Thank you for standing by, and welcome to the SeaSpine 2022 second quarter financial results conference call. At this time, all participants are on listen only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question at that time, please press Star one one on your touchtone telephone. As a reminder, today's conference call is being recorded. I will now turn the conference over to your host, Ms. Leigh Salvo, with investor relations. Please go ahead. Thank you for participating in today's call. Joining me from SeaSpine is CEO Keith Valentine and COO and CFO John Bostjancic. Earlier today, SeaSpine released full financial results for the second quarter ended June 30, 2022. During this conference call, we will make forward-looking statements within the meaning of the securities laws in regard to our business strategy, expectations and plans, our objectives for future operations and our future financial results and condition. All statements other than statements of historical fact are forward-looking statements. Such statements may include words such as believe, could, would, will, plan, intend, and similar expressions. You are cautioned not to place undue reliance on forward-looking statements which are only predictions and reflect our beliefs based on current information and speak only as of today, August 2, 2022. For a description of risks and uncertainties that could cause material differences between our actual results and those stated or implied by the forward-looking statements, please see our news releases and periodic filings with the Securities and Exchange Commission, which are available on our corporate website www.seaspine.com and www.sec.gov. Our discussion today will also include certain financial measures such as adjusted gross margin and adjusted EBITDA loss that are not calculated in accordance with generally accepted accounting principles or GAAP. Management believes that the presentation of these non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to the company's results of operations. These non-GAAP financial measures should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are provided in the tables accompanying the press release we issued today. I will now turn the call over to Keith Valentine. Keith. Thank you, Leigh. Good afternoon and thank you all for joining us. Our second quarter results surpassed expectations despite some nominal disruptions from hospital staffing challenges throughout the quarter that were widely experienced throughout the industry. We successfully navigated these sporadic headwinds with our surgeon customers and distributor partners to deliver outstanding revenue growth and gross margin expansion. On the innovation front, we've fully launched seven new products and systems so far this year, including three significant spinal implant systems since our first quarter earnings call. An increasingly more complete spinal implants and orthobiologics product offering, combined with our 7D enabling technology platform, is helping attract many distributors from our large competitors to partner with SeaSpine, a few of whom we've already fully onboarded. These groups, along with those we're in the process of onboarding, are expected to generate even more momentum as we move further into the second half of the year. Based on all of this, we have confidence in our decision to raise full-year 2022 revenue guidance to a range of $234 million-$236 million, representing year-over-year growth of 22%-23%. In the second quarter, we grew total revenue 19% over the prior year period to $56.3 million. In the US, where we generate approximately 90% of our total revenue, we saw revenue increase 16%, reaching $49.5 million. International revenue grew 39% to $6.8 million. As I noted earlier, we continue to expand our product portfolio to address our surgeon customers' needs and attract larger distributors with the recent full commercial launch of three products and systems. This include WaveForm C, a 3D-printed cervical interbody, and WaveForm TO, a 3D-printed lumbar interbody, both of which utilize our innovative WaveForm 3D technology to deliver a highly porous and yet robust interbody solution with a design intended to optimize subsidence resistance, implant stiffness, and orthobiologics packability while maintaining radiographic visualization during intraoperative and postoperative imaging. The Meridian anterior lumbar interbody system featuring the Reef A interbody. The full launch of Meridian has been one of the most eagerly anticipated launches in recent memory for SeaSpine, as well as our distributor partners and surgeon customers. Meridian replaces our legacy ALIF system that offered only three standalone options without supplemental fixation. Meridian leverages the success of our flagship Shoreline modular anterior cervical system by featuring multiple true profile plating options to provide intraoperative flexibility from the simplest case to the most complex reconstruction and stabilization. Collectively, these three products and