CA - Aurora Spine Corporation (ASAPF) Q2 2023 Earnings Call Transcript
2023-08-30 14:17:03 ET
Aurora Spine Corporation (ASAPF)
Q2 2023 Results Conference Call
August 29, 2023 12:00 PM ET
Company Participants
Adam Lowensteiner - VP, IR
Trent Northcutt - President and CEO
Chad Clouse - CFO
Conference Call Participants
Tom Fedichin - Microcap Connection
Presentation
Operator
Hello, and welcome to the Aurora Spine Second Quarter Fiscal Year 2023 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.
I would now like to turn the conference over to Adam Lowensteiner. Please go ahead.
Adam Lowensteiner
Thank you, MJ. Welcome, everyone, and thank you for joining us today to conduct an update with investors and review the financial results Aurora Spine for the second-quarter fiscal 2023 ended June 30, 2023. With us on the call representing the company today are Trent Northcutt, President and CEO of Aurora Spine; and Chad Clouse, Chief Financial Officer of Aurora Spine.
Before we begin, I'd like to remind everyone that statements made during the course of this call may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Act of 1934.
These statements reflect current expectations concerning future events and results. Words such as expect, intend, believe, may, will, should, could, anticipate, and similar expressions are words that are used to identify forward-looking statements, but their absence does not mean a statement is not forward-looking.
These statements are not guarantees of future performance and are subject to risks and uncertainties and other important factors that could cause actual performance or achievements to be materially different from those projected.
For full discussion of these risks, uncertainties, and factors, you are encouraged to read Aurora Spine's documents on file with SEDAR including those set forth in periodic reports filed under the Forward-Looking Statements and Risk Factors section. Aurora Spine does not intend to update or revise any forward-looking statements, whether result of new information, future events, or otherwise.
On this call, management may refer to EBITDAC, adjusted EBITDAC, adjusted net income, adjusted EPS, which are not measures of financial performance under generally accepted accounting principles or GAAP. Management believes that these non-GAAP figures, in addition to other GAAP measures, provide meaningful supplemental information regarding the company's operational performance.
Investors should recognize that these non-GAAP figures may not be comparable to similarly titled measures of other companies. These measures should be considered in addition to and not as a substitute for or superior to any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures in accordance with SEC Regulation G can be found in the company's earnings release.
With that, I'd like now to turn the call over to Mr. Trent Northcutt, President and CEO of Aurora Spine. Trent, please proceed.
Trent Northcutt
Thank you, Adam. I'd like to welcome everyone to this call to update everyone about Aurora Spine. First off, I do apologize for the delay in having this call, but I've been out on the road meeting with doctors and surgeons and working towards developing this business further.
To lay out the agenda for today's call, I'd like to take a different approach and focus on a few topics to update investors as what we are working on at Aurora Spine. After those remarks, Chad and I will be happy to answer any questions you may have.
Topics to cover, number one: SiLO TFX is selling and doing well and is given the limited amount of kits in the field. But these limited amounts of kits have really performed well. So a, It is selling in and is doing well; b, more kits are underway. So we're going to have a more robust build out on this product line; c, plans for development of those kits is underway.
Number two: ZIP. ZIP saw a 33% increase year over year; b, continues to be the workhorse for Aurora; c, we're seeing growth due to picking up new accounts based upon the trainings that we've performed.
In-house sales team -- this is really key; working on building internal sales team. That's been our number one, a, focus on the in-house sales team; b, we will be between eight and 12, and we've already added -- we have over five now people in the field, working towards developing many -- we're going to add probably up seven additional by March of next year. We believe this is needed for the growth of the company to build a stronger relationship with the customers.
Number four, update up on DEXA Technology, where we are, having the first patient enrolled in the multicenter study is key.
Number five, the company's financial structure. Q2 was a step in the right direction, getting back on track to where we were in the previous year. The balance sheet is a bit tighter than you'd probably like, but we're working on bridging that financing and getting better sorting out of that financing. Profitability is now within grasp, and we really are moving in that direction. And six, we just want you to know that this is the time for Aurora to grow.
To summarize, I'm extremely proud of our team's performance and staying focused on building this team. We are well positioned to take advantage of the growing markets with several new proprietary products. We remain focused on penetrating these markets further this year as we continue with the training sessions and the clinical trials.
