Research analyst here at B of A, and it's a pleasure to have Paragon 28 with me today. From the company, I have Albert DaCosta, Chairman and CEO, and Matt Brinckman, VP of IR and strategy, or? Yep. Okay. There we go. So thanks, guys. Thanks for joining me today. Thanks for having us. Want to start with Q1 results just reported last week, so maybe we can do a recap of the results there. Strong Q1 growth, 19% adjusted for days on pretty tough comp. I think it's the toughest comp that you have all year. So maybe just start with some of the strength that you're seeing in the business. Yeah, that's right. We were certainly working off of the toughest comp last year. We grew 27% Q1 of 2023. On top of the success of the quarter, I feel like Q1 was really strong for us in terms of the energy that we generated. Q1 for us is typically conference season, so most of our big foot-and-ankle conferences happen in that quarter, and we happened to launch 6 new systems around those conferences. So real excitement, palpable excitement. I think the energy was really strong, even though those products maybe aren't contributing yet. We would expect that later in the year to next year, but it's driven a lot of attention towards Paragon. We've had a lot of interest in our medical education. We're thrilled there. And both internationally and domestically, that excitement was pretty strong. This past weekend, we had 65 surgeons in from the international market, and the reception was phenomenal. Great. Maybe just if we think about how you look at guidance for the year, and even with a strong quarter, you only reiterated the guide, even though comps get a little bit easier. So why not raise, given some of the strength, given the tough comp? Is it conservatism, or how should we think about or how are you thinking about the rest of the year? Yeah, we want to be really calculated in how we update that. One of the things, we looked at some of the positive assumptions for the year. We looked at some of the potential headwinds on the low end of that. I think there was some implication of a lingering supply chain from last year and the year beyond or before that. I think we feel pretty confident at this point that the supply chain issues are behind us. And then on the high end, I think we had some quarters like Q2 and Q3 that really saw the impact of some of those supply chains. So a lot of that was already factored in there, and we're going to update the market as we can, but we're going to be really careful in taking a look at those puts and takes and make sure that we feel confident that we can hit those numbers. Got it. Let me, I'll stick to guidance before getting into some of the other details within the business. But so the Street's modeling revenue, about $60 million in Q2. I think it's down $1 million sequentially, and then increasing sequentially Q3, Q4. And it's similar to the cadence that you saw last year. So I guess the question is, is that the right way to think about the seasonality of the business? And maybe just update us. You had one less selling day in Q1. How should we think about the selling day impact for the rest of the year? Yep. Yeah, great question. I think we commented last year that we were pretty excited to see normal seasonality for foot and ankle come back. One thing that I will tell you, since COVID, normal might have a slight little deviation in Q1 where we've seen a lot more carryover in Q1 from some of those elective procedures in Q4. But traditionally, we see a Q1 drop down just a bit from Q4, and then Q2 is really where we have a lot of our holiday seasons and summers. So we see a little bit of a drop down there, and then Q3 tends to come up back to Q1 levels, and then we see deductible season hit again in Q4. The one variable there that can fluctuate a little bit more than deductible season is trauma season. So we sprinkle in there trauma season, and you could see a little bit of variation from year- to- year. But your question was accurate. I think we can expect to see more normal seasonality this year as well. Got it. And then, I mean, thinking about longer term, the growth profile of the company, over the last couple of years, you've talked about being a 20% revenue growth company. I think that's roughly the top end of your guidance for this year. And is that still the way to think about the opportunity for you guys within the foot and ankle market? And is that the right way to think about what you guys can do? Yeah. Maybe the best way for me to characterize that is we've always talked about our growth opportunity really starts with product. We are obsessed with really building technologies that match the needs of the market, that help advance what we don't yet know about foot and ankle. And that's one of the brilliant things about the foot and ankle market. It's still pretty young. There's also well over 100 indications surrounding foot and ankle. So there's tons of opportunity with still relatively young complication rates, right? So it's not uncommon to see 10%, 20%, 30% complication rates for these things. So the energy, the growth opportunities, all of that really starts with product and making sure that we have solutions that can address all of the specific indications around foot and ankle. With that, we've launched a lot of great stuff this year, and we've got a lot of great things coming in the second