Good day. Thank you for standing by. Welcome to the Treace Medical Concepts 2nd quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Julie Dewey. Please go ahead.
Good afternoon, everyone, and welcome to our second quarter 2023 earnings conference call. We appreciate you joining us. I'm Julie Dewey, Treace's Chief Communications and IR Officer. With me today are John Treace, Chief Executive Officer, and Mark Hair, Chief Financial Officer. During the call, John and Mark will offer commentary on our commercial activity and review our second quarter financial results released after the close of market today, after which we'll host a question-and-answer session. The press release and supplemental materials can be found in the investor relations section of our website at investors.treace.com. This call is being recorded and will be archived in the investors section of our website. Before we begin, we'd like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995.
Any statements that relate to expectations or predictions of future events and market trends, as well as our estimated results or performance, are forward-looking statements. All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon current available information, and Treace assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings, including our Form 10-Q for the second quarter, to be filed tomorrow, our Form 10-Q for the first quarter, filed on May 9, 2023, and our Form 10-K for the full year 2022, filed on March 8, 2023, for a detailed presentation of risks.
With that, I'll now turn the call over to John.
Thank you, Julie. Good afternoon, everyone. Thank you for joining us on our second quarter 2023 earnings conference call. Before we begin the call, I'd like to start off by saying how proud I am of what our team was able to accomplish since our last earnings call and in the first half of the year. We're pleased with the progress we're making. We believe we are well positioned for the second half of 2023. In the second quarter, we continued to execute on our strategic plan, resulting in sustained strong revenue growth, encouraging adjusted EBITDA progress, and continued gains across our key operating metrics, reaffirming once again that we have the right strategies in place to expand the market penetration of our differentiated technologies. Before I go into details about the quarter, let's start with our market summary on where we stand today.
Our disruptive Lapiplasty solution was specifically developed to correct the root cause of the bunion and address a large and underserved market. We have identified an estimated addressable $5 billion+ US market of an estimated 1.1 million annual surgical candidates, of which only 450,000 undergo bunion surgery each year, which we believe is mainly due to limitations associated with current standards of care. We believe our proprietary Lapiplasty system addresses these limitations by surgically correcting all three planes of the bunion deformity and securing the unstable joint, thereby addressing the root cause of the bunion.
As of the second quarter of 2023, we've penetrated approximately 6.2% of the estimated 450,000 annual surgical bunion procedures in the U.S., up from 4.6% in the second quarter of 2022, and reflecting approximately 2.5% market penetration of the estimated 1.1 million annual U.S. surgical candidates that constitute our $5 billion-plus total addressable market in the U.S. Turning to our Q2 results. Revenue in the second quarter was $42 million, representing 40% growth over the second quarter of 2022. During the second quarter, we continued to execute on our commercial strategies and benefit from our investments, even as we saw some patients and surgeons prioritizing travel and time away from their practices.
We're extremely pleased not only with our top-line growth, but our sustained positive trends in our key operating metrics, including our expanding direct bunion-focused sales team, which accounted for 79% of our revenue mix in Q2, compared to 68% during the second quarter of 2022. Steady increases in the number of new surgeon users, ending Q2 with 2,581 active surgeons, up 26% year-over-year.
A year-over-year increase in trailing 12 months surgeon utilization, with an average of 10.7 kits per active surgeon in Q2, up from 10.1 kits a year ago, and strong blended average selling prices of $6,176 per Lapiplasty kit sold in the quarter, representing 8% growth over the prior year as our expanding direct sales team educates our customers on our broader portfolio of problem-solving complementary products such as Adductoplasty, our FastPitch screws, our SpeedRelease and TriTome tissue release instruments, and other products. Our strategic investments and commercial focus have continued to support the growth of our business, giving us confidence that we have a well-defined, proven, and scalable commercial strategy.