Looking on to the longer term, we are well positioned for success, especially as we have these new products and more clinical studies proving out our technologies and education, more doctors on the benefits of using the Aurora products. We remain highly focused on this opportunity that's in front of us, and we'll continue to invest in our growth and with each of our new major platforms such as ZIP, SiLO, and DEXA.
With that said, operator, we are ready for any questions.
Question-and-Answer Session
Operator
Thank you very much. [Operator Instructions] Tom Fedichin, Microcap Connection.
Tom Fedichin
Hey, good morning, guys, and thank you for taking my call. Congratulations on a great quarter. It's nice to see it's trending. Sales are trending in the right direction. I'd like to ask a few questions, and we'll start off with the TFX.
And by the way, I don't want to hog the call, so feel free to move on. I can come back and carry on with my questions as I've got a long list, but -- so maybe we'll start off with TFX. 10.6% of all sales were related to the TFX. This equates roughly to around $360,000 or in other words, 30 TFX affect sales during Q2 were $12,000 per device. That's how I've come up with this conclusion.
During your last call, you felt Q3 -- you were anticipating sales of 25 to 35 implants per month. Do you feel that you will be able to hit this target moving forward in Q3?
Trent Northcutt
Yes, thank you, Tom, for especially paying attention to the details because the details are important in this case. And we've been talking about SiLO TFX for a long time. I'm proud to say and super excited to say that and not only on the limited release of the inventory that we put out just to get the alpha phase underway that we are meeting and exceeding our unit counts that we were working on.
The turn rates have been stupendous. I really got to thank my team from the field all the way into the office where we were turning these sets and getting them moved around all over the country. Matt Goldstone, who is our new Chief Business Officer, who came in the beginning of this year, has worked well with the field, management team, the warehousing, the customer service.
And [Petra Lapizio], she's just been all over this inventory, making sure this is going well. Our manufacturing, the Head of Manufacturing, [Graciano], over at the machine shop, where we made virtually every instrument in house for the TFX. It is precise. It's been precision made. It's beautiful. The implants are beautiful.
And the procedure is going very well, where the doctors are able to get this product in the patients quickly, effectively, and most importantly is having a direct impact on that patient. The patients are walking in and walking up the same day.
We're very proud of this, and this is all part of the training programs that we put together. The designing of the products, the engineering, the manufacturing, and just pulling together as a team on a project that was very hard, very difficult, but it has certainly seen a very bright spot in the light right now, and we couldn't be happier about it.
And so yes, the answer to your question would have been yes, we're going to hit those numbers…
Tom Fedichin
And to carry the theme of TFX, so the kits, I understand there are seven kits currently out in the field. Is that correct?
Trent Northcutt
Yes.
Tom Fedichin
Okay. And I heard, I didn't hear this first hand, that there are 30 kits that have been ordered. Is that correct, or will we see sometime in September? Maybe you can speak to it if it's early September, mid or late September, when the 30 kits will have arrived?
Trent Northcutt
Yes, so two parts to that. First part is yes, we ordered an additional -- we had seven in the field. We ordered -- we had an additional 23 sets that are coming in, which would give us a total of 30. Plus, we added some extra kits for training purposes. That way, we did have a kit out at a cadaver lab or at a course, and not pull inventory from the field to go teach that course.
So we have some extra additional kits, and these are actual true surgical kits. So if we had to, in a pinch, pull a training kit in the surgery, we would do that. That's part one.
Part two is we are already identifying buildouts for additional kits because we feel as though as long as things continue to progress as we have seen so far that more kits will be needed, which is a good problem to have.
Tom Fedichin
And the cost for a kit, is it $12,000? Somebody posted, or maybe that's the pricing. They're just confused. How much of the cost per kit?
Trent Northcutt
Chad, what's the estimated cost on that again?
Chad Clouse
I'd say $8,000 to $9,000.
Tom Fedichin
$8,000 to $9,000, okay.
Chad Clouse
Sure.
Tom Fedichin
And you're still getting rewarded $12,000 per implant? That pricing has remained solid, no discounting?
Chad Clouse
So I'll answer it this way. The pricing is north of $9,000 per unit, but it's high at $20,000 per unit. Most recently, we actually got accepted onto the DoD contractor. So that's a different price point that's based on government pricing, which is higher, and we're proud of that effort. So we're officially on that contract, and we're working towards those different military and VA accounts around the country as we speak.
Tom Fedichin
Wonderful. Congratulations. That's awesome.
Chad Clouse
Thank you.