systems address market segments in excess of $900 million in the US alone. Turning to 7D Surgical, we generate $2.2 million of enabling technology revenue in the second quarter of 2022 with the placement of six units all via capital sale, and further increased our pipeline for earn-out opportunities in the US to the highest levels we've seen so far. We are very optimistic that we'll close multiple earn-out opportunities in the third quarter and add to the nearly $2 million of annual revenue commitments from previous earn-out placements. Additionally, in terms of non-contractual revenue pull-through of our spinal implants and orthobiologics products, we are seeing a revenue increase six months out in more than half of those accounts that purchased FLASH navigation systems via capital sale. The pipeline remains robust and the combined sales teams are working together to generate cross-selling opportunities across all portfolios. Before handing off the call to John, I would like to conclude with this. Although we did experience and continue to expect minor headwinds from hospital staffing challenges, these issues appear to be caused by the same limited labor resources experienced across many industries. We had a great second quarter, and I believe we've reached a turning point with respect to expanding our gross margins, which is a critical milestone on our pathway to profitability. These strong results are the product of our unwavering commitment to innovation despite all the challenges that COVID threw at us and our industry over the past two years. We would not have achieved these results without the trust and confidence of our investors delivering the growth capital needed to enable these positive results and securing even stronger future for SeaSpine. Now I'll turn the call over to John for more detail on our financials and our financial outlook. I will wrap up. John? Thanks, Keith, and good afternoon, everyone. As Keith noted earlier, total revenue for the second quarter of 2022 was $56.3 million, a 19% increase over the prior year. In the U.S., we posted 16% growth to $49.5 million. International revenue increased by 39% to $6.8 million. U.S. spinal implant and enabling technologies revenue in the second quarter increased 17% to $25 million, with the 7D FLASH navigation platform contributing $1.1 million of revenue. Products launched or enhanced via line extensions within the past 5 years continued to fuel revenue growth and drive market share gains and accounted for 74% of U.S. spinal implant revenue. This continues to be an encouraging indicator for sustained growth throughout 2022 and beyond. US orthobiologics revenue in the second quarter increased 16% to $24.5 million and continues to be driven by growth in the OsteoStrand Plus fibers-based DBM product line. Sales of products launched within the past five years accounted for 43% of US orthobiologics revenue. Our US spinal implant surgery volume 21%, while revenue per case increased mid-single digits compared to prior year. Utilization of our spinal implant systems and orthobiologics products increased to 2.2 per procedure in the second quarter of 2022 compared to 2.1 a year ago. We experienced low single-digit average price declines in both the spinal implants and orthobiologics portfolios, consistent with prior years. International revenue in the second quarter of 2022 totaled $6.8 million, a 39% increase compared to the prior year, and included $1.1 million of enabling technologies capital sales revenue. Our continued focus on margin improvement yielded GAAP gross margin for the second quarter of 2022 of 66% compared to 63.2% for the second quarter of 2021. Adjusted gross margin also improved to 67.9% for the second quarter of 2022 compared to 64.5% for the second quarter of 2021. The increase in GAAP and adjusted gross margin was primarily due to lower excess and obsolete inventory charges and production efficiencies gained at our Irvine manufacturing facility. Operating expenses for the second quarter of 2022 totaled $51.7 million, a $10.6 million increase compared to the second quarter of 2021, and of which $2.2 million of that increase related to operating expenses directly attributable to 7D Surgical. The increase in operating expenses was driven primarily by $7.6 million in higher selling and marketing expenses, the substantial majority of which related to the 7D Surgical sales and marketing organization and increased commissions on higher sales. $800,000 in higher research and development expenses, which was entirely attributable to 7D Surgical, and $2.2 million in higher general and administrative expenses, which was attributable to higher headcount related expenses and an increase in information technology costs associated with the implementation of a new inventory management system earlier this year. That system is expected to improve our ability to manage our spinal implant inventory and sets more efficiently in the future. Net loss for the second quarter of 2022 was $13.9 million compared to a