This was a real and dramatic shift in the way our patient demographic, the 30- to 60-year-old female in the U.S. behaved this year. And the headlines, you can see it all over the place. International travel, my wife was quite upset with me because I think we’re the only people we don’t know that didn’t go to Europe at least once this year. And it was bottled up, 4 years of pre-COVID plans that all came piling into this year once the COVID restrictions left, and that demographic behaved differently probably than other companies’ demographics.
Mark Hair: And I think the final piece on that, Drew, is we stayed really close to our surgeon customer base, and we continue to ask them these questions. So that’s what we’re telling you is also what we’re hearing from them. The same things.
Andrew Ranieri : And just on SpeedPlate for a moment, John. You were mentioning in your earlier remarks that this could appeal to a broader range of surgeons that believe in a different fixation system. So when you do think about SpeedPlates going into next year, will these surgeons adopt and also more broadly adopt the Treace portfolio, or do you expect them to be more siloed in one particular area of your portfolio with SpeedPlate?
John Treace: Yes, great question. It very quickly, in its limited availability, found its way to be the now preferred fixation system for Lapiplasty and Adductoplasty cases for the doctors that have access to it right now. And right now only a small fraction of our doctors have access to it. And we’re going to work on that quickly. But pretty quickly, we started hearing comments like, I can use this all over the foot. There are 5 or 6 other procedures that I do very commonly and routinely with your cases and outside of your cases where your rep can be there or not even have to be there. I love this fixation technology. This is a homerun, and this is the next big thing beyond nitinol technology. The combination of stability and strength of a titanium plate with the dynamic compression capabilities of a nitinol staple is an extremely attractive combination and it’s a unique and first and only from Treace again.
And that’s why we took the extra time with it to get it as great as it possibly could be. So when we go out there with this product, our customers say, wow, Lapiplasty, Adductoplasty first and only, and now another first and only awesome product from Treace. So I think it will be adopted over time more broadly across the foot-and-ankle outside of our core procedures.
Operator: Our next question comes to the line of Ryan Zimmerman with BTIG.
Ryan Zimmerman : Juggling a few calls tonight, so I apologize if this has been asked, guys. But I didn’t hear as much on your prepared remarks around your DTC investment priorities. And I’m just wondering how you think about that in the context of driving more operating profit or adjusted EBITDA, I should say, and leverage in the model and what needs to be done to continue to maintain your position, well-balancing maybe on some of those more profitability-oriented metrics.
John Treace: Ryan, it’s John. You’re right, we cut to the core on this script and prepared remarks and thought we’d follow up with a more detailed DTC catchup in our Q4 call. But in a nutshell, several months ago we brought on a new head of marketing with strong expertise in consumer DTC, and he’s very quickly come in and been able to look at the programs we’re running, fast wins, ways to optimize them, reduce even our spend and get higher output. So we’re seeing some really great efficiencies on the DTC side. With less spend, we’re getting higher levels of deep patient engagement and customer contact through our website and surgeon locator and call center. So we’re really pleased with what’s going on here. We’re also, right now, very actively sponsoring the National Pickleball Championship down in Dallas. So if you’re watching ESPN, you may see some…
Ryan Zimmerman : I saw that, John. I saw that. As a budding pickleball player, thank you.
John Treace: Yes. Well, Nathan is very savvy and very quickly dialed in on that demographic, which is right up our wheelhouse and a very efficient, low-cost way to get a lot of exposure and impact. So these are the kinds of things that Nathan’s working on already, and I have to say 3, 4 months in, he’s really on a roll and he’s going to bring a lot of value to our DTC initiatives.
Mark Hair: And Ryan, I think you talked a little bit about profitability, and I don’t think — there was a portion in my prepared remarks that talked about a potential of adjusted EBITDA breakeven in 2024 and perhaps even positive cash flow in 2025, the following year. So we’ve definitely started seeing leverage on the P&L already. And for the full year 2023, we continue to expect to show modest improvement in adjusted EBITDA compared to last year. So we expect operating leverage to continue in the coming quarters and into 2024.
Ryan Zimmerman : Got it. And again, apologize. I’m juggling a few calls, so if this question has been asked, just stop me. But John, as you think about the Hammertoe product and you’re expanding outward beyond Lapiplasty, has your view in terms of strategy changed at all to be more expansive in the foot-and-ankle space relative to maybe your prior views around really being focused on bunion and then adding some complementary products? it almost seems like you’re following this natural pathway, but I’m wondering if your aperture has opened up a bit as you get deeper into the bunion segment and look for new markets and opportunities for growth.
John Treace: No, great question and very timely. We have a high focus still on penetrating the bunion market, and we will continue to for future years. That is our sweet spot. That’s where we built our direct sales channel. That’s where we built our initial surgeon base and loyalty from. But now we’re in a wonderful position to leverage this large direct channel that we have and start to lay in some complementary product technologies that fit into the bunion case or overlap with the bunion case to a high degree. Our Sterile Osteotomes, our Hammertoe, our SpeedPlate that can provide fixation in other areas while they’re in the case that they didn’t want to use a plate. So you will continue to see us expand our footprint more broadly across the foot-and-ankle market but keep laser focus on penetrating the bunion market as our spearpoint and just building around that over time.
Operator: Our next question comes from the line of George Sellers with Stephens.
George Sellers: Could you maybe just help clarify the SpeedPlate launch commentary? Should we read into those comments as it’s still a more targeted rollout of SpeedPlate here in the fourth quarter with full commercialization in the first quarter of ’24? Or is the 1Q ’24 full commercialization comment referring to gen-2 SpeedPlate? And then how should we think about that relative to Micro launching this quarter?
John Treace: Sure. So, SpeedPlate, the only SpeedPlate we will market is the gen-2 SpeedPlate, just to clarify that. I know it is a little confusing. That is the refined product that we’ve decided to build large supplies of. We will be ramping our production levels as we go throughout this quarter and then achieving full market availability within the first quarter. So we’re working very hard with our vendors to get this done quickly. Just to clarify, this is not a supply chain issue. This is a change in the product configuration that we decided to make, and we had to work with our vendors to figure out how to get it achieved quickly and try not to lose too much of our revenue trajectory that we had planned for the SpeedPlate platform.
