Q1 2024 Anika Therapeutics Inc Earnings Call

Participants

Mark Namaroff; VP of Investor Relations, ESG, and Corporate Communications; Anika Therapeutics, Inc.

Cheryl Blanchard; President and CEO; Anika Therapeutics, Inc.

Michael Levitz; EVP, CFO, and Treasurer; Anika Therapeutics, Inc.

George Sanders; Analyst; Stephens, Inc.

Jim Sidoti; Analyst; Sidoti & Co.

Mike Petusky; Analyst; Barrington Research Associates

Presentation

Operator

Good evening, ladies and gentlemen, and welcome to Anika's First Quarter 2024 earnings conference call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this call is being recorded. I will now turn the call over to Mark Namaroff, Vice President Investor Relations, ESG and corporate communications. Please proceed.

Mark Namaroff

Thank you. Good afternoon, everyone. Thank you for joining us for Anika's First Quarter 2020 for our conference call and webcast. Our Q1 earnings press release was issued after the close of the market today and is available on our Investor Relations website located at Anika.com as are the supplementary PowerPoint slides that will be used for the discussion today. With me on the call today are Dr. Cheryl Blanchard, President and Chief Executive Officer; and Michael Levitz, Executive Vice President, Chief Financial Officer, and Treasurer.
Please take a moment and open the slide presentation and refer to slide number two. Before we begin, please understand that certain statements made during the call today constitute forward-looking statements as defined in the Securities Exchange Act of 1934. These statements are based on our current beliefs and expectations and are subject to certain risks and uncertainties. Company's actual results could differ materially materially from any anticipated future results, performance or achievements. We make no obligation to update these statements. Should future financial data or events occur that differ from the forward-looking statements presented today. Please also see our most recent SEC filings for more information about risk factors that could affect our performance. In addition, during the call, we may refer to several adjusted or non-GAAP financial measures, which includes adjusted gross margin, adjusted EBITDA, adjusted net income and adjusted earnings per share, which are used in addition to the results presented in accordance with GAAP financial measures. We believe that non-GAAP measures provide an additional way of viewing aspects of our operation and performance when considered with GAAP financial measures and the reconciliation of GAAP measures they provide an even more complete understanding of our business. A reconciliation of adjusted non-GAAP financial results to the most comparable GAAP measurements are available at the end of the presentation. Slide deck and our first quarter 2024 press release. And now I'd like to turn the call over to our President and CEO, Dr. Cheryl Blanchard. Cheryl?

