Good morning, welcome to OrthoPediatrics Corp fourth quarter and full year 2022 earnings conference call. At this time, all participants are in listen only mode. We'll be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Philip Taylor from the Gilmartin Group for a few introductory comments. Thank you for joining today's call. With me from the company are David Bailey, President and Chief Executive Officer, and Fred Hite, Chief Operating and Financial Officer. Before we begin today, let me remind you that the company's remarks include forward-looking statements within the meaning of federal securities laws, including the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to numerous risks and uncertainties, and the company's actual results may differ materially. For a discussion of risk factors, I encourage you to review the company's most recent annual report on Form 10-K as updated and supplemented by our other SEC reports filed from time to time. During the call today, management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance. The company believes these measures provide useful information for investors in evaluating its operations period over period. For each non-GAAP financial measure referenced on this call, the company has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its earnings release. Please note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for OrthoPediatrics financial results prepared in accordance with GAAP. In addition, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, today, March 1, 2023. Except as required by law, the company undertakes no obligation to revise or update any statements to reflect events or circumstances taking place after the date of this call. With that, I would like to turn the call over to David Bailey, President and Chief Executive Officer. Thanks, Philip. Good morning, everyone, thank you for joining us on our fourth quarter and full year 2022 conference call. As we start all earnings calls, I'd like to begin by highlighting that we helped nearly 17,000 children in the fourth quarter and approximately 70,000 for the full year 2022. Since inception, with the additions of MD Orthopaedics and Pega Medical, we have now helped over 630,000 children. Doing the right thing for children remains our top priority. Consistent with our pre-announcement on January ninth, we generated quarterly revenue of $31 million, representing growth of 25% compared to the fourth quarter of 2021. For the full year 2022, we generated $122.3 million, representing growth of 25% compared to 2021. Despite the negative impacts from COVID in Q1 2022, record high rates of RSV and flu in the back half of the year, and ongoing hospital staff shortages, we once again produced record revenue and growth in excess of 20%, a trend that has been ongoing since our founding, excluding the pandemic-ridden year of 2020. In addition to growing the top line in excess of 20%, we continued to grow revenue faster than expenses, which resulted in our first year of profitability. The headwinds we experienced in Q4 reduced our potential Adjusted EBITDA. However, we are pleased to have generated our first full year of positive Adjusted EBITDA in 2022. Our successful top and bottom line growth was driven by continued strong share gains resulting from increasing surgeon product adoption as a result of executing our account conversion strategies, increasing set deployments, launching new products, sales synergies from our two acquisitions, and our ongoing commitment to train the next generation of pediatric orthopedic surgeons. Overall, we are extremely proud of our performance and believe OrthoPediatrics is in its strongest strategic position of all time. With continued momentum from those growth drivers, we expect to deliver total revenue just over $146 million-$149 million for the full year 2023, while also continuing to improve our profitability. Additionally, with a strengthened balance sheet following our capital raise in August 2022, we believe that we have a solid line of sight to cash flow breakeven in the next five years. Moving to our revenue categories. In the fourth quarter of 2022, we generated total Trauma and Deformity revenue of $22.1 million, representing growth of 34% compared to the prior year period. This included combined global revenue of approximately $4.1 million for MD Orthopaedics and Pega Medical. Organic Trauma and Deformity revenue was $17.9 million, representing growth of 9% compared to the same period prior year. Organic revenue growth in the quarter was driven by market share gains with PNP| FEMUR, Cannulated Screws, and our Orthex external fixation systems, in addition to growth of Legacy Implant systems. We were also benefited from the sales synergies achieved with both of our 2022 acquisitions, MD Orthopaedics and Pega Medical, which have meaningfully expanded our Trauma and Deformity portfolio. As a reminder, in April of 2022, we acquired Iowa-based MD Orthopaedics, a leader in the non-surgical treatment of clubfoot. In July, we acquired Pega Medical and their gold standard Fassier-Duval Telescopic IM Nailing System used to treat rare bone diseases. I am pleased to report that OP continues to positively impact the growth trajectories of both new franchises. As we continue to execute, our strategic rationale is further validated. Turning to MDO. In 2022, we achieved strong initial sales with the existing portfolio of specialty clubfoot bracing products from strong European distributor reorders, new market expansion, and improved brand visibility in the U.S. as a result of its association with OrthoPediatrics. Going forward, we believe the momentum we are generating in our nonsurgical franchise ensures it will be a material contributor to our growth rate going forward. The acquisition of Pega Medical