Treace Medical Concepts Reports First Quarter 2024 Financial Results
Treace Medical Concepts, Inc. reported $51.1 million in revenue for Q1 2024, a 21% increase from the same period in 2023. Despite a net loss and revised guidance for 2024, the company achieved milestones, expanded its patent portfolio, and introduced new technologies. The CEO remains optimistic about navigating competitive challenges and delivering shareholder value.
Revenue growth of 21% in Q1 2024
Expansion of patent portfolio to 63 U.S. patents
Introduction of innovative technologies such as Micro-Lapiplasty™ and SpeedPlate™
Reaching 100,000+ Lapiplasty® 3D Bunion Correction® patient milestone
Net loss of ($18.7) million in Q1 2024
Revised full-year 2024 guidance due to market challenges and competition from knockoffs
Adjust EBITDA loss of ($8.3) million in Q1 2024
Operating expenses increased to $59.9 million in Q1 2024
Insights
Reviewing the financial results from Treace Medical Concepts, the reported 21% revenue growth is a notable year-over-year increase, which indicates a strong market demand for their surgical products. The gross margin remains high at 80.2%, which is reflective of the company's ability to maintain profitability on their products despite a slight decrease from the previous year's 80.9%. This slight dip could be attributed to the product mix shift towards newer technologies which may have higher cost inputs initially.
However, the increase in operating expenses, which have surpassed revenue growth, can raise concerns about the company's spending efficiency. It is essential to consider whether these investments in sales, product innovation and corporate initiatives will lead to sustainable long-term growth or if they are signs of cost management challenges. The reported improvement in Adjusted EBITDA loss by 18% does provide some positive outlook on the company's ability to manage its earnings before interest, taxes, depreciation and amortization.
The revision of the full-year revenue guidance downwards could be interpreted as a prudent move in light of increased market competition and the adoption of alternative surgical solutions. While this does temper expectations, it also reflects a realistic appraisal of market conditions. For an investor, this may suggest a period of caution is warranted until the company demonstrates it can successfully navigate these competitive pressures and maintain its market position.
The medical technology industry is characterized by rapid innovation and competition, particularly when it comes to minimally invasive surgical (MIS) solutions. Treace Medical Concepts' mention of the evolving market environment and the introduction of competitive products indicates a highly dynamic industry. For an investor, understanding the competitive landscape is essential and the company's plan to introduce two 3D MIS Osteotomy solutions could be pivotal in maintaining its competitive edge.
Another point to consider is the company's strategic decisions to rightsize the P&L and reduce costs. These measures could improve operational efficiency and financial performance in the long run, but it also suggests there might be a period of transition and potential cost constraints impacting the company's operations. For investors, the effectiveness of these measures will be a key development to watch.
Setting the financials aside, reaching the 100,000+ Lapiplasty patient milestone demonstrates significant market penetration and may serve as an indicator of strong brand recognition and customer satisfaction within the industry. The expansion of the patent portfolio to 63 U.S. patents also suggests a robust commitment to R&D and intellectual property protection, which is important in the medical device sector for maintaining a competitive advantage.
However, the mention of increased competition from knockoffs is troubling as it highlights the challenges companies face in protecting their innovations. This can impact long-term profitability and market share if not managed effectively. Investors should watch closely how Treace Medical Concepts enforces its intellectual property rights and how it innovates to stay ahead of the competition, as these factors will be critical in sustaining its market leadership.
PONTE VEDRA, Fla., May 07, 2024 (GLOBE NEWSWIRE) -- Treace Medical Concepts, Inc. (“Treace” or the “Company”) (NasdaqGS: TMCI), a medical technology company driving a fundamental shift in the surgical treatment of bunions and related midfoot deformities through its flagship Lapiplasty® and Adductoplasty® Procedures, today reported financial results for the first quarter ended March 31, 2024.
Recent Highlights
- Revenue of
$51.1 million in first quarter 2024 increased21% over same period in 2023 - Gross margin of
80.2% in first quarter 2024 - First quarter 2024 net loss attributable to common stockholders was (
$18.7) million compared to ($13.5) million for same period in 2023 - Adjusted EBITDA loss improved to (
$8.3) million in first quarter 2024 compared to loss of ($10.0) million for same period in 2023 - Achieved full commercial availability of Micro-Lapiplasty™, SpeedPlate™ and Hammertoe technologies in first quarter 2024
- Celebrated 100,000+ Lapiplasty® 3D Bunion Correction® patient milestone and first-ever National Bunion Day, launched new “Future You” patient education and awareness campaign, and named First Medical Device Partner and Official Foot and Ankle Solution Partner for Professional Pickleball Association Tour
- Patent portfolio expands to 63 granted U.S. patents, with an additional 20 granted patents worldwide and 83 pending U.S. patent applications
- Revises guidance range for full-year 2024, expecting revenues of
$201 million to$211 million from$220 million to$225 million
John T. Treace, CEO and Founder of Treace, said, “Our first quarter revenue growth rate of
Mr. Treace continued, “Despite our strong start to the year, we have revised our guidance for fiscal 2024 to reflect a quickly evolving market environment with increased use of MIS Osteotomy solutions and more competition from knockoffs of our Lapiplasty® products. We plan to introduce two innovative 3D MIS Osteotomy solutions later this year that we believe will establish Treace as the leading comprehensive bunion solution provider. We are also taking decisive action to mitigate the impact of these competitive headwinds by rightsizing our P&L and reducing costs. I am confident in our ability to effectively navigate this new operating environment as we continue to work to capture the opportunities ahead, innovate for our surgeon customer base and deliver long-term value for our shareholders.”