Given these positive trends, we are raising our full year 2023 revenue guidance to $191 million-$197 million, which reflects an increase of 35%-39% over 2022 revenue. We remain committed to balancing aggressive execution of our targeted commercial initiatives to maximize our growth and market penetration while delivering modest improvement in expense leverage. Shifting to our commercial and market development activities. As we've previously discussed, we have continued our targeted investments in 2023, with the goal of increasing our market penetration by expanding the footprint and coverage of our bunion-focused direct sales channel, advancing our patient awareness DTC initiatives, and driving more targeted R&D innovations into the market.
We have a highly specialized team at Treace, including a rapidly growing direct sales force, one that is 100% focused on bunion and related midfoot surgery, and the only such organization that we're aware of in the U.S. med tech industry. We believe this has contributed meaningfully to our revenue and market penetration over the past years. As previously mentioned, in the second quarter, 79% of our revenue was generated by our direct sales force, up from 68% over the same period last year.
We continue to see increasing productivity from the direct sales reps that we added during 2022. As we've discussed in the past, our historic data demonstrates that our direct sales reps typically scale with significant revenue and cost leverage achieved within 24 months, primarily because they're exclusively focused on our products and fully utilize our suite of corporate resources and programs. Further, over the past year and a half, we've aggressively invested in our direct sales channel. We ended 2022 with 168 quota-carrying direct sales reps and began this year with a target of having over 200 quota-carrying direct reps by year-end. With strong interest from candidates to join our direct sales team, we're happy to announce that we've already achieved our full-year target by the end of Q2.
We plan to continue to opportunistically hire to ensure that we are prudently balancing growth and delivering modest improvements in expense leverage, all while increasing revenues from our direct sales channel. Our patient awareness DTC initiatives are a key component of our commercial strategy. As you may recall, our investment in DTC is resulting in hundreds of thousands of potential patients visiting our website every month. On this strong momentum, we've increased our DTC investments in 2023, incorporating new digital tools to make it easier for patients to connect with Lapiplasty® doctors, and as a result, we've seen a significant increase in patient-initiated physician contacts on our website, which have more than doubled in the first half of this year compared to the same period last year.
With one in four surgeons in the U.S. using the Lapiplasty procedure, we have a large and expanding national surgeon base that can now field inquiries from this higher volume of potential patients. To further support this increased patient interest, during Q2, we ramped up a new Lapiplasty call center. This call center is integrated with our patient website and serves as another communication and education channel for both potential Lapiplasty patients by answering basic questions about the Lapiplasty procedure, with the goal of ultimately connecting these patients with trained surgeons in their area. Although early, we're encouraged by the volume of calls this center is already receiving and believe this will meaningfully increase the number of informed patients who enter the Lapiplasty treatment funnel over time. Our surgeon education and training programs continue to be well received.
These programs play a key role in the effective onboarding of new surgeon users and increasing the skills of existing surgeons, broadening their patient indications. We're encouraged to see continuing growth in our active surgeon base, with 2,581 active surgeons in Q2, which is up 26% from the prior year period. Demand for our introductory and advanced surgeon training programs, both online and in person, remains robust. We look forward to executing additional training sessions that we have slated for the back half of this year. As our surgeon base continues to develop, we anticipate utilization gains with increased use of our Lapiplasty and Adductoplasty systems, as well as further adoption of our growing portfolio of complementary products, all supported by our expanding direct sales channel, differentiating clinical data sets, and patient awareness DTC initiatives. Speaking now to our product development strategy.
We have an R&D team committed to driving innovation to maintain our industry leadership with programs for both next-generation bunion correction systems, as well as the development of new complementary technologies addressing other bunion-related pathologies and IP defense of our technology and innovations. We now have 49 granted U.S. patents and 72 U.S. patent applications pending. We continue to advance our product pipeline with the development of several new technologies. First, our Micro-Lapiplasty System. This is an advanced instrumentation option designed to further reduce both the incision size and related tissue dissection with the Lapiplasty procedure. This exciting evolution of our instrumentation allows the patented Lapiplasty procedure to be performed now through a 2-centimeter incision. Our SpeedPlate Implant Fixation Platform. This is a new fixation technology platform designed for rapid insertion while providing dynamic compression of the joint surfaces.
