion. You can see the patient is incredibly happy. How do you know that patient is happy from preoperative to postoperative. How do you know? Quick. Good toe nail. That's exactly right. So it's good anyway. But you get the concept. But what I want to emphasize with you is that, yes, there's a lot of innovation and new things to take something that's complex, 130 different bunion operations to try to get it down to something that's reproducible, predictable, and works for patients and works for surgeons, but then also something that's very established, a big toe joint fusion, again, a very common operation, but we can make it better. And what impresses me is that Treace puts the effort in to make that better.

Holly, I think, is next.

All right. Good morning, everyone. I'm Holly Johnson from the Hospital for Special Surgery right across the island. And I'm going to talk to you today about some of the more percutaneous options for bunion correction and try to give a little background, but also give the thought process behind why Treace would enter this market. So you've seen this slide a couple of times, and I'm going to address Class I, and this is where we have a fairly straightforward bunion deformity without adductus and without arthritis. And we have two new options for that, Nanoplasty and Percuplasty.

So when we think about how surgery in general has gone from open procedures to more minimally invasive procedures and virtually every side of surgery, even open heart surgery, general surgery and in orthopedics. And I think to make it the most relatable, everybody in this room has either had an ACL reconstruction, a knee scope, a shoulder label repair or they know someone who has. And if you think about those people in your life who've had those operations, it's all done through small incisions. And really, the entire market is going towards small incisions for obvious reasons, decreased pain, decreased swelling, et cetera, faster recovery.

And so when we think about the advancements in arthroscopic surgery, it started from advancements in the technology and training that allowed every surgeon to do it. And at this point, I don't -- I can't imagine a surgeon doing an open rotator cuff. It's just completely gone. It's off the table. That procedure is not done anymore. And I think that as we move forward in bunion surgery, we're going to go in that direction. So again, some graphic photos, but I think that it really makes the point that when we look at the foot on the left-hand side, traditional open procedure and the foot on the right, what person in their right mind would ever want the surgery on the left, honestly, right? There's not a single person ever who would rather have that surgery than the other surgery.

So when we think about that and what's available out there, Treace saw an amazing opportunity to expand patient interest in surgery. So historically, and for those of you, there are probably some people in the audience who have bunions or have a spouse that has a bunion, traditionally, even the primary care doctors say, you should never have bunion surgery. It hurts so much. It's going to take years to recover. It's never going to be good, literally wait until you can't put a shoe on anymore. That is the worst advice because we know that from when a bunion starts, it continues to get worse over time. And as it gets worse, the toes get involved, the foot gets much more problematic and the ability to fix the foot in a nice way is basically eliminated.

So there's a subset of patients out there who want to have the bunion fix, but they're afraid. And so now people are seeing, look, we've got these minimally invasive approaches that have less pain, faster recovery, I want that. And so they're coming into their surgeon's office, and they're demanding those techniques, okay? And I'll say just anecdotally, I do no marketing. I'm not on social media. My hospital doesn't really do any marketing for me. I literally have to push. I have so many bunion patients. It's like they come because I operated on Susie and then Susie's sister comes and sees me and I do both of her feet and then she goes and gets a pedicure and then the woman who does the pedicure comes to see me and it's just this circle of people coming in because they see a fast painless recovery.

So when we think about where we are in the country of the current state of bunion correction, it's a trade-off between patient benefits and technically challenging surgical procedures. So this is me doing the procedure on the left-hand side of this video. And basically, many of you may have seen it out there, but you have this power device with this -- it's essentially a drill on it, and that's how you cut the bone. And the drill diameter is 2 millimeters. So I can cut the bone through a 2-millimeter incision as opposed to a more traditional way where you have to have exposure for the saw.

It's a complicated procedure where I cut the bone, I shift the head, I put in wires percutaneously, meaning not through an incision and then I place two screws, and that's what the foot looks like at the end. Those are the incisions. No incisions on top of the foot. And the problem is that it's really hard, and it's taken me a long time to become proficient enough to be able to do this in a reasonable time frame and to be good enough to really want to offer it to all my patients. So when we look at some of the x-rays that are out there, and I know that there's -- I'm showing three different x-rays here. These are all percutaneous or minimally invasive bunion surgeries done really poorly.

And these are people who even post this on LinkedIn and think these are done poorly and the patients aren't going to do as well. And so when these patients come in and they say, I want minimally invasive surgery, but I don't understand why everybody is not doing it. And the reason is it is because the surgery is really hard. And it's a difficult surgery to learn. It's a difficult surgery to teach. And if you think about how many you have to do to become proficient, it's anywhere from 40 to 50 when you're using a freehand technique.

Most bunion surgeons may not be doing 50 bunion procedures in a year. So why would they want to adopt a surgery or a type of technique that's going to take that long to do it when they can do it the old-fashioned way and maybe they don't get as many good results, but hey, they can do it. Well, the problem is that now we have this entire patient population that was never going to have bunion surgery before that wants to have surgery, and we need to teach the surgeons how to do it. So this is where Treace comes in. And basically, they've come up with two instrumented systems designed to dramatically reduce the learning curve of a 3-dimensional minimally invasive surgery.

And so there are two options that address really, I think, two different surgeon populations. There's Percuplasty, which is the screw technique that you saw me doing percutaneously, but now we have an option for a gig. And then Nanoplasty, which is an intramedullary device, plate system that surgeons can still do with a saw if they don't feel comfortable with the burr, but they can do it through a very small incision. And so with the Percuplasty, it's a few -- very small poke holes in the skin. And with the Nanoplasty, it's one singular 1.5 centimeter incision.

So again, thinking about, well, does minimally invasive surgery work? Well, we know it works. There have been multiple studies that show that you can get rotational correction. You can get that 3-dimensional triplanar correction using the minimally invasive system and you can have successful outcomes. And there are multiple studies that have come out over the last 5 or 6 years that show excellent short-term and long-term results with this distal osteotomy technique. And now, of course, we have these patients coming in who want the surgery, and we're going to develop a system that's going to allow the surgeon to do it better.

So if we think about the Percuplasty portfolio, there are three aspects to it. So there's a 3-dimensional correction and targeting guide. And this is where I would say for Treace, it was better to be a little later to market. And so there are other jigs that are out there on the market now from our competitors, but honestly, the jigs just don't really help the surgeon. They're very bulky. They're difficult to even get on. They don't get that 3-dimensional correction. They're only correcting the bunion in two planes. And if you recall where Will DeCarbo was talking about how you need to get that rotational correction, none of the jigs on the market other than Treace correct for that 3-dimensional deformity.

So you can get the correction where you want it. It makes it very simple to place the screws and essentially makes the procedure much more boiler plate, which goes along with Treace's mission. There's a plug-and-play MIS power system that you can bring into any ambulatory surgery center into a hospital that makes it simple for any surgeon to have access to the burrs and then the screw system, which is pretty unique as well. So looking at the targeting guide, you're essentially making those same incisions. You're sliding this guide in and the jig or the guide itself helps you to dial in the shift of that metatarsal head, but then also rotate it to get that rotational correction, that triplanar correction. It holds it in place.

And another advantage of this jig is it's essentially hands-free. So a lot of times when people are doing the bunion correction, they need two hands. They need somebody to hold the correction and another person to fire the screws. This jig allows a surgeon to do it single-handedly. You place your wires and then very easily place the screws over the wires. When we think about the screws themselves, the heads are beveled, which means they're angled and they sit flush against the bone. So that you're not feeling those screws through the skin and there's a much lower rate of hardware removal. They have a self-drilling tip. And what this does is it makes it so you don't have to drill the bone over the wire. And it basically just simplifies the entire workflow and you save time in the operating room and effort. And here's the screw going in.

So thinking about case examples. This is an example of -- I don't know if you can get the sense of shifting the head, putting in the screws and then it's 6 months. And yes, this patient has had a pedicure because they're quite happy. And that's actually a sign of a successful surgery, I agree. So just addressing the market that's out there, we have two populations of people that we're capturing with this new minimally invasive technique. We're capturing all those -- I mean, largely women who've been afraid to have bunion surgery in the past because of the pain and everything else.

And I will say, from a pain standpoint, one of you asked me earlier about pain medication. My patients take no narcotics after surgery. And if you think about historically where bunion surgery has been described as very painful, this is not a painful operation anymore. And then we're addressing the surgeons who need to learn the technique, and we've got a great solution. Thank you.

Hi, everyone. I'm Jonathan Kaplan. I'm also from Duke University like Mark Easley. And I'm actually going to leave this slide up for a second before I go on because I get to talk about the Nanoplasty, which I like that is in the middle because I'm kind of giving you the best of both worlds. And I think that's something that's a nice feature for most of our surgeons that are doing these procedures.

And so like I said, this is who I am and where I'm from. And really, you've seen this over and over again, and there's a reason we're showing you this slide repeatedly because it really does make sense. It helps surgeons develop an algorithm for their approach because historically, like Will talked about, most surgeons did what they learned, what they trained, what was in their area. And that's not really a good way to practice medicine. We want a way to sort out what patients need different procedures so that we can have more predictable results.

And I'm like Holly going to talk on the mild-to-moderate deformity of these distal osteomies and specifically, I'm talking on the Nanoplasty, that medullary system. And so why are we talking about this in general? So again, these are instrumented systems that accelerate the growth, accelerate reproducibility for our surgeons, and we're decreasing the recovery for patients. And one of the challenges with the osteotomies, I think Holly did a tremendous job explaining it so well that I don't have to hammer it out. But even admittedly, I'll say these are hard procedures.

Holly and I have been doing them for many years at this point, and we even struggle still, right? And so think about the average surgeon who's not doing hundreds of bunions a year. It's going to be hard for them to adapt a procedure that is technically challenging, that they struggle through the surgery, they have unpredictable outcomes because at the end of the day, we care about our patients, and we want our patients to do well. And so these are those black diamond procedures, and we're bringing them into that beginner. We're going to see them go into the green target that we want.

And these are accelerating that recovery and accelerating the MIS procedures. And Holly talked about it. Why are MIS procedures important? Well, we see this. There's good data that shows patients have less pain, less risk of wound complications, less swelling, shorter recovery. That's what patients care about. And then there are surgeons and surgeons want precision, they want adaptability, they want accuracy. They want this to be more streamlined in the operation so that they can have a better outcome. And that's what these systems do.

Now the Nanoplasty specifically kind of meet surgeons in the middle because you've seen Will talk about the open procedures where we're using saws, we're looking at everything. That's something that surgeons are used to throughout their training. At the same time, Holly showed an example where she's using a burr. A burr for us, Holly and I is very natural now, but it's not necessarily natural for the average surgeon who doesn't have experience. And so the Nanoplasty allows surgeons to use a saw through a very small incision, allows them to be accurate and then use the instrumentation to correct the 3-dimensional deformity where they want it to be. And hopefully, you'll see that as we go. This is a comparison of what these look like.

So an average bunion surgery done open, it's usually as small as 3 centimeters, can be up to 7 centimeters in size, whereas with the Nanoplasty, consistently, it's 1.5 centimeters. But then the other thing you don't see in this, but you'll see in the next slide, and I know Mark said, you're eating, so just a forewarning. With the traditional procedure, we're actually having to lift all of the soft tissues. So it's not to be too gory.

