Thank you everyone for joining us this afternoon. I'm Drew Ranieri, one of the medical device analysts here at Morgan Stanley. It's my pleasure to have Paragon 28 with us this afternoon. From the company, we have our CEO, Albert DaCosta, CFO, Steve Deitsch, and thank you both for being here today and making the trip over from Denver. Before we get started, quick disclosure, but for disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. With that, let's kind of get into the discussion today. Maybe first for Albert, we can kind of dig into your views on the market. But to start, let's talk about the F&A market at large. You've sized it before, about $6 billion, maybe growing high single digits. There's more commentary from large joint companies. I know you're a little apples and oranges there, but that there could be a modest acceleration in orthopedic market growth. But with your position in the marketplace, it'd be great to kind of hear your views on where you're thinking about growth going forward and the market in general. Absolutely. I'd like to start by thanking you again for the invite. This is a great conference, and we appreciate being here. To start, I would say this is really a gem of a market. It's a young segment within orthopedics, and as a young segment, it just hasn't had the level of attention and research and a commitment to the space, right? And so we're still plagued with complication rates that could be easily 10%, 20%, 30%, and 40% on a lot of the procedures we deal with. For people like us, that's a tremendous opportunity to do something powerful and not just be in a space and sell product, but really contribute to a space and a better understanding of how we should be thinking of these patients and improve outcomes. That is a part, but the other part of this market is it's really broad. We have over 100 indications to address. We characterize the market as five subsegments. Those subsegments are the ankle market, which is really everything in the back of the foot. We also have a fracture fixation market, which is more known as trauma, but things like ankle fractures and foot fractures and heel fractures, and all the subsequent soft tissue injuries that we experience. We have Charcot reconstruction, which is a really debilitating, mostly diabetic condition that we're doing limb salvage procedures there. We also have our forefoot segment, which would be things like bunions and hammer toes that we include in that segment. And then what am I missing here? Flat foot. Flat foot. Wow, just he's right on it. And so it's really a diverse market across the board, and all of those segments are still pretty hungry for better technology and a better understanding. So for people like us, we're thrilled that we could be in this market. It also gives us, you know, development runway for years and years and years as we think about all of those indications and all the tentacles that break off of those indications. So when I say it's a gem of a market, it's encompassing all of that piece. And then one more part of this, and this is a little bit self-serving, but the foot and ankle really is the most complex skeletal aspect of your body. When you think of the fact that our bones in our feet are really small, they bear a ton of weight. The stress distribution through the foot is really complex. We have well over 100 soft tissue insertions that we have to consider. There's 30 bones if you take into account the tibia and the fibula. I know Paragon 28 missed two of those, but it's not as feng shui to say 30. But, and then the fact that we wear shoes, we have a really thin, soft tissue coverage. It's every complexity you can imagine. And the three-dimensional relationship those bones have to each other, to the soft tissue structures, to the floor, really impact the way we walk and the way we feel. So activity levels and everything can be hindered by that. So when, when I say that this market is a gem of a market, for people like us who eat, sleep, and breathe this, we wake up every morning thrilled that we can do something meaningful in a space. This is the perfect place to be. And it is growing, by the way, about 7%. The U.S. is about 55% of the global market. And, and, it's grown about 7%. We say somewhere between 5% and 7% year after year. There is a huge opportunity to accelerate as we develop a better understanding of what these deformities really are, as we characterize the patient types a little bit more exact and more precise, and as we bring in tools that we didn't have years ago. On the enabling technologies side, that can really influence better outcomes, take big chunks out of complication rates, and that's why we're invested so heavy there, and that's why we're pretty excited about what that can mean to this market. So that could be an acceleration of the market, and we think the TAM is in excess of $10 billion. There's a lot of patients waiting for better technology there with that piece. Is there, like, a highest growth segment within kind of the five subsegments that you laid out, or maybe just a category that's really underappreciated from a technology perspective? I mean, you're talking about higher complication rates, but does the technology have to catch up to, like, the indication to really drive growth? Anything like that? Yeah. I would say there's younger pieces within the overall market, but those pieces are kind of spread across all five subsegments. So I wouldn't say there's one segment that has an advantage or a disadvantage over the others. The entire market hasn't been researched as well as some of our counterparts. You know, if you draw comparisons to hips and knees, those patients have a pretty successful outcome with a hip and knee replacement. I think the complication