Greetings. Welcome to Anika's fourth quarter and year-end 2022 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Namaroff, Vice President, Investor Relations, ESG, and Corporate Communications. Thank you. You may begin.
Thank you very much. Thank you. Good afternoon, everyone. Thank you for joining us for Anika's fourth quarter and year-end conference call and webcast. Our Q4 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 Mike 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. The company's actual results could differ 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 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, 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 fourth quarter year-end 2022 press release. Now I'd like to turn the call over to our President and CEO, Dr. Cheryl Blanchard. Cheryl?
Thanks, Mark. Good afternoon, everyone, and thanks for joining us. Please turn to slide three. I wanna start today's call with a high-level overview of where we are and why we're so excited about the value creation potential of our business. Over the last three years, we have expanded our addressable market from $1 billion- $8 billion+. We've attracted leading industry talent, and we've developed and are now introducing into the market differentiated solutions in the largest and fastest-growing segments of orthopedics. As we enter this next phase of execution with a strong balance sheet and expanded portfolio and an energized team, we are very excited about the path ahead. In just this last year alone, we made a number of strategic investments, and our teams continued to execute well.
X-Twist, our new cornerstone product in sports medicine, just moved into full market release at the beginning of this year. We've initiated the limited market release of our RevoMotion Reverse Shoulder Arthroplasty System. We completed significant development and filed multiple 510(k)s with the FDA for our hyaluronic acid-based regenerative rotator cuff patch system. We have nearly completed enrollment for the Hyalofast Cartilage Repair phase III pivotal trial, and we are in the process of engaging with the FDA on Cingal, our next-generation OA pain therapy, following the exciting news last quarter that we met the endpoint of our phase III clinical trial. 2023 is an inflection point for Anika as we build towards our accelerated growth targets over the coming years. Let me get into more specifics.
As you can see on slide four, we delivered strong financial performance with revenue up 11% for the fourth quarter and 6% for the full year, even with sustained supply chain headwinds through the year. Anika continues to be a leader in the hyaluronic acid-based OA pain management market with Monovisc and Orthovisc in the U.S. and internationally. Outside the U.S., we continue to be excited by the growth of Cingal, our next-generation non-opioid single-injection product to treat both short- and long-term OA pain. Through our long-term partnership with J&J Mitek for Orthovisc and Monovisc in the U.S., we have strengthened our number-one market share position in the U.S. viscosupplement market. Cingal is a tremendous opportunity for Anika.
We have successfully commercialized Cingal in more than 35 countries outside the United States, where more and more clinicians and their osteoarthritis patients are realizing the benefits of this next-generation OA pain product. Given its international commercial success and our recently reported exciting phase 3 clinical data, we're continuing to advance Cingal towards FDA approval in the U.S. We expect our joint preservation business will accelerate its growth as we move through 2023 based on the strength of our recent product launches. While we're still in the early stages, we are receiving great feedback from surgeons about the differentiated benefits of Anika's products.
Tactoset, our rapidly growing regenerative solutions product that we launched in 2019, continues to capture market share with revenue up 28% for the full year. Given the success of this platform, we're targeting further Tactoset expansion, which we'll discuss in more detail shortly. Following the successful limited launch of X-Twist late in the third quarter of last year, we moved into full release early in 2023. We're thrilled to be positioned to meet demand now that we are past the initial X-Twist supply chain challenges that constrained its growth during its limited launch last year. Surgeon feedback continues to be positive as they highlight the confidence they have in using it in a variety of sports medicine applications.
We've also received great feedback on the surgical versatility that X-Twist has given them across procedures in the shoulder, foot and ankle, and other extremities, and that our design facilitates soft tissue repairs that other systems are unable to accommodate. In addition, we recently commenced the limited market release of our new RevoMotion Reverse Shoulder System with the first surgeries performed in early 2023. RevoMotion significantly expands our shoulder arthroplasty portfolio and early feedback from the limited release surgeons has been fantastic. As I'll discuss further on the next slide, this product launch marks our entrance into the rapidly growing $800 million U.S. reverse shoulder market segment, the largest and fastest-growing segment of the shoulder replacement market.