Cheryl Blanchard

Thanks, Mark's. Good afternoon, everyone, and thanks for joining us. Please turn to Slide 3. Last quarter, we outlined the actions we're taking to focus our business, optimize performance and drive even stronger results. As we accelerate our path to profitability, with continued strength in our market-leading OA pain management platform, an expanding and highly differentiated HA-based regenerative solutions pipeline and continued cost discipline. We delivered a good start to the year and are on track to achieve our 2024 guidance. And we are confident that the core elements of our strategy position us well to maximize value creation in an orderly fashion in 2024 and beyond. In the first quarter, our overall revenue was up 7% compared to Q1 last year, driven by another strong quarter in OA pain management.
We also completed the cost reduction initiatives that we spoke about last quarter, including significant headcount reductions, putting Anika on the path to realize $10 million in annualized cost savings. These cost savings will enable Integra to deliver 75% growth in adjusted EBITDA in 2024, accelerating our profitability for the year.
Let me now review our key achievements from the quarter. First away. Pain Management had another great quarter with revenue of $24.3 million, representing a 7% increase year over year on growing market demand and some favorable order timing. And we're pleased to announce that we've extended the exclusive distribution agreement with our established Canadian commercial partner, Penta farm to sell single Monovisc, Autodesk through 2013.
Building on the existing market leadership position in Canada, single remains a key driver as the next-generation non-opioid OA pain product of choice in now over 40 countries outside the United States. We continue to see strong growth and are exploring partnership opportunities in select Asian markets, and we remain confident that Qingdao will truly be a game changer when it is approved in the U.S. To that end as we continue to interact with the FDA on a regular basis, we recently received feedback from the agency in response to our proposals that were requested by FDA during the Type C meeting in April of last year. While the FDA feedback provided some clarity, there's additional information Anika needs regarding what FDA will require for nonclinical data, we have reverted back to the FDA with questions. As we've said previously, we will begin the remaining non-clinical testing once we have received additional clarity from the FDA moving to joint preservation and restoration, we had revenues of $13.8 million, up 3%. We are seeing good progress following the recent launches of several new innovative solutions these early results have energized our teams as we work diligently to increase the adoption of our new products, which offset headwinds from some of our more mature products during the quarter, let me first describe the progress we are making on the regenerative side. We have now completed more than 200 cases with over 40 surgeons using our HA-based integrity implant system since its limited market release at the end of last November, which is double the number since our last update, we continue to receive incredibly positive clinical feedback as it becomes increasingly adopted by surgeons not only for rotator cuff repair, but also in other tendon repair applications such as in the foot and ankle. The full-market release remains on track in the middle of this year and is expected to increase growth in our regenerative business in the back half of 2024. Sales continues to do very well outside the US now selling in over 35 countries. As a reminder, higher, faster H, a single-stage cartilage repair system was granted Breakthrough Device Designation by the FDA. We expect to begin filing the modular PMA this year with a target product launch by 2026, creating a highly differentiated entrance into the $1 billion plus U.S. cartilage repair market opportunity with great clinical feedback on integrity and 15-year data likely publishing this year on pilot test. Anika now has two highly differentiated regenerative platforms to leverage as the basis for additional near term regenerative products. We continue to build out our exciting regenerative pipeline, and we look forward to providing additional details about it in the future.
We also remain encouraged by the performance of our Extremity Fixation System which has been a standout product for us, more than 10,000 extra acres have now been implanted globally since the limited release of the PEEK version early last year, which is a real milestone for us between the bio composite version now fully launched this month and extra with peak, we are addressing the entire $600 million U.S. rotator cuff market.
Lastly, regarding our RevA motion Reverse Shoulder System. We regularly engage with our distributors to improve our channel and commercial execution, and we're actively training surgeons on the safe and effective use of the system. The pace of adoption remains slower than anticipated due to a more complex sales cycle, including obtaining facility approvals. That said, we are encouraged by the recent CMS decision to now reimburse shoulder arthroplasty procedures in the ASC and the surgeons are taking. We have a motion to their surgery centers due to our efficient to instrument tray system design. I'm proud of the work we've done to build on our momentum, enhance execution across our business. We are laser focused on maximizing value for our shareholders and remain open to pads that will help us achieve this objective while continuing to invest in our greatest opportunities.
On a separate note, we announced earlier today that Mike made a personal decision to step down as CFO effective June third. On behalf of all of us at Anika, I'd like to thank Mike for his leadership over the past four years. Mike joined Anika in mid 2020 following our two acquisitions, his strategic and operational insights to help the Anika navigate this period of significant change while positioning the Company for an exciting future.
I appreciate everything Mike has done for Anika, and we all wish him the best. We're excited to welcome Steve Britten as our new CFO on June third, Steve comes to Anika with more than 15 years of experience in public company, CFO and other senior finance leadership roles and a proven track record of value creation at both large and small public companies. We are confident that Steve will help us build on our momentum to achieve meaningful growth and profitability potential across the business. Michael remain with Anika through the end of the year and will work closely with Steve and me to ensure a smooth transition of responsibilities for glad to continue benefiting from his expertise during that time and in the near term.
Looking forward to introducing you all to Steve, Mike. I'll now turn it over to you for a few words on our financial results.