net loss of $5.2 million for the second quarter of 2021. Net loss in the second quarter of 2021 included the $6.2 million non-operating benefit from the forgiveness of our Paycheck Protection Program loan. Adjusted EBITDA loss for the second quarter of 2022 was $4.7 million compared to a loss of $3.5 million for the second quarter of 2021. The increase in adjusted EBITDA loss was entirely the result of the dilutive impact of 7D Surgical on the current quarter results. Adjusted EBITDA loss is a non-GAAP financial measure that we believe provides valuable information on our operating results that facilitates comparability of our core operating performance from period to period and against other companies in our industry. A reconciliation of GAAP net loss to adjusted EBITDA loss was presented in the financial tables of the press release we issued this afternoon. Cash and cash equivalents at June 30, 2022 totaled $66.1 million and included $25 million of outstanding borrowings under our credit facility. In July, we announced that we extended the credit facility by three years through July 2025 and expanded the total potential borrowing capacity to $40 million. Our free cash flow burn, which includes operating cash flows and purchases of property and equipment, was $15.9 million for the second quarter of 2022 and $40.2 million year-to-date through June 30, 2022. This relatively heavy spend is in line with a large amount of inventory and set build capital expenditures we forecasted for the first half of the year to support the recent and upcoming full launches to fulfill the final European spinal implant stocking orders and our aggressive U.S. revenue growth expectations for the full year. Turning to our financial outlook for 2022, as Keith noted earlier, we now expect full year 2022 revenue to be in the range of $234 million-$236 million, which includes $10.5 million-$11 million of total anticipated revenue based on current FX rates from the final European spinal implants stocking orders and for U.S. spinal implants growth to exceed 20%. This compares to previous revenue guidance of $231 million-$235 million. With the benefit of those European stocking orders, we are anticipating year-over-year revenue growth of 40%-41% for the third quarter. Therefore, excluding the impact of the absence of any European spinal implants revenue in the fourth quarter, our annual guidance implies mid- to high-teens year-over-year growth for the fourth quarter for the rest of the business. Moving down the P&L and notwithstanding the temporary impact on the third quarter of the relatively low gross margin European final stocking orders, we still anticipate generating 150-200 basis points of adjusted gross margin expansion for the full year 2022 compared to the 63.5% we reported for 2021, and to reduce our adjusted EBITDA loss by 15%-20% compared to the $22.9 million we reported in 2021. We expect to generate these operating improvements through a combination of more efficient revenue growth fueled by the continued onboarding of more exclusive and high-quality distributor partners from the robust cadence of transformative product launches, from further market penetration of the unique 7D FLASH technology, and from higher adjusted gross margins through an increasingly favorable sales mix. Our expectation for free cash flow burn in excess of $60 million for 2022 remains the same as we reinvest that P&L leverage in the more than $40 million of additional inventory and spinal implant sets we committed to purchase to support our product launches and the onboarding of transformative distributor partners and to position ourselves for the sustained 15%-18% long-term revenue growth rates we committed to earlier this year. To date, we've received and paid nearly $30 million of that significant investment. Contemplated within that 2022 free cash flow burn guidance is the negative impact this year from the extended payment terms we provided to our European distribution partners for those final spinal implant stocking orders, and for which we'll see a reciprocal cash flow benefit from in 2023. Finally, despite the supply chain challenges affecting many markets in the industry these days, we remain on track to receive and deploy the more than $10 million of additional planned sets and inventory on time. We remain in constant communication with our suppliers and are not seeing any meaningful disruptions in our supply chain that would change our expectations for the timely receipt and deployment of these assets that will be so critical to our future growth plans. At this point, I'd like to turn the call back over to Keith for closing comments. Thank you, John. We are at a period where our largest competitors saw a loss in market share or experienced a slowdown in revenue growth, whether from ongoing supply chain challenges, higher than typical summer vacations or other transitory and COVID-related factors. However, SeaSpine is gaining momentum. We are raising our revenue outlook for the rest of this year and are