Good afternoon and welcome to SI-BONE's First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder: This call is being recorded for replay purposes. I would now like to turn the call over to Saqib Iqbal, Senior Director of Investor Relations at SI-BONE, for a few introductory comments.

Thank you for participating in today's call. Joining me are Laura Francis, Chief Executive Officer; and Anshul Maheshwari, Chief Financial Officer. Earlier today, SI-BONE released financial results for the quarter ended March 31, 2024. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. These forward-looking statements are based on the company's current expectations and inherently involve risks and uncertainties. These risks include SI-BONE's ability to introduce and commercialize new products and indications, SI-BONE's ability to maintain favorable reimbursement for its products and procedures, changes in payer requirements for authorization of procedures involving SI-BONE's products, the impact of potential economic weakness on the ability and desire of patients to undergo elective procedures, SI-BONE's ability to manage risks to its supply chain, the impact of future capital requirements driven by new product introductions and risks to the continued renormalization of the health care operating environment. Other forward-looking statements include our examination of operating trends and our future financial expectations such as expectations for physician training and adoption, active physicians, new products and clinical trial enrollment; and are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our most recent Form 10-K filed with the Securities and Exchange Commission. During this call, management may also discuss certain non-GAAP measures, including the company's adjusted EBITDA results. For a reconciliation of these non-GAAP measures to GAAP accounting, please see the company's full earnings release issued earlier today. SI-BONE disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements whether because of new information, future events or otherwise [indiscernible] conference call contains time-sensitive information; and is accurate only as of the live broadcast today, [ May 6, 2024 ]. With that [indiscernible].

Thanks, Saqib. Good afternoon and thank you for joining us. I'm pleased with our solid first quarter results driven by continued robust procedure demand in the U.S. across all our target markets. We delivered $37.9 million in worldwide revenue, representing growth of 16% over the prior year period. I'm particularly impressed with our performance in the first quarter when you compare to typical industry seasonality trends and our stellar performance in the prior year. The demand momentum was also evident in our impressive physician engagement trends. In the first quarter, we maintained a near-record number of active U.S. physicians and completed a record-breaking number of new physician training. As we look at the rest of 2024, we remain enthusiastic about the revenue growth acceleration fueled by 3 key tailwinds: first, the continued growth in our physician base driven by the record level of engagement we're seeing; second, building on a strong success of iFuse-3D and expanding adoption of TORQ across all our call points; and third, the exciting opportunity to leverage the expanded family of granite implants with our active physician base to accelerate adoption within pelvic fixation and increase procedures per physician. In the first quarter, we received 510(k) clearance from the FDA for our 9.5-millimeter-diameter iFuse Bedrock Granite implant, with market-expanding indication for placement in the S1 pedicle and pediatric deformity. These are new but adjacent market opportunities for us. We launched this implant at the end of April with Dr. CJ Kleck, a key opinion leader at the University of Colorado; Dr. Ali Mesiwala, a surgeon who guided the development of our granite technology; and Dr. Ronald Lehman, a nationally recognized expert in the treatment of adult and pediatric spine conditions at Columbia University, utilizing both open- and closed-head options, performing the first cases in the country.…

Thanks, Laura. Good afternoon, everyone. My comments today will be focused on first quarter revenue growth, gross margin trends, productivity and liquidity. Additionally, all the comparisons provided will be versus the same period in the prior year unless noted otherwise. Starting with revenue growth. Our first quarter worldwide revenue was $37.9 million, representing growth of 16%. U.S. revenue also grew 16%, to $35.4 million, due to increasing U.S. procedure volumes, with our procedure ASP in the first quarter being relatively flat. International revenue in the first quarter was $2.4 million, representing 8% growth. Moving to gross margin and operating leverage. Our gross margin for the first quarter was 79%. The gross margin reflects the impact of product and procedure mix, [ higher freight ] driven by revenue growth as well as depreciation from deployment of additional instrument trays. Operating expenses were $41.9 million in the quarter, representing 10% growth. The increase was driven by higher commissions related to revenue growth, impact from stock-based compensation and research and development investments. The increase in operating expenses was also impacted by the timing of our global sales meeting which was held in the first quarter of this year versus the second quarter of last year. Our net loss improved by 2% to $10.9 million or $0.27 per diluted share. Net loss per diluted share for the first quarter of 2024 also reflects the increase in shares outstanding due to our follow-on common stock offering in May 2023. Our adjusted EBITDA loss in the first quarter was $4 million, which was nearly flat compared to the prior year period. Turning to liquidity. We exited the first quarter of 2024 with a robust balance sheet including $157.8 million in cash and marketable securities. We delivered 30% improvement in our net cash flow from operations. Given our strong liquidity position, our relatively asset-light business model and a clear line of sight to adjusted EBITDA breakeven, we have the financial resources to self-fund our long-term growth priorities going forward. Finally, moving to our updated outlook for 2024. Based on our first quarter results, we are increasing our 2024 worldwide revenue guidance. We now expect 2024 worldwide revenue of between $164 million and $166 million, implying year-over-year growth of approximately 18% to 20%. Considering the potential 2x operating leverage in the business, we expect significant adjusted EBITDA improvement for the full year 2024, putting us within reach of our adjusted EBITDA breakeven goal. With that, I will turn the call over to Laura.