positions us at the forefront of the pediatric rare bone disease market by means of the Fassier-Duval Telescopic IM Nailing System. In two quarters, we have fully integrated the Pega Medical product portfolio into our U.S. sales channel. This integration has produced an immediate positive revenue uplift. Our customer surgeons' feedback is extremely positive. The product synergies are obvious and the cultural integration of the business is exactly what we had hoped for. We are very pleased with the performance of each thus far. Both acquisitions bolster our market leading positions in their respective categories while expanding our total addressable market. Looking ahead, we are excited by the multiple opportunities to further expand our leadership position within pediatric trauma and deformity. Further deployments of new PNP|FEMUR, Orthex, Cannulated Screw, and legacy implant sets are a core component of our growth. Additionally, we expect both Pega Medical and MDO to outpace our organic corporate growth rate in 2023. With Pega, there are multiple levers for growth, including plans to dramatically improve surgeon access to key Pega Medical products, deploying more instrument sets to meet the increasing demand, fully training our global sales representatives, and launching of new products. These opportunities position this business to be a key contributor to our growth for several years. With MDO, we expect to accelerate growth as we train new customers in the Ponseti technique, open new international markets, and introduce several new nonsurgical specialty bracing products throughout 2023. We'll move to the scoliosis business. In the fourth quarter, we generated scoliosis revenue of $8 million, representing organic growth of 12% compared to the prior year period. Similar to T&D, our revenue growth was primarily a factor of taking market share with key products such as RESPONSE and ApiFix, which is accelerating with additional 7D placements. During the quarter, we gained market share and added new surgeon customers in prominent accounts that will lead to material growth in 2023. We also onboarded several new ApiFix users and added additional commercial sites. We continue to see RESPONSE pull-through in accounts where ApiFix and or 7D is being adopted. We expect our scoliosis business to be a significant growth driver for OP for many years to come as more surgeons adopt our RESPONSE fusion systems. We complete the placement of additional 7D units and expand the user base for ApiFix as we report two-year clinical outcomes data to our customers. Moving on to international. In the fourth quarter of 2022, we generated quarterly international revenue of $8.3 million compared to $5 million the prior year period, primarily driven by new set sales to our stocking distributors as well as the addition of MDO and Pega International Revenue. In January, we announced the formation of our direct sales organization in Germany, which is one of the largest orthopedic markets in Europe. OrthoPediatrics GmbH marks our first direct international organization and reflects our expanding commitment to helping children across the globe. With this new direct sales organization, we will be able to establish deeper connections with the German pediatric orthopedic community and provide a deeper level of service that we believe will ultimately lead to better patient outcomes. This, along with the integration of Pega products in our European sales agencies, additional international product launches in key markets, new market expansion within the MDO franchise, and increasing willingness for set purchases from our international stocking distributors gives us confidence that our international business is well-positioned to generate strong growth in 2023. Turning to new product development. In 2022, we launched several new products, including DriveRail, Bone Support, and 3D Side, along with the MDO and Pega product portfolios. Altogether, this brings our total product offering to 46 systems. We are pleased with the initial contributions and expect our recent product launches to be a source of growth in 2023. We have also advanced R&D projects across our entire business. This includes progressing the late-stage development projects from Pega and MDO that made these businesses incrementally more attractive to us. In scoliosis, we remain on track to launch our new RESPONSE Derotation Instrumentation, RESPONSE Cannulated Screws, and a number of RESPONSE instrument set upgrades. Additionally, we finalized the development of our RESPONSE Power System that will assist surgeons when placing both pedicle and set screws, and we look forward to launching this system in the second quarter of 2023. In Trauma and Deformity, we continued to advance several organic development initiatives such as PNP | Tibia, DF2, and the Orthex pre-planning software, which just received FDA 510(k) approval, and we expect an initial launch of each in 2023. Within the Pega Medical product family, we continue to invest in the development of several limb deformity correction products with at least two slated for launch in 2023. Lastly, we continue working on introducing several new nonsurgical products through MDO, where we're building a robust cadence of new product introductions starting in 2023. In all, we are pleased with our ability to advance the development of the next generation of pediatric orthopedic solutions while remaining on path towards improved profitability. We believe the constant introduction of new products in 2023 and beyond is another source of revenue growth and competitive advantage. Moving on to surgeon training and education. As a leader in pediatric orthopedics, we believe it is our responsibility to help advance the entire field of pediatric orthopedics, and we see no greater