on track to deliver the meaningful gross margin and P&L leverage we committed to for 2022. We are winning and taking market share with new and existing surgeons and distributors on the strength of our past successes, as well as our continued commitment to acquiring or commercializing innovative and differentiated technologies and complete procedural solutions. We enjoyed for years being called the best-kept secret in spine by visiting surgeons and new distributors coming to our offices. That time is gone. The secret is out as we continue to invest aggressively in growth and to relentlessly execute on our strategy to be the most innovative and customer-focused spine company. With that, thank you all for your time and more importantly, your support. We will now open it up to questions. Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star one one on your touchtone telephone. Again, to ask a question, please press star one one. One moment for our first question. Our first question comes from Matthew O'Brien of Piper Sandler. Your line is open. This is still on for Matt. Can you hear me all right? Hey, Matt. How are you? Congrats on the quarter, and thanks for taking my questions. Just from what I see, you know, 7D seemed to come in a bit sluggish. Can you talk about the capital environment right now and the impact it has on your business as a result? Is there any line of sight into, you know, how this capital environment will play out in the back half of this year and into 2023? Thank you. Yeah. I think the progress we're seeing on the earn-outs, you know, may or may not be indicative of some of the capital constraints that we're seeing with other companies reporting. We're not seeing any, you know, fundamental shift in the outlook for capital sales for the full year, or earn-outs. I mean, you know, if anything, we're seeing a greater percentage of earn-outs showing up in the pipeline, but that's kind of what we anticipated as we got our distributor network working with the 7D sales force and, you know, really leveraging the spinal implants and orthobiologics portfolio. Obviously, we don't have a huge slice of the market, so it's tough for us to really, you know, say we're a barometer, but we're not seeing any fundamental changes, like I said, in the outlook, for the year. If anything, there is capital constraints in the broader market, it probably plays well for the earn-out opportunities which produce the longer term revenue opportunities for us anyway. Thank you. Just a quick one here on gross margin. You know, adjusted gross margins of 67.9%, you know, certainly above our estimates. What's the durability like here? I appreciate you reiterating the 150-200 basis points of leverage. But what's your, you know, cadence expectations for the second half? Thank you. Yeah. With the large stocking orders for the spinal implants in Europe coming in the third quarter, that's relatively low gross margin. We will see a dip in the third quarter gross margin solely because of the impact of that low gross margin final stocking orders. Then we expect it to pick back up in the fourth quarter when we don't have that low gross margin burden from European spinal implants revenue. Yeah, we wanted to reiterate the expectations for the full year to deliver that gross margin expansion, even in the face of the lower gross margin of, you know, roughly $10 million of relatively low gross margin for that European business. It will be a dip in the third quarter because of that, but we expect it to pick back up, to, you know, kind of current rates as we get into the fourth quarter and beyond. All right. Thank you. I'll hop back in the queue, but, congrats again on the quarter. Thanks. Thank you. Our next question comes from Kyle Rose at Cowen. Rose at Cowen. Your line is open. Kyle Rose, your line is open. Great. Thank you for taking the questions. You're breaking up a little bit there, so hopefully you can hear me fine. Just wanted to think about the 7D commentary, just about, you know, the placements in the quarter and then, you know, the trends towards earn-outs and just how we should think about that layering into the spinal implants business, specifically from an earn-out perspective, whether it's internationally or in the U.S. How should we think about that from a modeling perspective there? Yeah. The earn-outs are really a U.S. transaction. There's not much opportunity for us to do anything outside the U.S. because we're selling to our stocking distributors. They may do earn-outs themselves, but for us, all the upside opportunity for earn-out is in the U.S. I suspect it'll be heavy on spinal implants, although we are seeing some interest in the orthobiologics is sort of the catalyst for the earn-out. Most likely that'll be triggering higher revenue on the spinal implant side. The $2 million of annualized commitments we have, the units we've got in the pipeline that we expect to go to an earn-out in the third quarter, in the fourth quarter is kind of what gives us the confidence to say we