half of the year. We've talked about SMART 28 quite a bit, and we're pretty excited about that mid-year. And so there's a lot of opportunity for us to continue to fuel growth. The one thing I will say is we support that growth with really clinically oriented sales folks, people that can be a real service in the operating room. And in Q1, we had and I would credit a lot of the interest that we had from sales force around a lot of these new products. And so we had some opportunities to make some additional investments there. That's the one thing that I'm proud to say that we've always said we're going to continue to make bold investments in the things that matter in our business, and we're going to look at every dollar of spend everywhere else to see what we could optimize and improve so that we can keep investing in those things. That's a long answer to just say our guide has certainly on the high end of that range implies close to 20%, just underneath 20%. It means some of these products are starting to contribute more. We still have a lot of real positive effect from products we launched last year and the year before that that are influencing some of those opportunities. We have a lot of optimism that we can continue to see growth. One more thing on that, the international market is in a younger stage for us as a company. We didn't enter the international market till around 2017. And because of regulatory considerations, you tend to see a delayed introduction of some of the products we're launching. So if we're launching products this year, we might see those a year and a half, 2 years from now as an opportunity for the international market. So we've got tons of levers to pull to continue to see geographic expansion, product introductions, and just great momentum in the business. Got it. Thanks for that. And maybe a good segue into you talked about some of the investments in the commercial team that you made. And it probably came as a surprise that you decided to what I see as opportunistically make these investments in the sales force came as a surprise to investors. But maybe just talk a little bit more about kind of the rationale, why it was the right time to make these investments. Timing seems to be everything, right? So maybe just expand upon the rationale for it. Yeah. I mentioned we have a real clinically oriented sales force, and that matches the product. The product is one piece. The systems, the procedures, really understanding the technology that we've created is where I think our sales force is most effective. And some of these conversations with people that have experience, and specifically people with experience in our particular space, they're going on for a while, right? And it's hard to schedule and predict when the time is right, but the time was right in Q1 for some significant pulls for us. And again, those are the investments that I want to make sure we've got the discipline and the confidence to keep making those to benefit this company. Now, we might not see some of the impact of that this year, and we certainly expect to start seeing some meaningful contribution next year as those people get really established. But those folks presented and said the time is right, and we've had those conversations with those folks, and I think that's going to be a real positive for Paragon. Maybe if you could just talk about, I mean, were they competitive hires? I guess, where, why did the opportunity present itself? Maybe just talk about the, in the ortho space in general, rep hiring is always a competitive process. So maybe just talk about the hiring environment and then, where you did or, I guess, if you would characterize the hires as competitive rep hires. Yeah. So there's a lot of different reasons for competitive folks to consider coming to Paragon. One, we certainly have a culture around sales, and that's attractive to people. Sometimes, depending geographically on where those folks are situated, they might have a really lopsided but strong presence in one particular area, like maybe Ex-Fix. They've got a lot of relationships and deep understanding of one particular aspect. So up until we had an Ex-Fix, we might not be a great landing spot for them. Q1, for us, really, we launched a lot of product, coincidentally, all around forefoot, a few in soft tissue and flat foot. And a few of those folks had a lot of presence in those particular areas. And for some, not all, but that might have been the catalyst to make that decision and jump over. But other times, people are maybe just unhappy with where they are, or maybe there's a consolidation and somebody gets displaced. The foot and ankle community is pretty small and tight-knit, and so we all tend to know who's who, and we have long-standing relationships. And so those conversations aren't always new, but when the time is right, we've got to make sure we pull that trigger. Got it. And on the call, you said that the investments that you're making were to accelerate growth rather than maintain kind of where you are. So I think that's an important distinction. You just mentioned that you may not see it in 2024. Maybe it's more of a 2025, but. I hope we do. I guess that's where I'm going with my question is, what is it or what has to happen for them to be productive maybe a little bit earlier where you may actually see some impact on this year's numbers? Yeah. So