Good afternoon and welcome to SI-BONE's Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. We will 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 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 September 30, 2023. 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 are related 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, 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 re-normalization of the healthcare operating environment. Other forward-looking statements include our examination of operating trends, and our future financial expectations, such as expectations for surgeon training and adoption, active surgeons, 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. During this call, management may 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. 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 and Form 10-Q filed with the Securities and Exchange Commission. 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. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 6, 2023. With that, I'll turn the call over to Laura.

Thanks, Saqib. Good afternoon and thank you for joining us. I'm proud of our performance, as strengthening demand for our solutions allowed us to defy industry seasonality trends and deliver record worldwide revenue for the sixth consecutive quarter. In the third quarter of 2023, we generated worldwide revenue of $34 million, an increase of 29% compared to the third quarter of 2022. The quarterly result was led by record U.S. revenue of $32.3 million which represents U.S. revenue growth of 31% compared to the prior year period. This robust revenue growth also translated into continued improvement in adjusted EBITDA loss and cash outflow and moved us closer to our profitability and cash flow breakeven goals. We also achieved a major surgeon milestone in the third quarter with the number of active surgeons in the quarter exceeding 1,000 for the first time in the Company's history, performing nearly 3,900 procedures. Our confidence in the business is reflected in the updated 2023 revenue growth guidance of 28% to 29%. As we look toward 2024, with a market opportunity of nearly $0.5 million annual procedures, we're in a distinguished position to capitalize on what we believe to be prolonged demand for our expanding portfolio and deliver strong and consistent revenue growth. Before I discuss the progress across our key initiatives, I want to thank our employees for their focus and persistence to create this unique platform and for positioning us to deliver breakout growth. Your impeccable execution ensures we achieve our mission of helping thousands of patients rise up and reach for the stars. Now, let me provide an update on our key initiatives as we look to extend our leadership position and drive strong long-term growth. Starting with sales infrastructure. Our direct sales team is our biggest asset as we expand our product portfolio and surgeon base. Our revenue growth and operating leverage over the last several quarters are the outcome of the investments in our seasoned world-class commercial organization. At the end of the third quarter, our U.S. commercial organization was comprised of 83 quota-bearing territory managers. We complement our territory managers with clinical support specialists as well as a growing network of third-party sales agents for case coverage. We also selectively place instrument sets at high-volume hospitals to meet demand. This hybrid strategy allowed us to deliver nearly 30% average growth in both U.S. procedure volume, as well as U.S. active surgeon base over the last four quarters. This growth has translated into trailing 12-month average revenue per U.S. territory of over $1.5 million, representing a 38% productivity gain over the comparable trailing 12-month period. Moving on to surgeon engagement. We exited the third quarter with over 1,040 active U.S. surgeons, representing approximately 30% growth over the third quarter of 2022. This was the 11th consecutive quarter of double-digit year-over-year growth in our U.S. active surgeons. To put it in perspective, we had approximately 1,000 surgeons perform a procedure in all of 2021 and now we have a larger number of surgeons perform procedures in a quarter. We're proud of this milestone, which is the outcome of years of focus on driving surgeon awareness through education, building the best clinical evidence, and expanding our portfolio of solutions to address our surgeons' unmet needs. This elevated level of surgeon interest and engagement is a great forward-looking indicator and underscores the long-term growth trajectory of our business. In the third quarter, nearly half of the active surgeons added in the quarter performed at least one minimally invasive SI joint fusion procedure and in several instances they also performed a pelvic fixation or fragility fracture procedure. We expect our complementary portfolio to drive deeper engagement and increase procedures per surgeon over time. Turning to products and solutions, the U.S. procedure volume trends confirm that with iFuse 3D, iFuse-TORQ, and now iFuse Bedrock Granite, the value of our innovative, versatile, and complementary product portfolio has positioned us as the top choice for surgeons looking for sacropelvic solutions. iFuse-TORQ remains a key growth driver for us due to its expanded clearance covering SI joint dysfunction, trauma and adult deformity. iFuse-TORQ provides complementary technology to iFuse 3D for existing surgeons. It has also been a key driver of new surgeon engagement, as well as successful conversion of surgeons using competitive products when