Tom Fedichin
Can you speak to the SiLO sales? I understand last year, Q4, we saw a 70% decline in the legacy SiLO implant. And of course, we saw in Q1 a rebound. And I assumed, and again, just my assumption, so it wasn't written in the press release that sales were probably around 50% of what they were a year ago. Is that pretty accurate? Is that what you're seeing today for the legacy SiLO product or is it better?
Trent Northcutt
[Multiple Speakers] Go ahead.
Chad Clouse
Yes, I've got that one. You're right, Tom. It's about 50%.
Tom Fedichin
Okay, perfect. Okay, I'll step aside. I know others have questions. I have a list of questions. I don't want to hog the call, so I'll step aside and let others ask and come back to you guys.
Trent Northcutt
Yes, when it comes, I want to give you some more color on that. So yes, please come back to the other questions?
Tom Fedichin
Okay.
Operator
[Lindsay Lee], private investor.
Unidentified Analyst
Hi, and congratulations on a really great rebound quarter from Q1. I'm just really excited to see your progress in Q2. I wanted to ask a bit about the order-to-cash cycle. From the time a surgeon does a surgery, how long would it take for you to be able to collect on that money? Typically, I know there's going to be some variation, but just a guesstimate on that.
Trent Northcutt
Yes, that's a good question. It varies, of course, from account to account, hospital system to hospital system. But our terms are typically between 35 to 45 days to get the PO number back off the invoice from that hospital. But some hospitals are 60 days plus. Some hospitals are 90 days plus. So those are real, and some hospitals are -- can be worse than that. But typically, all -- majority of our good payers, [hospitalized], are all between 30 and 60 days.
Unidentified Analyst
Okay, excellent. Thank you. And then I'd like you to talk a little bit about your sales strategy. I have heard you've been using distributors. So I'm wondering, these new salespeople you're hiring, are they replacing distributors or are you keeping those distributors as well? Can you share a little bit about that, please?
Trent Northcutt
Yes, we are we are adding some direct representation in areas that we do not have strong distribution in. And the key thing about some of the products that we have been working on for the last five years was we wanted to have a portfolio that would really attract not only just the surgeons, the doctors, but also distributors that do not have this product in their bag. So our key distributors that we have currently, we really embrace and appreciate them.
And then our -- the ones that are out there that are now taking a look -- closer look at Aurora because of announcements and because of coding and reimbursement headwinds that happened last year going into -- even into this year, we feel like we now have the portfolio that will attract new distributors. But where we need to go direct, we will -- in those areas, it might just be faster for us to go direct into certain locations because there's not a distributor there that we can access or rely on. So it will be a blend. Mostly will still be in independent distribution because it's a broader net that we can cast with that distribution. That is part of our sales strategy.
Unidentified Analyst
Okay, awesome. Thank you. In your SEDAR filings, it looks like there's some supply chain issues in Q2. And I'm wondering, are those fully resolved? And were there any downstream effects on SiLO decks as the supply chain issues go?
Trent Northcutt
Yes. So I would like to believe that we weren't the only one affected by supply chain headwinds. That happened with a lot of different sectors of the market. But in our particular sector, one of the issues was 3M was manufacturing the lid that go on to our containers that hold the implant as we sterilize them, and they were backordered. And that was just one of the issues.
It had nothing to do with us, but it was a supply chain -- it's gotten better. It's springing up some more -- they made more lids, if you will, for everybody. And it was a material that's used for all sterile products around the globe. So it was a big, global backorder issue. But it seems like it's gotten better. Also, raw material seems to be more readily accessible to us. So we feel good about the raw materials that we're getting such as titanium, stainless steel, and also -- we use a material called Radel which is a radiolucent material that X-ray can shoot through it.
But that had no backorders, it's just we were able to get that more readily. And that's part of the key build-out in our TFX system. We used that -- not only did we -- surgical kits are typically metal trays that are used over and over again to be processed in the hospital or surgery center. We are able to use Radel as a polymer to make our surgical kits out of Radel. And we are also using the Radel now in National Instruments themselves.
So it was a nice pivot, and I give credit to our engineering and manufacturing team for recognizing this. And that helped us build our kits up faster for TFX. In fact, all the TFX gets -- are made out of the polymer versus the metal. So it's unique, and it's really helpful to us.
Unidentified Analyst
Were there any -- you said there was some effect on SiLO TFX. Did it bottleneck you at all on SiLO or DEXA?