expect spinal implants revenue growth in the U.S. to be above 20% for the year. Because one, we're taking market share, right? We're seeing growth from bringing on new distribution, existing distributors going deeper with surgeons and bringing on new surgeons. Also just the clarity we're seeing from the earn-out commitments we already have and those we expect to close in the third quarter because those will be the ones that make an impact in the fourth quarter. Anything we close in the fourth quarter probably won't be a significant driver. It's part of what gives us the confidence to raise our revenue guidance is what we anticipate generating revenue from those earn-outs, mostly on the spinal implant side. Okay, that's helpful. You know, Keith, you talked about a lot about, you know, the commercial channel and just some of, you know, bringing on onboard new distributors and as well as, you know, getting ready to bring them on. Maybe just help us understand, you know, what's different about these distributors than some of them that you've brought on in the past, and kind of just frame out what that, you know, pure feet on the street opportunity looks like from upgrading those distributors. Yeah. What's a little bit different is the size and market share opportunity that we have with bringing aboard some of these new distributors. There's been a balancing act, if you will, between when we can bring them aboard, making sure that we have enough inventory, we have the investment in sets. A lot of the new products that we talked about that we're launching were key in making sure they were comfortable transitioning, meaning the products fit nicely into the portfolio, for their surgeons and their surgeons' needs. It's different in the sense that we're investing ahead. We're making the right investments and inventory to bring them over and to make sure that we can satisfy the demand. A little bit different than previous because a lot of our transitions before we had expected it to be a slower ramp. These distributors, we are anticipating a faster ramp in how they're able to, you know, go after the market. Okay, great. I'm gonna squeeze one last. Sorry. Thank you. Our next question comes from Ryan Zimmerman, BTIG. Your line is open. Can you put Kyle back in the queue? It sounded like he had another. Sorry, operator, can you put Kyle back in the queue? It sounded like he had another question. Can you Yes. Okay. Ryan's line is open. Kyle, can you just press Star one one for me, please? Sorry to cut him off there. He'll be fine. That's all right. You enjoyed Ryan. Let me ask a few questions, guys. Thanks for taking my questions. I wanna ask about, Keith, really the market sentiment and just trends into July and August. I mean, there's been a lot of commentary, you know, from other companies so far in earnings season about momentum in early, you know, in March and then April. You know, we did hear some commentary today on a call about, you know, things kind of slowing a little bit into July. Love to get your sense of the market into July and August. That comment was just related to joint recon, large joint recon, just to be clear. It could be very different in spine. I have a follow-up. Yeah. I think we saw, as we mentioned, a little bit in the script, that, you know, there was some spottiness to the quarter. You know, there was signs of real strength as we kicked off, and then I think we saw some, you know, not concerns, but just light shifts in May, June with a strong close. I think what we're seeing is a number of factors that like, at least for us, we know that in our support areas around the United States, there was commentary about challenges with OR staff in certain areas. There was also even challenges with clinicians themselves coming down with COVID and being out of surgery for a week or so. You know, I think it's individualized. We didn't see anything that I would say was concerning from a trend perspective, more probably just unique to our business and our coverage and our where our market share sits across the United States. As you look into the third quarter, you know, we anticipate something similar. There's obviously vacationing schedules. There's gonna be still certain areas that have more staffing challenges than others. We generally and genuinely feel that the coverage across the United States will be able to accommodate those ebbs and flows. I think the sentiment you're hearing is similar to what we're seeing. We may be just in different pockets for some of it. That's fair. I appreciate that, Keith. You know, John, when I think about the investments in sets, this obviously significant amount, and you've already purchased a lot. Everything's on time, which is really great to hear given the supply chain environment. When do we see the impact of those spinal implant sets really having a material impact on growth? And as you think about the second part of this question, as you think about the distributors that you're bringing on board, are you satisfying all their