Imagine we have to lift everything off of the bone to be able to see it and do what we need to do. And logically, it makes sense. It's going to be more painful. It's going to have more swelling. It's going to have a longer recovery. That's why these horror stories exist with patients. That's why for years and years, patients have been afraid to have bunion surgery. Whereas even with the Nanoplasty, it's 1.5 centimeters, but you don't have to lift the soft tissues, you're working through this nice little pocket and you're able to do everything through that small incision. So this is what it looks like. You can see the comparison. I won't leave this up too much, so nobody gets nauseous, but that's the difference there.

And this is what it looks like in recovery. Now this is what patients see, right? They're not looking at their surgery. They're not watching their surgery, so they don't see that open picture, but they do see the after effect, right? And the things that they're looking at. They're looking at the alignment of their nail like Mark talked about. And then when you take the dressings off, they're looking at the size of the incision. And you can see the difference here.

The picture on the left, it's a large incision, but not just the incision, you see bruising tracking down the toes, tracking up the foot. Patients can see that. Whereas with the smaller incisions, really what sticks out on the picture on the right is actually our surgical marker. That's purple lines that we draw on the anatomy, you can barely see the incisions and you see less swelling and patients are happy about that. They can get back to life quicker.

So what does the Nanoplasty do? Well, just like everything else, it's step by step, it's instrumented. It's allowing a 3-dimensional Triplane correction. And so the first step is we're going to have a precision-guided cut with a saw, which again is very natural for most surgeons. We're able to insert the jig through that small incision. And we're really able to work through that small incision, we're able to correct all three deformities. So we're able to translate, meaning we move the head over into a position that we want it to be. We're able to angulate it. So looking from the side, we're able to get it lined up well.

And then really that third plane that is absolutely critical is the rotation and you're able to dial that in and it's possibly my favorite part of the procedure because it's very precise and accurate, and you're going to see an example of that in a second, and then we're able to fixate it. And the key with these minimally invasive procedures is we don't want to compromise outcome, and we don't want to compromise recovery, just to have smaller incisions and less swelling and less pain. And so that's what these do.

They're really strong, stable constructs, allow patients to walk right away, allow patients to maintain good alignment because at the end of the day, the patients are looking for three things. Number one, they don't want their bunion to come back. They want predictability. Number two, they would like to have less pain with the surgery, with the recovery. And number three, they'd like to get back to life quicker, have a quicker recovery, and that's what this does. And so this is what it looks like on an x-ray. The first picture on the left is where you can see our cutting guide. So we're not just randomly making this cut. Surgeons can see on an x-ray where the cut is going to be. And again, they can use a saw that's very familiar and natural to them.

And then in the middle picture, we can see we're inserting that guide. And I'll bring your attention to the middle and then the third picture because there's a pin you can see coming in at an angle on the metatarsal head. And then in the third picture, you see that it's up and down. And what that's doing is that's essentially rotating. That's giving you your 3-dimensional rotational correction. And we'll show you an example what that looks like in a second. And then this is our fixation on the right.

Now what I didn't talk about earlier, but I'm going to point out here is it's also very low profile because what we don't want to do is we don't want to remove the patient's bony bunion, meaning their anatomy and give them a metal bunion, meaning give them hardware that's prominent and palpable and symptomatic where they have to go in and have another surgery to take it out. That's why Holly talked about the bubbled screws being low profile, and that was the goal with the Nanoplasty as well, and you can see that.

And so again, this is probably my favorite part of the procedure, which is the rotation. And essentially, it's very precise. Notice how we're just gently dialing it in. We're just turning in a controlled fashion, and we can be very, very accurate getting our rotation. So we're not trying to get it in the ballpark. We're getting it exactly where we want. We're essentially hitting a home run. So this is what it looks like through the recovery. The picture on the left is preoperatively where you can see that they have an angulation in the bone.

The picture in the middle is immediately postoperatively where you see the fixation. And a lot of people ask me on the drift and try not to trip. A lot of people ask, does it really heal in, in this area. And that's what we've seen over time over the years. You saw that with Holly's examples, and you can see it on the right, where all of that is new bony consolidation and new healing. And a lot of patients will also add something called an Akin osteotomy, which is we'll do an osteotomy in the proximal phalanx, and that's where the Percuplasty can come into play as well with this. So really, it gives you a comprehensive portfolio, a comprehensive package for these patients.

And then this is another example, and I like this one because you can see the clinical photo on the right, where you're looking, they're about 3 months postoperatively, common theme, their nail polish is done. They're back in regular shoes, they're running, they're active. You can barely see the incision. You're really just looking at the skin folds. And so it's really nice. And then imagine that's looking directly medially from the inside. Imagine looking from the top, you can't see any incisions at all.

A lot of our patients will come in at 3 months and say two things, well, three really. One, when can I do my other side? Two, I sent a lot of family members to you; and three, most people don't even know I had bunion surgery. And I think for us, that's important, right? That means they're happy. And so this is really kind of combining the best of both worlds. And again, it closes the loop, giving you a really comprehensive portfolio, but in a really nice algorithmic approach. So we're not guessing how to treat bunions anymore. Again, I'm going to bring Mark Easley, my partner back up to talk about the IntelliGuide.

All right. Sorry, stuck with me one more time. This is good. So I do have a question for you. How often do you go to a meeting and you're not prepared? Can I see a show of hands?

Really? How many want to do that? You really want to be prepared. Okay, good. Okay. All right, that's good. Spontaneous off the cuff. But what I love about this, so this is Patient-Specific Instrumentation, okay? So PSI, and we're talking about -- we really can talk about all of these things with this, but we'll focus on really these two center ones so that Lapiplasty or the Lapidus type procedure where the first ray that bunion is corrected or if you have that adductus problem, you have to correct as well. So that's what we can address.

So what's the difference here is that we can actually go to the operating room now with a plan in place. So we're not winging it. We're not seeing what might happen. We have a predictable plan going into the surgery. And this is not new in orthopedics. This is not new in surgery. This is a lot where surgery is going that we have the technology now where we can actually plan things ahead of surgery and then go in with that plan and execute that plan. So here it is, we use a CT scan, so a CAT scan. So it's a 3-dimensional way of looking at x-rays. I know that -- or the foot.

And I know that before it was mentioned that one of the mistakes is looking at bunions in particular, in 2 dimensions. I'm also a total ankle replacement surgeon. And there are very few total ankle surgeons now that do total ankle replacements by winging it or just guessing where it needs to be. We're pretty good at that, but we can use Patient-Specific Instrumentation, a CT scan to put those components, those metal pieces and just like hip or knee replacement in the proper position. And so we can do that now with bunion surgery, too.

And that's, again, that innovation that Treace brings to the table of looking at how can we predict this ahead of surgery. What you see all the way on the right after the CT scanning planning has been done is actually these cut guides. So you saw a lot of different cut guides and a lot of different instruments today, but same principles applied, planar is in place. And guess what, the cut guide is not being put on and we're looking at a fluoroscopy or that live real-time image in the operating room. We actually put the cut guide on that's premade for that patient. So we have that, that's a little model in the operating room. So you get the haptics, if you know what that is, right, where you get a feel for that model comes sterile in the operating room, you get a feel for how that sits on the bone. You can look at it even before the surgery starts. This can be sterilized.

And you take that and put it on to the patient. So it's a patient-specific guide because it's going to make the cuts then as long as you position it properly, exactly where you need it to be to get the correction you already planned. So this is really looking innovatively into the future where to go. Really old slide of an old type of ankle surgery that was done freehand for emphasis really. The ways we can do this with instrumentation ankle replacement surgery. And that's what I was talking about before. There's a patient-specific guide. So surgery has been planned. Where do we want to make the cuts in that ankle bone so the component sits exactly where we want it to be, and we're not guessing or trying to fiddle with it in the operating room to try to get it right.

Same thing for bunion surgery. So where can we use this? What can be just a straightforward bunion. It can be that metatarsus adductus bunion. It can be a bunion or a foot surgery that's previously done and potentially not done well or there were some complications. And we can correct that as well because we can make a preoperative plan and decide how to do it. So here it is, right here, we got the cut guides based on 3-dimensional analysis. And this can be personalized. I like that word. But what it really is, is going to your meeting, having planned for the meeting, knowing exactly where -- what your strategy is going in and knowing what the end result is going to be because you've planned it ahead of time and you're going to execute it based on patient-specific instruments for that, which I think is terrific.

So you see that here, all these measurements mean something to us, but you can understand that we can take a computer now and do all this, so we don't have to do all the heavy lifting with calculations that can do it for us. And what we really want to end up with is a plan like this. So here's the preoperative X-ray. Again, we're looking under the skin. So here's the x-ray. You've seen a lot of this already. And what we want to end up is where the green is, right? And that's in 3 planes. So we're going to move that we correct the bunion. If for some reason, we have that metatarsal deduct, we're going to move those other metatarsal out of the way. We'll put the bunion where we need to be. We'll correct that in 3 planes, get the rotation exactly where we want it to be. And we can tweak that, but it's all done before we ever step foot in the operating room.

And here are these patient-specific cut guides. So the beauty is that the trees team is available. So if surgeons want to do this, say they're a little unfamiliar with this potentially, the Treace team will sit with them with the engineers and go over the plan with them and little tweaks are made and there may be some surgeon preferences and those can be all built into these cut guides that are patient-specific, specific to that particular patient for that particular bunion deformity. But the big picture is that, that's a reproducible technique that can be done over and over and again.

And I think if you look 5 years from now, 10 years from now, this is where it's going. We'll be even more innovative and Treace will continue to be at the forefront. But the idea is that we're pushing this forward where it's very predictable. And I don't have to do all these little adjustments because I already know where I need to be. I just have to put the guide in the proper position and make the cuts and then finish the operation from there.

Yes, some more graphic pictures, maybe Holly would be disappointed in me because I actually made an incision. But you can see here that it's a patient-specific guide, but I can look at a preoperative plan, put it on, look at the fluoroscopy image and confirm that's where it is. Ideally, we get to the point where we just know where it's going to sit. We wouldn't have to look at the fluoroscopy until we're all done with it, right? That's where the evolution is going.

Again, a little more invasive here, but the idea is that cut guide is made specifically for that patient. And yes, we can start making those smaller and smaller and smaller incisions for that as well. But we're at the forefront of this right now working forward. You can see here this rotation. Remember the rotation. So think about it, you can put this cut guide on and here for the bunion, for instance, and you see how right here, we want to make this cut and we want to make this cut, and that's going to help correct the bunion and -- but also the rotation filter, can you see that these 2 pin -- I can see down these pinholes, but I can't see down these. Here, I can see a little bit better.

But what's going to happen is I want to make all these cuts and these pins will be in. And then I'll put another device on that actually just locks in and it takes those 2 pins and rotates them in alignment and drops in and then that corrects my rotation. So I don't even have to think about it. It's already all preplanned to make that a lot easier. And that's for the Adductoplasty as well. But you can see the pins are offset. When I put the next guide on, it drops them in, the rotation is already done.