I'm also pleased to report that Hyalofast has been designated as a breakthrough device by the FDA, allowing for prioritized interaction and review to enable patients faster access to new therapies. As a reminder, Hyalofast is our highly differentiated, off-the-shelf cartilage repair product that only requires a single surgery and is bone preserving. We are now approaching full enrollment in our Hyalofast pivotal phase III clinical trial, having enrolled 199 of 200 subjects, we remain on track to file a PMA for Hyalofast with the FDA in 2025. Finally, we made tremendous progress in our global medical education program in 2022, conducting in-person training for more than 450 surgeons in the U.S. alone, in addition to other training activities at orthopedic meetings.
Our medical education programs are enhancing technical and procedural confidence for our surgeons as they integrate our products into their practice and return their patients to active living. Let's turn to slide five, where I'd like to expand a bit on our recent launch of the RevoMotion Reverse Shoulder System. RevoMotion is a highly differentiated and innovative reverse shoulder system, specifically designed for the ASC and enhanced OR efficiency. On the implant side, RevoMotion offers the industry's smallest diameter threaded glenoid base plate, which enhances intraoperative flexibility. It also provides patient personalization with bone preserving glenoid and humeral designs that match the native anatomy, similar to other implant designs in our Arthrosurface portfolio. Some of the most exciting features of this system are on the instrument side.
With a streamlined two instrument tray design, the consolidated instrumentation is both ASC and hospital-friendly, limiting sterile reprocessing volume and reducing relative costs for our customers. In fact, most competitive systems require between 4-6 trays of instruments, which presents a major burden to hospital efficiency and makes those systems difficult to use in the ASC setting. We've received great feedback following first surgeries, with surgeons commenting that RevoMotion is much more bone conserving and that the system is very efficient. Most importantly, patients are doing well in their early post-op visits, and surgeons are extremely pleased with the post-op X-rays. We look forward to building on this momentum ahead of a full launch, which we are targeting toward the end of this year. I'd like to spend a few minutes reviewing our new product development pipeline.
As you can see on slide six, Anika has been incredibly productive with our NPD work, with now several successful product launches beginning in 2021, including the Total WristMotion, Tactoset Augmentation, X-Twist, and most recently, RevoMotion. These new product introductions are key to our growth strategy in achieving our multi-year targets. By launching these innovative new products across categories and procedures, we are continuing to expand our market opportunity and enhance the value that Anika brings to both the ASC and hospital settings. In our regenerative solutions portfolio, we remain focused on advancing our Tactoset platform. We have multiple 510(k)s in process, which will expand indications and allow us to further build on the commercial success we've had since launching this in late 2019.
We believe that with the continued expansion of the Tactoset franchise, we can increase the addressable market to well beyond $100 million by creating a new market for hardware augmentation. Following the full market release of X-Twist, Anika is positioned to address the needs of surgeons performing high-volume sports medicine procedures such as rotator cuff repairs and ankle stabilizations. With a $600 million+ U.S. market opportunity, X-Twist is a cornerstone addition to the Anika sports medicine portfolio, we believe it has the potential to become a true platform technology as we look to leverage its design in future products. We're also pleased to announce that we will be launching a hyaluronic acid-based regenerative patch system next year that will further strengthen our growing and differentiated shoulder portfolio.
It is initially designed for the shoulder to provide augmentation to the tendon to support healing for rotator cuff tears. Anika's patch is not only mechanically stronger, but our preclinical data shows that the regenerative capacity is improved compared with the first generation collagen patches on the market. Along with our arthroscopic delivery and fixation methods, the system promises to truly be a game changer. We completed multiple 510(k) submissions at the end of 2022, and we'll share additional details about the product once the system has been cleared and we're gearing up for first surgeries. Given the attractive market for regenerative patches, we believe this system has expansion opportunities beyond the shoulder and will be a key driver for growth.