performing minimally invasive SI joint fusion procedures. In trauma, we are engaged with major trauma center thought leaders and are encouraged by the adoption we're seeing for iFuse-TORQ and sacral insufficiency fractures. At a recent Orthopedic Trauma Association's event in October, there was tremendous excitement around our solution to address insufficiency fractures. This is consistent with the increase in our trauma procedure volumes in the third quarter of 2023. Based on an annual incidence of over 120,000 insufficiency fractures in the U.S., the trauma opportunity is of strategic importance to us as the sacropelvic solutions leader and is an important avenue for growth over the long term. What's equally exciting is the growing interest of trauma surgeons in the diagnosis and treatment of SI joint dysfunction and degeneration. In the third quarter, over one-third of the procedures performed by trauma surgeons were SI joint fusion procedures. Moving to iFuse Bedrock Granite. We're delighted with the outstanding performance of Granite as we increased our surgical capacity in the quarter to address surgeon demand. The additional capacity positions us well for the current quarter, historically, our seasonally strongest of the year. The market reception and the pace of adoption underscore Granite's success and reaffirms our belief that it is becoming the standard of care for long construct procedures to the pelvis. Following the successful launch of our Granite-Closed Head Implant, we're also poised to introduce another Granite line extension next year. We expect the line extension to accelerate our penetration of shorter multi-level fusion procedures for the treatment of degenerative spine disorders, which already account for over 40% of Granite cases today. With over 130,000 annual target procedures, we believe the Granite family of implants will be a crucial growth driver for us over the next several years. Along with the growing demand for Granite, we're also seeing a consistent trend in surgeons using some combination of our products with Granite to achieve two points of fixation across the SI joint on either side and long construct procedures. This is driving a significant pull-through opportunity for the portfolio and a higher per-procedure average selling price. Before I hand the call over to Anshul, I'd like to provide some background on drivers of sacroiliac joint pain incidents in the U.S. and the question of the impact of GLP-1. The primary cause of SI joint dysfunction and degeneration is the altered function of the ligaments and muscles supporting the SI joint. Changes in the position of the pelvis will lead to changes in load transfer across the joints. These factors are consistent with the patient demographics in our studies, where over two-thirds of patients are women, of which nearly 80% previously had at least one child. Additionally, the average BMI of the over 300 patients in our INSITE and SIFI studies was between 29 and 30, which closely approximates the average BMI of adult Americans. Based on data from our clinical studies, it appears that sacroiliac joint pain is more strongly correlated with female gender and traumatic events including pregnancy rather than BMI. Within the deformity market, patients can be classified as those with adult idiopathic scoliosis or adult onset scoliosis. Adult idiopathic scoliosis patients have had scoliosis since childhood and it mainly results from abnormal systemic skeletal growth and asynchronous spinal neuro-boney growth generally due to genetic, hereditary or biomechanical factors. Adult onset scoliosis, which typically starts at the age of 50 but presents itself at an average age of 70, is driven by age-related asymmetric spinal degeneration and can produce global sagittal misalignment with central and foraminal stenosis. Based on the data in our SILVIA study, the average patient BMI was between 29 and 30. There is no clear clinical evidence around cause-effect regarding high BMI and scoliosis, making it difficult to determine the direction of causality. Against this data backdrop, it is in our opinion, not likely that widespread adoption of GLP-1 therapy and a resulting decrease in average BMI in the American population would have a significant impact on the incidents of SI joint dysfunction, trauma or deformity that would meaningfully impact demand for our products in the near or immediate term. A 2018 study in the Spine Journal by an unidentified author of 244 adult spinal deformity patients indicated that BMI greater than 35 was associated with significantly worse peri-operative outcomes and higher costs compared to non-obese patients. As such, surgeons tend not to want to operate on morbidly obese patients. The consistent feedback from spine surgeons indicates that if GLP-1 therapy for weight management becomes more widely available, new surgery-ready patients may come into our patient funnel as they lose weight. Additionally, as people increase their levels of physical activity and live longer, they will become eligible candidates for musculoskeletal procedures. There's still a lot that is not known about the impact of GLP-1 drugs, but our data shows that the primary causes of our target disease state are generally related to genetic factors, gender, traumatic events, history of pregnancy and age-related changes. While it would be premature to predict the long-term implications of GLP-1, if any, on our musculoskeletal degeneration, there is the potential for a lower average population BMI to increase the number of surgery-eligible patients. With that, I'll hand the call over to Anshul.