Thanks, Anshul. Based on the momentum in the portfolio, we're set up to deliver a strong 2024. As we look beyond 2024, we're confident that the combination of our commercial footprint, differentiated portfolio across multiple target markets and planned new product launches in the coming years will allow us to continue delivering top-tier medical device revenue growth. With that, we're happy to take questions. Operator?

[Operator Instructions] Our first question comes from the line of Young Li of Jeff Co (sic) [ Jefferies ].

All right, great. I guess, to start, wanted to hear a little bit about the progress with INTRA since you launched, the early feedback from it. I mean it still sounds like TORQ is the focus for a lot of the interventionalists. And I guess I'm just kind of curious. Is the combined interventional portfolio opening doors to new physicians who weren't referring before? Is it expanding the market for you?

Yes, thanks for the question, Young. And we are pleased with what we're seeing with INTRA thus far. So we're still obviously very early in this journey, but we like the early results and how they're setting up. Especially from the perspective of our strategy, we wanted to engage a subset of interventionalists and get access to this discrete and untapped patient funnel. As you said, this is additive to our current sales with our surgeons, so we're pleased with the level of interventionalist engagement and their interest in being trained with TORQ as well as with INTRA. We're not planning to break down revenue by physician or procedure type, but what's impressive is the adoption trends of TORQ with interventionalists as they're being trained in the lateral technique. Within INTRA, we're still in the early days, and -- but we do believe that there's a subset of physicians who are going to be initially hesitant to use a metal implant. And so these physicians are going to be INTRA users, so we're positioned to be a preferred partner to this call point regardless of what their needs actually are. And as a market leader, we really felt a strong need to address this market. We have the best commercial sales force. We have unparalleled educational and advocacy infrastructure. We have a comprehensive product portfolio. And we've gotten clear feedback from interventionalists that SI-BONE is highly respected for our market leadership position. And we are particularly impressed by the large number of interventionalists who are already working with us or have begun the process of getting trained.

All right, great. That's very helpful. I guess, maybe to follow up, I wanted to ask about rep productivity. I think the territory managers are doing about $1.6 million. Before, you had a goal of $2 million plus. It's more of a milestone, not a ceiling. But wanted to hear a little bit about, as you get closer to that, $2-plus million range, what's the next milestone or target you think they can hit before maxing out. And also your agent base has increased a lot in recent quarters. Maybe thoughts on their contribution, so far, and adding more agents going forward.

Yes, yes. So we are extremely proud of the 26% growth that we had in trailing 12-month rep productivity, getting us up to the $1.6 million. And the commercial leadership team has done a really great job of leveraging hybrid commercial models here, so we have junior clinical support specialists that are working with our territory managers that help to identify new physicians as well as to cover cases. And then as you said, we've also added a significant number of third-party agents that are also selling the product and covering cases as well, so that really has helped us to grow our productivity in a significant way. So really 4 key drivers to that productivity. First is just the caliber of our increasingly seasoned sales force, complemented with these hybrid commercial models; secondly, our highly differentiated portfolio of solutions; third, the synergistic physician call point, which is allowing us to drive physician density; and then finally, the increase in field surgical capacity with the rollout of instruments and implants to reduce the logistical workflow. So in terms of where we're going, we -- as I said, our intention is to continue to grow over time to that $2 million per territory manager level. We do have a significant number of reps that are already selling in excess of $3 million per territory, and so that's been a guide for us. And in some of those particular territories, they're actually working with 2 clinical support specialists. In others, they're heavily leveraging third-party agents. And so those are just some of the ways that we're getting at this opportunity to continue to grow territory manager productivity. And they give us a lot of confidence that we can actually do more than where we're at currently, but overall we're going to continue to selectively add to our sales force and maybe exit the year a little -- with a little over 90 territory managers but remain focused on driving strong, sustainable and profitable growth. And we do expect that year-over-year sales force productivity to continue to improve in the year.