Since it can be implanted through small 2-centimeter incisions, SpeedPlate not only offers broad applicability with both our standard Lapiplasty and Adductoplasty systems, but also serves as an enabling fixation technology for our Micro-Lapiplasty System. We have been performing limited launch clinical cases with SpeedPlate for several months in preparation for our full anticipated launch in Q4. Initial response from surgeons who received early clinical access has been overwhelmingly positive, specifically with regard to time savings, stability, and the dynamic compression benefits that the SpeedPlate is designed to provide. We're also hearing positive feedback from these early surgeon users related to the bone healing they're seeing in their SpeedPlate-treated patients. We continue to anticipate the commercial launch of our SpeedPlate implants and Micro-Lapiplasty instrumentation to begin in the fourth quarter of this year, and will continue to build during the first half of 2024.
We're excited about the potential benefits this Micro-Lapiplasty SpeedPlate combination could bring to patients. As with any procedure that involves smaller incisions and less tissue dissection and trauma, we believe this could translate to even faster recovery with less pain and swelling. We will provide additional updates on our new product innovations as we continue to develop our pipeline, centered upon our core technologies and IP, aimed at improving surgeon user experience, patient outcomes, and supporting continued market penetration. Turning to clinical data. A key differentiating driver for our business is our commitment to clinical evidence, which we believe resonates with both surgeons and patients. From what we can see in the marketplace, we believe we're the only industry participant with a growing body of clinical data.
We look forward to presenting new interim data, including our 2-year primary endpoint data on 157 patients from our ALIGN3D Lapiplasty study at the upcoming 2023 American Orthopaedic Foot and Ankle Society, or AOFAS, conference in September. Although the primary endpoint of this 5-year study is at 2 years, we now have a sizable number of patients demonstrating significant improvement in clinical and radiographic and patient-reported outcomes at 3 years post-procedure. Building upon this, later this year, we plan to submit our primary endpoint ALIGN3D manuscript for publication in a top-tier, peer-reviewed foot and ankle journal. This is an exciting milestone culmination of activities that began 5 years ago with the first patient enrolled in 2018.
Again, we believe the positive interim patient data coming from our differentiated ALIGN3D study resonates strongly with surgeon and patient communities, and is reinforcing further market adoption of our Lapiplasty procedure. I would also like to highlight that at the end of the second quarter, we acquired certain assets from RedPoint Medical 3D, adding FDA-cleared patient-specific instrumentation, or PSI, technologies and capabilities to our portfolio, building upon our pioneering 3D bunion correction and related midfoot solutions. This transaction is well aligned with our commercial strategy to increase investments in R&D, to continually advance our core Lapiplasty and Adductoplasty procedures, delivering an expanding portfolio of unique problem-solving technologies for our customers, which are marketed through our direct bunion-focused sales force. We're excited about adding this technology platform, which is highly complementary to our core Lapiplasty and Adductoplasty systems.
Finally, I'd like to note that CMS recently released its proposed 2024 Medicare payment rates for hospital, outpatient, and ASC services to cover facility costs for surgical procedures, including supplies and implants used in the surgical case. As a reminder, our products are used in procedures covered by specific, well-established CPT codes, and we're pleased to report that the proposed 2024 reimbursement rates for these codes are slated for low to mid-single-digit increases. Assuming the proposed 2024 rates are finalized, this will continue a multi-year trend of low to mid-single-digit increases in facility reimbursement rates for CPT codes associated with our procedures. In closing, I'm proud of another great quarter of execution at Treace, with solid execution from our talented team of employees. Our proven strategic investments, supported by our strong balance sheet, continue to drive our momentum on both the top and the bottom line.
We have a specialized and scalable business model that's fueling our growth strategy and our mission to advance the standard of care in the surgical correction of bunion and related midfoot deformities. With that, I'll now turn the call over to Mark to review our financial performance. Mark?