sometimes people have obligations to a former employer, and we respect those, and we would expect them to honor any obligations they have. Sometimes that's a delay. Sometimes it could be contracting. We need to refine a hospital contract or get access that way. Sometimes it's really just getting familiar with the portfolio and getting that in front of the surgeons that they have relationships with. And so there's a variety of reasons. Typically, for someone with little to no experience, we expect to see an average ramp up about 18 months. It might be a little bit accelerated with someone that has experience and specifically someone that has foot and ankle experience. That's what you would say, a full productivity for a rep, the 18-month ramp? For someone who might be brand new, and I do want to say not all recruiting efforts are experienced people. Some of our best sales force additions have been brand new to this space. We have quite a few athletes on the team who had zero med device experience, and they just have the right culture that matches us. What's really important for us is technology is only as good as the support of that technology in the operating room. And so we put a lot of pride in matching our approach to foot and ankle surgery with the right culture salespeople. And our goal is just to have worldwide presence that way that matches that in every aspect. Got it. That's helpful. There's another side to the hiring, and it's the profitability impact or the EBITDA impact. You had said that I think the expectation was that you guys were going to have positive EBITDA this year. On the call, you said that it was pushed out slightly. So what does that mean? Yeah. I maybe want to start off by saying the word slightly was missed there, right? So a lot of the feedback we got from investors after that call where they were thinking we're talking years. When we said slightly, we definitely meant slightly. We're talking a quarter to 2 quarters, potentially, of a slight push there. And we are look, I think you know the history of Paragon and the way we started this business. We really did bootstrap this business, and then it was built with friends and family investors, and we got to $100 million on $15 million of equity. And we took a lot of pride in that, right? It's one thing to build great technology and grow really well. It's another thing to balance the business, just have a really strong business. We are still those people, right? In one sense, it's offensive to us to take setbacks. But on the other side of it, it's a point that we have to keep making those right disciplined and calculated decisions, right, to keep benefiting this business. So I'm not giving up on the performance of this business, and I want to make sure that we look at every single dollar we're spending everywhere else that might be less productive that we can put back into the opportunities to keep growing this business. Got it. That was a long answer. Sorry. No, no. Slight. Appropriate. Yeah. So let's just talk about the cadence of EBITDA, cadence of operating expenses, and what we should expect now with the increased spending that you had in Q1. So maybe just walk through I think it was -5 EBITDA in the first quarter. How do we think about that going forward? And same on the OpEx side. So I think OpEx was low 60s. I think on the call, you said it likely to be consistent in that level, but maybe just a little bit more color on some of the details on the profitability that you expect for the year. Sure. Yeah. So maybe I'll hit on that, Craig. So what we said on our earnings call, and it stands true now, is that we expected that sort of low $60 million amount in terms of OPEX for the rest of the year. So that would be in each of the quarters. Obviously, the second quarter where consensus sits, we might expect a little bit less draw-through of the revenue there. But otherwise, we would expect EBITDA to improve sequentially quarter-over-quarter throughout the rest of this year. And then going back to Albert's point on how that impacts our EBITDA break-even target that we had previously guided to, we're looking at when you think about a rolling 12 months with this first quarter of this year being where it was, once that sort of sunsets, we should be looking at a better outlook for EBITDA. Got it. And I mean, the opportunity for that to be better? So I mean, you say low 60s, but I mean, is there anything that you talked about understanding where you're spending in other places, maybe? I mean, is there any opportunity where that number could be lower during the year, or? I think right now, we're confident committing to keeping that steady. But I will just kind of reiterate, one thing that we are obsessed about is just looking at every dollar that we invest in marketing and in our G&A, looking at just overall spend and structure to make sure that we keep scaling this business but do it profitably. Got it. Then if I could just ask on you guys were comfortable with your cash position prior to the quarter. It sounds like pushing out EBITDA slightly doesn't really change that view. But I mean, I guess your view on your cash position today. Yeah. Again, I want to make sure that we're looking at every. I feel like I'm being repetitive, but I really do want to make sure that we're analyzing and scrutinizing every dollar spent, right? And one thing that I've