Thanks, Laura. Good afternoon, everyone. I will focus my comments today on third quarter revenue trends, operating leverage and liquidity, and end with our updated 2023 guidance. Additionally, all the comparisons highlighted in my section will be versus the same period in the prior year, unless stated otherwise. Starting with our third quarter revenue. As Laura noted, we delivered another record quarter with worldwide revenue of over $34 million, representing growth of approximately 29%. Third quarter U.S. revenue was $32.3 million, increasing approximately 31%. Our U.S. revenue was driven by growth in procedure volumes, which rose by approximately 34%. The fourth consecutive quarter of over 30% growth in the U.S. case volume highlights the underlying patient demand for our procedures. The average selling price in the quarter reflects the evolving procedure mix as the expanded use of Granite in degenerative procedures to the pelvis resulted in an increase in to-implant Granite cases in the quarter. International revenue was $1.7 million implying nearly flat revenue. We saw strong performance in France and are encouraged by the improvement in the U.K. We are focusing our commercial efforts on revitalizing growth in Germany and the rest of Europe through expanded surgeon engagement. Additionally, given the reception for TORQ in the U.S., we are diligently working on getting notified body clearance to launch TORQ in EMEA. Moving to gross margin and operating leverage. Our gross margin in the quarter was 79%, in line with our expectations. Consistent with recent quarters, the gross margin reflects the impact of procedure and product mix, higher total cost of TORQ and Granite, increase in depreciation from the deployment of instrument trades to support the growing demand for them, depreciation associated with our second facility in Santa Clara and higher freight cost. Operating expenses were $38.1 million in the quarter, representing 6% growth. The increase in operating expenses was driven by higher commissions associated with the revenue growth, as well as increase in R&D and other commercial activities. We are proud of our demonstrated track record of investing in infrastructure to drive robust revenue growth and then translating that to healthy operating leverage over the last several quarters. Going forward, we remain focused on investing in R&D and clinical research, which are crucial to delivering strong and sustainable revenue growth while progressing towards breakeven. Our net loss was $10 million for the quarter or $0.25 per diluted share. Compared to a net loss of $14.2 million or $0.41 per diluted share in the prior year. This represents a 29% reduction in net loss. As a reminder, the earnings per diluted share for the third quarter of 2023 were impacted by the increased number of shares outstanding from the May follow-on stock offering. Adjusted EBITDA loss in the quarter improved 44% to $3.9 million versus $6.9 million in the prior year period. Adjusted EBITDA loss also improved sequentially by approximately 18%. Turning to liquidity. We exited the third quarter with a solid balance sheet including approximately $167 million in cash and marketable securities. Our cash usage in the quarter was $2.7 million. On a year-to-date basis, cash used in operating activities was $16.4 million, an improvement of 53% compared to $34.9 million in the first three quarters of the prior year. We are pleased with our trajectory of cash utilization in the last several quarters while making investment in long-term growth initiatives including building incremental surgical capacity to support the anticipated demand for our new products. Finally, moving to our updated guidance for the year. Based on the strong performance throughout 2023, as well as the momentum exiting the third quarter, we are increasing our full-year 2023 worldwide revenue guidance. Our revised 2023 annual worldwide revenue guidance is a $136 million to $137 million up from a previous guidance of $132 million to $134 million. This revised guidance translates to year-over-year growth of approximately 28% to 29% versus the previous range of 24% to 26%. We expect the 2023 annual gross margin to be approximately 80% implying fourth quarter gross margin to be in the 78% area due to the factors discussed earlier. With that, I will turn the call over to the operator for questions.

Our first question comes from Young Li of Jefferies.

Hi, guys. Thanks for taking our questions. And congrats on a good quarter and six quarters of record revenue. I guess to start, I appreciate the color on a potential GLP impact. It's a hot topic. I guess the comments from spine surgeons that lower BMI patients can fall back into the funnel. I guess I'm just wondering, have they or can you quantify that impact? I mean some of the ortho companies have talked about a 10% increase in near-term volumes as a reference point.