Our next question comes from the line of Craig Bijou of Bank of America Securities.

Congrats on a good start. Anshul, maybe for you, to start, wanted to talk about expectations for operating expenses growth; and then even some of your comments to the last question, Laura, on sales rep spend, so -- or adding sales reps and what the spend would be but would love to just kind of get your thoughts on operating expense growth for the rest of the year. And the comments on EBITDA, does that mean that we should or we could see EBITDA -- positive EBITDA in Q4 of this year? Is that something that's on the table?

Craig, thanks for the question. We're really pleased with how the quarter played out both on the top line and also on the leverage side. So just to provide some context: As I shared in my prepared remarks, the first quarter included the impact of our global sales meeting, the timing of that. You've got OpEx being a bit higher in the first quarter than you did prior year because of when the global sales meeting happened. And what we've said in our remarks also is we do expect to see 2x OpEx growth rate -- revenue growth rate being 2x OpEx growth rate, sorry, so what that would imply is, if you think about the midpoint of the guidance at about 19%, you're looking at OpEx growth of 9.5%. And it's primarily driven by the higher commission rates that you could earn because of the higher revenue and as well as some of the accounting on the stock-based side. So the leverage continues and we feel really good about that. Now in terms of adjusted EBITDA breakeven, look. We're early in the year. And as we've always articulated, our strategy is to just have our results speak for themselves and get there in terms of adjusted EBITDA breakeven time line. And as we go through the year, we'll be able to provide more information on the progress we're making towards that breakeven, but what I would leave you with is we're feeling really good about the trajectory that we're on. And we feel good about our ability to get to adjusted EBITDA breakeven and also very quickly to cash flow breakeven given our asset-light model.

Got it. And then maybe as a follow-up, I did want to talk about your guidance for the year. So you beat by roughly $1.5 million. I think that was the raise for the year. Obviously, good to see the raise, but maybe if you can just talk about is that conservatism to start the year. What do you see -- or how do you see the year progressing? And maybe a little bit on the cadence of revenue. And how should we think about that?

Yes, no, happy to take that as well, Craig. So if you look at the midpoint of the raise. The midpoint of the raise is about $1.5 million from the prior midpoint, which is pretty much what we did in Q1 in terms of the upside on our performance. It is still early in the year, so you're right. We just want to be thoughtful. We've got a lot of things that are going in our favor when you think about the number of physicians that we're training. It was a record number of physicians that had their first training; still seeing really good adoption on the surgeon side; seeing good traction on the interventional side and with granite 9.5 being sort of -- starting to roll out in the second quarter, more in June. And then so all of those things make us feel really good about the business but still coming out of the first quarter, so we want to be thoughtful. In terms of cadence, we do expect revenue growth to accelerate on a year-over-year basis in each of the quarters going forward. So even the typical seasonality that you see in the third quarter, our expectation is with the rollout of the granite 9.5 in June should help us offset some of that seasonality. So net-net, we feel really good about the setup that we have in the business coming out of the first quarter.

Our next question comes from the line of Matthew O'Brien of Piper Sandler.

Laura and Anshul, you've kind of touched on a couple of these here, but the 2-year stack growth rate in the U.S. was really strong, much better than we saw in the last 4 quarters -- or the 4 quarters of last year. So what is it specifically that's really driving that? Is it a function of those new reps or productivity amongst the new reps that's really driving that? And then the momentum there, again, seems really good with easier comps, kind of to Craig's question earlier. Is there anything you're factoring in that could disrupt some of that momentum? I don't know [ if it's those ] LCDs that are proposed or other things like that, that you're really worried about, but what would slow down some of that momentum that we really saw in Q1?