been talking a lot with Matt and the team is just if our presence at a meeting has doubled, are we getting double the effect at a meeting, right? And so that's the kind of opportunities. The answer might be yes. The answer might be no. And can we redirect those dollars into something more meaningful? So we're always going to be looking at our capital structure. Right now, the market is certainly not the ideal market for people needing capital, and we're aware of that. Generally, general housekeeping is we're going to keep a close eye on our capital structure, and we're going to keep making sure that we're making the right investments and being stingy on the things that don't contribute to the business. Got it. Okay. Maybe taking a step back, looking at the overall market, a competitor of yours recently cut their outlook on a tougher market, competitive market. So maybe are you seeing any changes or dynamics that are either troubling or that you could see be challenging throughout the year? I mean, is there anything that you're seeing, anything that we should know about the overall foot and ankle market? Maybe the best way to describe that is to say that there's always been competition, and it really depends on which segment, where that competition comes from. We really value competition, particularly some of the smaller companies. Emerging companies can sometimes inspire us to think of things a little bit different. On the other side of it is we kind of have an internal philosophy. If we make a really good technology, then we might not have to worry as much about our competition. And I hope that we're the ones driving this market forward, and that might mean that people are chasing, right? So generally speaking, I haven't seen anything that stands out beyond traditional trends there. I will say that, again, kind of repeating that Q1 and even the end of last year, some of our product launches, even in 2022 and 2023, have been really exciting for us. And the surge in feedback is really exciting. And even though, again, some of those products are pretty new and maybe aren't contributing as meaningfully to top line, the feedback from surgeons tells us a lot and sets a lot of excitement for us moving forward. So that's maybe the best way to characterize some of the competitive dynamics in the market. It's helpful. And I'm a little scared to ask you this question because I don't know how long you're going to go on for. But so new products. Eight minutes. Yeah. So I mean, new products. You talked about the 6 that you launched. I know you love all your children. But maybe talk about some of the products that you're very fired up for and how that contribution. I know you're not going to give dollars, but how they could contribute. And maybe even if there's a way to kind of think about how those products contribute to some of your more recent product launches that you clearly benefited from in 2023, so. So maybe to start, I'll tell you that one of the things we're the most proud of is we have a finger on the pulse of this market in a way that's really unique, right? The conversations we have with surgeons, our obsessions with really understanding limitations to procedures and helping to craft the future of how we're going to be thinking about some of these things, but also listening to patients, right? Patients demand better technology. They're looking. They get excited about different things. And the fact that we're so in tune with that really shapes the way we develop technology. When we talk about launching 5-10 products a year, it feels like sometimes it's all about numbers. And it's not that at all. It is really every single project is a baby, right? And sometimes the best gems for us answer questions or needs in very unique areas that might not be millions of dollars of contribution, but to a surgeon needing those options, it means a lot. And so I would just say, generally speaking, even the products we started this company with back in late 2010, early 2011, those products are still growing and still contributing nicely to the portfolio. And it just tells us that we keep looking at the right things. We keep addressing real needs. We're not me too bag fillers. That doesn't excite us at all. But when we see an opportunity to improve an outcome for a patient, we're going to do it. And SMART 28. So the first module is going to launch a little bit later, a couple of months from now, maybe. I'm really excited about that for a lot of different reasons because I just feel like that's a chance for us to not only stop at the surgery but really start to look at what happens beyond the surgery and how these patients respond, understanding characteristics of deformities that we should be considering more when we're thinking about the procedures that we use to address them, right? We always talk about how many different pathways there are to a deformity. I just feel like SMART 28 is going to get the whole industry thinking with more precision but also really characterizing these deformities a little bit differently and then tracking the success of those to see how well we did. Sometimes we're going to have to go back to the drawing board, and we're committed to that. Sometimes we're going to realize that some of the things we've developed are really benefiting these patients in different ways. There's so much knowledge to be had with