contribution than our commitment to help train the next generation of pediatric orthopedic surgeons. Clinical education and training is at the core of everything we do. With that said, we are pleased with another year of extremely prolific clinical education and training. Again, in 2022, we were proud to continue our leadership in sponsoring the major pediatric orthopedic surgical societies such as POSNA, EPOS, SLAOTI, and IPOS. In 2022, we conduct more than 280 training events for healthcare professionals covering more than 700 product sessions. Additionally, we held seven ApiFix user group meetings and ran 15 Orthex training courses throughout the year. In the fourth quarter, we attended and were the lead supporter of the IPOS meeting in Orlando and saw strong attendance at the specialty day in several of our hands-on workshops. Finally, I want to call out our efforts and substantial progress on our ESG initiatives. As a company that lives our cause every day, we are committed to affecting lasting and meaningful change in the organizations with whom we engage. In early February 2023, we released our ESG report highlighting several key accomplishments in 2022, including our diverse employee representation and strong environmental and business ethics. We are proud to stand behind our dedication to fostering an environment that is respectful, compassionate, and inclusive of everyone in our community. I'll turn the call over to Fred to provide more detail on our financial results. Fred? Thanks, Dave. Our fourth quarter 2022 worldwide revenue of $31.0 million increased 25% compared to the fourth quarter of 2021. Growth in the quarter was driven primarily by continued surgeon adoption. MDO and Pega Medical contributed $4.1 million of combined revenue. For the full year of 2022, our worldwide revenue of $122.3 million increased 25% when compared to 2021. Growth in the year was primarily driven by set deployments, increasing surgeon adoption of key new products, and sales synergies from our two new acquisitions. In the fourth quarter of 2022, U.S. revenue was $22.7 million, a 15% increase from the fourth quarter of 2021. For the full year of 2022, our U.S. revenue of $92.4 million increased 19% compared to 2021. Growth in the quarter and the year was primarily driven by organic growth in Trauma and Deformity and scoliosis products as we continue to deploy more sets and increase surgeon adoption, as well as the addition of MDO and Pega Medical. In the fourth quarter of 2022, we generated total international revenue of $8.3 million, representing growth of 67% compared to the prior year period. For the full year 2022, our international revenue of $29.9 million increased 47% compared to 2021. Growth in the quarter and the year was driven primarily by increased procedure volumes, increased set sales to our international stocking distributors, as well as the addition of MDO and Pega Medical. In the fourth quarter, Trauma and Deformity revenue of $22.1 million increased 34% compared to the prior year period. For the full year of 2022, Trauma and Deformity revenue of $85.1 million increased 29% compared to 2021. Growth in the quarter and the year was driven primarily by the organic growth from Cannulated Screws, PNP|FEMUR, Orthex systems, as well as the nonorganic growth from MDO and Pega Medical. In the fourth quarter of 2022, scoliosis organic revenue of $8.0 million increased 12% compared to the prior year period. For the full year of 2022, scoliosis organic revenue of $33.4 million increased 19% compared to 2021. Growth was primarily driven by increased sales of our RESPONSE fusion system, ApiFix non-fusion system, and 7D sales, as well as pull-through and increased set sales to our international stocking distributors as they look to respond to increased backlog. Sports medicine other revenue in the fourth quarter of 2022 was $0.9 million, which decreased 22% compared to the prior year period. For the full year of 2022, sports medicine and other revenue of $3.8 million decreased 9% compared to 2021. Turning to set deployment. $6.3 million of sets were consigned in the fourth quarter of 2022, compared to $2.4 million in the fourth quarter of 2021. For the full year of 2022, we deployed $20.1 million, up 48% compared to 2021. We continue to experience strong demand for more and more sets, would expect to see increased deployments in 2023. Touching briefly on a few key metrics. For the fourth quarter of 2022, gross profit margin was 68.5% compared to 72.9% in the fourth quarter of 2021. The decrease in gross margin was driven primarily by higher set sales sold at cost to our international stocking distributors, as well as a minimum purchase obligation fee on the FIREFLY licensing agreement, which resulted from unfavorable impacts of respiratory illnesses in the quarter. For the full year of 2022, gross profit margin was 74.1% compared to 74.9% in 2021. The slight decrease was primarily driven by the fourth quarter performance. Total operating expenses increased $5.9 million or 25% from $23.6 million in the fourth quarter of 2021 to $29.5 million in the fourth quarter of 2022. Total operating expenses increased $24.6 million or 27% from $91.4 million in 2021 to $116.1 million in 2022. The increase was driven by the addition of MDO and Pega Medical, as well as incremental personnel required to support the ongoing growth of the company. Sales and marketing expenses increased $1.0 million or 10% to $10.9 million in the fourth quarter of 2022. For the full year 2022, sales and marketing expenses increased $5.4 million or 14% to $45.1 million. The increase was primarily driven by increased sales commission expense, coupled with the addition of our recent acquisitions. General and administrative expenses increased $4.5 million or 37% to $16.6 million in the fourth