First Quarter 2024 Financial Results
Revenue for the first quarter of 2024 was
Gross profit for the first quarter of 2024 was
Total operating expenses were
First quarter 2024 net loss attributable to common stockholders was (
Cash, cash equivalents, marketable securities and investment receivable totaled
Financial Outlook
The Company now expects full-year 2024 revenue of
The Company continues to expect to make significant improvement in Adjusted EBITDA for full-year 2024 and anticipates Adjusted EBITDA to improve approximately
* A reconciliation of adjusted EBITDA to GAAP net loss on a forward-looking basis is not available without unreasonable efforts due to the high variability, complexity and low visibility with respect to the items excluded from this non-GAAP measure.
An investor presentation for the Company’s first quarter 2024 financial results is available in the "Investors" section of Treace's website at investors.treace.com.
Webcast and Conference Call Details
Treace will host a conference call today, May 7, 2024, at 4:30 p.m. ET to discuss its first quarter 2024 financial results. Investors interested in listening to the conference call may do so by registering. Once registered, participants will receive dial-in numbers and a unique pin to join the call and ask questions. The live webcast of the conference call will be available on the Investor Relations section of the Company’s website at investors.treace.com. The webcast will be archived on the website following the completion of the call.
Use of Non-GAAP Financial Measures
To supplement the financial results presented in accordance with GAAP, this earnings release presents Adjusted EBITDA, which the Company defines as net loss before depreciation and amortization expense, interest income, interest expense, taxes, share-based compensation expense, acquisition-related costs and debt extinguishment loss. Non-GAAP financial measures such as Adjusted EBITDA are presented in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management uses non-GAAP financial measures to evaluate the Company’s operating performance and trends, as well as for making planning decisions. The Company believes that Adjusted EBITDA helps to identify underlying trends in the Company’s business that may otherwise be masked by the effect of the income and expenses and other items that it excludes in its calculation of Adjusted EBITDA. Accordingly, the Company believes this non-GAAP financial measure provides useful information to investors and others in understanding and evaluating the Company’s operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by the Company’s management in their financial and operational decision-making. The Company also presents this non-GAAP financial measure because it believes investors, analysts and rating agencies consider it to be a useful metric in measuring the Company’s performance against other companies and its ability to meet its debt service obligations.
There are limitations related to the use of non-GAAP financial measures such as Adjusted EBITDA because they are not prepared in accordance with GAAP, may exclude significant income and expenses required by GAAP to be recognized in the Company’s financial statements, and may not be comparable to non-GAAP financial measures used by other companies. The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. A reconciliation between GAAP and non-GAAP results is presented below.
Forward-Looking Statements
This press release and statements made during our earnings call contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, the Company’s: revised revenue guidance and estimated revenue growth rates for full-year 2024; estimated quarterly revenue growth rates; ability to effectively respond to and mitigate the impact of challenges in the current market environment, including in response to increased competition and accelerating adoption of MIS osteotomy solutions; ability to effectively reduce costs and right size the Company’s P&L; anticipated future product launches and the timing of such product launches, including our planned 3D MIS osteotomy platforms; our ability to protect and enforce our intellectual property rights; our success in defending against infringement of our intellectual property by third parties, including our competitors; expected seasonality; anticipated pace of growth in the foot and ankle market; sufficient balance sheet strength and flexibility to continue effectively executing on its strategic investments and growth initiatives for the foreseeable future; and expectation of progress in Adjusted EBITDA for full-year 2024 and expected rate of Adjusted EBITDA improvement. Forward-looking statements are based on management’s current assumptions and expectations of future events and trends, which affect or may affect the Company’s business, strategy, operations or financial performance, and actual results and other events may differ materially from those expressed or implied in such statements due to numerous risks and uncertainties. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could cause actual results or other events to differ materially from those contemplated in this press release can be found in the Risk Factors section of Treace’s public filings with the Securities and Exchange Commission (SEC), including its Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 27, 2024, and its subsequent SEC filings. Because forward-looking statements are inherently subject to risks and uncertainties, you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements speak only as of their date and, except to the extent required by law, the Company undertakes no obligation to update these statements, whether as a result of any new information, future developments or otherwise. The Company’s results for the quarter ended March 31, 2024 are not necessarily indicative of its operating results for any future periods.