Finally, we have two important longer-term opportunities with Hyalofast and Cingal that will further augment and reinforce Anika's growth once they are approved and available for the U.S. market. We're making great progress advancing Hyalofast and are excited about its significant U.S. market potential, which will enable us to reach an addressable market that we have conservatively sized to be at least $350 million. Due to its differentiation, we also believe that Hyalofast has significant market expanding potential, given that it is a single-stage, off-the-shelf solution. We look forward to advancing Hyalofast through the FDA. We're also continuing to advance Cingal toward U.S. commercialization. In the third quarter, we announced that it successfully demonstrated superiority over steroid alone for pain reduction at 26 weeks.
Cingal is a true next generation non-opioid OA pain product. Given its strong international performance and clinical data, we believe it could potentially double our total addressable market in the OA pain space and become a key revenue engine for Anika for years to come. As we look ahead, we will continue to engage with the FDA regarding next steps for U.S. regulatory approval. In parallel, we are exploring the potential to advance Cingal through commercial partnerships in the U.S. and select Asian markets. As a reminder, Anika controls full global rights for Cingal. We intend to proceed thoughtfully as we evaluate our options to commercialize Cingal to best serve osteoarthritis patients around the world and drive shareholder value. We will continue to provide updates over the coming quarters as we make progress on this important strategic asset.
Similar to last quarter, I want to use slide seven briefly as an opportunity to reflect on how far our business has come as we continue to expand into large and growing markets that represent high opportunity spaces within orthopedics. Over the past three years, we have expanded Anika's market opportunity from $1 billion to more than $8 billion today. In addition to advancing Cingal through clinical development, we have grown and evolved our portfolio, actively investing in higher growth, yet highly complementary areas to build a comprehensive joint preservation portfolio in regenerative solutions, sports medicine, and Arthrosurface joint solutions. Moving to slide eight, we are targeting the largest and fastest-growing segments of the joint preservation market by focusing on the shoulder, particularly across the continuum of rotator cuff disease, representing a $2 billion U.S. market opportunity.
Our portfolio, using Anika's unique and proprietary technologies, includes recent product launches that specifically address the shoulder continuum. First, looking to the upper right-hand corner of the slide, we believe X-Twist has the potential to become a true platform technology as we look to leverage its design in future products. Continuing clockwise on the regenerative side, we offer Tactoset to augment hardware, specifically with suture anchors when surgeons encounter poor bone quality to provide a differentiated solution to achieve a strong repair. Now that we are in more rotator cuff procedures, we have the opportunity to cross-sell Tactoset Augmentation with X-Twist. In the pipeline is our regenerative rotator cuff patch system, providing a strong foundation in regeneration alongside Tactoset. Finally, adding RevoMotion enables access to the full joint replacement market in the shoulder with a focus on a differentiated and bone-sparing design.
This means our portfolio will now address the full spectrum of shoulder arthroplasty needs for surgeons in the hospital and ASC settings. Now that we have this major product category filled, the opportunity to drive our Arthrosurface joint solutions products, specifically OVOMotion, our total shoulder, is dramatically enhanced. We expect that X-Twist and RevoMotion will be significant growth drivers, positioning Anika to deliver double-digit growth in joint preservation and restoration in 2023, which will be augmented further by our regenerative patch system in 2024. I'll now turn it over to Mike for a review of our fourth quarter and year-end results and 2023 outlook. Mike?
Thank you, Cheryl. I will now walk you through our financial results for the fourth quarter of 2022. All comparisons will be against the same period of 2021. Please turn to slide nine. Total revenue for the quarter was $39.6 million, an increase of 11%. Revenue in our largest product family, OA Pain Management, increased 20% to $23.7 million, due primarily to favorable year-over-year ordering patterns from J&J Mitek, which had greater quarterly volatility last year, and to a lesser extent, due to continued year-over-year international growth. As a reminder, revenues in our OA Pain Management product family can vary significantly on a quarterly basis based on ordering patterns by our partners and distributors, both in the U.S. and internationally.