quarter of 2022. For the full year of 2022, general and administrative expenses increased $13.3 million or 29% to $59.4 million. The increase was driven primarily by the addition of MDO and Pega Medical, as well as the personnel and resources to support the ongoing expansion of business and an increase in legal expenses associated with our recent acquisitions. Research and development expenses increased $0.4 million or 26% to $2.0 million in the fourth quarter of 2022. For the full year of 2022, research and development expenses increased $2.5 million or 45% to $8.0 million. The increase was driven primarily by incremental product development, including research and development associated with our recent acquisitions. Total other income was $0.4 million for the fourth quarter of 2022, compared to $5.4 million for the same period last year, and was $21.7 million for 2022 compared to $0.6 million for 2021. In the fourth quarter of 2022, we realized a $0.5 million fair value adjustment benefit, compared to a $5.5 million benefit for the fourth quarter of 2021. For 2022, fair value adjustment of contingent consideration was a benefit of $25.9 million compared to a $1.8 million benefit in 2021. We reported an Adjusted EBITDA loss of $2.2 million in the fourth quarter of 2022, compared to a loss of $0.6 million for the fourth quarter of 2021. For the full year 2022, we generated a positive $0.2 million of Adjusted EBITDA, compared to a negative $0.2 million in 2021. We ended the fourth quarter with $120 million in cash, short-term investments, and restricted cash. We maintain a strong cash position and $50 million available on our line of credit. In the current economic environment, our strong balance sheet, positive Adjusted EBITDA, and line of sight to cash flow break even positions us favorably to execute on our current business strategy. For 2023, we expect an operating environment similar to 2022, with hospital staffing and capacity constraints, along with the outsized respiratory illness rates. In 2023, revenue is expected to be in the range between just over $146 million-$149 million, representing year-over-year annual growth between 20% and 22%. The guidance assumes roughly $5 million of revenue contribution from MDO and Pega Medical before the acquisitions become organic on their anniversaries. We expect organic growth of 15%-18%. Lastly, we plan to deploy around $25 million of new sets in 2023, representing a year-over-year annual growth of 24%. Additionally, moving down the P&L, we now expect to generate between $3 million-$4 million of Adjusted EBITDA in 2023. At this point, I'll turn the call back to Dave for closing comments. Thanks, Fred. Unlike many businesses our size, our growth doesn't rely on one or two major products or a few key initiatives. We are a company with an amazing cause, supported by an amazing culture dedicated to changing the world by meeting unmet needs in pediatric health care. Our ability to surround surgeons with the most comprehensive portfolio of pediatric orthopedic solutions has truly differentiated us. The focus and specialization of our products expands surgeons opportunities to help kids and enables improved clinical outcomes. As we think about 2023 and beyond, we believe our capacity to help even more kids has never been greater. We have several growth drivers in place across the business, such as set deployments and key account conversions, continued share gains in T&D with leading products such as PNP|FEMUR, outsized growth in our new non-surgical specialty bracing business, accelerating growth of the Pega Medical franchise, continued share gains in our scoliosis fusion and ApiFix non-fusion segments, and the opportunity for further international sales growth as markets stabilize. These opportunities give us every reason to be confident that our growth story will continue. Clearly, I believe OrthoPediatrics is in a position of tremendous strength, and we are confident we can continue to make share gains, grow revenue, and improve profitability, and most importantly, positively impact the lives of children and their families. With that said, I'd like to turn the call back over to the operator and open the line for questions. Thank you. Thank you. If you'd like to ask a question, please press star one one. If your question has been answered and you'd like to remove yourself from the queue, please press star one one again. Our first question comes from Rick Wise with Stifel. Your line is open. Good morning, gentlemen. Thank you, and thank you for all the excellent perspective on the year ahead. Sounds like another terrific year on tap. I think it's best if I start with the guidance. You basically reiterated your range, the $146 million-$149 million, the 20%-22%. Thank you for calling out the $5 million related to MDO and Pega. Help me think to maybe break it down a little further. If the organic is 15%-18%, I'm a simple guy, I say to myself, they've grown 20% or much better since inception, I think the CEO just said. Help me better understand why we can't expect even stronger performance from the organic portfolio, particularly when I think about more docs trained, more products launched, going direct in Germany, it's, you know, getting the sales synergies. It just seems like this is an incredibly conservative setup. Maybe I'm not appreciating your perspectives on RSV or some other factors. Hello? Speakers, you may be muted. One moment, please. No. No, we're trying to. On the phone. Mr. Wise, you may want to repeat your question. Yeah. Okay, sorry about that, guys. We, we did hear the question. We were not muted, but for some reason, we lost the sound coming through. Dave will answer the question at this time. Sorry about that. No problem. Great. Well, Rick, I think it's a good question. You know, we have