So Matt, thank you so much for highlighting that point. As you know, last year, we grew at 46% in the first quarter. And if you do your 2-year stack with the 16% growth, you're talking about a very strong quarter that we have here, so out of the gates, we really feel great about the way the year has started. And even if you think about historical seasonality trends as well as that tough comp, it was just a strong quarter across all of the key KPIs. And it is a continuation of the strong demand that we've seen over the last few quarters. So in the U.S., we saw robust demand across all our target markets and across all our call points. And it allowed us to deliver 17% procedure volume growth; and as well as maintaining a relatively stable ASP in the U.S.; near-record physician engagement with over 1,100 active U.S. users, up 16%; and then getting 510(k) clearance for granite 9.5, which is positioning us to build on granite momentum and further accelerate adoption within pelvic fixation. And then if you even just look beyond the strong top line drivers: We continued to see strong operating leverage with a 30% improvement in cash flow from operations versus a year ago, so -- but we're also continuing to invest in our growth priorities, as you can see from the different product introductions. So what we really wanted to do, thinking about kind of that longer-term trajectory. Given that we're just starting the year, what we wanted to do was to be thoughtful about our guidance but, as Anshul said, really expect to see continued acceleration of our growth rate throughout the year. We're not concerned on the LCD side that you mentioned. As I said, most of the adoption that we're seeing currently with interventional is with our TORQ product. And that product is coded to CPT code 27279, where there are no issues. We're not surprised at seeing some of the challenges with CPT code 27278 because it's early days on this right now, but we think that we have the products and solutions in order to address whatever needs our physicians have, whether they're surgeons or interventionalists. And given our market leadership position here and our incredible field force, we're really excited about where we can go for 2024.

And Matt, the only thing on the guidance side I would add. Like Laura said, we've got a lot of experience in the reimbursement side. And our strategy anticipated some of this reimbursement challenge, so we don't expect this to have any impact on the guidance we just said at the $164 million to $166 million.

Okay, appreciate those comments. And then as far as that LCD goes, is there -- the 278 one specifically. I'm obviously new to covering the name, but -- and you guys -- but just it seems to me like that would be more of a tailwind for your business because now everybody is going to transition to 279. They're going to use TORQ, and that's going to be better than INTRA for you. Is that a dynamic that we should potentially be thinking about later throughout this [indiscernible] 278?

Yes, you're correct that we have seen interest from interventionalists starting last year already in our procedure, the lateral procedure using TORQ. And we're continuing to see strong interest in that particular procedure, over allograft procedures currently, likely due to the uncertainty around reimbursement for 27278 versus 27279, so -- and given where we're at as the market leader in this particular space, we're able to provide a number of different products. We're able to provide the right education. We're able to provide the right support from a reimbursement perspective. And finally, our sales team with 85 territory managers and a few less clinical support specialists provides us with the opportunity to adequately support those interventionalists.

Our next question comes from the line of Drew Ranieri of Morgan Stanley.

Maybe just to start. Laura, you mentioned in your comments of maintaining near-record docs, physicians in the quarter. I know that there's a little nuance here. It's declining a bit sequentially, but can you just help us better understand maybe some of the dynamics that were happening here? And then what's embedded from a new doc add dynamic to reach your full year guidance? And I'll stop there for right now.

Yes. So we're actually very pleased with where we're at having over 1,100 docs. It is a few less than we had at the end of Q4. That is typical for us. Last year, I think, was the exception to that particular rule, but it is very typical from a seasonality perspective that we will have a few less doctors that are performing procedures in Q1 versus Q4. We're very pleased, however, and we did throw in a little bit of qualitative information, about training here. We had very strong training trends in the first quarter with a combination of surgeons as well as interventionalists as well. And that's a great forward-looking indicator for us. The active surgeon number is just the number of surgeons that performed at least one case in the quarter, but all of these even more forward-looking indicators such as training give us a lot of confidence in this acceleration into the next few quarters. Also with new product coming out as well, it gives us a lot of confidence too. So in particular if you think about granite 9.5 is targeting 100,000 degenerative spine procedures and the expectation that that's going to increase physician density in the future is exciting. And finally, with the addition of interventionalists, it's increased our target physician number from around 7,500 to around 12,000 in total, so gives us the opportunity to sell to additional physicians and also the opportunity to increase the number of procedures per physician per quarter.

Got it. Maybe just on the utilization side for a moment. And I mean it looks relatively stable quarter-over-quarter. Just piggybacking off of the granite 9.5 launch, just maybe help us better understand some of the utilization -- or some of the more utilization drivers, kind of what you're expecting. And I know that there's -- surgeons, physicians are using your products far in excess of that, but when do we really start to see like a real true inflection in utilization? I mean you're making great progress on the surgeon side, but when do we kind of see the utilization really kind of pick up?