Internet Posting of Information
Treace routinely posts information that may be important to investors in the “Investor Relations” section of its website at www.treace.com. The Company encourages investors and potential investors to consult the Treace website regularly for important information about Treace.
About Treace Medical Concepts
Treace Medical Concepts, Inc. is a medical technology company with the goal of advancing the standard of care for the surgical management of bunion and related midfoot deformities. Bunions are complex 3-dimensional deformities that originate from an unstable joint in the middle of the foot and affect approximately 67 million Americans, of which Treace estimates 1.1 million are annual surgical candidates. Treace has pioneered and patented the Lapiplasty® 3D Bunion Correction® System – a combination of instruments, implants, and surgical methods designed to surgically correct all three planes of the bunion deformity and secure the unstable joint, addressing the root cause of the bunion and helping patients get back to their active lifestyles. To further support the needs of bunion patients, Treace has introduced its Adductoplasty® Midfoot Correction System, designed for reproducible surgical correction of the midfoot as well as its Hammertoe PEEK Fixation System designed to address hammertoe, claw toe and mallet toe deformities. The Company continues to expand its footprint in the foot and ankle market with the introduction of its SpeedPlate™ Rapid Compression Implants, an innovative fixation platform with broad versatility across Lapiplasty® and Adductoplasty® procedures, as well as other common bone fusion procedures of the foot. For more information, please visit www.treace.com.
To learn more about Treace, connect with us on LinkedIn, Twitter, Facebook and Instagram.
Contacts:
Treace Medical Concepts, Inc.
Julie Dewey, IRC
Chief Communications & Investor Relations Officer
jddewey@treace.com | 209-613-6945
Treace Medical Concepts, Inc.
Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| Revenue | $ | 51,108 | $ | 42,195 | |||
| Cost of goods sold | 10,127 | 8,039 | |||||
| Gross profit | 40,981 | 34,156 | |||||
| Operating expenses | |||||||
| Sales and marketing | 40,328 | 33,655 | |||||
| Research and development | 5,259 | 3,412 | |||||
| General and administrative | 14,362 | 10,865 | |||||
| Total operating expenses | 59,949 | 47,932 | |||||
| Loss from operations | (18,968 | ) | (13,776 | ) | |||
| Interest income | 1,535 | 1,479 | |||||
| Interest expense | (1,317 | ) | (1,285 | ) | |||
| Other income, net | 74 | 128 | |||||
| Other non-operating income (expense), net | 292 | 322 | |||||
| Net loss | $ | (18,676 | ) | $ | (13,454 | ) | |
| Other comprehensive income (loss) | |||||||
| Unrealized gain (loss) on marketable securities | $ | (94 | ) | $ | (29 | ) | |
| Comprehensive loss | $ | (18,770 | ) | $ | (13,483 | ) | |
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.30 | ) | $ | (0.23 | ) | |
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 61,792,788 | 58,723,760 | |||||
Treace Medical Concepts, Inc.
Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 9,334 | $ | 12,982 | ||||
| Marketable securities, short-term | 100,672 | 110,216 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of | 30,083 | 38,063 | ||||||
| Inventories | 35,860 | 29,245 | ||||||
| Prepaid expenses and other current assets | 11,448 | 7,853 | ||||||
| Total current assets | 187,397 | 198,359 | ||||||
| Property and equipment, net | 24,517 | 22,298 | ||||||
| Intangible assets, net of accumulated amortization of | 8,787 | 9,025 | ||||||
| Goodwill | 12,815 | 12,815 | ||||||
| Operating lease right-of-use assets | 9,064 | 9,264 | ||||||
| Other non-current assets | 146 | 146 | ||||||
| Total assets | $ | 242,726 | $ | 251,907 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 21,149 | $ | 11,835 | ||||
| Accrued liabilities | 15,155 | 10,458 | ||||||
| Accrued commissions | 5,527 | 10,759 | ||||||
| Accrued compensation | 4,196 | 7,549 | ||||||
| Other liabilities | 1,022 | 4,432 | ||||||
| Total current liabilities | 47,049 | 45,033 | ||||||
| Long-term debt, net of discount of | 53,083 | 53,008 | ||||||
| Operating lease liabilities, net of current portion | 16,166 | 15,891 | ||||||
| Other long-term liabilities | 37 | 37 | ||||||
| Total liabilities | 116,335 | 113,969 | ||||||
| Commitments and contingencies (Note 7) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock, | 62 | 62 | ||||||
| Additional paid-in capital | 279,433 | 271,973 | ||||||
| Accumulated deficit | (152,923 | ) | (134,247 | ) | ||||
| Accumulated other comprehensive (loss) income | 69 | 163 | ||||||
| Treasury stock, at cost; 19,604 and 1,218 shares as of March 31, 2024 and December 31, 2023, respectively | (250 | ) | (13 | ) | ||||
| Total stockholders’ equity | 126,391 | 137,938 | ||||||
| Total liabilities and stockholders’ equity | $ | 242,726 | $ | 251,907 | ||||
Treace Medical Concepts, Inc.