obviously historically been a grower organically of greater than 20%, and you can imagine that internally, you know, we're not planning to move off that aspiration. I think we have the opportunity here to do that. You know, I think Fred and I have seen enough disruption over the course of the last 12-18 months, certainly since the pandemic, but maybe even more recently, that, you know, our thought here was to guide based on the fact that, you know, we don't know what the future holds necessarily in terms of respiratory illness, COVID, staffing. We basically have guided with the expectation that those things that we saw in 2022 occur in again in 2023. That may be very conservative, but that's the way we've guided. We hope that that isn't the case, but I think that is the basis of a guide would be slightly lower than 20% organic. I think internally, we certainly have the aspiration to continue our long string of growth in excess of 20%. Just we're two-thirds of the way through the first quarter. Obviously, it's hard not to ask, is RSV lessening, getting worse, exactly the same? You know, just maybe help us some of the headwind assumptions. Is it just like the fourth quarter? What's going on on that side? Yeah, I think we're seeing, and you've probably seen this, just the news cycle has certainly slowed down with respect to RSV, flu, some of the things that impacted us in the fourth quarter like we had never seen. I think, you know, that would still impacted, obviously, early in January. Numbers were still very high. I think what we're seeing here is a general trend in the right direction. Hopefully we continue to see that through the summer, and hopefully we can continue to see this through the balance of the year. Okay. I'm gonna sneak in one more. Apologies. On gross margin, Fred, you highlighted higher set sales, the Firefly licensing and RSV. Can you help us understand, you know, the relative impact of each on the fourth quarter? Would your gross margins, if I don't know how you would exclude it, especially the RSV side. If we exclude that, would we imagine gross margins would have been 74%? Help us think about the first quarter, you know, relative to all that. Thank you. Yeah. Thanks, Rick. Our gross margin does fluctuate between the quarters depending on volume, highest in the third quarter, a little lower in the second quarter, and then down in the fourth quarter, and typically the first quarter is our softest. Because of RSV, volume was much less than we expected in the fourth quarter, volume was lower. That did bring our margins down in the fourth quarter. Even if you compare to last year in the fourth quarter, which had that lower volume as well, the decline versus last year was probably split pretty evenly between higher set sales at cost as well as this FIREFLY license agreement minimum commitment. It's pretty even. We would expect, I think, going forward that 2023 margin is probably similar to 2022 across the quarters, excluding probably the softness we saw in the fourth quarter of 2022. Thanks so much. Thank you. Our next question comes from Ryan Zimmerman with BTIG. Your line is open. Good morning. Thanks for taking the questions. Hopefully, we won't lose the feed again. Rick's questions were so good, I think the call might had to end there. I wanna just squeeze in a few questions from me. Number one, there's been some disruption in the spine market. As you guys know, NuVasive and Globus Medical and Orthofix Medical and SeaSpine. Each of those have subsequent growing rod franchises. I'm wondering kind of what your expectations are as a result of those changes in the market and what, you know, any disruption to those franchises could do for OrthoPediatrics, whether it's, you know, new business or distributors or whatnot. Just appreciate your thoughts there. Yeah, good question. I think particularly on the NuVasive side, you have the MAGEC rod there, and we see that product being used for Early Onset Scoliosis. We don't see a lot of the other companies growing, at least spinal growing technology. I'm not sure that it's available in the market just yet. I think the disruption generally benefits us, probably benefits several companies. It's not something that we've necessarily factored into our growth for next year. I think that there's probably some disruption, particularly on the potentially on the NuVa side that would drive us to be able to attract some different salespeople, add to our selling organization in areas where they're strong. Again, I don't think it's something that we've contemplated as one of our major growth drivers for next year. Yeah, I would just add that, we don't highlight it a lot, but we are working on our own growing rod technology. It is not going to be launched in 23 as it's still being developed, but we're pretty excited about what that could be in the future as well. I appreciate that, Fred. Then, you know, for MD Orthopaedics and Pega, you know, you made the comment that they will grow above, I guess, the corporate average. You know, help us understand kind of the growth before OrthoPediatrics acquisitions and then after, and kind of the lift that you expect as a result of integrating those into your sales force. I mean, they're small, so they should be already growing, you know, I think at a relatively good rate. So, you know, just appreciate kind of your compare and contrast, maybe what kind of impact you're having from those two businesses and as a result of those acquisitions. Yeah. Good question. Neither of those businesses were effectively growing when we acquired them. They're pretty static. I think it was primarily, you know, lack of sales force focus, lack of inventory. Just generally speaking, those businesses hadn't had a lot of capital investments made behind them, despite the fact that there