Yes, yes. So we did talk a little bit about physician density. Now we're in these early innings of expanding our portfolio, but we are seeing a growing number of physicians that are performing multiple procedure types. We did mention specifically that, in the first quarter, around 15% of our active physicians performed more than one type of procedure, but once again if I go back to granite 9.5, granite 9.5 is targeting degenerative spine procedures. And that's the bread-and-butter procedure of our target surgeon and so the majority of their practice is going to be in that particular category. And we just had our first procedures with granite 9.5 completed in the month of April. And then we're rolling out and we expect an expanded rollout and launch in June, so I think you're going to start to see the impact in the second quarter, but I think you're going to really start to see that accelerate in the second half of the year. So very excited about the opportunity that's there with our surgeons and increasing our density there; and then with interventionalists, the opportunity to further increase the number of physicians, active physicians, we're working with quarter by quarter.

Our next question comes from the line of Dave Turkaly of Citizen JMP.

Laura, maybe one for you just on the competitive front. It seems like there was several sort of fast imitators on the core SI joint MIS market, and I'm just curious. Like what are you seeing in terms of TORQ or Bedrock Granite or some of these other sort of markets that you're kind of creating or targeting? But I don't know that I've seen the competition follows quickly. And I'm curious to see and get your thoughts on what's happening there and what you expect moving forward.

Yes. I think, Dave -- thanks for the question. And what we pride ourselves on is identifying unmet clinical needs and then developing differentiated products around those unmet clinical needs. And so we're identifying new markets, in some cases, so -- where they're -- typically a physician is not operating on a patient, performing a procedure on a patient. So SI joint fusion was in that category, and certainly sacral insufficiency fractures. Most of those cases are treated conservatively as well. So our goal is to either identify these unmet clinical needs and develop new solutions around them. Or to develop a significantly improved technique or product or both that addresses an unmet clinical need in granite really falls more into that category. And so we expect to see competition coming in. What they're doing is creating widgets basically and selling those into the market. And we think that, especially when you're in a market where there is an unmet clinical need, having the capabilities that we have are really important. So whether it's differentiated and patent-protected product; whether it is the level 1, level 2 clinical data that we have; reimbursement support, including the NTAP, for example, for granite. And then just taking an educational approach to the market as well, which really is supported by both our professional education group as well as by our sales force. Those are the ways that we really are leading in all of these markets. And we know that that's appreciated by physicians in these markets and that's what we're going to continue to do, so I think that we're going to keep disrupting the market. We've launched 2 products, so far, this year. We've talked about a third that we're going to launch by the end of the year. You're going to continue to see us innovate and grow and utilize these competitive advantages that we have in order to build these markets, treat these patients, support the physicians and build the company.

Great. And then I think you even mentioned ASPs. I think you said they were flattish, but given that differentiation you're talking about and what we've seen from some of your peers, I'm just curious. I mean, is there an opportunity for price increases? I know we've kind of modeled it declining over time, but you seem to have some things that are pretty unique. And I'm just curious as you look ahead. Do you think there's opportunity potentially for price? Or is that something we shouldn't think about?

Yes. So Dave, this is Anshul. Thanks for the question. In terms of the ASP, when you think about the opportunity that's ahead of us, we've got almost 0.5 million annual target procedures that we're going after. And so there's a huge opportunity, so for us, we're focused on market development. We maintain ASPs that allow us to maintain our attractive gross margins so that we can continue to reinvest in the business from an R&D standpoint. This is something Tony and team review on a very regular basis on how to make sure we can manage the ASP alongside driving adoption. We feel good about that. Our ASP trending generally is based on the procedure mix versus a price erosion to some extent. When you're doing a deformity procedure using 4 implants versus a degen procedure using 3 -- versus SI joint fusion, you're using 3. So those things can have an impact, but overall, from a per-implant ASP, we tend to be pretty disciplined on holding that.

Our next question comes from the line of Caitlin Cronin of Canaccord Genuity.

Congrats on a great quarter. Just to start with the training: You mentioned a record number of docs with first training this quarter. How many of those were interventionalists? And just thoughts on, given the uptake and interest of TORQ and the lateral trajectory for those interventionalists, would you start thinking about training them in 3D as well.