Thank you, John. Good afternoon, everyone. Revenue in the second quarter was $42 million, an increase of $12 million and 40% growth over the prior year. Growth was driven by increases in procedure volumes and an increase in blended average selling price due to adoption of our newer complementary technologies. As a reminder, we commercialized the Lapiplasty procedure nearly eight years ago, and in the past two years alone, we've added 1,089 active surgeons, or about 42% of our total active surgeon base. On average, this growing number of active surgeons have steadily increased utilization each year they use Lapiplasty, which we believe is due to positive patient outcomes and expanding indications in their practices. We sold 6,793 Lapiplasty procedure kits in the second quarter, a 30% increase versus the prior year's second quarter.
Blended average selling price in the second quarter was $6,176, an 8% increase over the second quarter in 2022. This blended average selling price includes a contribution from Lapiplasty and from our expanding portfolio of complementary products, such as our Adductoplasty system, TriTome and SpeedRelease instruments, and FastPitch screw kits, as our expanding direct sales channel helps provide surgeons with our problem-solving technologies. As John mentioned earlier, we continue to anticipate strong year-over-year increases in our blended average selling price, but there could be some variability from quarter to quarter. Gross margin was 81.7% in the second quarter of 2023, compared to 82.3% in the second quarter of 2022. The 60 basis point decrease was primarily due to changes in product mix and an increase in inventory provisions.
Total operating expenses were $47.3 million in the second quarter of 2023, which includes sales and marketing expenses of $33.8 million, research and development expenses of $3.5 million, and general and administrative expenses of $10 million. This compares to total operating expenses of $36.6 million in the second quarter of 2022, which included sales and marketing expenses of $26.6 million, research and development expenses of $3 million, and general and administrative expenses of $7 million. The increase in operating expenses reflects strategic investments in our expanding direct sales channel, investments in product innovation, increased capacity requirements, as well as support for other commercial initiatives.
Second quarter net loss was $12.3 million or $0.20 per share, compared to a net loss of $17.2 million or $0.31 per share for the same period of 2022. Due to our continued focus on operating expense management and the scalability of our business, our adjusted EBITDA loss improved 20% in Q2 compared to the prior year. We continue to expect modest adjusted EBITDA improvement this year. Cash, cash equivalents, and marketable securities were $139.5 million as of June 30, 2023. This represents a decrease during the second quarter of approximately $31 million, which primarily reflects the RedPoint acquisition payment. We believe we have sufficient balance sheet strength and flexibility to continue aggressively executing on our strategic investments and growth initiatives. Before concluding, let me turn to our outlook for full year 2023.
As John mentioned, we are encouraged by the underlying strength and momentum in our business and are raising full year 2023 revenue guidance to $191 million-$197 million, which reflects an increase of 35%-39% over 2022 revenue. This is an increase from our prior full year guidance of $190 million-$196 million. To help you with modeling the back half of the year, we expect Q3 revenue will be roughly similar to Q2 due to seasonality and believe Q4 will be driven by typical bunion seasonality tailwinds, new product launches, including SpeedPlate, and the positive impact of the incremental sales rep hires that occurred in Q2. For these reasons, we believe Q4 will once again be our strongest quarter of the year.
Turning to the middle of the P&L, we expect that our operations and expenses will continue to grow throughout 2023 as we increase our DTC investments and further expand our direct sales force, while increasing leverage of our fixed costs and overhead expenses. Therefore, we will still expect to show modest improvement in adjusted EBITDA for the full year compared to 2022. With that, let me turn the call over to the operator to open the line for your questions.
Thank you. We will now conduct the question and answer session. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question is from Robbie Marcus with J.P. Morgan. Please proceed with your question.
Hi, this is actually Lilly on for Robbie. Thanks for taking the question. Maybe if you could dig a little bit deeper into the guidance and the cadence commentary you just gave. I think historically you've been able to still improve 3Q over 2Q sequentially. Any reason why we shouldn't see a bigger step up into the third quarter this year?
Yeah, great question. Thanks, thanks for joining us. Yeah, let me, let me take that. This is Mark Hair. you know, first of all, we, we again, are really pleased with all the execution in the second quarter. We had 40% growth, which we're really pleased about. As we've mentioned on prior quarters, the orthopedic industry traditionally does experience lower sales volumes in the third quarter, as elective procedures generally decline during the summer months. As we talked about in the past, we're now at a scale where this seasonality has become apparent to us, and we feel very comfortable with that guidance range.
you know, we as we've said in the past, we just want to be prudent with our guidance as we continue to execute on all those commercial strategies that, that John has talked about.