Statements of Cash Flows
(in thousands)
(unaudited)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (18,676 | ) | $ | (13,454 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization expense | 1,909 | 924 | ||||||
| Provision for allowance for doubtful accounts | 159 | 38 | ||||||
| Share-based compensation expense | 7,408 | 2,692 | ||||||
| Non-cash lease expense | 592 | 626 | ||||||
| Amortization of debt issuance costs | 75 | 74 | ||||||
| Recovery of loss reserve for surgical instruments | — | (23 | ) | |||||
| Accretion (amortization) of discount (premium) on marketable securities, net | (335 | ) | (297 | ) | ||||
| Other, net | 90 | — | ||||||
| Net changes in operating assets and liabilities, net of acquisitions | ||||||||
| Accounts receivable | 7,821 | 3,793 | ||||||
| Inventory | (6,615 | ) | (3,189 | ) | ||||
| Prepaid expenses and other assets | (1,495 | ) | (963 | ) | ||||
| Other non-current assets | — | (69 | ) | |||||
| Payable to broker for unsettled marketable security purchases | — | 710 | ||||||
| Operating lease liabilities | (657 | ) | (478 | ) | ||||
| Accounts payable | 9,314 | (3,592 | ) | |||||
| Accrued liabilities | (6,918 | ) | (4,076 | ) | ||||
| Other, net | 107 | 25 | ||||||
| Net cash used in operating activities | (7,221 | ) | (17,259 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of available-for-sale marketable securities | (28,711 | ) | (99,550 | ) | ||||
| Sales and maturities of available-for-sale marketable securities | 36,396 | 20,548 | ||||||
| Purchases of property and equipment | (3,927 | ) | (1,478 | ) | ||||
| Net cash provided by (used in) investing activities | 3,758 | (80,480 | ) | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock from public offering, net of issuance costs and underwriting discount of | — | 107,527 | ||||||
| Proceeds from exercise of employee stock options | 52 | 352 | ||||||
| Taxes from withheld shares | (237 | ) | — | |||||
| Net cash provided by (used in) financing activities | (185 | ) | 107,879 | |||||
| Net increase (decrease) in cash and cash equivalents | (3,648 | ) | 10,140 | |||||
| Cash and cash equivalents at beginning of period | 12,982 | 19,473 | ||||||
| Cash and cash equivalents at end of period | $ | 9,334 | $ | 29,613 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | 1,317 | $ | 1,285 | ||||
| Operating lease right-of-use asset and lease liability adjustment due to lease incentive | $ | — | $ | (35 | ) | |||
| Noncash investing activities | ||||||||
| Unrealized (gains) losses, net on marketable securities | $ | 94 | $ | 29 | ||||
| Unsettled matured marketable security and receivable from broker | $ | 2,100 | $ | — | ||||
Treace Medical Concepts, Inc.
Reconciliation of GAAP Net Loss to EBITDA & Adjusted EBITDA
(in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| Net loss | $ | (18,676 | ) | $ | (13,454 | ) | |
| Adjustments: | |||||||
| Interest income | (1,535 | ) | (1,479 | ) | |||
| Interest expense | 1,317 | 1,285 | |||||
| Taxes | — | — | |||||
| Depreciation & Amortization | 1,909 | 924 | |||||
| EBITDA | $ | (16,985 | ) | $ | (12,724 | ) | |
| Share-based compensation expense | 7,408 | 2,692 | |||||
| Acquisition-related costs | 1,317 | — | |||||
| Adjusted EBITDA | $ | (8,260 | ) | $ | (10,032 | ) | |
FAQ
What was Treace Medical Concepts' revenue in Q1 2024?
Treace Medical Concepts reported $51.1 million in revenue for the first quarter of 2024.
What is the stock symbol for Treace Medical Concepts?
The stock symbol for Treace Medical Concepts is TMCI.
How many U.S. patents does Treace Medical Concepts have in its portfolio?
Treace Medical Concepts has 63 granted U.S. patents in its portfolio.
What is the full-year 2024 revenue guidance for Treace Medical Concepts?
Treace Medical Concepts expects full-year 2024 revenue of $201 million to $211 million.