Trent Northcutt
It did. The lids from 3M bottlenecked us in DEXA-C, which we got -- we got through that. And then as far as getting the metal instrument trays made, we did the pivot and made those out of Radel. So we are able to expedite that process and speed it up. So we're pleased with it, and it's performing well. In fact, all 30 of the kits that I mentioned for TFX, they're all made out of Radel.
Unidentified Analyst
Okay. For the SiLO TFX kits, what's your level of confidence that they'll be shipped in, say, September?
Trent Northcutt
My confidence is 99.9%, so I'll leave one little small percentage there, just in case there's something I don't see. But I'm super confident that all those kits are coming out before September is over. And we have homes for them already in the field.
Unidentified Analyst
Awesome. Thank you so much. I'm going to back out -- back into queue. Thank you.
Trent Northcutt
Thank you.
Operator
Tom Fedichin, Microcap Connection.
Tom Fedichin
You just answered my question about the 30 kits and the full 30 kits, I should say. So you found homes for them already. So obviously, that means you've trained the doctors already. There's no hand holding. You send them on out, and they can start to implant them, provide surgeries immediately.
Trent Northcutt
Yes, instead of us -- we actually missed some surgeries because we were lacking inventory -- trays, special trays themselves, not the inventory. They're in there, but just not the kits. So we had to bounce them from one location to another. So we're talking trains, planes, automobiles. People jump on planes themselves, personally flying them and handing them over to the distributor, get them in surgery.
You've really got to praise the team for getting out there. And we are setting all-time records for us internally for churn rates with TFX. The demand is there. And I know you just asked the question, but it's -- you've been part of the conversation for a long time, Tom. It's that the coding and reimbursement -- five years ago, when we started making TFX, we were worried about the coding reimbursement because there was only one code and only one version of that is being used.
That all changed over five years. And the demand is there for TFX because we met the code requirements just by goodwill because we were already working on the system that was directly competitive with some of the biggest companies out there in SI space. But we really felt like we did it properly and made the product on its own merits without being focused just on the codes and reimbursements. We're there on the biomechanics and the safety and efficacy of the product for the patient.
Tom Fedichin
Wonderful. That's fantastic news. Now what sort of turn rate do you expect per doctor per kit? So if 30 kits were in the field, is it safe to say three surgeries a month? Like that's one every -- not even one a week. Is that a safe assumption?
Trent Northcutt
Yes, we're going to -- we're taking the existing 30 kits, and we're putting it out there as our first step forward once they go out to the field. Once they get released out of the field, our first step forward is to get no less than two turns. So that's about 60 implants, right, if you run the math there.
And of course, we already know that we're doing more than that with the seven kits, but three is a great measuring stick for us; and we think it's going to be north of three, but we're starting with two, and then we're working towards three and then -- and so forth.
And if we're already identifying if we're getting north of four per kit, then obviously, we're going to park those sets there like -- not to digress here, but one of the accounts that Matt Goldstone brought up to us even this morning was they have over 10 cases on the schedule already in one month.
So I'd rather not fly a bunch of trays around when I could just leave them one or two kits right there because they're going to do 10. There's five turns right there per kit, and so that's the kind of turn rates I think we can get to in a short period of time this year.
Tom Fedichin
Impressive, very impressive. [Multiple Speakers] Can you -- you mentioned Matt Goldstone, and I heard his name mentioned. Adam Lowenstein has really given some really glowing remarks about Matt. Can you speak about how Matt has kind of changed the face of your company since it's been brought in and how he has attracted some individuals?
And I say this because I saw Stephen or Steve Sharkey was brought in. He was hired. I saw his posting on LinkedIn, and he looks quite the hire. So maybe you can speak to both Rob Sharkey -- or pardon me, Steve Sharkey, I should say, and then maybe Matt as well?
Trent Northcutt
So definitely, Matt Goldstone had a direct impact. It really stems back from adding -- there was a process. So first, we added Blake Carver who came in and really embraced our pain interventional concept that we were talking about with the multicenter study for ZIP and for TFX.
Future TFX and of course, SiLO, these things came into place. And then Matt Paxton joined us from Medtronic. He came in and was in direct -- instant impact for us. I got to give credit to those two gentlemen who really hit the ground running right away, which really set the table for me to -- I made a change in sales leadership last year as everyone knows.
And Matt and I have crossed paths. We didn't truly know each other well. And we met and we discussed the philosophy of the company. And with his sales leadership, [what's it like], his business strategies. It was aligned with mine. And I was -- I couldn't be more pleased. He was pleased.