Based on my preoperative plan before I ever did step into the operating room, as I said. So here's the correction. You can see that the same implants, those are important. But what's really important, I have a way of reproducibly doing this operation and plan it all before the surgery. And what if you have this situation where somebody has just physiologically has a short first metatarsal. Well, as you can imagine, there could be some problems that the foot isn't balanced properly.

Well, I can actually address that. I can -- in my plan and say, okay, I got to lengthen this bone this much. And I can plan that exactly how I need it to be. That right there all the way on the right is some bone graft. So there are donors out there, I can donate corneas and hearts. You can donate bone too. And these are precut. Treace has these too, so the surgeon doesn't have to sit there with a saw and try to get it just right and a lot of tailoring has to go into it. It's already premade for this particular problem in different sizes. Yes, it's human bone and then that is immediately available and can drop in so I can make up for that deficit in length and address that with the same type of fixation, but all preplanned. And that's the difference.

So again, I think what's amazing about this, and I really think this is where it's going to go is that all this can be preplanned. Think about how predictable it is. When you go to your meeting, you feel very comfortable going in because you have your strategy, your plan of attack, and you know what the result is going to be because you're prepared. And that's the big difference. So all of this can be done, but with a preplanning in place, patient-specific instrumentation. Thanks.

All right. Thank you, Dr. Easley. Okay, that's loud. I'm Sean Scanlan. I'm Chief Innovation Officer at Treace Medical. I've been at Treace since just about the beginning. And I'd like to say I have the best job in the world. I get to work with big company, joined John Treace very early on that has invested in innovation since day 1, and we're still accelerating our innovation. We work with surgeons that are super talented, visionary and pioneers in MIS, Lapiplasty in this field. And then we have a mission at this company that is very clear, and we went through it a lot today. It's how do we bring triplanar correction, how do we democratize it for all surgeons in order to improve bunion surgery.

We've done this through highly instrumented techniques that we can take a surgeon, do one training lab and they can get out and get a great result in any of these procedures. And we've worked hard over the last couple of years of how do we expand this 3-dimensional correction to the osteotomies to MTP fusion. And this is really a coming out party for us this year as we launch this full system. We also have these enabling technology platforms that we talked about through the different talks. And these are things we're going to continue to build on as we grow the company.

So where are we going to play? How are we going to continue to grow? We talked about the bunion opportunity. It is still a massive opportunity that's underpenetrated. So through our open procedures, Lapiplasty, Adductoplasty, and then as we go into MIS procedures, we think we can move further up the funnel, as we talked about, bring more patients in that are on the fence for bunion surgery and expand through penetrating the bunion market. We're also going to use some of these core kind of technology platforms to expand the market and grow within the market, too. There's a lot of adjacent procedures with bunion surgery. There's 28 bones in the foot. There's other common pathologies associated with bunions. So how do we become one-stop shop with the best instrument and systems for all the different pathologies that surgeon needs to address in the bunion case.

And so 5 growth drivers, and this is a bit of a summary of what I just went through. But number one, continue to advance our core procedures and penetrate the bunion market. Two, we're going to expand our portfolio into these other highly adjacent procedures with bunions, and we're going to do this by growing our 3 main platforms, our MIS systems, our SpeedPlate platform, and then also scaling the PSI digital solutions that we're working on as well.

So this first thing is something that you've seen a lot today and something that we're super passionate about. So by being highly focused on bunions, we can continuously be very close to our surgeons and in these cases and become experts in these procedures and look at the unmet needs in the procedures to continue to make them better. So we're -- I like to call it kind of John mentioned kind of the iPhone model. We're always working on the next iPhone on the core Lapiplasty, Adductoplasty, and now the MIS and MTP systems. How do we make them easier to use, more reproducible, and then provide less invasive options for them as well.

You can see an evolution. There's actually like 12 different versions of Lapiplasty over the past 10 years. And this year, we're actually launching at the end of the year, a limited release of our Lightning system, which is a way that really integrates Lapiplasty with SpeedPlate and makes it a truly hands-free system that's really conducive to the speed and efficiency of SpeedPlate.

Also, as we've kind of been deep in these procedures and kind of attention to detail around what are the other unmet needs in the procedure? How do you make these procedures more efficient, faster and improve outcomes? And we've talked about a good bit of these single-use instruments. These are all highly unique to Treace. These are procedures specific. There are problems we see in the case and how do we make the case go better.

Examples are, we talked about a little bit, LapiTome, you make a small incision, you make a bone cut. How do you get that bone slice out of the small incision without breaking the bone and having to dive in and pick it out. This is an Osteotome like a little chisel, but has a hook on the bottom, so you release the bone and then you can hook the bone and pull it out. The speed release it's common to do a -- it's called a sesamoid release at the big toe joint when you're doing Lapiplasty.

We saw surgeons just using a scalpel and many of them would spend about 5 minutes digging around in their blindly trying to do the release. We found a very incomplete release affecting the outcomes. So how do we make a guided instrument that allows them to do that release very efficiently. So it both improves the speed and efficiency of the case, but also leads to better outcomes. And these have become a large part of our kind of revenue base in these procedures, too. And once surgeons try these, they can't go back to doing the cases without these tools. There's such great problem-solving tools.

All right. So the second part of this is expanding our portfolio. And like I mentioned, there's 28 bones in the foot. There's a lot of other common pathologies associated with bunions. And so how do we take our recipe of highly instrumented techniques and address these other adjacent procedures, too. And we're just getting started into some of these different areas. And a couple of examples here, you saw in some of the cases in Akin osteotomy, which is an osteotomy to help straighten out the big toe joint. It's commonly done in bunion surgery. So often use a staple for this. Many of the staples in the market were very blocky, very prominent for the patient. So we're able to use our SpeedPlate technology platform and make a very low profile staple. You can see how well this staple fits to the contour of the bone.

And then we also mentioned bone grafts. And so other procedures in the foot, flat foot, other things that we're moving into. How do you address those? And so we're able to use our SpeedPlate platform. You see in the bottom right bone graph to both lengthen the first metatarsal. But if you look in the back of the foot, that's actually in the heel, that's an osteotomy to address flat foot. So these are areas we're going to continue to build instrument systems, train surgeons on and bring these solutions to help really be one-stop shop for everything that's performed in a bunion case in addition to our core procedures.

All right. So the third thing, and we spend a lot of time today, really excited about MIS and where this is going. And so how do we accelerate access to MIS? These are challenging procedures like we went through. How do we take our surgeon base, the majority of them are not doing MIS and how do we help train them and give them the tools to be very proficient in MIS after just one surgery. And you see a stat here. This is the fastest-growing area of bunion surgery when we pull our surgeons. MIS is also used in many adjacent procedures throughout the foot. So again, it a platform as we move from bunions also throughout the foot to other pathologies.

And there's two really main limiters here in addition to the training. One is we talked about burrs. So a low-speed high-torque bur is used for MIS surgery. This is a capital piece equipment. How do we provide access to surgeons and they are able to do this. So we are announcing today a partnership where we can have a really plug-and-play MIS system that's dialed in for a foot and ankle surgery where they just plug in the handpiece and all the settings are pre-ready to go. And this is highly scalable for us in a very capital-efficient way to address MIS power systems

And then the other side of MIS is how do we make instrumented systems like we talked about with Nano and Percuplasty that the surgeon can go to one lab and get a great result in their first case. So we're going to continue to iterate and expand on MIS and grow this throughout the foot.

And then the fourth thing is expanding on our SpeedPlate platform. And so we've also covered this a bit through many of the talks, but this is a highly differentiated implant platform that only Treace Medical has. And the benefits are surgeons love nitinol staples have been in the market. They love the dynamic compression of nitinol staples. They're fast and easy to put in. They like the compression. But if you look at the data in the bottom right, this is some head-to-head testing that we did of our titanium SpeedPlate versus nitinol staples.

Titanium is much stiffer. So you get a lot more compression from titanium kind of pound for pound. And then it's much better in fatigue. So as the patient walks, you can see the cycles of failure of the SpeedPlate in the bottom right, the red bars versus nitinol is much better in fatigue, so patients can [indiscernible] faster with these nitinol -- sorry, with our Titanium SpeedPlate technology. And then the other benefit, and we talked about how do we get into small incisions, is that we can actually do highly anatomic shapes and machining of titanium that you can't do with nitinol.

So things like the MicroQuad would not be possible with nitinol, we can do it with titanium, make a very robust fixation through very small incisions. And we're also expanding with SpeedMTP into this hybrid fixation, which combines the best of both worlds. So you have the dynamic compression of SpeedPlate, but then you also get the locking screws of a typical plate. So that gives off-angle support and stability so that makes the SpeedPlate even more stable. So as we look at these other pathologies in the foot and as we continue to advance our core procedures, but also these adjacent procedures, SpeedPlate is a platform that we're going to be applying throughout the foot where we can make very anatomic designs in order to address many different pathologies throughout the foot.

All right. And then the fifth one is PSI and other digital solutions. So Dr. Easley did a great job of who want a personalized solution to go in as a surgeon and to be able to communicate to the patient, here's your anatomy in 3 dimensions. Here's what I plan to do and know what the outcome is going to be, preplanned before you step foot in the OR. And so the challenges that we're planning to address here, and we've been investing in this area a lot is how do we bring software solutions and AI into this in order to make this highly scalable for Treace and for our surgeons and also just make it accessible for all surgeons out there. So how do we make the process easier, smoother and less costly so that we can expand this throughout the entire bunion surgery, which is a much more common procedure than something like total ankle we talked about.

So super excited about where this digital technology is taking us from both a surgeon and intraoperative guidance, but also as a patient communication tool to help educate patients of what their pathology is and why they need bunion surgery and what the reconstructive plan is. So those are the 5 growth drivers that continue to grow Treace Medical as we expand from where we are now to kind of doubling the size of the company in the next several years.

And that is all. Thank you, and we're going to take a little minute break and then do a panel Q&A.

[Break]

Okay. Welcome back, everybody. We're going to start with Q&A. I'm going to start with a question for the panel up here. So we presented kind of the broad portfolio of bunion solutions. Curious how you see the average surgeon applying these in their practice and what their indications will be.

So one of the things that we talked about is mild, moderate, severe, and that's a kind of theme that will persist. As patients adopt new technology, they're going to do it most commonly in their comfort zone. And so like if it's Nanoplasty or Percuplasty, they'll start with that mild, moderate and then maybe over time, they can push that envelope. And that same thing happens with Lapiplasty. It happens with Adductoplasty.

The SpeedMTP is something that could instantly be adopted in the patient's practices because this is what everybody is doing now. And we just have a solution that gives a better fixation option and with the compression and all the things that we talked about. So I think it will follow the patient's comfort zone. Just like Sean had said in his letter though, that's super important, you can come to literally one lab and then apply these technologies the next surgical day and have outcomes better than you probably ever had with a freehand technology.