Yes, thanks for the question, Caitlin. So yes, we are excited about the record number of first trainings that we saw. And there certainly was heightened interest from interventionalists during the quarter. And that definitely was a contributor to the number of first trainings, but we also saw strong surgeon interest and demand for being trained across our procedures. So pelvic fixation in particular, with the knowledge that granite 9.5 had been cleared and was imminent was certainly a driver as well; and then some of the work that we're doing on the trauma side too. So it's really across the board that we actually saw that interest -- and then remind me of the second part of the question.

Yes, no, just any thoughts given kind of the uptake of TORQ and the lateral trajectory for those interventionalists that we're training. Would you think to start training them in 3D at some point?

So we're not. TORQ really has been the product of choice for those interventionalists that are interested in the lateral technique. The iFuse-3D procedure falls into a category that I would call more orthopedic in nature, so that's not a product that interventionalists are naturally gravitating to. It is definitely a product. It's the gold standard product that's out there. It has the most clinical data around it. And we have some very loyal users of that particular product, but the interventionalists are actually a little bit surprised at the ease of use with TORQ and the technique and the outcomes that they're starting to see with this, some of the early interventionalists that are performing the procedure. So TORQ really, as it relates to the lateral technique, is the product of choice. And then there certainly are interventionalists right now that prefer a bone allograft product. And so that's the product that some of these interventionalists are at least thinking about before they get more comfortable with the lateral technique, but you mentioned iFuse-3D. And as I said, there's we have the most data on that product. And when physicians think about us SI-BONE, they really do think about level 1 clinical evidence and level 2 clinical evidence. And so we have one study called the SALLY study which was evaluating iFuse-3D, and we expect to see the 5-year SALLY study results coming up in the second half of this year. So we're continuing to work closely with our portfolio of products, whether it's iFuse-3D, with SALLY; whether it's TORQ, with the STACI study or with the SAFFRON study; and then granite and the Bedrock technique, with our SILVIA study, with our PAULA study. We're continuing to really focus on clinical data and being the market leader in this space.

Just jumping off of that really quickly. Any updates to the progress on the STACI or the SAFFRON studies?

Yes. I think you'll be seeing a little bit more here later this year. So enrollment in STACI is expected to be completed this summer, and the early results are very promising and exciting. And so the purpose of STACI was to provide post-market information on lateral minimally invasive SI joint fusion procedures performed with TORQ when performed by interventionalists, so it's going to give us more information on the interventional physicians performing lateral SI joint fusion procedures using our TORQ product. SAFFRON, you're going to actually expect to see some initial results that will be available later this year. So that will be in line with the launch of our new trauma product as well. You'll see some clinical data coming through as well as a new product as well. So those are a couple of things, in addition to SALLY, you can expect to see.

Our next question comes from the line of David Saxon of Needham & Company.

Congrats on the quarter. I wanted to follow up on a previous question around pricing. This is probably for Anshul. So pricing is tracking better than -- I think it's a low to mid-single-digit decline that's assumed in guidance, so is there anything that would cause pricing to get worse throughout the year? I don't know if it's the 9.5 launch. Or is that more of an area of conservatism as we think about the guidance?

Yes, Dave, thank you for the question. So when you think about the low end of the guidance, some of that conservatism on ASPs are reflected there. We haven't really changed our ASP expectations for the rest of the year, in the guidance. Now in terms of what could have an impact on the ASP, you're right. With the 9.5 launch, even though there is no change in price per implant, the potential for the shorter construct procedures using 2 implants, versus the deformity procedure using 4, could have an impact, but we think there's potential for upside on the ASP front as we progress through the year. But again, it's the first quarter. It's early in the year, so we think it's just prudent to hold some of that conservatism to see how it unfolds in the second quarter and the third quarter.

Okay, great. And then maybe for Laura. So the granite NTAP, I think that runs out next October, so how should we think about that as it relates to granite procedure volumes? How impactful has that NTAP been to granite adoption that you've seen over the last couple of years? And is there any way you can do work around like granite coding to preserve this premium facility fee or even a pro fee?