He lives here in San Diego, which made it easy versus having somebody else across the country. I even emptied out the other half of my office, and he now sits across from me, and we can strategize on where we're going. We've got the maps up on the walls. It's full steam ahead.
So he added Katelyn Sims right away. We were in discussions with Katelyn, Matt coming onboard, sealed the deal. She came in, and she was the fastest growing regional sales director in our company ever. So she hit sales revenue faster than any other sales person. And she's -- probably lead the way for quite some time.
And adding somebody like Katelyn and Matt Goldstone and Paxton and Blake led us right to the path of getting Steve Sharkey onboard, another highly talented guy, somebody who's really buttoned up structure wise, business wise. And I think you're going to see more of that.
I don't want to downplay Steve Sharkey because he's a super good person, number one; and number two, he's got the right business sense in his head and in his career that he is respected amongst his peers that he works within the areas and across the industry. So Steve's a great hire for us.
And Matt Goldstone has several other people that we have in the queue. Offers have been made up to other people that we think a lot of, highly of. But we are looking to possibly add up to seven new people as such up until March of next year. That's kind of what we're identifying right now in regions such as the Southeast, the Northeast, additional areas in the Midwest, and the upper Northwest.
Tom Fedichin
Fantastic. That's huge. Thank you. Maybe we can switch gears just a little bit and speak now about the ZIP. You've mentioned it being the workhorse of your company and -- can you -- and I guess the sales were up 32% as well, I see. Will this growth continue? Will it improve, or are you expecting it just to stay at these levels moving forward for the next -- for the foreseeable future? Have we -- yes, I'll let you answer.
Trent Northcutt
Yes, we're on a -- we're having fun with it. We just came back from a big conference in Miami, the ASPN Conference. It was one of the best conferences I've ever attended in over 20 years. The passion, the fire, and the people [indiscernible]. The conversations that were there was real. It had over 3,000 registered surgeons and doctors at this. We're talking -- that's the same kind of numbers as -- even larger than NASS, right? It's a very large amount of people. It was packed. And the conversation that got us to that meeting all started because of -- a couple of years ago, we started on this multicenter for the ZIP product.
ZIP opened the doors for us to get involved there. And we are in the middle of a campaign called the 51 Weeks of ZIP 51. There's a real need and opportunity for us to grow more ZIP sales with our ZIP L5-S1 product, the ZIP 51 because there's not a lot of options out there for ZIP L5-S1.
And these pain surgeons are really looking closer at this device because they were all trained on the regular ZIP, which led us into showing them SiLO and now SiLO TFX. But now we're saying, look, take a look at our ZIP 51. We are a gold standard for L5-S1 fixation/infusion.
It's hard even to get screws down there sometimes. It's a small area, low -- as far down in the back as you can go. And our ZIP 51 has impressive biomechanics, and it's a real great screwless alternative for patients and for doctors who take care of those patients.
Tom Fedichin
Wonderful. That's awesome. Obviously, sales are going well. It's great to see. It's a big part of your company. So that's definitely great to hear it's going to continue. Let's move on to DEXA-C. How are sales going? Are you facing the same hurdles you had before with getting into hospitals, getting approval?
Trent Northcutt
Not so much in the headwinds of the hospitals anymore. It's been more of getting the attention of the customers that already have legacy products such as PEEK or another 3D-printed implant and trying to compare the DEXA to those devices.
It takes some salesman, saleswomanship to get out there and talk to the accounts about this. We had some early adopters, and we still have those adopters that still use the products. We have more people using the products. The numbers have certainly come down a little bit, but it's not due to lack of effort. It's just -- it's going to be a little bit of a growth curve. It didn't happen as fast as I originally had predicted.
I thought we were going to build to hit the ground a lot harder, but we've made steps to get more awareness. And what we did was we got our IRB approval for the multicenter study for the cervical, which just has begun. And we got our first patients enrolled on that. And that directly ties to what we did two years ago when we were talking about ZIP, right?
ZIP was not a product that was high on the revenue side for us. We had to go reintroduce it to get more customers take a closer look at it. We've got an IRB approval. We restarted the multicenter study. We got the ZIP into more doctors' hands, and we had some information that was coming up. Doctors were talking about it because there were more users of the product.
And in these discussions, that's exactly what I needed for ZIP to take off. And that's exactly what I'm doing with DEXA. I'm getting it more -- into more hands of people, so we can talk about it, more posting of the information online. We have to educate the medical staff -- the surgeons have options, and they're also creatures of habit. They get really great clinical results with a lot of products that they currently use.