Michael Levitz

Thank you very much, Cheryl. While I have decided to leave and I could spend more time with my family. I'm very thankful for the opportunity to have been a part of the Anika team over the last four years when I joined the Company was just starting to absorb its acquisitions of Parcus Medical and Arthrosurface. In the midst of the first few months of the COVID pandemic, COVID lasted much longer than expected as impacts were more widespread. The company has navigated this challenging period and made meaningful strides, including thoughtful investments, strengthening the core OE business and advancing a meaningful portfolio and pipeline of products that leverage Anika's H expertise, while at the same time, maintaining a healthy balance sheet and making targeted cost reductions to support sustainable and growing cash generation. And a good foundation is strong and the Company has tremendous opportunity with its established and differentiated products and pipeline to both fulfill its mission to customers and their patients and deliver value for our shareholders.
The last four years I have so appreciated the opportunity to work closely with Charles with my peers and team in finance and IT with the many wonderful dedicated people across Anika globally. And with such a quality Board of Directors. Cheryl is a smart and resilient leader who exemplifies the Anika core values of doing the right things the right way focused on driving high-quality products that truly improve lives. Steve is joining a talented team, and I look forward to supporting this transition as Anika's next CFO and following Anika success for years to come.
Now, please refer to Slide 4 in the online presentation where I will walk through the results for the first quarter of 2024. Unless otherwise stated, all comparisons will be against the same period in the prior year. I'm pleased to report total revenue for the first quarter grew to $40.5 million, driven by growing demand as well as favorable order timing revenue in our largest product family, OA Pain Management increased 7% in the first quarter to $24.3 million due to growing demand as well as favorable ordering patterns from both J&J Mitek in the United States and from our international distributors.
Our joint preservation and restoration revenue increased 3% in the first quarter to $13.8 million driven by our recent product launches in the U.S. led by X twist and integrity. This growth was partially offset by lower sales of certain of our more mature products.
Lastly, our non orthopedic revenue increased 29% to $2.4 million on growing demand and year-over-year order timing in a high risk of veterinary sales.
Moving to gross margin, our gross margin in the first quarter was 61%, up from 60% on lower intangible amortization. Our adjusted gross margin was 62% in the quarter, down from 64% due primarily to the timing of impact of production inefficiencies and reserves in the quarter.
Moving to operating expenses, our operating expenses in the first quarter totaled $29.7 million. That's down $5.7 million. These lower operating expenses reflect fewer nonrecurring costs as well as effective cost control following launch of key products and addressing the new regulatory requirements in the EU to continue to sell our legacy products there. As a reminder, Anika incurred $5.8 million of nonrecurring costs in the first quarter of last year. For the Parcus arbitration settlement, shareholder activism and other items. In comparison, operating expenses in the first quarter this year reflected $1.4 million of nonrecurring items, including severance costs for the headcount actions we took in the first quarter and shareholder activism costs. Our net loss for the quarter was $4.5 million or $0.31 per share compared to a net loss of $10.4 million or 71% $0.71 per share. Excuse me, we generated adjusted net income of $1.2 million in the first quarter or $0.09 per diluted share, up from an adjusted net loss of $2.2 million or $0.14 per share. As we highlighted on our last earnings call, beginning this year, the calculations of adjusted net income and adjusted EPS have been revised to exclude stock-based compensation net of tax. And this revised calculation is reflected for all periods presented. Anika generated adjusted EBITDA in the quarter of $2.5 million, up from a negative $1.2 million. And our adjusted EBITDA margin in the quarter grew to 6%, up from a negative 3%. The nine point improvement was primarily due to the combined benefit of both revenue growth and reduced spending.
Lastly, with regards to our cash flow and capital structure, operating cash flows were just below breakeven in the first quarter, a $3.5 million improvement from cash outflows of $3.6 million, reflecting lower nonrecurring costs and reduced spending our capital expenditures in the quarter totaled $1.8 million, up 0.4 million, reflecting continued investments in manufacturing capabilities, supporting growth in our OA pain management product line. We ended the quarter with $68.6 million in cash and no debt.
Please turn to Slide 5. Now I'd like to review our full year and financial outlook for 2024. Based on our progress to date, we are reiterating our guidance for 2024 with total company revenue of $168 million to $173 million, representing growth of 1% to 4% in OA pain management. We continue to expect revenue to grow to 102 to $104 million, up 0% to 2%. This reflects continued above-market growth in end-user sales, led by growth of Monovisc globally and single outside the US this year, the impact of the continued above market growth is offset by unfavorable order timing year over year. On a quarterly basis. We also expect ordering patterns to be lumpy as they been historically with higher revenue in the second half of 2024 based on projected timing of transfer shipments compared to quarterly timing last year. In joint preservation and restoration, we continue to expect revenues to grow to 58 to $60.5 million, up 6% to 10% as faster growth in our new products led by act with integrity is partially offset by lower sales of certain legacy products. We continue to expect that growth to be weighted more towards the second half of the year due both to normal seasonality and the full-market release of integrity which remains right on schedule. In non orthopedic, we expect revenues to be eight to $8.5 million, a decrease of 14% to 19%.
With regard to gross margin we continue to expect adjusted gross margin for 2024 of 66, 66.5%. From a spending perspective, we executed on the planned workforce reduction and other spending reductions in the first quarter and are on track to deliver the $10 million in annualized operating expense savings as previously announced, as we have said, a partial year impact will be realized this year due to the timing of the actions in 2024, we plan to use a portion of the savings to fund the filing of the first PMA module for Hyalofast in the United States as well as additional clinical follow-up for our HA-based regenerative products such as integrity. We continue to expect our adjusted EBITDA in 2024 to be between 25 and $30 million, representing an increase of over 75% at the midpoint. This translates to an adjusted EBITDA margin improvement of over six points growing to at least 15% for the year. We continue to be positioned to deliver positive adjusted net income this year and generate positive free cash flow, even as we invest in higher capital spending this year, focused on our O. 18 management manufacturing operations in part, reflecting timing from last year.
In summary, the first quarter was a solid start to 2020 for demonstrating the strength of our market-leading core oh eight franchise and growing momentum from our new products like integrity and Anika is on track for significant bottom line growth this year.
I will now turn the call back to Sharon.