However, that quarterly volatility generally stabilizes on an annual basis. Our joint preservation and restoration revenue in the quarter increased 8% to $14.3 million on improved elective procedure volumes with continued strong growth in Tactoset. Our non-orthopedic revenue declined to $1.5 million compared with $2.8 million on last-time buys of certain legacy products last year. Our gross margin in the fourth quarter was 61% and includes the impact of $1.6 million of non-cash acquisition related expenses from the 2020 acquisitions of Arthrosurface and Parcus Medical, as well as a product rationalization-related reserve of approximately $600,000 associated with legacy non-orthopedic products we no longer expect to sell. Our adjusted gross margin, which excludes the non-cash acquisition related expenses and product rationalization charge, was 66% in the fourth quarter.
That's up nine points from 57% last year as we continue to successfully navigate the global staffing and supply chain challenges that caused production inefficiencies and increased reserves in Q4 last year. From a spending standpoint, our research and development and SG&A expenses together totaled $30.8 million in the fourth quarter, up 17% from $26.5 million as we continue investment in development of key products and expand our internal capabilities in support of our growth initiatives. The higher spending in the quarter included commissions on higher U.S. joint preservation and restoration sales, along with increased medical education to support safe and effective use of Anika's growing product portfolio. Spending in the quarter also included higher general corporate costs as well as non-cash stock-based compensation expense, driven in part by the growth in personnel to support Anika's strategic transformation.
Our net loss for the quarter was $4.9 million or $0.34 per share, compared to a net loss of $5.8 million or $0.40 per share in the prior year. Our adjusted net loss was $3 million or $0.21 per share, favorable compared to our adjusted net loss of $3.2 million or $0.23 per share in the prior year as we continue to execute on Anika's strategic transformation and growth acceleration initiatives. Our adjusted EBITDA generated in the quarter was $1.4 million. That's up from an adjusted EBITDA loss of $200,000. The increase was primarily due to our revenue growth along with the operational improvements reflected in our higher adjusted gross margin.
Lastly, with regards to our cash flow and capital structure, Anika's balance sheet remains strong with $86.3 million in cash and no outstanding debt as of December 31. We generated operating cash of $500,000 during the fourth quarter, down from $4.5 million. Our capital expenditures in the quarter totaled $2.6 million, up from $1.1 million last year, reflecting investments in working capital and fixed assets in support of our new product launches and overall business growth. Please turn to slide 10. I would now like to walk you through our full year results for 2022 as compared to the prior year and compared to our most recent guidance.
For the full year, Anika generated revenue of $156.2 million, an increase of 6% from the $147.8 million of revenue reported in 2021, at the upper end of our most recent guidance. By product family, our OA pain management revenue finished up 9% at $97.9 million at the high end of our most recent guidance expectation, primarily reflecting above normal international growth due to recovery from the initial COVID impact, favorable distributor ordering patterns, as well as continued growing global commercial adoption of our combined portfolio of Cingal, Monovisc and Orthovisc. Our revenue from J&J Mitek increased 2% in fiscal 2022 as higher growth in single injection Monovisc was offset by lower multi-injection Orthovisc revenues.
The growth in OA pain management revenue also included $5.9 million of veterinary product sales, up from $4.4 million in the prior year. Our joint preservation and restoration revenue grew 4% to $50.4 million for the year, in line with our most recent guidance of low to mid single digit growth. We were pleased to see the sequential quarterly growth in joint preservation and restoration throughout the year. Our non-orthopedic revenues, which represent 5% of our revenues, totaled $7.9 million for the year, down 18%, which was slightly favorable to our guidance.