We have to show them there is a benefit here to switching from another cervical device to our cervical device as part of the platform buildout of our products. So I'm still very bullish on DEXA. Obviously, the numbers have to improve, and they will.
We are making some strides on that and talking to even larger distribution companies out there that could take this on and really focus on this as a product in their portfolio, why I have a lot of salespeople focusing on, say, TFX and ZIP sales. So I'm working on some strategies on that that I think will be key for us to get DEXA. DEXA is still very near and dear to me.
Tom Fedichin
Okay. Would you say that the DEXA line has taken a little bit of a backseat as SiLO -- let's be honest, the SiLO was selling or the TFX was selling. You focus on what's selling, you put all your efforts there, and you try to move into profitability. And DEXA takes a little bit of a backseat, and the time will come when you get more focus. Is that the kind of the strategy or are you still equally giving both the equal amount of attention?
Trent Northcutt
Well, obviously, everything is new. The shinier thing always seems to get pulled out of the bag first. But what is key is that what we noticed that happened, and I know I mentioned this to you before, was we used to be a very heavy top-sided hospital business versus surgery center business.
And what I like about the portfolio is that Aurora has this portfolio that has now -- it's been a slow burn for five years of coming together. But with the APOLLO cervical plate getting everything worked out there; the DEXA now being all built up the way we wanted it to be; the TFX coming off of its R&D into its alpha phase, now being released as a full product; SiLO seeing some breath of life again because of the coding reimbursement changes --
A lot of these interventional physicians and of course, ortho and neuro doctors, own surgery centers. That's something that we see more and more popping up across the country, and the DEXA fits nicely in that portfolio because it's a prepackaged sterile implant. It can sit on the shelf and wait for the next cervical to come along.
There's over 300,000 cervical procedures performed annually. And we think that we have the best-in-class cervical option. We need to get more people to be aware of us.
So our business people that are out there talking about TFX, they have the appointment -- or they'll talk about SiLO, the other point, or talk about ZIP, they're in front of that customer and the question is, hey, doctor -- Dr. Debbie or Dr. John, do you have a surgery center that you're working at, and do you have orthopedics and neurosurgeons working at your surgery centers? I'd like to talk to you about DEXA.
So it is part of their sales presentation -- their business presentation because it's right there, available to them. But certainly, what they'll do is to mostly talk about -- our TFX is high, and everyone is --
Tom Fedichin
Of course, yes. As for DEXA kits in the field, how many kits are currently in the field today?
Trent Northcutt
Okay, that's a good question. I don't know off the top of my head. I know, Chad, you have that number for me.
Chad Clouse
Gosh, no. Let me -- I'll find it.
Tom Fedichin
We can come back to that, and I can ask some other questions in the meantime. So doctor training, what's the plans for doctor training with the growth of SiLO TFX? And ZIP has taken off. It appears the profitability is within sight as mentioned. Will doctor training start to pick back up again?
Trent Northcutt
Yes, there's -- we decided on the national levels that the national labs were not as effective as retail labs. So we focused more on regional, get together some locations that we could for doctors in that area. They could drive over to the lab and sort of get on a plane and fly in.
It wasn't -- certainly, we're always watching costs as we're trying to be profitable as a company. But of the effectiveness that the closing, our ROI rate was better to be regional. There's a conference that we have that we're calling Train the Trainers next month, where we have 22 very high-level people coming -- the doctors and surgeons coming into this conference. That's our conference to train the trainers.
This is all part of our preparation and planning for what we think can be a very successful 2024 campaign, and I'm impressed with what Matt Goldstone has assembled through this conference for us next week. The roster of these attendees is top shelf.
So these people will be talking about trainings, and these are thought leaders, podium speakers. These are people who obviously have actually used the products, and they'll be -- they're going to be our evangelists, right? They're going to be the ones out there talking about their good clinical results because we believe we're going to have very strong results all through 2024.
Tom Fedichin
Wonderful. And -- sorry?
Chad Clouse
Real quick [Multiple Speakers]
Trent Northcutt
Go ahead, Chad.
Chad Clouse
33 DEXA sets.
Tom Fedichin
Okay, and that's what's in the field?
Chad Clouse
21 of them are in the field right now being used currently. And there's -- whatever the difference is in house right now, waiting to go out.