Got it. That's helpful. Maybe just on ASP, I think that stepped down a little bit sequentially for the first time, despite you continuing to roll out new products. Anything to call out there, and how should we be thinking about ASP trending from here? Do you think that can continue to move higher as you expand the portfolio, or are there any sort of headwinds to keep in mind? Thanks so much.
Yeah. Hi, Lily, John here. We continue to anticipate strong year-over-year increases to continue with our blended ASP. As we have discussed before, you can see some variability in quarter-to-quarter based on mix and other factors. We're continuing to see lifts from our new plating systems like S4A and our expanding portfolio of complementary products like Adductoplasty, SpeedRelease instruments, FastPitch screws, and some others. Beyond that, we've got a pretty robust pipeline of future product launches in the works, including our SpeedPlate implants coming towards the end of the year, which we believe will help continue to sustain VASP, going up into the right over time.
... a little color on the softer versus Q2, Q1 number. You know, we're, we're really focused on penetrating this market, and in order to do that, we need to ensure that our docs can get access to Lapiplasty wherever they operate, even more, you know, cost sensitive settings like an ASC. In Q1, we did add a new Lapiplasty kit configuration to our menu of offerings, to allow our surgeon customers to get greater access in these more cost-sensitive set-- settings. We're really pleased with the success we're seeing here, but it did put a little bit of a swipe and what we believe to be a short-term dampener on our Q2 blended ASP.
Got it. Thank you.
Thank you for your question. Please stand by while we get our next question. Our next question comes from Drew Ranieri with Morgan Stanley. Please go ahead. Please stand by for our next question. Our next question comes from Ryan Zimmerman with BTIG.
Good evening. Thanks for taking the questions and congrats on the progress. I want to ask a little bit about the cadence of doctor additions that we saw this quarter. You know, John, just to get your thoughts around kind of the pace at which you expect to educate and bring in physicians to be Lapiplasty users going forward?
Sure, Ryan. Thanks for the question. Yeah, we ended, ended the quarter with 2,581 active surgeons. We feel really good about our annual progression of our new surgeon adds as we continue to onboard new reps, make new relationships with doctors, put those doctors through our training events. You know, surgeon additions may vary from quarter to quarter. You know, for example, during the second quarter, we saw some surgeons and patients sort of prioritizing travel and time away from the office. We feel good about the number we're bringing on this year relative to our expectations. As you may recall, in 2021, we added about 500, and last year we added about 600 or so. We feel like we're, we're on the right track there.
I could tell you the interest and attendance by surgeons at our training events remains really strong. I just returned from an oversold training event this weekend in Boston, for example. I can tell you surgeon and rep enthusiasm for our differentiated technologies is very, very high. We look forward to executing on additional training events we have slated for the back half of the year.
Okay.
I think, I think overall, we got the right strategy in place and to continue to penetrate the target surgeon market and increase utilization over the long run.
That's helpful, John. Just 2 more for me, if I could. The first one is just, you know, as you add new products, the SpeedPlate, the microincision Lapiplasty system, you know, one of the things that you've talked about is, is the penetration of usage, say, for example, in the Adductoplasty product, right? How you could eventually get to maybe 15%, you know, of midfoot deformities, and, and you're not there yet, and there's kind of a long right here, you know, runway there. Just help us understand kind of how you think about the penetration rate of some of these newer products as they launch and where you'd be happy with kind of their adoption over time.
I mean, you know, I don't think it's reasonable to assume that 100% of cases would use all those products necessarily, but what's the right way to think about kind of that adoption, over time? Then I have an expense question for, for Mark. Thank you.
Sure, sure. You know, with things like going to Adductoplasty specifically, you know, that midfoot deformity affects about 30% of bunion patients. Our customers tell us that they could foresee at some point in time using it on half of those, so 15% of their Lapiplasty cases. We continue to train more doctors, get them more comfortable with this procedure. You know, I, I asked one of the doctors at this Boston lab, "Why are you here?" He said, "I'm, I've done a couple Adductoplasties. I want, I want to get more experience. I think this is a breakthrough.