was a lot of demand for both of those products. I think, you know, particularly on the Pega side, when we have our selling organization adopt those products, which we have now for the first two quarters, I mean, surgeons were very keen to be able to call somebody that they already knew, that spent time in the operating with to help them work through some very difficult products. We've seen growth almost... We saw growth accelerate from the minute we adopted the U.S. sales force adopted that particular product line. I think as we get inventory for this product as well as new products out for both MDO and Pega, and we can get those in the hands of both our U.S. and international selling organization, we expect those product lines, those two businesses to grow, you know, in excess of 20% for the next several years. Yeah. I would just add, particularly on the Pega side, I think we've gotten a question from investor in the past, you know, can this grow 40% or 50%? It's not gonna grow that fast because we have to get inventory. Yeah. We have to get sets, and we have to deploy those sets. Obviously, we ordered a lot of sets when we first bought it. We've now put our second round of sets, orders on place. Those will start showing up in the second half of 2023. As we continue to roll out more and more sets on the Pega side, we'll have growth, well in advance of the overall business growth for the next five years. Last point I'd make on that, Ryan, is that, you know, on the Pega side, the only product that had been aggressively commercialized of their seven products was the FD-rod. We're already seeing an uptick in the use of FD-rod in indications that are more related to trauma. So we see a build of, and share gains of the FD-rod, but also you have six additional products that, for the most part, are new to our customers. They may have a few KOLs that have used them that helped maybe design those products, but for the most part, they're entirely new to our customers, both in the U.S. and around the world. So, you know, we're thinking about how we pace out new product development and new product launch. Kinda feel like we've got in the bag here about six different products that we'll be launching over the course of the next 12 months or so that I think our customers are really gonna like, and so far we've gotten positive feedback on. They just haven't had access to them or a sales force to really, you know, credibly deliver those products and educate on those products. Pretty bullish about what that could look like as we start to roll out products beyond the FD-rod. Appreciate it. Thanks for taking the questions, guys. Look forward to the year ahead. Thanks. Thank you. Our next question comes from Matthew O'Brien with Piper Sandler. Your line is open. Good morning. Thanks for taking the questions. Hey, Dave, on RSV, it sounds like things are tapering off. I know the guide for the year is somewhat conservative, which is great, but what you trained a lot of folks last year, but what did it do to you as far as the momentum goes, especially in Trauma and Deformity as far as taking market share? 'Cause I'm sure you had to slow down as far as your interactions with clinicians, et cetera. What kind of headwind are you facing this year to getting that momentum back going in T&D as we think about 2023? I don't know that it blunted momentum. I think we were definitely having a lot of conversations with customers, and, you know, you've seen from the deployment in Q4 that we were pretty aggressive, obviously for year and for Q4 in getting new sets to the field. It's possible, Matt, that, you know, some of those sets that deploy and then ultimately take a little bit of time to get inside the children's hospitals and get on consignment, it's possible that some of that momentum would've slowed down a little bit just from a pure administrative standpoint. We've seen that right on the 7D side, where surgeons get very excited, but then just some of the administrative challenges of moving this through the process have been slowed just by some of the disruption in the marketplace. You know, we just came out of our sales meeting in Miami. I don't know that I've seen our U.S. sales force more excited or motivated about what we've got in front of us in the future. I think when we look at key account conversions, when we look at places where we are starting to win either, not normally single vendor contracts, but let's say two vendor contracts, that trended pretty positively in the back half of this year. I just don't think what we've seen so far is kind of the harvest of all of the legwork we've done with deployed inventory, new product launch, new products, getting in new customers using more products. hopefully, as the market kind of stabilizes here, we'll start to reap some of the benefits of the hard work that we put in here, throughout 2022 into 2023. Does that make sense, Matt? Totally. I really appreciate that. Excuse me. Then on the ApiFix side, Dave, I think it's important to address, for investors. I think you've said a doubling of revenues, which you're expecting this year from that product. I know a lot of people have been very bullish about it. I certainly am. I wanna make sure that the expectation for the company on the opportunity for ApiFix hasn't changed in any way or, you know, when we should think about maybe a little bit more of an inflection in that product. You know, I know doubling sales is not easy, but, you know, a bigger inflection from a contribution perspective, when we should think about that. Thanks. Yeah, good question. you know, obviously, we're pleased with the doubling of this product line in the U.S. Again, I know we've said this a number of times, but as our surgeons get more and more comfortable with the data, that's when we expect more