capacity? And what I mean by that is, you know, do we expect to see more investments next year to meet the demands and the capacity of the new distributors you've brought on this year? Thanks for taking the questions, guys. Yep, sure. A couple ways to look at that. The investments we've made in the first half, you know, most of those have been to support new product launches, like the two WaveForm footprints that are out, Explorer TO Expandable Interbody. We just announced Meridian, which is, you know, probably one of the most anticipated launches in SeaSpine history. Those are getting deployed now and should have a meaningful impact on revenue in the second half of the year. Because to kind of, you know, tie that in with the distributors we're onboarding, in a lot of cases, those distributors are not gonna utilize the sets we park in their territory very efficiently for the first month or two as they're ramping up. What we're careful to do is make sure we put more than enough sets in those territories so that they've got comfort, they can grow their business as fast as possible without risk of missing a surgery. There's typically a two- or three-month lag between when we deploy a set, particularly for a new launch or when we're onboarding a distributor, and when you'll see that start to generate revenue at efficient turns, which is, you know, a minimum of three surgeries per month. Because we're bringing on board transformative distributors who have confidence in our systems, we gotta make sure they've got enough sets, more than enough sets to get their business started and to convert as much as they can for those that are flipping everything. Others, it's a more staged and planned conversion, you know, surgeon by surgeon. Those you might not need to park as many sets, but we err on the side of parking more sets than are needed in those territories to give them the confidence they can turn on their business as fast as possible, and that's why you're gonna see a little bit of a lag. As we said, we've deployed about $30 million of that $40 million investment this year so far in the first half, $10 million more to go to support further product launches like the rest of the WaveForm footprints. But that's gonna generate revenue growth in the first half of next year because a lot of those sets will get deployed in the back half of this year and be in a position to be utilized much more efficiently next year and move the needle for revenue. Thank you. Thank you. Kyle Rose, your line is open. Back in. You know, we talked about the commercial team on the distributor hiring side. I just also wanted to see, you know, where you were at as far as, you know, building out the direct, you know, the small direct sales force, any commentary on the timing around there would be helpful. Thank you. Yeah. We kind of mapped out that that was gonna be a focus for us in the second half of the year. We are in and around decisions and driving that process right now. Obviously we're looking at a couple different ways. One is areas of white space that need the greatest help that we haven't been able to find the appropriate partners, and then the other is also ensuring that we're doing it as cost effective as possible. We'll be giving more updates on future calls on how progress is going on the direct side. Thank you. Yeah. Thank you. Our next question comes from Richard Newitter of Truist. Your line is open. Congrats on another great revenue performance. Thanks. Wanted to maybe just ask on gross margin, SG&A and R&D. The first question on gross margin. You know, should we think of Q2 as kind of a baseline as we think of where 2023 gross margin could be going, particularly considering that the mix is gonna be accretive without Europe next year? Then just on S&M on a percent basis, obviously it's, you know, increasing about in line with the revenue sequentially from last quarter. When should we start to see leverage there? Is that something that should materialize in the back half or is that more of 2023 event? R&D, how should we think about you guys getting your R&D margin up towards the target you laid out your analyst day at around 12%? I'd love to just hear any thoughts there. Thank you. Yep. Q2 gross margin I think, yes, is probably a good indicator of where we can be in 2023 because we won't be having the lower gross margin European spinal implants revenue. We think we're past the biggest risk of E&O, excess and obsolete inventory provisions related to new product launches. E&O is a recurring part of the business, right? That component will never go away. But I think we're past the greatest point of risk as it relates to new product launches. We continue to see efficiencies slow but steady at the Irvine manufacturing facility and with volumes going up and being able to grow our orthobiologics revenue, you know, more than 10%, 15%, 16% this quarter. We're gonna continue to get efficiencies out of that facility because of the fixed costs and the higher volumes, but also that team is implementing