I'm operating on patients that I either used to have to refer or I, I would only do the bunion on, and I knew it wasn't a comprehensive fix. We see this gaining more and more traction, and we have next generation Adductoplasty systems in the works. Another catalyst there, I think, is going to be our SpeedPlate implant platform, because that can be used in Adductoplasty cases and inserted through some smaller incisions. It goes in quicker than our current plate, and doctors are really, really liking that in some of the pre-market cases as a, as a key application for SpeedPlate.
Mm-hmm.
I'd like to see us work our way towards that 15% over time. I just can't tell you the exact pace at which it would, it would occur.
Right. Okay. That, that's helpful. Then, you know, just for Mark-
Speedplate-
Go ahead. Go ahead, John.
Oh, sorry. I would say SpeedPlate could get, could get significant traction as an overall platform pretty quickly. There's a lot of enthusiasm from the doctor community about that technology, and the sales reps that have used that have a lot of customers saying, "This is the way I want to go for most of my patients." So...
We're really excited about that platform coming on, not only in its ability to make the procedure faster, less fixation options, and maybe haven't embraced Lapiplasty yet because we don't offer something like SpeedPlate.
That's helpful, and apologies for jumping the gun there. Just last question from me, I'll, and I'll hop back in queue. Just, Mark, take me through your thought process a little bit about, you know, balancing additions to DTC versus expense leverage and, you know, what, you know, kind of how you're pushing and pulling on those two components. As you think about, you know, ramping headcount or maybe slowing the pace of ramping headcount versus maybe what you need to do in terms of further additions and, and increases in DTC. Thanks for taking the questions, guys.
Yeah, thanks, Ryan. Great, great question, and it's something that John and I talk often about, is what is, what is the right mix of, of the DTC and the investments into our business and the over time, profitability of the business. I can tell you, and what we've said in the past, is our primary objectives right now is to, to really execute on all of those commercial strategies that have been working for us. That is building a, the bigger direct sales channel and, and, really helping patients be educated about the, the, benefits of Lapiplasty through our DTC platform. We'll continue to do those things. You know, we, we have an eye on profitability.
We've, we've talked about on, on this call in the prepared remarks and in the past, that we want to have leverage this year compared to, to last year, and so we're still on track to do that. Again, as we announced today, that we had some really strong improvements from an EBITDA bottom line perspective. We think we can do a little bit of both, with the primary objective is to really execute on the, the, the top line. As John said, we, we really want to introduce products that are going to be helpful to our surgeons, that are going to be useful in bringing new surgeons to, to become customers, and to continue to drive our top line through more and more direct sales reps, who, who really leverage our, our whole portfolio with, with our surgeon customers.
Thank you. Thanks for taking the questions. Congrats on the good quarter.
Thanks, Ryan.
Thank you. As a reminder, to ask a question, please press star one, one on your telephone and wait for your name to be announced. Please stand by while we get our next question. Our next question comes from Richard Newitter with Truist Securities. Please proceed.
Hi, thanks for taking the question. This is actually Sam on for Rich. Just to start out with a guidance question, it looks like unit growth accelerated on an underlying basis with the Lapiplasty. Just with, you know, coming up a little, against a little bit easier unit growth comp in the second half and then a little bit harder ASP comp in the second half, how should we think about the components of growth as it's factored into guidance? You know, is this level of unit growth sustainable through the second half, and should we think about a little bit softer on ASP?
I think there's a couple questions there. With, with respect to ASP, I think John talked about that, that, you know, we believe that we're offering these, these very beneficial ancillary complementary products, and so that's going to fluctuate from time to time, from quarter to quarter. We think overall, we're going to continue to offer products that are going to add to our overall blended ASP over time. That's, that's going to continue to happen. As we think about, just really the cadence and the volume, Q3 versus Q2, you know, I mentioned a little bit, there is some, some seasonality that we'll, that we do feel at this scale of business. We feel really good about what guidance we gave, which is really consistent with the Q2 levels of volume.