rate is somewhere around 1.5%, three years out. That's a dream for us, is how do we take our indications to that complication rate? And so, again, to go back to your, your question, I'd say there's newer pieces, like the Total Ankle Replacement is one of the youngest pieces of the foot and ankle market, and so we still have a lot of energy and a lot of excitement around that part. And so it might be driving a little bit faster growth rates. But the Total Ankle Replacement also is about 5% of the overall market today. So, you've got bits and pieces like that, but generally speaking, I'd say all subsegments need some help. Okay. Okay, and maybe taking kind of the same question from a different angle, but just when you think about the share gain opportunity, I mean, there are several foot and ankle companies that are growing 20%+, including yourself. Maybe just how do you kind of think about your opportunity for share gains in foot and ankle, and the goal is to grow? Mm-hmm. But how do you think maybe, too, about the pace of your share gains over the next few years or anything that we should be thinking about? Yeah, I would tell you that, our philosophy, first of all, I mean, we've been a public company since the end of 2021, so a lot of the investment world hasn't had visibility to our progress for the years before that. But we founded the company late in 2010, and our strategy has almost been the same throughout, right? We've had tremendous success before we went public, and it's new to the investment community today, but it's certainly a proven strategy for us. And that strategy starts with product, right? Technology wins, right? And if you support that amazing product with a great sales culture and a great clinically oriented sales force, it seems like a pretty awesome combination. And then third, you layer in some really effective medical education and boom, you kind of have Paragon's strategy, right? So, that part of it, I think, gives us runway. We have over 25 projects actively being developed right now, but then we have pipeline behind that that we desperately need to bring forward, right? There are areas that still need better technology, improved understanding. So I think we've got years of durable growth opportunity as we think about the strategy still going on years and years and years. Foot and ankle feels a lot like maybe spine did at its in its earliest phase, where every piece of technology was addressing something new and real. Today, you have well over 200 spine companies competing for the same areas, but it took years to get there, right? I think foot is even more dramatic than spine in the sense that we have so many indications to address, that I don't see that pipeline opportunity slowing down anytime soon. Got it. Good thing that there's a light in our eye for the eye rolls this question might get, but just on GLP-1 impacts. Yeah. And it's been very topical in med tech, and there's concerns about it's obviously reducing obesity, maybe even OA, for high BMI patients. But patients' feet obviously bear the weight of the body, and you were talking about just soft tissue, even some limb salvage. But what's kind of the house view, on the potential procedure impact, volume impact, for, for Paragon? And, maybe how you're thinking about the short-term versus long-term impact. You want me to hit this, and maybe you can. I got to tell you, I'm really surprised of the excitement around this particular topic. But more generally, if I take a step back, I would say that our patient population tends to be a little bit on the younger side, right? About 76% of our patient population are commercial insurance, right? So that, it tells you we see a lot of younger athletes that develop arthritis from wear and tear on joints. We have a lot of hockey players who get, you know, ankle pain. We have a lot of post-traumatic injuries. So an ankle fracture that doesn't get reduced perfectly can lead to ankle arthritis down the road, and they get total ankle replacements. But generally speaking, we have patients that are starving to maintain an active lifestyle. They want to hike, they want to ski, and those are the patients that typically seek out total ankle replacements in a lot of the procedures we treat. All that to say that I'm not expecting an impact on our particular segment with GLP-1. I could only see an improvement, right? In the unique situation where maybe we have a BMI that's a little excessive, and we might not consider a total ankle replacement or something like that. That might see some positive benefit there, but it would be a positive benefit. And the other thing is, you know, patients are presenting today from injuries that happened or initiated 20+ years ago, right? And that arthritic process doesn't reverse with weight loss. And so again, we don't envision that. Then the one question that I'm surprised with all the GLP-1 questions is, w hy aren't people asking more about the impact of pickleball, right? Because pickleball is definitely influencing some opportunities in the orthopedic segment and could be a tailwind. So that would be the way, d id I miss anything on GLP-1? No, I, I think that's right. I, you know, we're considering putting in a pickle patch at Paragon 28 to take care of all of our pickleball patients coming in. But well said on GLP-1, Albert. Yeah. We're seeing a lot of soft tissue injuries- Yeah -from the pickle patch. And if people just stretched a little bit before they played pickleball, I think it's a phenomenal sport, but stretch. Just want to jump right into it. Yeah. Yeah, maybe on the operating environment for both Albert and Steve, however you want to break this up. But how are you thinking about it today from a commercial standpoint and even from an