Cheryl Blanchard

Thanks, Mike. Please turn to Slide 6. It's clear that Anika's renewed focus is proving effective as we accelerate our path to profitability. It's still early days and we're continuing to take the necessary steps to optimize performance. We'll remain nimble in our approach, and we are confident that Anika is on the right path with our product portfolio and exciting pipeline, we will continue to improve the lives of the millions of patients in need of early intervention orthopedic care. We appreciate the support of our Anika colleagues without whom none of this would be possible. And we appreciate the support of our shareholders as we work to deliver value under investments. With that, we'll open up the line for questions.

Question and Answer Session

Operator

(Operator Instructions) George Sanders, Stephens.

George Sanders

Good afternoon and thanks for taking the question. Maybe just to start on guidance, I'm just curious, the OA pain management business continues to outperform pretty strong throughout 2023 with a couple of quarters of double-digit growth and another strong quarter here. I'm just curious, how should we think about sort of the cadence through the remainder of the year you get your guidance, are those tough comps? What's sort of limiting stronger or an increase in that in that guidance? And then also, how should we think about sort of the Joint Preservation & Restoration piece and some of the new products like that, the H8 data patch system, how should we think about those contributing more significantly to revenue growth?

Michael Levitz

George, it's Mike. Thank you for your questions. First to the guidance on OA pain management, one of the things that we mentioned last year and we wanted to continue to mention is that the underlying business is growing above market. One of the things that those that have followed this Company know quite well is we do generally have volatile order timing because we deal with big companies like Johnson & Johnson. And so that definitely occurred last year. Q2 last year was was very high, and we called that out in the period and said that was that was not sustainable. That was just timing of how they manage their inventory. And so this year, we have a tough comp as we go into the second quarter because of that. And so on the way to think about the cadence this year is, again our guidance.
We reiterated our guidance. There's no change to our guidance for the year. So 0% to 2% for the year because of the timing of transition. I do expect the second half to be higher than the first half this year for revenues in our only pain management business just based upon the year-over-year comps. So last year, Q2 was bigger this year that Q3 will be bigger. So that's how I would think about the cadence. So you'll see we guided 0% to 2%, but we grew 7% this quarter. I would expect that given the tough comp next quarter on a year-over-year basis, it will be down, but that's not any issue or challenge just this because of the timing last year, frankly, with regards to the joint preservation cadence, the growth this year. So we reiterated the guidance of 6% to 10% on the growth this year is driven. We said on the last call was going to be second half loaded in the sense that we knew we were launching the Integrity product in the middle of the year. And as Cheryl said, we remain right on track to do that.
We're very excited about what we're seeing in limited market release and that product is right on track. And so as we look at joint preservation, we've again reiterated our guidance. We expect the second half to be stronger, both due to integrity moving into full market release as well as the continued growth and ramp of our new products. We're very pleased this first quarter to have the extra bio composite launch and X was continues to be a really nice product and doing exactly what we expected it to do when we gave our guidance. So I hope that's helpful to us.

George Sanders

Yes, that's really helpful color. I'd appreciate that. And then maybe looking it's really beyond this year. I'm just curious, we've seen some announcements of some studies at various other companies. I'm just curious how you all are thinking about the competitive dynamics, potentially some competing offerings in the HA injection market or with what pile of assets going to bring to the table when that's approved. Has there been any change from your perspective on competition in the market as we look beyond this year?