rapid adoption. What we are seeing right now is more willingness from a commercial account standpoint to start with ApiFix, do a few cases. I think there is a bit of wait and see approach that most of our customers are having. You can understand that given some of the challenges with other new technologies that have entered the pediatric space on the spine side that have had a start stop phenomenon in some of those product lines. I think our customers are being cautious. Obviously, we're really pleased with that. I think when we start to get two-year data and then ultimately three-year data, that's when we start to see inflection point. Just so you know, we should have about 90 patients at two years by the end of 2023. We have 30 patients right now at the end of Q1, and we expect to get on the podium at POSNA for the first time with two-year data with our 30th patient. Still small numbers, I think, you know, we would look at a bigger inflection point maybe out in 2024, 2025, when the data is a little richer, data is a little more aged. Makes sense. Thank you. Thank you. Our next question comes from Mike Matson with Needham & Company. Your line is open. Yeah, thanks. I wanted to ask one just about kind of the market opportunity. You know, I'm wondering if you look at all the pediatric surgeons out there, I guess I'm focused more on the U.S. here, but, you know what... I don't know if you're gonna give me numbers on this, but maybe we could just discuss it. What portion of, you know, those pediatric surgeons are now your a customer of OrthoPediatrics in some way? How much of your growth is coming from, you know, just actually taking a surgeon that's not using any of your products and getting them to use some of your products versus, you know, having a bunch and the majority already using your products and just trying to get them to, you know, to deepen penetration in those existing accounts? Good question, Mike. I think every major children's hospital in the United States is a customer of ours, and then there's some additional places that aren't freestanding children's, but have a pediatric orthopedic surgeon, more in a community setting. About 1,400 or so surgeons. I can't substantiate this exactly, but I would argue that there's very, very few of those surgeons that don't have some type of association with one of our products, where they're using at least one of our 46 implant systems. I think the challenge for us, and I think it's been the secret to our growth here in this consistent kind of drumbeat of 20%, has been that we are getting deeper penetration with existing people who have a solid relationship with OrthoPediatrics. Moving a customer who may use one or two of our systems to four or five of our systems or 10 or 12 of our systems or somebody who's using 25 of them to, you know, 35 of our systems. That's generally the strategy here, and I think that applies also outside of the United States, particularly in developed markets in Europe, where customers are generally accessing or using at least one of our products. We have that relationship, and we're just expanding that relationship. Again, Mike, we have still fairly low share total. I mean, we think we're in the very early innings of this. T&D and scoliosis probably in the, you know, mid-teens kind of share. We got a long way to go to be able to get more and more of these customers using more of our products, and we think we got a long growth runway there, for the next several years. Okay, thanks. That's helpful. Just you mentioned, you know, international markets, emerging markets. I wanted to ask, can you just remind us what you're doing in some of the emerging markets like China, Brazil, et cetera? Are you in any of those markets right now? Is there an opportunity if you're not to enter them? Yeah. We have a strong business in Brazil. certainly was as almost all of our markets internationally, but maybe more so than others, Brazil impacted by COVID and really nice recovery opportunity for us there. we do well there. We have a lot more products that we can get in and then get approved in Brazil, that's a growth opportunity. at this stage, frankly, with the volume of growth opportunities that we have right in front of us right now, it's been difficult for us to contemplate, you know, an aggressive push into markets like China and India. there is opportunity there. We do have a lot of inbound requests, both from surgeons as well as from distributors who would like to carry products. I think we've got our hands full with another enough things that we know a lot about that are right in front of us that is, are a matter of execution for us to continue our growth. In the out years, those markets will really remain potential long-term sources of growth for us. Yeah, with that said, I think MDO is starting to. That's a great point. into India. Yeah. I do think that that's an easier entry point. Yeah. Great point. into some of these countries. Just starting to dabble in India on the specialty bracing side of things, but we have nothing in China right now. Okay, got it. Makes sense. Thank you. Thanks, Mike. Thank you. Our next question comes from David Turkaly with JMP Securities. Your line is open. Thanks. Good morning. I was wondering, Fred, if you might quantify the dollar amount of the gross margin impact, 'cause I think you said that you would still expect 23 to wind up where 22 was, which I think is like, you know, again, around 74%. I wanna make sure that's true. Then if you could give that dollar amount, that would be helpful. I think the comment was, in the fourth quarter, gross margin was 68.5%, which was lower than last year. That reduction between the two years in the fourth quarter, versus the 72.9% we saw in the fourth quarter of 2021. That reduced gross margin rate is probably