operations standpoint? Like, where are you still seeing some barriers, some limitations on the commercial side, or even on the supply side? We can touch on that, too, if there's anything. Yeah, I would say there's really no barriers or limitations on the commercial side. We have more demand than we have product to provide, folks looking for Paragon 28 solutions, and so strong demand, not only in the United States, but all around the world. And that has come at a price, you know, in some areas of our business where we sold out of certain products and sizes that we had needed to have in the second quarter, particularly on sterile packaged products. And we talked about the fact that that sort of hit its apex or peak in the second quarter, and we turned away patients that otherwise would have had a purple product put in them. So, but that has peaked. You know, we mentioned after our second quarter call that we expected to be back to good for sterile packaged products by the end of this year, but not fully in the third quarter and working our way up through the fourth quarter. So that was certainly a headwind for us in the second quarter. The whole industry has been dealing with headwinds from supply chains for the last two or three years, and we've successfully navigated that. We grew 25% last year, 24% in the first half of this year, but we would have done even better in the first half of this year absent those headwinds. But we think we're largely through it and working through that as we enter the second half of the year and feel really good about where we're going. Is it reasonable to think that when you exit the fourth quarter, you're going to be at just a normalized rate heading into 2024 for- We think that's right. Yeah, we think we should have all the sterile packaging componentry that we need, and that's a lot of the new products that we've launched over the last two years, things like a lot of our soft tissue solutions as well as our Total Ankle Replacement. So back to good is what I'm calling it, and by the time we enter 2024, we shouldn't have any restraints on those products. And you know, similarly, we exited 2Q with incomplete sets where we were waiting for certain componentry to put new sets into the field. And I know our sales force is feeling really good about a lot of the sets that they're starting to see coming into the market, both in the U.S. and outside the U.S., that they were desperately waiting for in the first half of the year. And so that's going to help us build and take the bolus of procedures that we expect to see in the fourth quarter. A large portion of our business is elective. The majority of our business is elective, and the elective season for orthopedic procedures, as everyone knows, is in the fourth quarter, even more so for foot and ankle than perhaps hips and knees. And with just the sales organization and some of the new products being on a supply back order, is the sales force maybe not engaging the surgeon as much as on those newer products until you get full supply back? Yeah, I think you see that. You, you know, we see that, and we hear that from our sales force. They, they need the product to be able to take care of their surgeons and call on new surgeons. And so, you know, the fortunate thing is that we built the business in a very balanced way. I should say, Albert and his team, including Lee Rosenthal, one of his cofounders, built the business to have a lot of balance. And so if we're out of a certain product, sell something else, and, and the team has done a great job of doing that, including the second quarter, grew 21% despite these headwinds. So, you know, the balance business model pays dividends, and, and it did in the second quarter. You know, we expect to have, you know, that balance continue to pay off, but also start to get back some of those products we couldn't fully sell and our sales reps weren't fully representing during the second quarter. Got it. Got it. Let's switch gears to some of the growth drivers, and, it'd be great to kind of hit on enabling tech first, but, you've stepped up your focus on enabling technology. I mean, you've made prior investments, on the acquisition side. But maybe help us better understand how SMART28 will factor into the business going forward, and maybe how you can monetize the technology, down the road and how it might evolve. Yep. Yeah, I'll connect back to that early part where I was describing the market and how complicated this anatomy really is, right? When you think of the relationship of all those things that I mentioned, then it really ties so perfectly to why enabling technologies can mean so much to us, right? We break it into three different buckets, and there's a preoperative bucket that essentially has two parts of it. One is diagnosing these patients with three-dimensional awareness of what's going on there, what the soft tissue contributors are, and all the pathology and influencers that can affect that from a diagnostic standpoint. But then planning three-dimensional correction of that is another key piece of that. And then you start to appreciate really quickly how precise we can get with planning in three dimensions and actually predicting what the impact of the soft tissue and everything is going to be to that, and then turn that into some sort of intraoperative tool, right? If we approve a plan or if our surgeons approve this plan, then creating a reproducible environment where we can replicate that plan. And I always talk about, you know, we evaluate patients in a weight-bearing position, but as soon as that patient's sitting on a surgical table, that foot has completely lost its reference to a weight-bearing position, right? So giving surgeons that awareness of that weight-bearing aspect