Yes. So the granite NTAP. We have approximately 18 more months left on the granite NTAP. It will go through October 1, 2025. And what we've been doing is looking at the utilization of the NTAP with Medicare, seeing strong utilization on that NTAP. And so what that's going to help us to do is to quantify the value of granite and pelvic fixation in these particular cases. And so right now we're looking at a number of different ways in order to make sure that the incremental payment continues after the NTAP is complete, so it could be with a new code, for example. Or it could potentially be with an increase in the existing code or pointing to a higher-value code. Those are all 3 different options that we have right now, but we're midway through this. We do think that reimbursement is important. We have always focused, as a company, on ensuring that we have covered lives across the United States. Us building the SI joint fusion market, when I started in 2015, there was no coverage. And now we have complete coverage. And SI-BONE and our clinical data was a very big part of the work in order to build that reimbursement for SI joint fusion, so I see granite and pelvic fixation in a similar way to that. And we expect to continue to focus on using our clinical data and as well as the health economic data in order to support incremental reimbursement for pelvic fixation with granite.

Our next question comes from the line of Sam Brodovsky of Truist Security.

Congrats on a good quarter, especially a solid EBITDA result. I'll just ask a quick one, to start, on gross margin a little bit above the high end of the guide for this year. So how should we think about that progressing through the year?

Yes. Sam, thanks for that question. On the gross margin side, it is still early in the year. And we're really pleased with how the quarter played out in terms of coming on sort of the high end of the gross margin range, but again we're just holding onto our guidance for 78% gross margin at this point, the key reason being we are going to put more surgical capacity out there, especially as we get into the second half of the year. And that might have a timing impact on gross margin, so we want to see how it plays out again in the first half of the year before we make any changes to the guidance there.

Got it. And then I'll just ask a bit of a broader one thinking more long term, but the 2:1 ratio rep growth to OpEx growth, is that something we should think about happening this year? Is that a consistent operating model we can think of the company being able to hold onto for a while here?

Sam, thanks a lot. I mean look. We haven't provided long-term guidance in terms of how OpEx leverage would work out. Our view is that top line growth is going to remain strong with all the tailwinds that we have in 2024. Plus, like we've talked about, we've got a pretty significant investment in R&D, so we expect new product launches to come out, so our focus on leverage is going to be more driven by how do we drive more product to the call point. How do we drive more density or more procedures per physician? And that should translate into sales force leverage. And like Laura said earlier, our next milestone is sort of getting to that $2 million, but we've got reps that do more than $2 million today with additional ancillary support, whether it's junior reps or coverage agents, so we think leverage will continue. We feel really good about that. We'll just stay with what we've provided for the year at sort of that 2x leverage, but we don't think it's the end of the leverage. We think it will continue at a pretty healthy clip going forward.

[Operator Instructions] Our next question comes from the line of Ross Osborn of Cantor Fitzgerald.

Just one. With regard to the smaller-diameter granite launch, would you [ just touch ] feedback or level of early adoption within the pediatric population?

Yes. We're actually excited about the expanded indications for granite 9.5, so -- and including pediatric deformity as well as in the S1 pedicle as well. So we have gotten inquiries from pediatric deformity surgeons that would actually like to use a smaller granite implant with their patients, and we think that granite 9.5 is going to be a potential solution for them. So we're happy to be able to address that particular need for those surgeons and for those patients, but the S1 pedicle opportunity is quite significant for us too. That's a significant part of the market that we're not addressing at this point in time and with our previous product. And so some of these newer surgeons that we talked about in our prepared remarks, they're starting to use the product already for that purpose. And then that's the second area of focus. And then the third is that we did get some feedback from surgeons that just said that the 10.5 or 11.5 product was just larger than what they wanted to use. Or they felt uncomfortable using stacked implants or 2 implants on both sides which provides both pelvic fixation and fusion. And so the smaller-diameter implant also provides an opportunity for surgeons who are currently using 2 implants, instead, to use 4 implants. So there's a lot of opportunity that's here with the granite 9.5 product, whether it's pediatric deformity, as you mentioned; whether it's the S1 trajectory that I talked about; or whether it's surgeons that previously felt that they needed a smaller implant; or finally those that have said, "I'd like to use 4, but I want something that's a little bit smaller." So great opportunity for us going forward; just getting started, just had those first few cases done in April; going to see some acceleration into May and June; and really excited about what we can do in the second half of the year.

Thank you. And showing no further questions at this time, I would now like to turn it over to Laura for closing comments.

I just wanted to say thank you for your participation in today's call. And we look forward to seeing you. Those of you that are going to be at the Bank of America health care conference, we will see you there. Thank you. Bye-bye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.