Yes. I mean I think the only thing I'd add to that is that suddenly surgeons who are really just doing one procedure are going to branch out. So again, allowing the average surgeon and talking more about the percutaneous surgery to open up their options to patients. So when they see a patient that comes in and says I want minimally invasive surgery instead of the surgeon saying, "Oh, you're going to have to go see my junior partner because I don't do that surgery, he or she can actually do that surgery." So I think it just really opens up the toolbox for the surgeon to have more options for everything that the patient wants and needs.

Yes. I mean, I would echo the same thing. I think every surgeon probably has two or three procedures that they want to have in their toolbox. And I think that there's probably one that's predominant and then they'll have their outliers. Every surgeon is probably going to want an osteotomy procedure. Every surgeon is going to want a Lapiplasty procedure and then every surgeon is going to want an MTP fusion because patients have arthritis without bunions. But then the beauty of it is every surgeon is going to have continued literature showing it's important. So I think each surgeon wants two or three options for their bunion procedures, and that kind of fits that need.

I'm going to go back to -- I mean, these are great answers. I'm going to go back to the principles. So the surgeon education component that Treace does well. And again, I didn't start with Treace. I was very impressed with what the philosophy is. And I think that's what's really important. We had a conference -- Jonathan and I did, we have a weekly conference with our team. And one of our colleagues is an excellent surgeon, does a really good job. He had a bunion surgery, and we talked about things that didn't go quite the way we wanted to, and he shared a case with us.

And to Jonathan and me, it was quite obvious what was missing. But to him, he did a surgery well. He put the implants in properly and everything was done technically appropriately, but he didn't quite have the full principles. And once we shared some of those concepts with them that we -- that are very familiar to us, he said, "Oh, I see what you're saying now." And I think that, that's what Treace can do is that, yes, we have all these great implants. And yes, they are these great techniques, but it's really understanding the surgical principles behind it. That's what you do well.

So that's the instant impact, I think, that can be made. And so with Treace out there, it can be peer-to-peer. They offer peer-to-peer surgeon interaction or these bigger bunion master courses, which you maybe have heard of. But anything from one-on-one to bigger scale teaching opportunities and webinars, that's the key that will help drive all the success for the surgeon and for the patients.

Great. And I appreciate those answers. And then relative to the learning curve in MIS and Dr. Kaplan with Nanoplasty, what are you seeing the learning curve be for Lapiplasty with the surgeons that you're helping train?

Yes. So the learning curve, Holly touched on a little bit. And I vividly remember, I think I was 10 surgeries into my MIS bunion adventure, and I was struggling and I was frustrated. I remember exactly where I was standing in our surgery center when I said, why am I doing this to myself? Because there's a notable learning curve, and it's probably Holly hit the nail on the head when she said it's about 40 or 50 with the traditional MIS bunion procedures. And I think that's probably the coolest feature of the Percuplasty and the Nanoplasty.

I know this sounds extreme. I think the learning curve is probably maybe 2 to 3. And the reason I say that is we're training surgeons. We'll have surgeons that will come to one of our training labs. They'll do it the first time. It will be smooth, seamless. And then they'll reach out to us before a case because we do peer-to-peer direct interaction. They'll do the case and we get follow-up. And usually, I've seen as little as 2 or 3 surgeries where the surgeon is saying, it went the way I wanted it to go. We look at their x-rays, their x-rays look good. There's good alignment. And the representation, the people that are watching them do it also say to us, that went the way the lab went when you train them. And so I think it's drastically decreased that learning curve, and I think that's going to be the biggest adaptation of those procedures.

And I just want to clarify one thing. The first 2 of the 3 say, it's not that the case went poorly and the patient had a bad outcome, and that's really important. It's just that maybe it took a little bit longer. Instead of taking 35 minutes, it took 55 minutes. So it's not the way that the instrumentation is designed, so you can't screw it up. And so even though there's maybe 1 or 2 cases where it takes a little longer and you're getting used to it, you're not going to have a bad outcome, whereas with the more old school freehand technique with MIS, I mean, I've seen some disasters that people have had with their initial cases because they didn't know how to do it well. So we've eliminated that part of the learning curve.

Yes. And I mean, touching on the learning curve before these systems, if you logically think if it takes 50 procedures to be even just comfortable and proficient with, not even an expert, if a surgeon does 25 to 50 in a year, it's going to take them a year of struggling and nobody wants to struggle for a year. I mean imagine when you're learning how to drive a car, if you had a car accident every month for the first year, you probably wouldn't drive, right? And that's what happens with these bunion procedures is when you struggle through it and you have these car accidents, you almost don't want to do it anymore.

Yes. What's also interesting about these systems are it's almost like a third hand or a second person in the OR. They're all at major teaching facilities. So they have students, residents, fellows. But the vast majority of foot and ankle surgeons across the country are maybe alone in some community offering these technologies. And what this does, this offers another skilled hand, so to speak, through the instrumentation, which is invaluable because Holly accurately said, you need somebody to hold the deformity, you need somebody to throw it. Well, that, by definition, is two skilled hands. And if you guys aren't surgeons, we're surgeons. But if you have a tech in the room that maybe isn't very keen to how to hold, then you need two skilled people. So this really eliminates a lot of issues with reconstructive surgery around bunion deformity.

Ryan Zimmerman from BTIG. Thanks for putting on the day and attending here. Two questions for me. One, there's an abundance of new products. They all seem like really good incremental offerings for the company. Can you just talk about your facility's willingness to spend incremental dollars for these products relative to other products that may be more inexpensive and out there in the market? And then the second question is, in your mind, as physicians, how does Treace launch all these products successfully without maybe overwhelming the physician population around the country because there is a lot out there.

So two great questions. One of the things -- I'll start with the second one. One of the things when you had said about overwhelming, and you heard a consistent theme, each surgeon has in their mind an approach in order to do this. What Treace does is offers the platform. So if they want to do osteotomy MIS or they want to do a triplane tarsal, metatarsal like Lapiplasty or whatnot, you have the ability in order to do that. So it's really surgeon preference.

And then to go to number one, a lot of times, what's happening at the facility because the facility may just be looking at comparison [indiscernible] they don't really understand. Once the surgeon gets their hands on this technology with Treace products, the surgeon goes to the facility and fights for it harder than anybody else would because they instantly see the value of it. So what I can say in my practice, what I did is said, "Hey, these are my patients and here's what I'm going to use, and this is the technology I need." And the value add speaks for itself. And so then the companies go forward with that.

I can speak from having worked at two academic centers, the Hospital for Special Surgery and MGH in Boston. And so when you want to bring new product in, especially at two facilities like that, that have a lot of power over what comes in, offering a huge patient population and surgeon populations. HSS specifically, they can negotiate pretty much any price they want.

And so Treace comes in at the same level as the competitors. And I think that, that's going to be really important. But if they're offering -- if Teresa's product -- and this is where the surgeon argument comes in. If I say -- if I go to the gatekeeper of instrumentation and I say, look, I can do this procedure 30 minutes faster if I have this jig, and I -- that means I can do two more cases in a day, they're going to bring that product on immediately. And so it really hasn't been an issue bringing them in. And of course, there has to be some negotiation of prices, but it's not like these price points are crazy different than what's out there.

And then to address your other question, every foot and ankle surgeon is doing all of these procedures. So it's not like there's this -- oh, we're introducing these new concepts. It's -- of course, there's a concept around 3D triplanar correction, but it's about doing the procedures that you're doing all the time and making it easier and faster. So it's -- you're not going to get overwhelmed with the product because the concept is still the same. It's just, okay, you have this really easy technique that I'm now going to use to take care of this difficult problem. And so most surgeons would adopt the whole portfolio very easily.

Yes. And I think speaking on that, too, I mean, Holly and I didn't really get into the osteotomy world. There's over 50 different ways you can do osteotomies. And so I think the way you avoid overwhelming surgeons is coming out with a technique for every single osteotomy, whether it's Chevron, an Akin, a MAO, a Ludloff. I mean I can just rattle off a lot of names. So I think it's having that armament where you give each surgeon the option of what they want, at least within the theme of an osteotomy, a first TMT arthrodesis, but then streamlining the rest of it.

And then on the first question, I mean, my background is I'm at Duke University now, but I was in private practice for 10 years in California before that. California notoriously is hard from a cost standpoint everywhere. And I think from being a private practice, though, what we recognize, too, is there's value that goes beyond the individual dollars as well. So your patient outcomes affect your outcome. Our surgery center was connected to our clinic, which was connected to our orthopedic hospital. And a patient saw all of that as one entity. So if they had a good experience within any of those, that translated to positive outcomes.

And like Holly said, too, the more efficient you are in the operating room, a, that decreases the cost because the dollar -- the expense of healthcare is how long you're in the operating room. And then the second thing is the more cases you can do improves reimbursement. So I can't speak on the specifics of how our facility negotiates the prices, but there is collateral benefit that we see with these types of systems, and they recognize that.

I think you're right. Treace -- I mean, some of this is pretty involved. It's intricate technology. So it warrants -- and there's more production cost behind that. I think Treace is very efficient, and I'll let the Treace team speak to that. But what's really important is what's the #1 worry we have with bunion surgery. Is that the damn thing recurs, right? We're trying to avoid it recurring. So this is a very reproducible way, whether it's MIS or it's done with the more maximally invasive surgery that I showed, showing that it's a reproducible procedure that gets reproducible outcomes and the recurrence rate is really low.

And what Treace does a good job of, if you look at the literature, there's a lot published on how good the results are in the MIS. I mean, you do in your research, too, so that will soon follow to show. And I think that hospital systems will recognize that. Yes, the patients will be happy. That's important. But also you can say the recurrence rate is low, meaning that the patient most likely won't have to have a reoperation. It's not foolproof, but it's certainly a lot better than what's out there. right?

And as far as the other question where you said, how are you going to overwhelm the surgeons or overwhelm the market with this? Not really. Like it was said that all these procedures are done. What's frustrating sometimes is Treace did a very good job of entering the market with a very specific product, very specific technique, and it was very -- so effective that everybody else actually mimicked it, right? And so definitely a leader in this field, but very narrow. But there are times you say, gosh, there's arthritis, I'd like to be able to do a fusion of the big toe joint or the bone is a little bit short. What if I had a way to lengthen a little bit. So you don't want to have to call on another vendor, have somebody else there. So now it's a complete portfolio where every situation that's encountered can be addressed. And then you also have different instruments to make those techniques easier, and I think surgeons gravitate toward that.

The other thing I'd say, Will did a very nice job of showing you that patients understand that, too. You saw that little schematic little drawing of moving the metatarsal, moving the bunion, and I think you can conceptualize that. It's really amazing when you take that not just as a 2-dimensional drawing and put it in 3 dimensions and have that patient-specific instrumentation. So yes, maybe not everybody right now can get that CT scan and put that through the process of doing a 3-dimensional surgery. But look over the next 3 to 5 years, and it's going to go there. It's going to be much more accessible and Treace is already there and make that easier as part of the portfolio.