For the full year, our GAAP gross margin was 60% and our adjusted gross margin was 66% at the upper end of our guidance and in line with last year's adjusted gross margin despite the ongoing supply chain and staffing challenges that we experienced throughout 2022. Adjusted EBITDA margin finished at 8%. It was favorable to our mid single digit guidance as we continue to self-fund investments supporting our key growth initiatives. For the year, we generated operating cash of $4.4 million. Our capital expenditures totaled $7.5 million, and we ended the year with $86.3 million in cash and no outstanding debt. Please turn to slide 11. Now I'd like to review our full year financial outlook for fiscal year 2023.
I'd like to make a brief clerical comment about a change we are making to product family reporting to provide investors a clearer representation of the performance trends in our business. Beginning in the first quarter of 2023, veterinary product revenues, historically reported within OA Pain Management, will be reported in the non-orthopedic product family. The growth outlook for 2023 reflects this reclassification of veterinary product revenue for both 2023 and 2022. We currently expect total company revenue for 2023 to be between $158 million and $163 million, representing growth of 1%-4% compared to 2022. Continued growth in OA Pain Management and joint preservation and restoration is offset by lower ancillary non-orthopedic revenues. The lower non-orthopedic revenues reduce total company growth by approximately 3-4 percentage points.
In OA pain management, we expect revenue of $93.5 million-$96 million, up 2%-4% over 2022, which is above market as our market-leading products continue to gain adoption globally, and also reflects the favorable international timing that we had in 2022. As a reminder, this guidance reflects the reclassification of veterinary revenue from OA pain management to non-orthopedic. With the key product launches in joint preservation and restoration, we expect full year 2023 revenue of $55.5 million-$58 million. That's up 10%-15% over last year.
Given we are early in the full market release of X-Twist, and we expect to begin full market release of RevoMotion toward the end of 2023, along with normal seasonality, with Q1 being the weakest and Q4 being the strongest quarter of the year, we expect the growth in joint preservation and restoration to be weighted more toward the second half of this year. We expect non-orthopedic revenue to decrease approximately 35% to $9 million, due primarily to higher revenues in the prior year from last time buys of legacy products and order timing in veterinary product sales last year. The decline in non-orthopedic revenues reflects the continued impact of product rationalization decisions that we have made to exit legacy product lines that do not support our growth and profitability objectives.
With regard to gross margin, we expect adjusted gross margin for the year to be roughly in line with the 66% we reported last year. We remain focused on driving margin expansion, but we anticipate the headwinds from the global trends in supply chain and staffing challenges will likely continue through the year. With regard to spending, in 2023, we are continuing to self-fund critical growth initiatives and investments in key research and development programs and commercial execution, and other operational investments that support our transformation and will enable us to scale as we grow. In addition, our 2023 spending will include investments to support our existing revenue streams, such as the significant efforts to meet the new EU MDR medical device regulatory requirements for our international sales, as well as required investments in equipment and personnel for our OA pain management manufacturing.
As such, we expect operating expenses for 2023 to increase over 2022 as a percentage of revenue as we self-fund our growth strategy, resulting in expected adjusted EBITDA margin for the year in the low single digits as compared to the 8% EBITDA margin we reported in 2022. We also expect capital expenditures to increase in 2023 above depreciation to support the rollout of key new product introductions and necessary investments in manufacturing equipment to support our legacy business. As Cheryl mentioned, we view 2023 as an inflection point in Anika's multi-year growth strategy. With key shoulder-related product launches in 2023 and 2024, we are diligently driving execution to realize the significant multi-year growth prospects within joint preservation and restoration.
All of these efforts support delivering on our 2025 growth targets of $230 million in revenue and 70% adjusted gross margins, as well as our adjusted EBITDA margin target of 20%, which we expect in 2026, reflecting in part the expected timing of the international MDR efforts. Our team remains focused on both Anika's company mission to restore active living and on driving value creation for our stakeholders, and we look forward to updating you on our continued execution of this strategy. I will now turn the call back over to Cheryl.