Young, thanks for the question. On GLP-1, I think just talking about the overall addressable market is probably the right place to start. So we have a pretty significant runway and we're confident in our ability to deliver strong and sustainable growth. I did talk a fair amount in my prepared remarks about the causes of the disease state and the general demographic makeup of our typical patients. The primary causes for the disease state, specifically SI joint dysfunction, as genetic factors, gender, traumatic events, history of pregnancy, as well as age-related changes and we even included some information in our studies. Based on the details shared from these studies, what we are stating is that we don't believe that a decrease in average BMI is going to have a significant impact on the incidence of SI joint dysfunction or trauma or deformity that would meaningfully impact demand for our products in the near term. And then, if you're asking whether it will actually generate more demand, I mentioned that surgeons tend to not want to operate on morbidly obese patients, and that is consistent with the feedback we've received from our spine surgeons indicating that GLP-1 therapy for weight management could lead to more surgery-ready patients coming into our funnel. But instead of giving you a specific percentage of what that could be, we're saying that there is no significant downside risk and that there is potential upside as individuals increase their levels of physical activity and live longer, which will make them eligible candidates for procedures like ours.

All right, great. That's very helpful. I guess the follow-up. I guess, Laura, for your comments in the press release on exiting the year with strong momentum, demand inflection at the early phases. I mean, on the call, you talked about momentum exiting the third quarter. I guess, I'm kind of wondering what are you seeing in 4Q so far, if you can comment on it. Your guidance for the year implies high 20s growth for the year. Does your comments sort of imply 20-plus percent growth for next year as well? What can you comment about the puts and takes for 2024?

So, thanks again for the question, Young. Our Q3 performance speaks volumes about our execution, delivering another record quarter and outperformance amidst typical summer seasonality. Just to reiterate, we delivered 34% growth in U.S. volume for the fourth consecutive quarter of over 30% growth. We observed strong growth across all our procedures and certainly benefited from the rollout of additional Granite and TORQ surgical capacity, which sets us up very well for our seasonally strongest fourth quarter as well as for 2024. I'm excited about reaching the milestone of over 1,000 active surgeons in the quarter. Just to put this into perspective, in 2021, we had just 1,000 surgeons doing a procedure for the entire year. Looking at our adjusted EBITDA loss improvement and the fact we only used less than $3 million in cash in the quarter shows that we're in a strong position proceeding forward. The nearly $0.5 million annual procedures still untapped put us in a great position moving along.

Yes. Hi, Young, good to connect. Regarding our Q4 guidance, we consistently outperformed our own forecasts due to our execution and the strong demand we are seeing. We feel very good about that. We're focused on achieving strong year-end performance, given the demand trends, record number of active surgeons, and the significantly higher surgical capacity coming into the fourth quarter compared to the previous quarter. Regarding 2024, we'll provide specific guidance with our fourth quarter earnings. Our focus is on execution for the fourth quarter, but when thinking about the drivers of the robust growth observed in 2023, we are confident in our long-term trajectory, as it relates to our expansion initiatives through our product portfolio. We've increased our surgical capacity and intend to add more, which will allow us to capitalize on the Granite and TORQ demand. Surgeon interest remains at a record level, and the caliber of our sales force and hybrid model is functioning well to drive deeper surgeon engagement.

All right. Thank you very much for the color.

Thank you. Please standby for our next question. Our next question comes from the line of Drew Ranieri of Morgan Stanley.

Hi, Laura and Anshul. Thanks for taking the questions. Maybe just to start on utilization for a moment. It looks like utilization kind of held fairly consistent quarter-over-quarter despite kind of the average surgeons going up so significantly. So one, can you just maybe talk to us about what you're seeing in terms of utilization, kind of on the same surgeon level and what kind of adoption drivers are there seeing there and then layering on some of the newer products?

Sure, happy to do that. So I'm going to go back to the point about active surgeons in the quarter, we were above 1,000 for the first time in our history. That 30% growth provides a strong forward-looking indicator and it's our 11th consecutive quarter of double-digit growth. We are seeing around half of those new surgeons coming in for primary SI joint procedures, and the other approximately half are involved in our pelvic fixation or pelvic ring fracture procedures. This means that we are seeing surgeons not just doing one procedure but several with us. It's a focus we've had to ensure our surgeons engage with multiple types of procedures, and we are also working to train residents and fellows for broader adoption.

Got it. Thanks, Laura. And maybe this is a question for both of you. When - I think you mentioned you had about 83 reps ending in the third quarter. So, that number has been kind of steadily moving down yet sales productivity is moving higher, but can you talk a little bit more about what your expectation is for sales rep productivity and maybe the direct portion of the sales force and how that opportunity can translate eventually into adjusted EBITDA breakeven, and maybe a time, if you're willing to provide that, Anshul? Thanks.