that they plan so carefully and turning that into an intraoperative piece b ecomes a really valuable tool to create, a reproducibility from surgeon to surgeon, and, and then even to track those variables. So one of the pieces that I talk about all the time is, you know, total ankle replacement. We sort of know what the alignment should be for a total ankle replacement, but we don't know when it becomes symptomatically wrong, right? So we don't know what the guardrails are for alignment. Is it two degrees? Is it five degrees? And I think enabling technologies and the ability to monitor these patients in the post-op, in the back half of this, and see, one, how well we match that plan, but two, how active the patients are, what their satisfaction rates are, and just track the effectiveness of that, is going to give us tons of information and visibility to, to patterns that we don't have today, right? So all of that becomes, really influential in a, in a goal to improve outcomes for patients, and so that's why we're just-- we're tickled to death about what that could mean. We actually announced today, and I'm really proud of this piece of it. We had the first and only 3D printed, the FDA approval for a 3D printed bone segment. It's, it's an ankle bone, and these can be really young patients, right? Avascular necrosis was the indication, and that was a meaningful option that surgeons had. And we worked really closely with the FDA, who's trying to understand this advanced technology, to make it accessible to surgeons who desperately want these options for their patients, and honestly, patients who desperately need these types of options. We worked really closely with them, and we actually received the approval to initiate an IDE study of that ankle bone in tandem with half of a total ankle implant. And that's a first of its kind process that we're working with the FDA. We're going to initiate that study, and it's with and without fusions of the talus component, and it's also including a few other aspects of that, that will be such a meaningful contributor to this market, right? I mean, we've I don't mean to go down this path, but we've received some really amazing testimonials from 15-year-old patients' parents who were impacted by this type of technology. So we're talking about meaningful options that surgeons didn't have five years ago. They didn't have ten years ago, and we want to be on the forefront of bringing these options to these patients. So when we talk about things that excite us, it's exactly that, right? SMART28, it's these novel technologies that can really improve patients' lives in a meaningful way. And maybe just to unpack that release a little bit further from this morning. We bought a company about 2.5 years ago called Additive Orthopaedics, and part of that purchase was the first and only approved in the world, device that was a total talus replacement, 3D printed, patient-specific, but approved only for AVN. And so what we're working with the FDA right now is to expand the indications beyond just AVN and replacement of the total talus, so that that technology to print a patient-specific metal total talus to be combined with an ankle replacement and a lot of other ankle indications and issues, will be able us to get that technology, once successful in the study, into more surgeons' hands to benefit more patients more broadly. And so really excited about that, and that's just part of the SMART28 initiative. Just one small element of it, an important one, but one small element of the total package that we're bringing to market. Okay. Can you put maybe some, like, timing details or milestone details on the study that was announced this morning? When do you expect to hit maybe full enrollment? Mm-hmm. Apologies if I missed this, but have you talked about the opportunity of what the indication expansion could mean for the company? So we haven't talked about any financial impact from that, and- Today is a good day to see. Yeah, well, you know, one of the points that I'll make here is, like, not all development projects impact the market the same way, right? And this one, just providing these options, and I know I'm being repetitive on this point, but they can mean so much to surgeons who are so frustrated to have to tell a patient they don't have an option, right? And the other piece of that is, when a patient doesn't have this technology available, the alternative is very scary, right? Doing a fusion with that big space can be very problematic, and you're not talking about everyday patients. You're talking about, in some cases, some patients with severe comorbidities that can compromise healing, right? And so, having these technologies could prevent things like amputation and some really rough complications. So these are powerful. And that, to us, means more than potentially some of the financial impact that these products have. But in addition to that, having those options available certainly shines a light on all products around our ankle franchise. So ankle fusion products can be influenced. There's a huge complementary benefit to having this type of technology, especially as unique as it is, and being the only one working with the FDA to get that through. So those are all really powerful pieces. Now, there's still some details to iron out with the FDA to figure out exactly how many patients we're going to enroll and the timing of that study, but I expect to kick that off pretty soon. And then we'll have some updates to that as soon as that becomes available. I don't want to step on any timelines or make any promises that we certainly don't have the visibility to yet. Okay. But I do think that's a powerful impact to the market. Got it. No, that's fair. Yep. Maybe just on the product