that, and it's time that device starts using some technology to enhance our thinking there. What's the first module going to include? Does the first module do what you're talking about, about maybe changing how the industry is thinking about procedures? So I will say it's going to enhance in one way because our industry, at least around total ankle replacement so far, we are doing some three-dimensional planning. So the ability to take a CT scan and convert that into a three-dimensional model and then really analyze anatomic and mechanical alignment variables, we're doing that today. We might not be tracking it as well on the back end to just reinforce the preop planning. We might not be using artificial intelligence to really kind of identify three-dimensional predictions that could tell us where the foot's going to end and how the alignment's going to affect the patient. But that type of planning is sort of there today, at least for that indication. The idea for us is to bring that to the foot, to bring that to all the indications that we have, to have that precision. Millimeters really do make a difference when it comes to how we bear weight. And if one bone starts to shift, the soft tissue will conform around that. It'll change the mechanics of how we walk. It's ultimately going to change the entire start that whole cascade of deformity. So I feel like the future for Med Device is going to have significant preop planning and the ability to track those plans in the back end. So that, in a nutshell, I didn't answer you which segment it is. I could probably say at this point that it's going to center around the forefoot. And I would tell you that you're going to see just a lot of modules coming shortly after in tandem. And our goal is to really cover all aspects of foot and ankle surgery. Maybe talk about the pull of the technology from the surgeons. We've seen enabling tech in other orthopedic industries, and there's been quick adoption, some not so quick. Maybe just talk about the surgeon interest and how quickly you think that type of technology can be adopted. Yeah. So I'll tell you one of the drawbacks is not all surgeons are uber technical. They're not going to take things into Materialise and convert these DICOM images. And so our approach was to make it as effortless, as simple as maybe using Facebook or I'm dating myself. When I say Facebook, I guess my kids would say Snapchat or something. But it has to be that straightforward and that simple to use. And I think that's going to open the access to our surgeon base. Our surgeons are incredibly busy. They want to be thinking about these procedures. We have to give them that information without it taking hours of their time. But with that information, we're going to make better decisions. And so I think the reception is going to be there. Got it. Couple of minutes left. One other topic I did want to talk about. You talked about it a little bit earlier, international. So you've seen a lot of great strength there. So it's becoming a decent size of the business. So maybe just talk about what's driving that. Is it new markets? Is it deeper within the markets that you're in? Yeah. Two things that I'm going to talk really quick. So this is when the Portuguese comes out of me. But one, you can't change the world for foot and ankle without being global, right? The way we do things here in the States is very different than how folks are considering different approaches internationally. And it's really important that we bring that voice into the shaping of where this market's going to go. So that's a proud moment for us. It's also a really important part of our business, right? On the other side of it is the diversity of our portfolio and the fact that every single ounce of design work that's gone into the systems and the optionality and the implants has been litigated with the most amazing KOL surgeons. And just the reception that we get from that is really powerful. The world is craving that. In certain parts of the world, they don't have the reimbursement structures that we do. They're not used to the type of technology. And so in some situations, what we've developed is even more meaningful for some of these countries as we're going into. The growth opportunities for us geographically, we keep selecting the next area for us to look at. We tend to look first at the most academic type countries. We look for a representation partnership. We look for surgeon interest. But we're very careful and very selective on where we go next. And we want to make sure that we keep controlling and building this thing the best that we can. I see what I mentioned before is that there's a delay on some of these new products entering some of these markets. We've got a lot of things we've launched in the last 3-4 years that, because of places like EU MDR, where we just received our certificate on that, we now have access to start introducing some of that newer technology. So we're really excited about the runway of growth internationally. We've got geographic expansion, and we've got product expansion in the rest of the world there. 15%-ish or so is about what it represents today of our revenue. Just keeping that all balanced is something that we really look at as well. I did almost. Almost. Almost. Almost on time. Pretty good. Yeah. All right, Albert, Matt, thank you. Of course. Thank you.