Tom Fedichin
Wonderful. Thank you. And -- where was it going? As for breakeven profitability, obviously, more sales staff have been brought on and plan to be brought in moving forward.
What's the breakeven today? Is it $1.3 million? I think you had mentioned maybe $1.2 million last quarter, but we saw, of course, $3.6 million. And we -- I think was a $400,000 loss, right? So I'm guessing, is it closer to $1.3 million per month right now for breakeven?
Trent Northcutt
It is. It went up a hair, but the sales are pointing in the upward direction, which -- obviously, we have to keep doing the work to get there. But yes, the breakeven is, call it, $1.3 million, $1.32 million. And then as we add more people, we'll have to edge that up a little bit. But our -- the sales team is focused on the $1.5 million month. That's where we are first. That's where we want to have our minimums at, and we're getting close to that.
Tom Fedichin
Wonderful. That's great to hear. Congratulations. Now Q3, do you think there's a chance of breakeven?
Trent Northcutt
I do.
Tom Fedichin
Wonderful. Again, congratulations. [Multiple Speakers]
Trent Northcutt
I do with confidence. Yes, I do with confidence. I think that -- Tom, there's been a lot of heavy lifting going on here. We've embraced the challenge, and the team is really, really focused. And there's more people joining our team. It's going to take more people, right? We can't do it as light as we probably were trying to do it.
So more headcounts, more Sharkeys, more Katelyns, more Goldstones, and beyond. We're going to build off of that. And that will also really help us pick up that number.
First, we want to cross the profitability line. That's our number-one focus. right? It's getting the products up, and then become profitable. So that's our number-one goal. And then, from profitability is to hit that next target number, which is our minimum. We want it to be $1.5 million. Once we hit $1.5 million, we'll set the new marker, what we want to hit, but profitability is going to come first.
Tom Fedichin
Yes, of course. My eyes have been set on Q4, so it's great to hear the Q3 for breakeven. That would be huge. So again, congratulations. It's great to see. A question now on the cash and the company, you mentioned it is tighter than you would like. You had mentioned about bridging.
Maybe you can speak a bit about this and what you mean, what the plans are for shoring up funds to allow for this expected growth.
Trent Northcutt
Yes, I am in the process of working on a bridging type of financing internally. I'm not talking externally at all. So I'm keeping everything in house right now. We're discussing some options and things that we can do. Nothing's ever 100%, but I'm working to get that done and wrapped up here right away, so I can build and make some announcements on that.
Tom Fedichin
Okay. And maybe you can speak about future plans? In my opinion, the TSX Venture has probably [solidified] to get to this point. But at some point, you probably will be looking at de-listing. And a company that's profitable, listed on the Nasdaq is going to give you a much better valuation than, say, in Canada. Do you foresee something like this taking place in 2024?
Trent Northcutt
Number one, I love all my brothers and sisters in Canada. So we're really grateful for the time that we've been on TSX, but I do agree with you. I think -- it's a US story that isn't really well supported over the years with our Canadian listing, but we've got to get some more of the masses, and we've got to get that stock price up for sure. And we need to have a way for that stock price to truly be in front of more people and to have more people take a closer look at it really.
So I do still lean towards doing an uplist onto the Nasdaq when the time is right. I've talked about this for a while, so there's been times I've been wanting to do this in earlier stages. But obviously, you're not going to do it when you're not profitable and not heading in an upward direction.
And there is a lot of variables, like we didn't get the FDA approval on the TFX until October -- end of October last year. And of course, there is two years of denials of that being approved. So that was a big affecting factor within my uplisting vision of this. But I'm real confident in the sales organization right now. I'm real confident in our manufacturing capabilities. My finance team is strong. My team is motivated. My Board has been nothing better than super supportive all the way through every step, and we're ready to make these leaps forward. We've been building up for a long time, and I think it's our time.
Tom Fedichin
100%, and two more questions I have. If there were any holes or any concerns that you think still need to be addressed other than financing, which we just discussed, what would that be?
Trent Northcutt
Well, so last year, we didn't have a firm answer. We couldn't just lay it out into a speculative conversation on the coding, the reimbursement of the allograft SI products. It was just -- there was just too much murkiness in the messaging. So for me to say one thing and then have it come back later that it wasn't accurate was possible.
So I just said, well, let's just keep what we're doing, keep selling what we have, and let's keep participating at these conferences that are discussing about the future coding reimbursements.