Thanks, Mike. Please turn to slide 12. I'd like to close by reiterating that 2023 is a real value inflection point for Anika. We are building a best-in-class portfolio as we continue launching exciting new products in high opportunity spaces and optimize our U.S. commercial reach and focus. With the key shoulder-related product launches in 2023 of X-Twist and RevoMotion, as well as the efforts supporting the planned 2024 launch of our HA-based regenerative rotator cuff patch system, we are diligently driving execution, supporting the multi-year growth prospects within joint preservation and restoration. This year, we are also exploring the potential U.S. and Asian market opportunities for Cingal, as well as completing the clinical follow-up work for Hyalofast as we approach completing enrollment in our phase III pivotal trial.
We remain disciplined as we deploy our capital, further enhance our portfolio, and deliver on our many growth opportunities. Anika continues to have a healthy balance sheet with a solid cash position and no debt. We remain laser-focused on delivering our multi-year growth targets. Before I open up the call for questions, I'd like to take a moment to thank all of our employees for their hard work and dedication to Anika. We have a talented team supporting our efforts. We appreciate all that they do each day to advance our mission to serve our customers and their patients as we restore active living for people around the world. We look forward to providing updates on our progress in 2023. With that, we'll open up the line for questions.
Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of George Sellers with Stephens. Please proceed with your question.
Hi, this is Harrison on for George. Good afternoon, and congrats on the quarter and strong finish to the year. My first question is, just wanting to dig in on your 2023 guidance a little bit more. I know it's a little bit lighter than we're expecting. I was wondering if you could give us any more color on what it assumes from a macro standpoint in terms of staffing issues, supply chain challenges, or any other headwinds that may persist in 2023. Also just how much general conservatism is baked into those numbers. Thanks.
Thank you, George, or Harrison, excuse me. This is Mike. I just wanna make sure that you understand one element of it, which is the non-orthopedic revenues. That is an area where we're expecting a 35% decrease year-over-year because it's not driving value for us long term in terms of our growth strategy. Relative to the expectations, I think I wanna make sure that you understand that. Included in that now is the legacy veterinary product sales. Those had historically been recorded in OA Pain Management and are now being reflected in non-orthopedic.
As it relates to our expectations for this year, you know, I think this is the growth in OA Pain Management of 2%- 4% is above market growth in this more mature market, and also coming off of a very strong year internationally, which was in part related to timing, as we called out last year. We just finished a year where we grew 9%. You know, most of that came from international, which a lot of that was COVID recovery as well as distributor timing. It can be a lumpy part of our business. It also, though, international represents a significant growth opportunity for us, so we're very excited about it. There was some favorable timing in the year.
As it relates to our joint preservation guidance, again, we're, you know, more than doubling the growth rate of that business and moving into the, into the teens there. W e're definitely reflecting our excitement in that business in what we've got here for guidance. We're also reflecting the reality of the timing of our launch. W e announced that we're moving into full market, or we moved this quarter into full market release of X-Twist. A normal ramp, you know, doesn't happen overnight 'cause surgeons are gonna try the product. They're gonna wanna see it working in people's bodies. The demand is very strong. The feedback's been great. We're just reflecting a normal ramp.
You know, as we discussed last quarter, you know, we were impacted last year with some initial supply chain challenges as so many other companies are. Those supply chain challenges were addressed, and we were able to move into full market release here in the first quarter. Also the RevoMotion, our new reverse shoulder product, is going to be a wonderful product, but it's in limited market release and moving into full market release toward the end of the year. That's why the guidance there is really second half oriented. One, you know, if you recall the growth in that business this last year, it grew sequential quarter. You know, Q1 is always the lightest quarter. Q4 is generally the strongest quarter in orthopedics.
We expect a similar trajectory, but more weighted to the second half because of the timing of these new product launches and the related ramp. You know, it's early in the year. It's early in these product launches. The feedback's been great, but we don't wanna get ahead of ourselves so early on in these launches.
Got it. Yeah. That makes sense. I wanted to follow up on the veterinary products and, what the quarterly cadence you're expecting from those products throughout 2023?