We're pleased with the productivity gains seen over the last several quarters, which is a major driver of the operating leverage you've observed in our progress towards adjusted EBITDA breakeven. For revenue per territory, we've achieved our goal of between $1.5 million to $2 million in revenue per territory annually. We reached $1.5 million last quarter, growing from less than $1 million in fiscal year 2021, indicating a 38% productivity gain. Factors driving this productivity include our seasoned and mature sales force and our hybrid commercial model, where territory managers are supported by clinical specialists and agents.

On the adjusted EBITDA side, all the factors Laura highlighted drive our operating leverage in the business. We won't provide specific timelines for reaching breakeven, but for the third quarter, we were at about a 44% year-over-year improvement in adjusted EBITDA. Our trajectory towards breakeven is pretty linear to top-line growth, and we are confident in delivering year-over-year improvement in adjusted EBITDA moving forward.

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

Good afternoon. Thanks for taking the questions and congrats on another strong quarter. I wanted to start and I appreciate the comments on the active surgeon dynamics. If you're seeing any pull-through from some of the new surgeons that are using Granite or the pelvic ring fixation procedures, if they were new to SI-BONE and then if you got them to pull-through to do some of the core SI joint fusion procedures.

Yes, happy to take that question, Craig. In terms of data points, nearly half of the active surgeons added in the quarter performed minimally invasive SI joint fusion, and many also executed deformity and trauma procedures. This indicates we're seeing a positive halo effect from our new product launches, driving both core and ancillary procedure growth, which supports future market expansions.

Got it. And that's helpful. Thanks, Anshul. And then maybe another one for you. So just talking about the P&L, the gross margin came in a little bit lower than we were expecting and then is supposed to step down, or you said it's going to step down again in Q4. So, appreciate those comments, but just wanted to understand the gross margin trend and when we're kind of thinking about '24, I know you're not going to give guidance, but how to think about the trend through '24 or just going forward and the same on OpEx? OpEx, mid-single-digit growth, I think was kind of the expectation for this year. Can you do that again going forward?

On the gross margin side, we anticipate some fluctuation given the evolving procedure and product mix. We have been ramping capacity, which impacts depreciation costs. While exact guidance is not provided at the moment, we expect Q4 gross margins to reflect the trends noted this quarter. We've implemented initiatives to lower product costs while adjusting for scale, and we remain focused on adjusted EBITDA progress. For OpEx in 2023, we expect mid-single-digit growth year-over-year, and we'll provide more specifics on 2024 when revenue guidance is established.

Thanks for taking the questions.

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

Great. Hi, Laura and Anshul. Thanks for taking my questions and congrats on the quarter. Maybe to start, I wanted to follow up on a previous question about utilization. So it looks like 3.8 cases per doctor in the quarter. So just wanted to ask, where does that go longer term? Is the ceiling higher across any of the three products or are they generally the same? And then when you think about your surgeon champions or higher volume docs, how long did it take them to ramp to their current levels?

Yes, David. Thanks for the question. Our utilization has held around four procedures per surgeon per quarter. A part of this consistency is due to the rapid increase in our surgeon numbers, which as stated have increased by 30% over the last five quarters. Champion surgeons performing our procedures tend to do around nine cases quarterly, which signifies a considerable upswing potential as we continue to educate surgeons on various procedures over two to three years.

Okay, that's super helpful. Thanks, Laura. And then just for my second question just on Granite and TORQ, by my math, the two combined are tracking in kind of the low-teens percent of revenue. Is that the right ballpark and where does that go longer term, especially with the shorter construct Granite coming out next year? I think that's a much larger TAM. And then can you give any update on that launch timing? Thanks so much.

Thank you. We don't provide specific revenue breakdown by procedure type, but we estimate our primary SI joint fusion market, pelvic fixation and trauma procedures are significant contributors to our overall revenue. Our target is nearly $0.5 million procedures per year, where we are just beginning to tap into our full potential, including our Granite products. Regarding the Granite extension introduction, we're aiming for a launch in 2024, focusing on the short construct degenerative spine procedures, which we believe will drive further adoption.

Thank you. Our next question comes from the line of Dave Turkaly of JMP Securities.

Hi, good evening. Can you hear me?

Yes.