Rich Newitter from Truist Securities. Thanks for doing this day. It's really helpful. I have a couple. The first is just on how SpeedPlate MTP fits in with the rest of these solutions. Are you -- was it a situation where people were coming in, maybe asking for Lapiplasty and they ended up having a big toe arthritis and they were -- you didn't treat the bunion, you treated the arthritis? Or is this a situation where you're doing -- you're always treating the Lapiplasty and on top of that, you're doing the toe arthritis too.

So you're getting two procedures really for that one patient. I'm just trying to get a feel for how it's plate MTP, whether it's more procedures per patient or if it's something that just allows Treace now to participate in the big toe arthritis where they had to hand it off to someone else, but they got the patient in from Lapiplasty. I'll just ask my -- well, let's go there and I'll ask the second one after that.

So it's a great question. Every bump around a big toe to a patient is a bunion. So first off, they come in, they have a bump, they have a bunion, and they may just have arthritis. There are two subsets of arthritis around the big toe. There's primary arthritis, so no angular deformity of the -- what we call the metatarsal, so no bunion, and that can be caused by trauma or these sorts of things. And then there is also a bunion with arthritis. And that's a lot of times people with long-standing abnormal alignment, then the joint kind of breaks down.

And to answer your question, there's two trains of thought for that. We were doing first MTP fusion with our plating system. We were doing the same BIPLANAR plating. But by and large, what surgeons use is a dorsal locking plate with an interfrag screw. And so we wanted an offering that did that because that's the kind of the traditional way to do it.

What SpeedPlate did is did a slimmer plate. It's actually the thinnest plate on the market. So we can still see the fusion. It doesn't create a prominence around the skin. That soft tissue is not very robust in that area and the continuous compression really changes it. And then to put a bow on the end of your question, sometimes patients come in and they have a deformity where that metatarsal is egregiously out of alignment. And maybe the first MTP fusion, the SpeedPlate alone can't get full reduction, and we do a procedure that we internally and we published on it called a double procedure. So in those cases, they are getting Lapiplasty with the first MTP fusion. And we have radiographic and functional outcome that we published that are just phenomenal. So this is one more step.

What percentage of the time is that?

I would say maybe 10% of the time.

Yesterday, it was 100%. But I like to have the solution, right? And it's -- yes, certainly, I could use any system to try to fuse both. But let's take, for instance, yesterday, I was -- I had two surgeries where I was going to do a fusion of the big toe. I like the Treace system, so I have that ready to go. And I did it, but it didn't fully correct it or that other joint was so unstable that I couldn't get the alignment I wanted. I could immediately add this the Lapiplasty principles and get it right with the double. So I think that's important.

The other thing I want to answer is it's not really trying to get too far out of something. It's really trying to do the right thing for the patient. And so I have a solution where I think some surgeons say, I've done the first big toe fusion. Yes, something doesn't seem quite right, that's good enough. And maybe that's okay. But I like the dedication this team has to doing the right thing and making sure it's perfect. And that -- if you fuse that other joint in the proper position and fuse the big toe joint, the patient will function exactly like if they only have a first big toe joint fusion.

The other thing that you need to know is that Treace is very careful in what they do, and this is just what I've observed. So it's very focused and been focused for years on Lapiplasty, right, and trying to get the big toe and get the rotation right and correct the bunion, not really thinking about the big toe joint. Yes, if there's arthritis, we need to fuse it, but not really focusing on having a specific system out there for that.

Will and I and others, we really kind of pushed Treace towards that, there's an unmet need here. We can make this better. And so Treace listened. And so I think I'm very impressed with the resources put toward that to make that operation that I mentioned was relatively common. But in my opinion, I think others would agree that it's better now.

Can I just ask one follow-up? It would be great just to hear from the doctors. Just on volumes, I know we're entering what the company is called bunion season. And I'm just curious if you could compare and contrast the demand curve that you're kind of seeing in September and what you know you have booked out into October or even further than that compared to maybe this time last year? Is it about the same, less, more?

I can say from my own practice and New York City is a little bit different because the summer tends to be slow. Nobody in the Northeast wants elective bunion surgery when we finally have a couple of months of great weather. So it slows down a little bit, I think, for everybody, HSS sees it across the board. I will say that from a bunion standpoint, I'm completely maxed out. I'm literally -- I'm maxed out basically until Christmas, and I had to add 2 more OR days in September because we have AOFAS coming up. I'm constantly looking for more OR time.

And so for me, personally, my volume could continue to keep going up, and I have no limit. The limit is literally that I can't get more block time in my hospital. So -- and as I think I alluded to when I was up there, my practice when I started doing minimally invasive surgery in 2017, when I came to HSS in 2018, it probably took about 1.5 years and then my entire practice just became much, much smaller. As I start doing -- and I don't do any marketing, people now want -- I feel like I fixed every bunion in the Manhattan and still the people keep coming. So I guess my short answer would be, literally, the sky is the limit. And I would see myself doing 20% more volume this probably, if we look at year-on-year, probably in 2026 than I have in 2025.

Yes. I mean I think to echo that, and I think Holly and I are in a unique spot because the minimally invasive procedures are self-referring. I mean, like Holly alluded to, they just grow because someone has it and then their friend or family wants it. I can't speak on the national levels, but my year-over-year growth just continues to grow because of those minimally invasive procedures because patients are becoming more and more informed about it, both by way of knowing someone who had it, but also online resources and learning. And so I think it just continues to grow.

The end of the year historically is usually a busy time of the year, not just because of seasonal changes, but also because of year-end deductibles and co-pays and things like that. And so I think just logically, it's continued to grow volumetrically each year just by way of what we do and how we do it and then outcomes being good because if a family member does well, there are other family members going to come. I have a family that has 7 sisters, and I've done 6 of their bunions. And the seventh is coming at some point, she's just waiting until it's convenient for her. So it just -- it's a self-growing system that I think works well in general.

Arthur Weise from Kingsland Investments. Just a question for each of you. Very simply, what percent of the procedures that you do, you use a Treace procedure. How long did it take you? How many years to get to that point? And for those that you don't, why is the main reason?

So I could start, we'll go down the line. So for my practice, personally, I use 100% of Treace offerings for all these pathologies. So I've been a part of Treace from a consultant and then a design surgeon for about 10 years. So since 2015, I started with them. It's interesting because the common theme that you hear from surgeons, and I had my own realization as well is this bunion, I did better than I've ever done it before. And then that creates this kind of groundswell and this momentum, not even just for you, but for patients. And that's what Jonathan and Holly and everyone is talking about that word of mouth continues to persist. So what Treace does is have the offering for all the midfoot, forefoot deformity. So in my practice, it's 100%.

For me, if we're thinking just forefoot, I use only Treace as well. I don't do open -- I do pretty much everything minimally invasively. So for instance, the first MTP fusion, I'm not using SpeedPlate, but I'm using Treace screws and the Treace burrs and the Treace system to get my fixation. In the midfoot, I do my metatarsal adductus correction and I use the SpeedPlate for that. So I'm using it for all of my forefoot.

And then in addition to that, when I have any need for a 4-0 screw or a 3-0 screw if I'm doing something in the midfoot or even an ankle fracture or something like that, I'm also throwing Treace screws as well. So basically, anywhere where I can use that system, I'm using it. I think that all of us -- we don't only do forefoot surgery. So for the non-forefoot surgery, probably the other -- 1/3 of my practice is sports. As soon as John is willing to jump into the sports market, I'm in. So we just don't have that yet.

Yes. My answer is very similar to Holly's in that I do a lot of minimally invasive surgery beyond the forefoot as well. And I'm pretty much for all these pathologies that there is an option I'm using a Treace product to go beyond the things I feel like I'll just beat a dead horse with what Holly does. We use screws all over the foot. We use these Percuplasty screws throughout the foot and the ankle. I use the FastGrafter. I do a lot of bone graft for my fusion. So I use the FastGrafter a lot as well. And now with the CortiFuse, the biologic, we can use that as well, both minimally invasive open. And so for me, if there's a Treace product that I can use on the patient, I am, similar with sports, it's a soft tissue line.

And then I think to answer your question of how long it took, I mean, some of these products are newer. So the percuplasty screws have come out this past year. And so that's where the evolution has changed where it's just continued to increase volume each year as these products have come out.

2020, maybe it was 2019, I did my first Lapiplasty procedure and really didn't go back. I had actually removed the postings on my surgeries for previous systems I used, so I could use the Lapiplasty. And then 2025, now is when the SpeedMTP came out. And so I had to do the same thing. I had to basically cancel all of those implants that I had scheduled to have for the surgery and replace them with the speedMTP and use only that system since. The only exception was if I had to use a bone graft. In other words, you saw that shortening, then I'd have to use a different system. And how long has the graft been there now?

This year, a couple of months.

So a couple of months. A couple of months ago, I started to switch that over as well. So it's actually backtracking from other systems I've converted over again, I think these work well. And I just -- I'm very familiar with the system. I've been taught well, and I teach it well. I feel like I teach it pretty well now because it's all these same philosophies and it works. And I like being on the same page with a system that's very adaptable to whatever the situation is. But those are the three examples where I was using other systems and now I'm converting over.

I'll just add to that, like the average surgeon customer of ours, they're doing the majority of their bunions and MTP fusions with other competitive systems. And so Lapiplasty was about, on average, about 1/3 of their bunions. And so it opens up that other kind of 2/3 of the cases to bring MIS osteotomies and then our MTP system to them, too.

And just a follow-up. So your view would be that the single-digit percent market share that Treace has, what do you think you would expect would happen in the next 5 to 10 years, given your experience, given how new a lot of this equipment is, what are your thoughts on that?

Yes. I think a lot of it's really about exposure. And I can't speak from firsthand, but we do a lot of training across the country. And one of the resounding themes that we continue to hear that surgeons that maybe have had other systems or tried other systems, once they get the Treace system, one of the most common things they say is this actually works. This actually did what it was supposed to do or said it was going to do. And so in my mind, it's really just about exposure as Treace kind of permeates through the surgeons and they get hands-on experience, we seem to have a very high adoption rate to say the least.

I think in the -- just to add to that, on the minimally invasive side, there's a couple of things that I think on the -- even orthopedic and podiatric side are going to spur growth. First of all, we're all in the podium a lot at national meetings. And everything I'm showing is Treace screws. And so when I'm talking about how I do my correction, I'm showing surgical videos, everything else, as a KOL on the field, you're showing all the Treace products. So I think that, that bodes very well.

We also -- in addition to the teaching we do for Treace, we all teach for other -- we teach in other capacities. So I run an MIS course. Jonathan is running the MIS pre-meeting for AOFAS. And so there's just a lot of overall exposure that I think really helps. And then the last part is that as this generation of surgeons is coming up learning MIS, if the Treace jig is the best ig, it's going to capture pretty much all the market.

I'll tell you what's pretty extraordinary. And again, that Treace does a good job of this. I have patients come to me and they say they want a Lapiplasty. I'm not really that familiar with that with some of the other systems. I used to say my total ankle replacement. Sometimes patients will come and say, I want to have this total ankle that you use. They actually come to me say I want a Lapiplasty. You don't say I want my bunion correct, I want Lapiplasty. They've done their homework. And Treace has done a good job of getting the information out there.