development side, you talked about 100 indications today. Mm-hmm. You have 25 products in the pipeline today. Enabling technology is becoming more of a focus area. But as you do think about your R&D function specifically, has anything changed with the way that you're approaching your product development strategy as you're layering on more enabling tech down the road? Absolutely. So one thing that I say is Paragon's approach to product development is first research, right? So we really do research well before we have a concept, and we do that on purpose because we don't want to bias our own, you know, development strategies here, and it's really good to dig deep with no visibility to what it should look like and understand what the real limitations are for these procedures. And we do that with surgeons guiding us along the way to say, "This is what scares me about this. This is what I'm thinking when I do these procedures. This is what scares me, this is what I love." And we really try to sympathize with what those surgeons are going through when they do these. That being said, you can think of the impact of something like the Disior acquisition. He mentioned Additive Orthopaedics, which we acquired in 2021. In 2022, in the beginning of 2022, we acquired Disior, which was a Finnish software platform, really working mostly on the diagnostic side for surgery and taking CT scans and converting that into three-dimensional models. That tool, since the day we acquired it, has been incredibly influential in our development in-house. So now, instead of kicking off some of these research projects from the more traditional sense, we can get answers to some of those research questions in almost real time, in minutes, compared to months, if not years before that. So the efficiency that we've created to that first step of product development has been overwhelming. The other piece of that is we are expecting to launch one of the first modules of that Disior strategy map. Disior and Additive Orthopaedics really combine nicely to give us a tandem of patient-specific algorithms and software, 3D modeling. Excuse me. So that tandem has been pretty powerful. We're gonna launch that first module early next year, and I think the world will start to see, okay, we get it. This is how this can impact patients in a meaningful way, and there'll be sort of an aha moment there. And I think that will ultimately, because there'll be subsequent modules that you'll see introduced, and additional layers that we'll keep adding to that. But I think you'll see that there's a few ways to monetize that. There's likely gonna be a pull-through of products. All of our portfolio will be influenced by that. Everything new in development will be influenced by that. There will be intraoperative tools that can be useful in replicating plans where there could be some opportunities there. And so, I think we're pretty excited about introducing this early next year, and we think the world's gonna see, okay, I get what Albert's been geeking out about for so long. It's pretty exciting. Looking forward to it. And maybe Steve, in the few minutes we have left, don't wanna neglect you on financial questions, but understandably, the company is focused on top-line growth. EBITDA is really coming up, I think, more in the conversation in your pathway to break even, but anything you can tell us on, maybe achieving profitability, EBITDA profitability in 2024? I think consensus has you, hitting that for next year, but- Yeah, happy to. And I think maybe as a backdrop, the company has a long history of being EBITDA positive. And, you know, really since from 2015 through 2021, the company was EBITDA positive, and then post-IPO, we made the decision to take advantage of a lot of different investment opportunities that were in front of us. We did that. Things like accelerating R&D opportunities, things like the Disior acquisition that brought over 25 engineers, and a very, very small revenue base, but a lot of product development potential and power. Things like sales force expansion, both here and internationally. Things like infrastructure to support a scaling business, including SAP and supply chain leaders that really can take us to the next level of excellence there. Those investments we've leveraged in 2023, and we've seen nice year-over-year improvements in adjusted EBITDA, double-digit gains in adjusted EBITDA. We said $5-$10 million of improvement this year from 2022, where we were about negative $10.7 million. We expect to be close to break even this year on the high end of the range, and next year we expect to continue to lever the investment base we've built and grow our revenue at a much faster pace than our operating expenses. To answer you very directly, we expect next year to be EBITDA positive. We haven't given a range for that yet, but we'll be clearly in positive territory next year and continuing to scale that moving forward. That combined with additional and continued improvements in our free cash flow, driven by a normalization of our working capital. We've really built up a lot of inventory over the last 12 months, and, you know, the reasons for that have been everything from just needing more inventory to satisfy par levels, given longer lead times, NPI launches that we're gonna fully take advantage of, and then also just sets being built out for our expanded sales force. Not all of which these sets we were talking about earlier have been able to drive our revenue. So, a lot of great things to come from earnings profitability, but also cash flow leverage going forward. We're gonna have to sadly leave it there for today. Albert, Steve, I really appreciate you joining us today. Okay. Thanks very much. Thank you so much. Thank you. Appreciate it.