more efficient means to manufacture. As we outlined in that March analyst day, there's lots of levers to pull to get that margin and I think Q2 is pretty good indicator for where things could go in 2023. On the sales and marketing front and R&D, you know, the lack of leverage in sales and marketing, keep in mind, we had a full quarter of 7D sales and marketing Q2 this year, whereas we only had about a month in last year's Q2. A lot of that lack of leverage for sales and marketing is just the full quarter impact of 7D in the year-over-year comparison. On the R&D side, we expect it to be ramping up, particularly with 7D and some of the initiatives they're gonna be undertaking in the back half of the year. That'll be some heavier project spend that'll likely bump that rate up closer to, you know, what we expected for the full year guidance where we said 12% as 7D continues to accelerate their development programs to bring those, you know, next generation enhancements to market as fast as possible. Thank you, and congrats. Thanks. Thank you. Our next question comes from Jeffrey Cohen of Ladenburg. Your line is open. Well, just quickly wanted to ask about your purchasing cycles. I know you mentioned it's about a 6-9-month process, and I'm wondering if given the additional awareness, and Keith, I think you said the secret is out commentary like that. Are you seeing that this cycle is actually decreasing, especially when it's coupled with the fact that, relatively speaking, you're a much lower cost option? You talk about the lead time for with our suppliers? We missed the beginning. No, I'm sorry. I'm talking about the purchasing cycles for 7D. Okay. Yeah. There are a couple of things that I think we've tried to, you know, make clear over the past, and that is that there are a couple things that'll make it easier for 7D for us. One of them, obviously, is the price point on capital, but probably the more important one is as we work through with these hospitals and even ASCs on the kind of metrics for an earn-out. The earn-out is much more attractive. I mean, obviously there's a price point component to it, but I think there's also a flexibility of the reality that we don't have a great deal of market share in a number of the accounts that we're talking to about 7D. The shift in market share that needs to happen to justify the earn-out is an easier equation, if you will. That's why we've had success getting earn-outs in ASCs because ASC settings are sometimes the most challenged to participate in earn-out programs. Got it. Okay. Then of the systems sold in place this quarter, were they all into new accounts or were those any additional placements in existing accounts? It's a mix, but more so into existing accounts. The pipeline we're looking at is a lot of new accounts in both capital sales and earn-outs. Okay. Just like a quick housekeeping question for me, actually, technically for you, John. I heard you mention different payment terms for your EU distributors. Should we assume a little higher accounts receivable in the near term? Yes. Okay. All right. Perfect. Yeah. Thank you. Sure. Thank you. Our next question comes from Ross Osborn of Cantor. Your line is open. Good quarter, and thanks for taking my questions. Just looking at the 2Q, could you parcel out how much of growth was from new distribution agreements versus driving further penetration in existing accounts, for the portfolio outside of 7D? I don't have good metrics on the growth sources from new distributors versus existing distributors going deeper. Sorry. The good news is, we've talked about it in the past, the growth is predominantly coming from new distributors, but we're starting to see a shift of existing distributors going deeper and bringing our competitive reps into the distributorship and recruiting more surgeons to work with SeaSpine. I don't have exact metrics, but you know, anecdotally, the most of the growth is still coming from recently onboarded distributors. I think that'll shift in the near term. With some of the other larger distributors we've got in the pipeline that we anticipate onboarding, that can shift right back to the growth coming mostly from new distribution. Sorry, that's perhaps not the most helpful answer to be able to quantify it, but the good news is both of those sources of growth are alive and well. No, no, that's perfectly fine. I just one more on 7D for me. Do you see any increase in demand or at least new interest from ASCs and mid-size hospitals? Yes. It's both in capital sales and earn-outs, but. Yeah. I think that right now from an ASC perspective, a lot of our discussions and perspective opportunities, we're seeing an increase in interest. I think it goes back to what we mentioned earlier, that the economic equation for it is attractive, the ability to earn out is attractive, or if they do wanna do a capital purchase, it is more attractive than the competition. I think the other part too that bodes well is that they know that we're in the later stages of our MIS early