So patient-directed marketing, whether you find it controversial or not, it can be in other industries or other aspects of medicine. But I do think it's effective. And it's a system. I mean, you can ask panelists here, but it works and patients are aware of that and the information is out there. So it's comforting to me that patient recognizes that there is a benefit to the principles that tend to lead to a lower recurrence and a successful outcome.

Daniel Antalffy with UBS. I just wanted to ask the physician's perspective on -- there's been a lot of activity in the space over the last few years, some large orthopedics players making acquisitions into the extremities market and specifically foot and ankle. So just curious about what you guys are seeing as far as any behavioral changes? And also, if you could just talk a little bit about how Treace has -- beyond the technology which you put on display today, how Treace has created and can maintain a competitive moat as some of these larger players try to get more aggressive.

So I would say two things on that. One, Treace started the conversation about triplane correction. This was not common vernacular in the foot and ankle reconstructive world. So Treace actually set the stage for that. And then I would say the constant iteration, you see that in the presentations and where we're going through. And one of Sean's slides that is very accurate is the iPhone, iPhone 1, iPhone 4, iPhone 18, whatever number we're on. That is the difference.

A lot of these other companies, and I can't speak for them, I could just say my perspective of it, they'll have an offering and there it is. There's your offering. That's it. What Treace does is continually makes that offering better through innovation, through less invasive ways, all these different things. So it's a company single focused on solving this problem and democratizing it. You've heard that word throughout the morning across the board to all surgeons and all deformities. So I think it's that dedication to improvement that really sets us apart.

I think there's another component of it as well, where if you look at the bigger companies, and I've done a lot of work with industry and with the major foot and ankle companies, I would say almost a lot of them, probably all of us have. There's something different about Treace. And number one is the amount of training sessions they have for their surgeons where you go and you go for a full day of training and you might be anywhere from 20 to 100 other surgeons. There's not a single other company where the CEO is walking around.

Everybody knows John Treace. And that's so different. I don't know -- I don't even -- I can't even keep up who's the CEO of Zimmer. Everybody sort of knows who Reinhold is, but nobody has actually met them. It's just a different -- it's a different feel with Treace. And so I think it's this kind of more mom-and-pop shop that has a very specific goal and product line, but it's really familiar. And I think that creates a lot of loyalty when John walks around and he's in the lab and scrubs and is there and meeting his customer base. And so people become loyal and they just don't change.

Yes. I mean I think to build off it, too, our perspective is unique. I obviously don't know the inner workings of any company. But our perspective is unique because it's almost like you feel like people are trying to bake you like speed dating and you get interactions with all these companies and get insight into them and some of the bigger companies that acquire some of these unique foot and ankle companies.

It almost seems like they acquired the company just to be present in foot and ankle. Like they're not acquiring the company to innovate. They're not acquiring the company to grow their company because they already have big, big volume in shoulder and hip. They're not acquiring the company to connect with the surgeons or the patients. They just want to have it on their checklist of things to have. And I would let my panelists say if they agree or not, but you see these companies come in and you see the products that they acquire and then you see those products just slowly fade from use.

Yes, they completely stagnate.

Yes. Because they're not innovating and they're not making the surgeons life better. They're not making the patient's life better and surgeons move on. And so I think foot and ankle is a rapidly growing field. That's evident in the data. But I think that's what we've seen with some of these bigger players.

And then the other thing like Holly alluded to is when they do innovate something, they work ahead of time on everything we've done designed for different companies. They work really hard and their engineers work hard in trying to come up with the perfect product. And then they come up with their product and then that's it. It doesn't change. It's the first Prius that ever came out, not an electrical car beyond that, not a Tesla, not anything else. It's just you get the first Prius or you can buy a different car. And so that's kind of what happens is they don't innovate, and that's why they don't grow.

Yes. And just one other comment on that. So I worked for another foot and ankle company doing MIS stuff. And the minute they were bought by a bigger company, we all jump ship. It took the whole design team left because we knew that nothing was going to change, that we were going to sit there and everything we wanted to design was going to be done. And that was almost 2.5 years ago and completely true. So since joining Treace, we've been able to launch all these products already making changes, everything. The engineers are just totally different, whereas the company that we left has done nothing. They've come out with nothing. The only thing that's changed is that they launched the product that I had been working on for 4 that was 5 years ago. So...

I'll say that the competition is great. I really think competition is good for the patients. It keeps pushing to make things better. So what I love about it, though, is, again, they're all these great products, and that's what we focus on the shiny objects, but it's really the principles behind the surgical techniques, and that's been the emphasis.

And so what I love about Treace, and this is me just being an observer watching what happens when we get together for our R&D meetings or our surgeon advisory board meetings that Treace is never covers. So they see there are bigger entities that may cash shadows, but Sean uses this expression a lot, which I really have seen in action is that the best defense is a good offense. So they just don't sit back. So the innovation is there. If there's threat may be a little bit extreme, but there's something that's squeezing a little bit. Treace will just get stronger and continue to innovate, but always with the right principles. It's always grounded in best patient care, best patient surgery, best surgeon education.

Great. Lilly Lozada, JPMorgan. Can you talk a little bit about the importance of data and long-term data for driving adoption of these products like Nanoplasty and Percuplasty. I know having that for Lapiplasty was a big differentiator and helped to get off the ground. So is that needed for these new MIS osteotomy products, especially for customers that might not be Treace performing surgeons right now? And I guess for Sean, is that something that we can expect to see for these new products as well?

I was waiting to get a question, so I appreciate that. I think it's a principle of like Dr. Easley is saying, we believe in there's a why behind our company, we're about improving patient outcomes. Part of it is the innovation and part of it is showing that it works and providing clinical evidence. So any new system we launch, we have a clinical evidence plan for that system. So that's all in place. And in the early stages, obviously, for these new products as they come out, we're already planning how we're going to build the data to help support it from both the surgeon and patient adoption of it, too. And these guys have been part of those studies so they speak to that, too.

Yes. I know your question is about the MIS, and they will talk about that in a second. But we say that every time we meet surgeons and do a training session with them. We have 25 published papers, and those published papers are on outcome, not just radiographic outcome, functional outcome because one -- it's one thing to say, hey, the x-ray looks great. It's another to say, I have no limitations. I can run jump, climb the mountain, whatever I want. And that's really our goal. The goal of any reconstructive surgery is decrease pain, increase function. And we prove that through the literature. These are all peer-reviewed papers. So we think it's of utmost important, and that's another differentiator of Treace versus other companies with maybe copycat, so to speak, products where they don't have the data behind it.

Yes. I mean I think in the MIS realm, it's basically an advancement of a procedure that's been out kind of like Lapiplasty was an advancement of the Lapidus procedure. And there's been a ton of data that's come out. I've authored multiple papers on outcomes from MIS surgery using the specific distal osteotomy and this construct. There's really excellent, right, there's just a paper published in JBJS actually, which is our leading in orthopedics. It's the highest end publication you can get on this exact procedure, showing 2- to 5-year data that's excellent.

I think one of -- and one other thing I'll say about just my own research is it's not industry funded. So the research that I do at HSS, we don't do it with any outside funding at all. So it's non-biased. And I have people working with me who don't work with Treace, who work with -- we all come from different backgrounds within our group at HSS. And so there's really no industry bias from that. So that's one thing. The other thing is when you look at -- and this is looking at from the MIS perspective, the patient outcomes that we record now for bunions look at long-term data more. They're looking at 1-year and 2-year follow-up. There's nothing out there yet that captures the early benefits of MIS. So we're actually working on this right now.

My research team and I, where we're trying to look at 6-week data, 3-month data, 6-month data, when are you back in a shoe? When are you back running? When do you go back to work? When can you take the subway? These are the real answers that patients are looking for, and we're looking to start studying that now, again, in an industry-agnostic way so that there's no bias. But I think that once we get that going, you're going to see the massive difference between how these products are better for patients and versus the competitors.

Yes. And I think to piggyback off that, I think two things I'd add to Holly's comment is I think the data is why you're seeing a rapid growth in MIS now. I mean MIS was first described in the early '90s. It did not work very well and the data kind of showed that. And I think our techniques have improved, our technology has improved, and you've seen over the last 8 to 10 years that MIS has grown exponentially because of that. And I think going forward, patients and surgeons are very smart. So it's -- you can't just -- just like all of you and everybody in the professional world, I mean, you can't just stand out there and say, I think this is the best because it's my opinion, right? You have to have data.

And we're only as good as our data and our ability to collect data has gotten a lot better. So now we have Weightbear and CT scans that are showing us 3 dimensionally these corrections. We never had a way to look at that. We have better promise scores, which are ways to look at actual patient outcomes as opposed to the surgeon just saying the patient did great. And so I think you're going to continue to see this data grow. And the nice thing is there's already a foundation over the last 10 years of the MIS procedures working well.

And now we can really take it to that next level, saying all these little nuances that we're talking about, here's how we can predict -- better predict how someone is going to do. And that's really what Holly is going to figure out when she talks about shoe wear, sports running. That's what patients want to know. When can I do these things? They don't just want to know what does my foot look like on the X-ray. So I think our data is just going to continue to evolve just like the rest of the world is, right? So...

Is one of your questions really when can I get on the subway?

We don't have that problem.

Patients commute to work.

Well, I got it.

Just again, let's talk about this. If you're non-weightbearing, you can't put your left foot down for 6 weeks because you've had an open procedure with a non-Treace system. Imagine how you get to work every day. A lot of people, they can't afford an Uber. They don't have access to a car. How do they get to work every day? They take the subway. So for me, I can tell patients, you know what, you can take the subway 2 weeks after your surgery. They can go back to work. It's a game changer as opposed to telling their employer, I'm sorry, I need 6 weeks at home or 8 weeks at home. So it's actually very relevant.

The bunion did well, but the patient got pushed in front of the train. Now just one other thing that's really good about Treace and the points were made, Ideally, the best research would be some prospective randomized study, and we all do research, and that would be ideal. So perfect science done independent of the design surgeons. And that's tough. That's tough. But it will come. It will definitely come. But what I've been impressed with is what Treace does, they put the resources behind doing good research. And that's tough, too. The difficulty lies in that no matter how rigorous it is, no matter how unbiased Treace tries to make it, no matter how many resources they put behind it to do objective research, it always gets that stigma of, well, still originating from Treace. So Will has been involved in some of this.

You Will, I'm sure, too, with this. But the effort is always there. I'm involved in a study, you saw the Adductoplasty. So I'm working on a project for that and looking at it prospectively over a 5-year span, trying to do really rigorous research and it will get criticized because of where it originates. But I can tell you, having worked at an academic institution for 25 years and thinking I'm doing rigorous research, this is brutal what Treace puts me through to try to do just what I think is a relatively straightforward research project, right, to follow up on these patients. So I do commend Treace on continuing to try to do that despite the criticism you get from the apparent bias that's projected.

Anton Heldmann from Stifel. Sean, I want to ask you another question, hoping you could expand on your comments about adjacent procedures. Treace has made a lot of headway there already with Adductoplasty now SpeedMTP. So I'd just be curious to hear how much runway you have there? Are there another 5, 10, 20 procedures that you can expand into? And what should we be expecting to see next?