I mean, where the stuff all got stems from, why the coding and reimbursement has changed after all these years -- and we're talking over 20 years of no changes to the code whatsoever. And then all of a sudden, there's all these changes that happened.
This last -- a month ago, when we were at this conference, there's been some new outlines laid out there for coding reimbursement. As you know, the allograft system is underneath the T code right now. So I think they're reviewing T code coding reimbursement.
We know that going into next year that the allograft will be coded out differently than, say, a metal implant such as the TFX that's underneath the 27279 reimbursement code. We feel that TFX meets and exceeds all the codes and the reimbursement CPT code. And our proof is in -- obviously is in the use of the product.
We've already been -- already built out the TFX Medicare and Medicaid, private insurance, work comp injuries, personal injuries, even some Indian reservations, government facilities, so we've really gone all the way across the board with our products being used, including private payers.
So I think it's a better view today than it was even one calendar year late, though, on what the coding reimburses because it really didn't affect us until midyear last year. But when it hit, it hit everybody.
David Rosencrantz, I'd give him credit. He came out to one of the conferences. And I'm friends with some obviously competitive companies, and I introduced him to some of the other CEOs that I know. And we asked the same questions, like how many allograft systems -- how did it affect you and your business?
It was eye opening for David to hear what these guys say, like how this coding murkiness in the conversation really affected that sector. They're all private, so they don't have to report their numbers like we do. And it affected their business dramatically.
So the coding and the reimbursement is key. It's really falling well in our favor. And I think that as long as we keep doing it thoughtfully, training the people, getting good clinical outcomes, we're going to enter into a multicenter study with the TFX, even though the TFX has a lot of traction to it already.
And I think that's all tied to the murkiness of the coding reimbursement. The doctors who are using TFX know exactly how it's built. It's built on the 27279, and there's no questions about the coding reimbursement. Where there's still a T code, it's still the question on what the overall reimbursement is going to be for the allograft system.
So that's what I was going to tell you earlier in your first question of the day. It was the problem last year and what was going into this year. But it looks as though it's been sorted out.
There's still some things that are out there, so to answer the second part of your question, am I worried about it? We still have to sort through it, but everybody in this industry, in the SI space, has to sort through it. And I like our chances.
Tom Fedichin
It got you. Great answer. And if there's any message or if there's anything I didn't ask that maybe you felt that should be asked, what would that be? I know I've asked you a number of questions top to bottom, but anything that I missed that I should have asked?
Trent Northcutt
Well, yes, I guess one of the -- we have three major sectors of our product portfolio, cervical, thoraco-lumbar, and SI joint products. And yes, there's been a lot of attention to the pain interventional division, and we're very, very thoughtful about that. We want to be good stewards of that sector of the market. But we are not ignoring the ortho and the neuro market.
In fact, now that -- we think that the TFX is a crossover product for us. It should be a hit. But I don't think the ortho and neuro doctors are all that keen on the allograft systems, although there's many who do use it. But I think that they're more in the camp of something that they could fixate into the bone. They like that idea of placing an implant into bone.
I don't think that will really resonate with the multicenter study that we'll do. So it will be ortho, neuro, and of course, interventional in that study. So I'm really excited about that.
So I guess the question would have -- I think we should ask ourselves again in the fourth quarter, how many were ortho and neuro doctors since you guys add on to your customer usage? Because over 300,000 cervical cases performed, and obviously interventional doctors do not do any cervical fusion cases, that's a question that we need to expand on a build off of -- we need to add more of those customers to our company. And then we'll talk about the future of what technologies do we see in the future that I think will be a big impact for Aurora going forward.
Tom Fedichin
Wonderful, wonderful. Well, thank you again, guys, for your time and Trent for answering the questions. Wonderful. I'm excited to see what Q3 and Q4 brings, so congratulations.
Trent Northcutt
Thank you.
Chad Clouse
Thank you, Tom
Operator
Thank you. Seeing no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Trent Northcutt for any closing remarks.
Trent Northcutt
Thank you. I thank you for all you joining us today. We really appreciate your time and interest in Aurora Spine. This is a very exciting time of what's ahead of us. If you had any additional questions, please reach out to Adam from Lytham Partners, and we'd be happy to schedule any follow-up calls. Thank you, everyone. Have a great rest of your day.
Operator
The conference has now concluded. Thank you for your participation. You may now disconnect your lines.
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Aurora Spine Corporation (ASAPF) Q2 2023 Earnings Call Transcript