Yeah. We don't provide quarterly guidance generally. There are reasons for that. One of them being, it can be pretty lumpy, frankly. As we've said, as I said in my earlier remarks, you really need to look at things on an annual basis. It's a very small number. I mean, we've talked about last year, it was about $5.9 million last year. Our guidance for non-orthopedic, which impacts all the elements in non-orthopedic, is down 35%. N on-orthopedic is a small part of our business. What I think it reflects is us focusing on the things that are really gonna drive the most growth and us making decisions to place more priority there and to really drive value from what we've got in the non-orthopedic segment.
Thank you. That's helpful. Thanks again, or congrats again on the great, strong quarter. Thanks.
Thank you.
As a reminder, it is star one to ask a question. Our next question comes from the line of James Sidoti with Sidoti & Company. Please proceed with your question.
Hi. Good afternoon. Thanks for taking the question. A couple of questions on Cingal. The first one, has the release of the phase III clinical data helped your business overseas? I know it's a US trial, but have you been able to use that to build some of the business outside the U.S.?
Hi, Jim. Yeah, thanks for the question. We will be using that data. It's obviously fairly new that it's come out, but it is being incorporated into our marketing materials for use overseas. It's obviously very supportive of the strength of the product. What we think is unparalleled clinical data for especially an OA pain product, but the next generation of OA pain product, because it really demonstrates superiority over both of the active ingredients in Cingal and placebo across all three of the clinical trials that we've run. Yes, we are using all of that data for use in our marketing efforts overseas.
In general, the OA business, the volatility was less in 2022 than it was in 2021. Do you think that trend continues in 2023 or do you go back to a more lumpy year, quarter-over-quarter?
Jim, this is Mike. You know, that business, it can be lumpy. One of the reasons that it is, it's less so on the end user side than it is in the transfer units. You know, over half of our revenue comes from transfer sales, with the corresponding remainder being related to royalties. On the transfer sales, that's entirely driven by how J&J Mitek manages their business within their buying group. It does become a bit challenging to predict that because it's really driven by their own internal decisions. That's why we generally say, you know, focus more on the year than on the quarter because that quarterly volatility tends to offset itself. You know, I think historically in that business, Q2 tends to be a stronger quarter than other quarters, as I say, it really is unfortunately more impacted by the decisions within J&J of how they manage their own operations.
On the other side of the business, it looks like the big launch will be the reverse shoulder. You know, what investments do you need to get that out to market other than the tooling? Is there gonna be an increase in salespeople or increase in surgeon training? You know, how should we factor that into the expenses for 2023?
Yeah, let me start, Jim, on that, and then Mike may have some comments to add. I mean, for a product launch as significant as a new implant system, there are a number of things. The first thing is right now with the limited release, we are getting feedback around the instruments, the instrument trays, and how they're deployed. I think you heard me talk about the fact that we're really excited about this streamlined two-tray design. It's highly differentiated and drives a lot of efficiency. With that, we wanna make sure we really get it right. We'll get that feedback. You know, for full launch, we've really got to build enough instrument sets to get them out in the field. In parallel with that, though, we will be talking about the system with surgeons.
We will be doing training on safe and effective use so that they feel comfortable adopting it when instrument trays and implants are fully ready to be deployed toward the end of this year. There will be expense dollars that we've got factored in relative to the training activities and on the instrument and inventory builds. Mike, I don't know if you have anything you wanna add to that.
Yeah. The only thing I would add is just, you know, as I mentioned before, Jim, you know, we do expect CapEx to be above depreciation this year. Last year, it was essentially in line with depreciation, but did include some of those instruments so we could move into this limited release. We will be adding more instrument sets, and we are encouraged by the strong demand and great feedback that Cheryl mentioned. You know, we do expect CapEx above depreciation for the instrument sets. We also have investments in production capacity. A good amount of our CapEx also has to do with the legacy business and the need to make sure that we've got the production capacity for what we're seeing there as well. A bit of a higher level of spending this year, but it's all in support of our multi-year growth targets.