All right. Quick one on some news that you had in the quarter. The press release you put on the Medtronic compatibility, I think it was with the CD Horizon, Solera rods. I was just curious, how many of the competitors out there are you compatible with and how do you think about that in terms of allowing you to continue to penetrate that market?

Great question, Dave. We announced compatibility with almost all rod systems out there last year with our Granite product. The compatibility announcement with Medtronic further reinforces our alignment and gives their surgeons confidence in using Granite for their adult deformity cases.

Got it. And the update that you put out on the triangular broach, the patent, I imagine that's - that refers to the core of the 3D implants, but I just wanted to get your thoughts on sort of what that means for your intellectual property and the runway that you have?

Yes. Our patents have been extended for the shape and trajectory through the end of 2025, now pushing that extension further into 2034. The triangular broach creates a channel for the surgeon to place the triangular implant. The patent extension strengthens our IP position and the runway for our products.

Thank you. Our next question comes from the line of William Plovanic of Canaccord.

This is Caitlin on for Bill. And congrats on a great quarter. I was hoping to dig a little bit into the ASP. Can you really talk about your expectations for the rest of the year? How much of a dynamic do you think using a second point of fixation for Granite will be on the ASP going forward? And aside from this kind of product mix dynamic, can you continue your success in maintaining price at ASCs?

From an ASP standpoint, our procedure average selling price varies depending on the type and procedure. In SI joint fusion cases, surgeons typically utilize three implants, while in pelvic fixation cases, they usually see the use of two to four implants. The continued evolution of our portfolio as we penetrate these markets will influence ASPs. While we note low-to-mid-single-digit ASP declines due to healthcare costs, we focus on executing to maximize measurement efficiencies.

Got it. And then just to touch a little bit more on competition. It seems like SI joint dysfunction is kind of a growing area - given all of your work on establishing reimbursement in the space, what are you really seeing from a competitive landscape and kind of any new products some companies have seen increased competition from even with your IP extension there?

It’s become clear that we are the market leader in this space. Previously, our market share was estimated in the high 50%, and we've likely increased that substantially by now due to our name being synonymous with sacropelvic procedures, our innovative products, strong clinical evidence, educational efforts, and reimbursement support. It’s not just about launching SI joint products; it’s about delivering differentiated offerings, clinical backing, and solid support structures.

Great. Thanks for taking the questions.

Thank you.

Thank you. Our next question comes from the line of Samuel Brodovsky of Truist Securities.

Hi, thanks for squeezing us in here, and congrats again on a solid quarter. I just wanted to start off with what you saw in 3Q. I know you're probably are going to break down growth rates by product, but did you see sequential strength in the core SI joint fusion market as well? Was that up from 2Q or was the strength more from Granite and TORQ? And I guess, more broadly, are you seeing any underlying acceleration of momentum in that SI joint fusion market?

Yes, Sam. Thanks for the question. I’m very pleased with our Q3 performance: another record quarter with 34% growth in U.S. volume. This reflects strong growth across all products, with Granite and TORQ contributing significantly. Our core business consistently demonstrates robustness in these results highlighting our execution with product differentiation, surgeon education, and engagement. We've built a significant commercial infrastructure to support demand, and the strong operating execution in 2023 is reflected in our increased guidance for the year from $132 million to $136 million.

Great. That's helpful, and then just as we think about the short construct opportunity, can you just give us any color on sort of the logistics of how that's going to happen? Is that going to require new sets and how quickly you should we think about existing Granite users being able to have access to a short construct option in '24? Thanks.

You will not require a new instrument tray for the Granite extension launch next year. We're capturing opportunities in the pelvic fixation market along with leveraging our current Granite product's usage. The extension will open doors for short construct procedures, allowing a capital-efficient model within the existing framework that surgeons already have.

Thank you. I would now like to turn the conference back to Laura Francis for closing remarks. Laura?

Thanks so much. Before I end the call, I just wanted to thank you all for your participation. The strength of the business is reflected in our impressive year-to-date performance and the increase in guidance for the third time this year. And I've said it many times, but with nearly $0.5 million targeted annual procedures in the ultra-state, I firmly believe we're positioned to drive sustainable long-term and profitable revenue growth. Anshul and I look forward to seeing you. We're going to be at the Jefferies London Conference as well as the Piper New York Conference, and we also have an NDR planned for Boston in New York later this month. Thank you and goodbye.

This concludes today's conference call. Thank you for participating. You may now disconnect.