Cheryl Blanchard

Hey, George, this is Cheryl. Can I just ask you to clarify what competition you're referring to, just to make sure I answered your question.
Sure. So one specific example would be Organogenesis announcing the Phase three trial results from their renew injection. Just curious if you all view that as a competing offering to Orthovisc and Monovisc and then also And products like to heal gaining momentum in the market, if that's a competitive concern Got it.
Thank you. I appreciate that's yes. So Organogenesis did just announce them. It will be a readout on their first Phase three clinical trial. And it's difficult for me to comment on that because they didn't provide any data. So I'll be in a better position to have a thought about that from a competitive perspective once I see their data, but they didn't put any data out yet.
And then on the cartilage repair side, from a hard-to-heal perspective, obviously hard-to-heal will be launching here soon into the space where they'll be competing with the MAC products. We've imparted yields placed with a situation with a product that has to remove healthy bone to be implanted. So I think it will be going after a smaller segment of the cartilage repair market that being the osteo control defect market highly fast. I'm very excited to bring that to market, and we'll start filing that modular PMA.
This year, we've got 15 years of data that is likely publishing this year. It is off the shelf single stage and something that we know how it plays in the market based on our commercial experience OUS and does it require you to take healthy bone doesn't require a second surgery. And so we're very excited to compete there to compete with that inside the United States. We just updated that we now sell halo effects in over 35 countries outside the United States. So I'm ready to go with how fast and we've got surgeons like waiting for it here in the United States.

George Sanders

Okay, great. That's really helpful commentary. Thank you for the time.

Operator

Jim Sidoti, Sidoti & Co.

Jim Sidoti

Again. Good afternoon and thanks for taking the questions. Can you talk a little more about the growth rate for the eye that the joint business yields, it's down from the fourth quarter of 23, and you talked about some of the mature products not grown as quickly or are you deemphasizing sales of those products? And I mean, will you continue to sell those go forward? Again?

Cheryl Blanchard

Thanks for that question. Yes, I would tell you that our new products are doing really well I mean, we just announced that that were over 10,000 implantations of extra Quest Integrity is doing very well even in the limited market release where our goal there was to get feedback in an LMR and we're feeling a real pull from the market with that product. We are facing headwinds with some of our more mature products. And while we have a subset of distributors that are doing very well for us and growing strong double digits.
We've talked about the fact that that is an area that we continue to focus on and that we are not happy with currently. So we continue to focus on commercial execution and on really driving those new products that are differentiated and have great clinical results and again, I would just say in that business, we have great products that are doing well. And really the new products are driving the growth in the face of some of those headwinds.

Jim Sidoti

Okay. So it sounds like you're going to continue to sell those products and maybe step up some of the marketing efforts in those products.

Cheryl Blanchard

Yes, we are continuing to sell those products and we continue to train and educate on them, and we continue to make some investments in them. I will just highlight again, one of the things that we announced last quarter with our cost reduction initiatives really put us in a place where that again, we report on one segment, but that part of the business is no longer kind of a drag on our adjusted EBITDA. So we've been thoughtful about how we're making our investments there and where we can invest to really drive that, that growth and where you know, focusing on the products that we think are more differentiated.

Jim Sidoti

Okay. And then if we switch to single, you talked about working with the FDA to figure out what nonclinical data they require once you guys come to an understanding, how long do you think it will take to to get that data to the FDA?

Cheryl Blanchard

Yes, great question. And as soon as I have complete clarity on the additional nonclinical testing that we're going to need to do. I will be in a better position to answer that question. So it is not again just to reiterate, it is not what some years ago the Company was talking about doing a significant clinical trial. It is really just the remaining nonclinical testing that the FDA has been talking to us about soon as I have that clarity, I will be the first one to be talking about it.

Jim Sidoti

Okay. Guy and then on pain management, your numbers, the past few quarters, even with the lumpiness to the distributor, your numbers have been growing very, very nicely. Your competitor reported last night, their seats and simply growth. So it feels like that market is very healthy right now. Is that more attributable to a procedure growth or pricing improvement?

Cheryl Blanchard

Yes, I think there's a couple of things that have happened. First of all, I think the companies that were more subject to the the ASP. changes that happened have anniversaried out of that dynamic. I think really just starting to see it happen this quarter.
So now over a period of time that that complete market in the US actually has shrunk a bit because of that ASP dynamic with with a couple of those companies that have anniversaried out of that dynamic. I think we're going to start to see growth of that market in that market, although had some shrinkage because they a few dynamic. It never stopped growing from a unit perspective.
And so we continue to see kind of low single digit growth of that market in the United States. And it is a healthy market it is still the pendant, along with immediate release, steroid kit can be used repeatedly the front-line treatment for osteoarthritis before we move on to a total knee replacement. So it does continue to have very healthy underlying market fundamentals.