Thank you. That's it for me.
Thanks, Jim.
Our next question comes from the line of Michael Petusky with Barrington Research. Please proceed with your question.
Hi, good evening. Cheryl, you mentioned being laser-focused on multi-year growth targets. Are you guys willing to sort of define that? I'm not sure I completely understand that there is a target out there for a specific year. Thanks.
Mike, I'm happy to respond to that. As I said in my remarks a couple of minutes ago, the specific multi-year growth targets that we have are the same ones that we've been talking about, which are $230 million in revenue and 70% adjusted gross margin, both of those in 2025. Our adjusted EBITDA target of 20%, which we expect in 2026, and that timing is impacted by the outsized EU MDR efforts related to the new regulatory regime.
Yeah. It doesn't feel like we're tracking to any of that, but okay. Also, Mike, I guess I wanted to understand, stock comp. It's elevated. I'm just curious, is it gonna stay at these levels going forward?
Yeah. Mike, let me clarify. One of the things that's happened over the last couple of years is there's been a lot of management transition, as you would expect, in this type of transformation. One of the things that happens in the stock-based comp run rate is as executives who have been around for a while leave, you get their forfeitures, which artificially lowers stock-based comp. That was happening a lot more in the last couple of years. When you look at year-over-year comparisons, that's one of the things that you need to keep in mind. No, we don't expect. I mean, we've got the team to drive the growth in this business. And the team that we've attracted is highly energized around doing that.
We have had to spend some more money in stock-based comp in line with market compensation, just to make sure that we have the right people to realize the significant opportunity in front of us.
I just wanna absolutely make sure I understand. The EBITDA guidance would suggest something like more than 50% down in terms of adjusted EBITDA in 2023 versus 2022, correct?
When we guided for the year, when we started the year, we guided last year at mid-single digits. We came in at 8%. A s we're guiding this year, we are guiding at the low single digits because of the multiple product launches, increased general corporate spend, and all the things that Cheryl and I just referred to. You know, one of the things that we are. To answer your question, if Cheryl says we're laser-focused on these targets, it's because t hese are very large market opportunities, very different than the market opportunities the company has historically had, in its joint preservation business, as you can see by the size of the X-Twist rotator cuff market, the RevoMotion reverse shoulder market, then now as Cheryl described, the new patch system that we're coming out with that we're really excited about.
These are very big opportunities. The dollar amounts that we're spending are much smaller than, you know, you're seeing a lot of companies out there spending a lot of money to buy into this space. We've decided that we're able to do it organically with a much smaller level of spend. As we've been saying, our capital allocation approach is to focus on investments in those things nearest to home, our organic opportunities, to really drive this value and realize the opportunity in front of us. That's what's reflected in the guidance.
Right. You are gonna be down based on your guidance 50%+ .
Our guided EBITDA number for 2023 is lower than our guided EBITDA in 2022 and is purely a function of the timing of these investments so that we can realize the value from them.
All right. Thank you.
In addition to the fact that there are increased costs associated with the legacy business. Those are the things that we just have to factor in. I mean, we're not immune from the things you hear about from all the other companies out there of inflation and people costs and all these other things. That's reflected in there. We also reiterated our multi-year targets because the opportunity is significant, and the dropdown to be able to leverage this spend, we believe is very real and tangible.
Okay. All right. Thank you. I appreciate it.
Thanks.
There are no further questions in the queue. I'd like to hand the call back over to Cheryl Blanchard for closing remarks.
I'd like to thank everybody for joining us tonight. We look forward to reporting out on the year that we've got ahead. We're reiterating that 2023 is a real value inflection point for Anika. We're building a best-in-class portfolio as we continue launching exciting new products in the high opportunity spaces we're in and as we optimize our commercial U.S. reach and focus. Thanks everybody for your time tonight. We appreciate your time.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.