Yes. Good question. And I think the surgeon team can talk to more how common some of those procedures are as well. But I mean things like you mentioned, Adductoplasty, hammer toe, you have other pathologies throughout the foot, arthritis of the midfoot, we talked about some. You have other things, tailors bunions, flatfoot, all things that are very commonly associated with bunions, either they cause a bunion or a bunion causes those pathologies. Those are all things on our radar of how do we build -- what are the unmet needs for them and how do we build a system that instruments them and makes those -- some of them are very challenging and complex procedures to address like Adductoplasty, how do we make them much more approachable. So it's not just how often are they performed right now. It's just like Adductoplasty.

If we give the average surgeon the tools, will they address these pathologies in much higher frequency like they should to do a more complete reconstruction. So that's kind of the way we think about it. I can't get an exact timing of how we roll that out, but there's a good amount of R&D work that's already going into it. And we have great platforms that we're building off of between the instrumentation, SpeedPlate and even PSI to expand into these other opportunities. I don't know if you guys want to speak to some of the other pathologies and things you see commonly with bunions.

Yes. I mean I completely agree with what Sean is saying. The idea is from a surgeon standpoint, is the patient comes in with a bunion, but there may be concomitant deformities that are associated with that bunion, like Sean alluded to, either directly or indirectly. And the idea is to say in our armamentarium, we have every offering in order to do that. That's what surgeons want. They don't necessarily want other companies coming in and whatnot. And Treace will eventually get to that point. I can't speak for the company. I'm just speaking for me, where any of these concomitant procedures are all handled through our technology.

I mean any time you're doing a fusion in the foot, you can use SpeedPlate or you can use screws. And when a good 4-0 screw is a good 4-0 screw. And if I have, as I was mentioning earlier, an ankle fracture or any -- a lot of fracture work actually or a fusion elsewhere from the forefoot, I'm going to use the Treace product. So technically, I guess it's not off-label. But in theory, you're not using it for bunion, you're using it for other things, but they're a lot. And as the -- maybe the screw portfolio expands, then there's even more options throughout the foot.

I would echo the same thing. Especially talking on the forefoot, I would say at least 20% to 25% of bunions have the hammer toe metatarsalgia, a bunion, which is on the outside of the foot, some other toe deformity. And at least for the MIS side, we can use burrs on all of those things, and we often do. And so I think it just is -- it's one of those things where just within this portfolio, you have a lot of the concomitant procedures like Will alludes to that you can use these products as well.

I think Treace has been the leader in Hallux valgus surgery, right, bunion surgery. So I think they've been very careful to focus on their mission. But the technology is good. And so you can expand it to other parts of the foot is pretty amazing, right? I mean that's what we think. Maybe you don't think it's so amazing. But that's what we do. It's complex. It's tough to work on the foot and you can't ignore. You can't just say I'm a forefoot surgeon because a lot of times, the midfoot or the hindfoot, the back of the foot affects what the forefoot is doing.

So Treace has gradually started it's awareness, but very carefully said, let's take some of this technology and start moving and think Holly alluded to these great beveled screws that work really well in the MIS procedures, that same technology. I mean, I want to get my hands on that if I'm doing MIS surgery, but you can make those screws a little bit bigger and have that same technology and use it in the hindfoot. And so there's a move toward that. I'm excited to use those and have that same -- those same advantages with those screws. But there are going to be other examples.

We showed that little FeatherRasp. It seems like a little tiny tool, but I called it like an artist work where you're starting to shape things. That thing can be used anywhere in the foot. And I think that's a good foray into going to other parts of the foot and then getting more involved. The bone grafts you saw, there are ways and you saw some pictures of it actually, where wedges can be used to realign the whole foot, not just the forefoot.

So it's moving there, but I really like Treace's careful, make sure you get it right where you're working, not just say, "Oh my God, we're missing out on something. Let's throw some things at them and just see if surgeons can use them. Let's do it the right way and gradually expand it to really be able to take care of the entire foot. Would you think having the last question, do you feel the power?

All right. Well, I appreciate the great questions. I appreciate the surgeon team of educating us here today. So thank you, everybody, for coming out, and we'll be around for more Q&A here and mingle. Thank you.

All right. Good luck.

Good day, and thank you for standing by. Welcome to the Treace Medical Concepts Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Trip Taylor, Investor Relations. Please go ahead.

Good afternoon, everyone, and welcome to our second quarter 2025 earnings conference call. Participating from the company today will be John Treace, Chief Executive Officer; and Mark Hair, Chief Financial Officer. During the call, John will offer commentary on our commercial activities, followed by Mark for a review of our second quarter financial results released after market close today. We will then host a question-and-answer session following our prepared remarks.

Our press release can be found on the Investor Relations section of our website at investors.treace.com. This call is being recorded and will be archived in the Investors section of our website. Before we begin, we would like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends as well as our estimated results or performance are forward-looking statements.

All forward-looking statements are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon currently available information, and Treace Medical assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings, including our Form 10-Q for the second quarter of 2025 filed after the market close today, August 7, and can be found in the Investor Relations section of our website at investors.treace.com for a detailed presentation of risks.

With that, I will now turn the call over to John.

Thank you, Trip. Good afternoon, everyone, and thank you for joining us for our second quarter 2025 earnings conference call. The second quarter in this transformational year for Treace demonstrates our commitment to meeting the evolving needs of surgeons and patients as we continue to drive our expanded portfolio of best-in-class bunion solutions into the market.

During the quarter, we delivered strong top line and bottom line financial results and made substantial progress on our strategic initiatives. We believe we've laid the groundwork commercially and operationally to position us for continued growth in the second half of the year and beyond.

Revenue in the second quarter was $47.4 million, representing 7% growth over the second quarter of 2024. We are pleased with the results and the overall performance of our products during the quarter. In addition to top line strength, we delivered strength across the entirety of the P&L as we executed on our expense management initiatives, lowered our cash usage and improved our adjusted EBITDA substantially.

As we've discussed in recent quarterly calls, we've been focused on our vision to become a comprehensive bunion solutions company, and we're excited to have achieved this important milestone on our journey with a portfolio and a strategy in place to drive our next phase of growth.

In addition to our flagship Lapiplasty and Adductoplasty systems, our portfolio now includes 3 new best-in-class bunion correction systems, namely our Nanoplasty and Percuplasty 3D MIS osteotomy systems and our SpeedMTP Great Toe Fusion system. This suite of technologies comprehensively addresses all 4 categories of bunions, and we believe this will allow us to further drive procedure penetration and expand our leadership position in the marketplace.

We're encouraged by the high level of surgeon enthusiasm and the patient outcomes we've seen during the limited releases of our 3 new systems throughout the first and second quarters. And now we're excited to deliver these new solutions to a broader base of surgeon customers. Our inventory timing and volumes support customer demand in Q3 as well as Q4, our seasonally strongest quarter.

Now I'd like to take some time to discuss our strategy to maximize market impact and drive overall growth by leveraging these new products as we enter our full market release. As a reminder, we participate in a market with a $5 billion-plus U.S. TAM, supported by a base of an estimated 1.1 million annual symptomatic surgical candidates in the U.S. And we estimate our penetration into this annual patient base is approximately 2.8% today. So there's a large untapped opportunity ahead of us.

At its core, our go-forward strategy is centered around increasing procedure volumes while continuing to expand our customer base. As we scale, higher utilization driven by increased adoption of Treace technologies across a broader range of bunion types is expected to increase our market penetration and share, supporting a sustainable growth model over the long term.

The execution of our strategy is focused on 3 key elements. First, we entered 2025 with a foundation of over 3,100 active surgeon customers, representing nearly 1/3 of bunion surgeons in the U.S. And if you look at this large and growing base of customers, we believe that on average, we've penetrated about 30% of their total bunion volumes. And with our new 3 targeted systems, we are focused on more effectively penetrating the remaining 70% of their bunion-related cases. Keep in mind, these are customers who use Lapiplasty technology already and have established relationships with their Treace sales reps. So bringing these new bunion products to our existing customers and becoming their one-stop shop for all their bunion needs presents a large and immediate growth opportunity and is a high priority for the company.

Second, we believe our new bunion technologies allow us to attract a new audience of surgeons, those who currently prefer metatarsal osteotomy procedures for the majority of their bunion cases versus our Lapiplasty Fusion solution. Given that we have not offered any osteotomy solutions in the past, there have been limited opportunities to engage with these surgeons. With our expanded portfolio now offering 2 differentiated 3D MIS osteotomy solutions as well as our new Great Toe Fusion system, SpeedMTP, we now have multiple opportunities to appeal to this surgeon audience.

Third, not only do we expect to add new surgeons through these new products, but we also expect that many of these new surgeons will adopt our flagship Lapiplasty and Adductoplasty solutions. And I'm pleased to report our strategy is working. During the limited market release of these new systems over the past 6 months, we experienced successful traction on each of these 3 fronts. Due to the market enthusiasm around our expanded best-in-class portfolio, we've experienced very high attendance at our 2025 Bunion Master surgeon training events.

And following these events, we've seen a growing portion of existing Treace surgeons utilizing our new bunion technologies, surgeons that are new to Treace attracted by our new technologies, adopting these new systems into their practices and many of these new surgeons also embracing our core Lapiplasty and Adductoplasty technologies. The early traction we've seen bolsters our confidence in our strategy, which we believe will translate to accelerating growth in Q3 and through Q4, our seasonally strongest quarter of the year.

In addition, these new systems are also being supported by expanded availability of several other complementary technologies, namely our IntelliGuide PSI pre-op planning and patient-specific cut guides for complex bunion and mid-foot deformity corrections, and our new SpeedPlate MicroQuad and SpeedAkin implants. We will also launch several new problem-solving sterile instruments in the back half of the year and cap off 2025 with a limited market release of our next-generation Lapiplasty system known as Lapiplasty Lightning.

And with our rapidly expanding portfolio, we've become a top destination for some of the best foot and ankle sales reps in the industry. Access to cutting-edge technology and strong and supportive company culture, combined with the efficiency and scalability of our product model has proven to be extremely attractive to highly experienced foot and ankle sales professionals, and we are taking full advantage.

Turning to our outlook. We are reiterating our revenue guidance for 2025. We continue to expect full year revenue to be between $224 million and $230 million, representing growth of 7% to 10% over the prior year.

Before I close, we're excited to have reached yet another important milestone with the recent peer-reviewed publication of our ALIGN3D Lapiplasty clinical study, demonstrating successful patient outcomes out to 4 years. This long-term multicenter prospective study sets a high standard for clinical evidence and further differentiates Lapiplasty in the marketplace with our surgeons and patients. We look forward to expanding our market-leading body of clinical evidence as we continue our focus on advancing the standard of care for bunion surgery.

In closing, this is a transformational year for Treace Medical as we establish ourselves as the premier one-stop shop for surgeons by bringing to market a comprehensive suite of differentiated best-in-class bunion systems. We've already made substantial progress on our strategic initiatives in 2025, which we believe positions us well for accelerating top line growth in the back half of the year. And with a robust pipeline of future technologies and a strengthening commercial organization, we believe we have the right strategies in place to drive continued growth in 2026 and beyond.