Michael Levitz

And I would just add consistent with what I said at year end, we're seeing really healthy growth in our same section volume, but the pricing has essentially been fairly consistent over the last couple of years for us declining low to mid single digits on a fairly consistent basis. But the volume growth in our single and in our Monovisc products is very healthy.

Jim Sidoti

Okay. And then two quick ones for Mike. On gross margin, that your adjusted gross margin for the quarter was 62% but you're guiding 66 to 66.5 for the year. So is that because of a bunch of onetimes in the first quarter or do you expect product mix to become much more favorable in the back half of the year of hedging, both actually.

Michael Levitz

So we expect favorable mix as we go through the year compared to the first quarter and we just had a number of one-time things in the quarter. So we had production inefficiencies that got amortized into the period. We expected that that was built into our guidance we also had some reserves that were recorded in the period. Oftentimes, those happened throughout the year. It happened in Q1. So on we that's why we felt comfortable reiterating our guidance for the year, and we expect that to approve improve through the balance of the year so that we're in line with our full year guidance.

Jim Sidoti

Okay.

Michael Levitz

On the Aitik $900,000 of severance costs is that in the SG&A line and the severance costs were split that in the areas they recorded in the areas to which they related. And so they're split evenly between research and development and SG&A.

Jim Sidoti

Got it. Okay. Thank you. That's it for me.

Cheryl Blanchard

Thanks, Jim.

Operator

Mike Petusky, Barrington Research.

Mike Petusky

Curious on the on the on the sort of the severance, when does that happened and that happened sort of in March second half of March when one event?

Cheryl Blanchard

Sure. Yes, it came like it was at the end of Q1. So it really didn't have an impact yet in Q1. So you're going to see this year basically an impact of that on three quarters, but not fully annualize until next year. Sure. Okay. From a cash basis and the severance was actually paid out in the second quarter then a share on the.

Mike Petusky

Yes, Claire, what confidence level finally for the full year indeed, material?

Cheryl Blanchard

Yes. Yes, I would never want to speculate around FDA, but we have met with our clinical data, the endpoints that they set out for the Company to meet. We've done so with statistical significance in multiple Phase three clinical trials and FDA continues to reiterate that our clinical data will be a review issue. So there is no I'm not going to get any additional clarity on that topic until we actually file. But we do have continued ongoing dialogue with them. They did give us some feedback here recently.

Mike Petusky

We went back to them with some additional clarifying questions, and I look forward to continuing to give updates on this as we make progress shifting over to integrity and any learnings from the or and.

Michael Levitz

Yes, thanks for asking. The feedback has been really quite stellar. The surgeons, a number of the surgeons now have patients in a number of shoulder applications, although primarily rotator cuff repair in the number of foot and ankle applications and some even in other parts of the body with appropriate on-label use where the feedback has just been.

Cheryl Blanchard

This is great. It's a it's a path of the implants. The patch implant itself is strong. It's manipulated bill under arthroscopy. It's simple surgical technique. The fixation elements are great. Their patients are having great outcomes, and it has just given us a really great feedback and the competence that we need to as we remain on track for our full market release in midyear, we're also really experiencing a pull from surgeons and distributors on this product. So we're very excited to get to that full market release.

Mike Petusky

Could you sorry, is this the sort of the cadence of gross margin? I mean, should we look for sort of gradual improvement or are you know, are the factor?

Michael Levitz

Yes, please. Good question, Mike. We don't give quarterly guidance in part because of the lumpiness of the business, which can impact things on a quarterly basis. One of the things that we did this year. Our guidance is essentially consistent with what we guided to last year and what we actually delivered last year and ending Q1 of last year, we had a low gross margin and then it was higher in the remainder of the year. And I don't know that there's anything unique to the subsequent quarters that I can speak to just because on it it can move on.
I think it's fair to say, you know, you could you could take the guidance for the year if we wanted to spread it evenly, you probably that's pretty reasonable place to go in terms of the some gross margin percent from. But what I But keep in mind that from a gross profit dollars, the revenue growth that we expect to be weighted towards the second half, both in OA pain management and joint preservation. So but from a percentage basis, we might get some as that moves into Q2 and from the timing of things. But it's hard to say at this point, I guess, was it whatever?

Mike Petusky

Great.

Cheryl Blanchard

Thanks, Mike.

Operator

There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call to you for your participation. You may now disconnect.