half of that reduction is from the higher set sales at zero cost, and the other half of it is from the FIREFLY. Okay. the fair value adjustment to $26 million, what was that for? That was in the third quarter related to the ApiFix. We updated the model, and our third-party valuation firm sent us a new accretion model, which changed the accretion on ApiFix. As you may recall, we have a system sales payment out, an earn-out payment based on sales in year four, which is April of 2024. That adjustment was a favorable adjustment in the third quarter of 2022. Okay. Then last, the $25 million in sets. I think in the past you'd said some of the new acquisitions, maybe before MD Orthopaedics, maybe ApiFix and Orthex had sort of a different investment needed. The $25 million that you're forecasting this year, I guess, any comments or color on how maybe the newer products are a component of that or what's core versus what's new, or how maybe MDO and Pega Medical compare to the other acquisitions you've done from a set standpoint? Absolutely. The benefit of MDO is that they have no consign. That specialty bracing business can grow very aggressively without us deploying more and more capital as we are on some of the legacy businesses. The Pega side, I would say, is more similar. Although they have a high return on their sets being deployed, it's similar to the legacy business. We are deploying capital on the Pega side of the business in 23 and would expect to do that for years to come. In that 25 is definitely some efficiencies from no capital for MDO growth, ApiFix growing at tremendously efficient capital, and as well, you mentioned Orthex, which is probably our second highest product from an efficiency standpoint. There is the efficiencies built into that $25 million number for 2023, and we would expect that to probably increase, particularly as ApiFix continues to become a bigger part of the business. Thank you. Thank you. Thank you. Our next question comes from Sam Brodovsky with Truist. Your line is open. Hey, good morning. Thanks for taking the question. Just two quick ones to start on MDO and Pega. In terms of the cadence of growth, I mean, should we expect those businesses to follow the broader company seasonality in 2023, or can growth start to pick up a little more and maybe look a little off from that? Then between the two businesses, should we expect fairly similar growth rates for both, or maybe MDO grows a little faster, given it's got about a quarter head start on Pega? Yeah. I would say that the MDO business, the seasonality of the MDO business is a little different than our traditional implant business. I believe there is some seasonality there, but it's not a lot. That should hopefully, as that business grows, start to flatten our seasonality a bit. Certainly, it's not big enough at this stage to have that big of an impact overall, but over the course of the next several years as it grows, it'll flatten that seasonality some. Pega is very similar in terms of its seasonality, although it may be a little bit flatter, because, you know, it's a trauma and limb deformity product, it's not as impacted obviously what we see in the big summer scoliosis selling season. I think we expect both of those businesses to grow at similar rates, again, north of 20%, but kind of similar rates. Some of this because there has not been any growth in these businesses for the last bit, will be predicated on, as Fred said, when some of this Pega Medical inventory hits the shelves, as well as these businesses haven't really been prolific in terms of their new product launches. We do expect for the first time, both of these businesses to launch new products in 2023, expect those moments to potentially drive increasing revenue as well. Hope that answers your question. I think, you know, both growing at similar types of rates throughout the year, and some of that is indexed by when we get new products and inventory to the field. Got it. That's helpful. Thanks, Dave. On 7D, you'd mentioned that contributed well in four Q. Can you just maybe quantify that a little bit at all and how much that plays into expectations for the scoliosis business in 2023? Thanks. Yeah. We, we had a couple we've had a couple a couple additional deployments over the course of Q3 and early Q4. You know, we are, you know we look at those deployments and ultimately the contracted revenue that comes with those deployments as a source of growth for our scoliosis franchise. Scoliosis franchise historically grows faster, at least organically, it grows faster than the Trauma and Deformity business. We expect that again. Obviously, with more and more deployments of 7D that are leading to more market share gains with our RESPONSE fusion system, as well as the interaction that we see between the technologies of 7D, ApiFix, kind of making the entire scoliosis portfolio more credible to top KOLs. 7D has performed really well. Surgeons, one of the... We've seen such positive RESPONSE from surgeons and, you know, we have several of these units right now that we think are at the, you know, three, two, one yard line in terms of being able to get them across the goal line and start to enjoy revenue increases with RESPONSE as a result of their placement. Great. Thank you for taking the question. Thank you. There are no further questions at this time. I'd like to turn the call back over to David Bailey for closing remarks. Great. Thank you all for joining us on the call. Sorry for the technical difficulties here. Hopefully, it wasn't too disruptive and you could hear the answers to our questions. We appreciate your ongoing interest in OrthoPediatrics and look forward to reporting out on a successful 2023. Thank you. Thank you. This does conclude the program. You may now disconnect. Everyone, have a great day.