Surgalign Holdings, Inc. (NASDAQ:SRGA) Q4 2022 Earnings Call Transcript

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Matt Hewitt: Got it. And then maybe one last question, I’ll hop back into the queue. And Dave, thank you for providing some of the granularity and the puts and takes for the 2023 guidance. The one thing I’m curious, how much — how should we be thinking about organic growth? I realize that you’ve got the Coflex headwind, if you will, on the revenue side, and you’re going to still have some additional product line rationalization. But on an apples-to-apples basis, whether you’re looking at HOLO or some of the other products that you’ve introduced, are you anticipating some growth there or are you kind of looking at this conservatively saying, okay, let’s just given what’s going on in the market, hospitals are struggling and all that, let’s just assume that we’re flattish this year and then 2024 is where we start to see some growth?

David Lyle: Yeah. I’d say it’s a question. It’s going to be complicated when it comes to looking at the actual results quarter to quarter in 2023 because of all the things that are going on right now. So, for instance, if you remember, we sold Coflex at the end of February, so we had two months of Coflex revenue hitting our Q1 number this year, which is going to make that revenue look higher as we move forward. So, by default not having Coflex, all things being flat or equal, we’re going to have a lower Q2 than a lower than we did in Q1. However, there are some other puts and takes here. The rationalized products, meaning the products that we are obsoleted, the two-thirds of the portfolio commentary that we talked about are still selling, even though we’ve obsoleted them and they will continue as we harvest inventory that we have on hand through some period of time over the coming months and quarters.

And then lastly, we’ll — or I think that process will start ramping down and should be pretty much complete into Q3. So that being said, it’s going to be hard to see when you see the end revenue numbers quarter to quarter. However, when it comes to growth, Terry talked about our new pedicle alpha launch, pedicle screw alpha launch Cortera, that’s done really well for us since it launched over the summer. We saw some growth in the Q4. It was one of our bigger growth drivers in 2022. We expect that to continue and be our biggest growth driver in 2023. So, underneath all of those variables I just described, you’re going to see growth out of products like that, and out of some of the products that we had, product issues in past years that have now been fixed.

Matt Hewitt: Got it. Thank you. Appreciate the color.

David Lyle: No problem.

End of Q&A:

Operator: Thank you. Thank you. There are no further questions at this time. With that, it does conclude today’s teleconference. We do appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

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