launch, our alpha and beta, and now we're gonna be moving towards full launch. That has a great deal of excitement of the simplicity of our system being used in an MIS fashion. Great. Congrats on the quarter, and thanks for taking the question. Thank you. Thanks. Thank you. Our next question comes from Jason Wittes of Loop Capital. Your line is open. Witt here. First off, just to clarify, you mentioned the tool set and inventories. A lot of it was gonna hit at the end of the year and really kind of accelerate the first half of 2023. Is that correct? Did I hear that correctly or is it a bigger impact in 2022? No. The question we got asked was the timing of when the sets we're deploying this year are gonna impact revenue. You know, a lot of what we spent in the first half of the year, 30 of that $40 million investment was to support full commercial launches, and also some additional sets we're deploying. The back half of the year, it'll be a bit more balanced between just launching more of our high running sets, but still a meaningful investment in product launches because we still have WaveForm anterior and lateral to be fully launched. The Mariner adult deformity to be fully launched in the back half of the year. We were just talking about the timing of when those set deployments are expected to generate revenue growth. I was saying it's typically a couple of month lag because we wanna park those sets in a distributor's territory as they're converting business. We err on the side of putting too many sets in those regions because we wanna make sure they've got the confidence they can flip as much business as fast as possible. With that, we have the expectation those sets won't be as heavily utilized in the beginning as we anticipate later on as you know, those distributors ramp their revenue up. Hopefully that clarifies it. Yeah, that does. Thank you for the clarification. Maybe another clarification. I think you said that 7D was seeing something like 50% pull-through of implant products or just general products, including biologics. Is that- That was on- Yeah. Sure. That's on the non-contractual revenue. On the earn-outs, we talked about the $2 million of committed annual revenue we've got under the earn-outs. The other metric we gave was where we do a capital sale of a 7D unit, and there is no earn-out revenue commitment. In half of those capital sales, we're seeing those accounts increase their purchases of our spinal implants and orthobiologics. We just wanna give color that even the non-earn-outs are producing. The capital sales are producing upside revenue opportunities in spinal implants and orthobiologics. It makes sense, right? We've talked about how we're integrating our spinal implants to be the easiest to use with the 7D technology. While it'll always be an agnostic system, we of course want our spinal implants to be the easiest and most seamless to use with that technology. It, you know, logically, it flows that we'd expect to see some pull-through revenue of our implants and orthobiologics in those non-contractual capital sales. Okay. Thank you. You anticipated my full question. Thank you. On biologics, they're growing quite healthy. I would say way above market. It's almost double the market or triple the market. Are you surprised by that, those numbers? I know you do have some pretty significant new products. In terms of sustainability of this type of growth rate, how should we be thinking about it? Yeah. You know, it's a great question, Jason. We have been kind of messaging the past year and a half or more with a great deal, I think, of interesting data, some that has been even accepted to JBJS and very important publications. I think what we're seeing now is kind of that momentum shift of hospitals pushing back on expensive biologics, whether that's BMP or cellular technologies. The reality that cellular technologies more and more is being discussed, that what you're paying for is not an increase in performance. Further, that DBMs, especially the research that we continue to publish and continue to push forward, shows that high-powered newer DBMs with newer technology have the ability to not only be a great graft alternative, but also to be very cost-effective. I think what we're seeing is kind of the culmination of so much of that data finally getting absorbed and the marketplace accepting that it's a great alternative for their patients, in addition to having a nice cost savings for the hospital. Great. Thank you. I'll jump back in queue. Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press Star then one one on your touchtone telephone. Again, press Star one one on your touchtone telephone. One moment, please. I'm showing no further questions at this time. Let's turn the call back over to Keith Valentine, CEO, for any closing remarks. Again, thank you everyone for joining us this afternoon, and we look forward to updating you on results after the next quarter. Have a good afternoon and evening. Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.