With that, now let me turn the call over to Mark to review our financial performance. Mark?

Thank you, John. Good afternoon, everyone. Revenue in the second quarter was $47.4 million, an increase of $2.9 million or 7% over the prior year period. Growth was mainly driven by an increase in bunion procedure kits sold compared to the prior year. Gross margin was 79.7% in the second quarter of 2025 compared to 80.2% in the second quarter of 2024. Total operating expenses were $54.7 million in the second quarter of 2025, a 4% reduction compared to total operating expenses of $57.1 million in the second quarter of 2024. These reductions reflect continued execution on our expense management initiatives.

Second quarter net loss was $17.4 million or $0.28 per share, an improvement of 18% compared to the net loss of $21.2 million or $0.34 per share in the second quarter of 2024. Adjusted EBITDA loss for the second quarter was $3.6 million compared to $8.7 million in the second quarter of 2024, an improvement of 58%. This represents significant progress towards our improved profitability goals for 2025. Cash, cash equivalents and marketable securities were $69.3 million as of June 30, 2025, compared to $76.1 million as of March 31, 2025.

Total liquidity, including access to an additional $21.4 million of cash through our existing revolver, the balance of cash, cash equivalents and marketable securities would be approximately $90.7 million as of June 30, 2025. Compared to the prior year, cash usage decreased in the second quarter of 2025 and year-to-date by 55% and 78%, respectively, supporting our expected 50% reduction in cash used in the full year 2025 compared to 2024. We believe our balance sheet strength and flexibility is sufficient to continue executing our strategic and growth initiatives for the foreseeable future.

Before concluding, let me turn to our outlook for full year 2025. As John mentioned, we are reaffirming our full year 2025 revenue guidance of $224 million to $230 million, which reflects an expected increase of 7% to 10% over 2024 revenue, with growth rates to step up sequentially in the remaining 2 quarters of the year. We continue to expect breakeven adjusted EBITDA for full year 2025 and expect our cash usage to decrease by approximately 50% for the full year 2025 versus 2024.

Lastly, as you may have seen in our press release earlier today, we are excited to announce that we will host an Investor Day on Wednesday, September 3, in New York from 9:00 to 11:00 a.m. The event will include presentations by members of management and leading bunion surgeons highlighting our expanded technology portfolio.

With that, let me now turn the call over to the operator to open the line for your questions.

[Operator Instructions] our first question comes from the line of Ben Haynor with Lake Street Capital Markets.

This is Aaron, on the line for Ben. I appreciate all the color on the call surrounding the new 3 new systems. I was just curious if you could maybe provide any more quantitative commentary or color on some of the surgeon profiles for those systems? And I guess the second part of that, do you expect volume ramps for folks adopting them to sort of track similarly to Lapiplasty? Any additional info there would be great.

Aaron, it's John. Great question. We do expect to see increasing volumes and revenue contribution from our 3 new systems as we progress throughout the remainder of 2025. Again, we're primarily tapping incremental new cases that we just weren't getting before and serving the osteotomy portion of the bunion surgeons practice. So our strategy at this point of our evolution is really focused on penetrating faster into the 1.1 million patient base and doubling our share of procedures with our customers.

We know we're only getting about 30% of our current surgeon user bases bunion volume, and penetrating the additional 70% is key while also bringing on new customers that are attracted by these new technologies we have. All is good. Our TAM hasn't changed. We maintain our $5 billion TAM. These other products have some different ASPs, but nevertheless, still strong price points, and these are all incremental cases to what we were getting before. So we couldn't be more excited about where we are and where we're heading.

Great. No, really helpful. And then with the Lapiplasty Lightning system scheduled for the market release, can you just give us a sense maybe of what surgeon feedback has been so far? I think you mentioned a little bit on the call. And maybe whether or not you expect Lightning to support a reacceleration in 2026 in that Lapiplasty penetration?

Sure, sure. We've been working with our design team and on the Lapiplasty Lightning project for some time. We anticipate initiating an LMAR, a limited market access release, sometime in the fourth quarter. It's a significant advance forward for Lapiplasty. This is more than an incremental adjustment. This is a step function, I would say, in innovation, reducing steps, increasing reproducibility, delivering a faster procedure for the surgeon. Beyond that, we're not really revealing much more about it. We'll share more as we get a little further into the year, but we do see it as a growth engine and a growth driver for 2026.

Our next question comes from the line of Lily Lozada with JPMorgan.

I was hoping you could speak a bit about what you're seeing in the foot and ankle market. I know you talked about some procedures getting pushed out to later in the year and some of your peers have spoken about softer trends as well. But can you speak to what you've been seeing and how that's trended into July and August?

Lily, this is Mark. Maybe I'll take the first stab at this question. It's definitely early in the quarter. We saw Q2 playing out just the way we anticipated and we discussed last quarter, and we continue to anticipate growth to be more back half weighted this year. We talked last time about we don't believe any of these cases are lost necessarily, but they tend to compress more in the fourth quarter when there are some changes in patient scheduling. It's early in the third quarter.

But with that said, nothing has changed since our last call. Our confidence in the back half and the full year really hasn't changed. We believe we understand the gating for this year and also the impact that our new products can have in the third and the fourth quarter now that we have them in much larger supplies. So our guidance has reflected what we understand, which will happen in the third and fourth quarter. We anticipate roughly 10% growth in the third quarter and a nice step-up from there in the fourth quarter.

Great. That's helpful. And maybe just following up on that. Can you speak a little bit about your visibility into the ramp in fourth quarter? I know a big step-up in revenues is not abnormal for Treace. But just in light of some of the market challenges in terms of procedures getting pushed out and expectations for the ramp of new products, how would you describe your level of confidence in that step-up? And what's assumed in the guide in terms of new products contributing and catch-up from delayed procedures?

Great question, Lilly. I appreciate that. And I would just kind of say some of the same things here that we talked on our last call that there was some changes in some patient scheduling. But again, our view isn't that these are lost cases. They tend to compress in the fourth quarter. We anticipate that to be the same thing this year that they're not necessarily lost. It's just really a timing thing.

What's unique this year for Treace is that for the first time in the history of the company, we have this full suite of bunion products. We're hitting all 4 categories of bunions. And now for the first time here in Q3, we have full market launches, releases of these products and full inventory levels. And so to the extent there is this compression in the fourth quarter, we're in a position to really pick up even more of this revenue because we have more opportunities. We have more procedures available for surgeons, and we will have more surgeons doing cases in the back half of this year.

So albeit some shift in the gating of the revenue, it really plays. I guess you could even call it to our advantage that we're going to have a lot more products available. So I think our guide continues to contemplate everything that we know at this point. And we're looking forward to stepping up the revenue growth. Each quarter of this year, there's a little bit of step-up. And so we anticipate fourth quarter to continue to step up and be our strongest quarter of the year.

Our next question comes from the line of Danielle Antalffy with UBS.

Congrats on a good quarter here. I just wanted to ask about how to think about the back half of the year and really the setup as we go into 2026. Appreciating you guys aren't going to give guidance there, but back half ramp looks pretty strong. And if anything, new products are ramping, right, as we go into 2026. So can you talk a little bit about your confidence in being able to get back to a sustainable double-digit growth trajectory in 2026?

Yes. So let me start and then John can probably add some additional color. As we think about the back half of this year, there's really a few opportunities that we have going for us. One is that we've got these new systems, all 4 bunion categories covered for the first time for the company. We also have really highly experienced new additions to our commercial leadership and sales team that we believe will also benefit us in the back half of this year. And then, of course, we have what we refer to as bunion season, which is this step-up in elective procedures that we begin to see at the end of Q3 and then into Q4. So all those things, we believe, are playing to our advantage.

With respect to the guide that we've given for the full year, we are looking at double-digit growth in the back half of this year. And so we're not really speaking specifically to the growth rates into 2026. We need to learn a little bit more as we get these new products into more hands of our surgeons, but we feel like we've got a really good setup for the back half of this year.

And again, the guide, the way we're looking at it, for the full year, we would expect around 10% growth in Q3. So that is double digits already this year. So every quarter in this year, we see this nice step-up sequentially in growth rates and Q4 is even a step-up from Q3. So we feel good about this year. Give us a little bit more time with these new products, and then we'll give a little bit more color on how we see 2026. But with that said, we really feel good about the setup for next year.

Great. And then my next question is, I appreciate that you guys are going to be having an Analyst Day in a month now. And my birthday is the day before, so I expect a cake, by the way. But just maybe a procedure...

Except we are taking them. We can give you cakes. We're not sure about bunion procedures.

I don't want to front run anything, but you guys have -- and I appreciate you're trying to work on margin expansion, things like that, but you're also filling out the portfolio. I assume you've got a lot going on organically. But any interest inorganically here to fill out the portfolio via small tuck-in type acquisitions?

Sure, Danielle. John here. Yes, we're always opportunistically leaning in, looking for new ways to drive growth, and some of that down the road could be through inorganic. And we do have a team keeping an eye on those types of opportunities. And if and where we find the right fit, we will be prepared to lean in. We also have opportunities outside the U.S. for this product line, and we're looking harder towards those opportunities as well. So to answer your question, yes, we're looking at a lot of different things.

[Operator Instructions] our next question comes from the line of Rich Newitter with Truist Securities.

It's Felipe, on for Rich. I guess just back to the elective procedures question. I'm just wondering if you're seeing any changes in appetite for foot and ankle elective procedures? And just like remind us of the typical seasonality with the business. Have you seen any changes since your last prior guidance? I know this is fourth quarter weighted guidance. So just maybe just dig into that a little more would be helpful.

Thanks for the question. This is Mark. Let me take a stab at that. So in our business and where we play in the bunion procedure, we've typically seen the strongest quarter -- seasonally strongest quarters in the fourth quarter, and that's when deductibles are met, when patients tend to have a little bit more time off to recover from their procedures, from these surgeries, and so we don't see any change to that this year.

We did talk about last call that there was a little bit of shifting in some of the patient scheduling. And Q2 played out just the way we anticipated and just the way we discussed it. And so to the extent there is some of that shift, we believe that these cases aren't lost. They tend to push later in the year, so in the fourth quarter. Now historically, we've seen a really substantial step-up from Q3 to Q4. We're anticipating again a large step-up from a volume perspective and a revenue perspective, but this is very much in line with what we've seen year after year. That's just the way the market performs and what we anticipate seeing again this year.

So I wouldn't say there's anything new since our last call, and I wouldn't say that there's anything new with respect to seasonality and what we're expecting in the fourth quarter. But the benefits that we have this fourth quarter is that we've got a lot more opportunities to penetrate into that very large bunion U.S. market with a lot more procedures. And so we're hearing and feeling enthusiasm from surgeon customers, who are trying these new products and seeing opportunities in their practices. And so that can work to our advantage in the third and fourth quarters when we have a lot more shots on goal, if you will, with many more new procedures available.

Thank you so much. This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.