That's, so that's going to translate into very similar, unit volumes and blended ASP as well. It's going to be pretty consistent. It's the way we're, we're thinking about Q3.
Okay. Just you'd mentioned that, I think, a new kit for, for the ASC setting may have weighed a little bit on price. Just curious why? Should we, should we expect that to be a more sustained impact on ASP going forward, given, you know, assuming a growing mix of Lapiplasty to the ASC? Thanks for taking the question.
Yeah. Hi, Sam, this is John. I, I wouldn't say it's going to be a long-lasting dampener. We tend to see whether we sign a GPO agreement. They tend to be short-term, you know, dampeners on our blended ASP, and then the new product, and the complementary product contribution starts to outweigh those dampeners. We're, we're really pleased with the incremental uptake we got from that product. I'd say it had a little bit to do with that strong kit volume number, and it's, it's a great thing to have in our, in our menu of offerings.
Thank you. Please stand by for your next question. Our next question comes from George Sellers with Stephens. Please go ahead.
Hi, this is Harrison on for George. Congrats on the quarter, and thanks for taking the time and for taking my question. I wanted to start on the two distinct sets of surgeons. Y'all have often talked about the, you know, on one hand, the ones who primarily use osteotomies to treat patients and then, you know, reserve the Lapidus fusion for the select few, you know, more severe cases, and then the surgeons who, you know, more fully adopted the Lapidus fusion procedure. I was wondering if you could sort of parse that out a little bit more and maybe quantify those surgeon populations and the mix of 10,000 total. If you could break out how penetrated y'all are at this point in both of those markets.
Yeah. Hi, Harrison. John, I'll try to clarify that a little bit. You certainly have surgeons that have been through training programs that are more, Lapidus fusion centric, as their primary way of fixing the bunion. Then you have, the majority of surgeons that have been educated through, teachings that the osteotomy is for the majority of bunions and Lapidus type procedures are for the minority, the more severe, bunions. I, I would say the majority are of the n- the 10,000 are in that latter group, where they, they view Lapidus fusion as for the more severe and osteotomy is for the less severe, so by numbers. We make excellent inroads into both of those camps with our training programs and our products.
With a more Lapidus-centric surgeon, they tend to embrace it pretty quickly for all of their procedures. It's just a better way to do a Lapidus and add the third plane of correction to what and what prior to this was a 2-plane correction. That camp embraces pretty quickly. Then the other group, we typically get their next Lapidus case, which might be a more severe deformity of a patient, and then we work on them over time and educate, and they get more proficient with the procedure, and they start to carve more and more into their osteotomy practice and do a higher overall % of Lapiplasties relative to their osteotomies over time.
Got it. Yeah, thank you. That makes sense. As a follow-up there, I was, I was wondering, did those sort of, you know, surgeon, or did those different types of surgeons do your sales force, do they choose a specific type of surgeon to go after? Or are y'all really just, just trying to reach out to as many surgeons in there as possible?
Yeah, great, great question. I mean, they certainly have data to help them, you know, ascertain who the busier surgeons are performing bunions, and they typically take that approach, but sometimes it can be a bit opportunistic. You know, we say with Lapiplasty, we're never selling a surgeon hard and, and trying to quote, "Get a case." We're trying to get the surgeon to embrace our philosophy, and once they've embraced our philosophy, you know, we can, we can be very successful with them and getting them trained, onboarded, and getting them up that utilization curve. That's, that's been the approach.
Understood. Yeah, thanks for, thanks for taking the questions.
Thank you.
Thank you. Please stand by for our next question. Our final question comes from Rick Wise with Stifel. Please go ahead. At this time, I'm showing no further questions. I will now like to turn the conference back over to Julie Dewey for closing remarks.
Thank you. On behalf of Treace Medical, thanks for joining us today. If you have any more follow-up questions, please reach out, and we'll look forward to talking to you following the close of our call for the third quarter, 2023. This concludes our call today. Thank you.
Thank you for participating. You may now disconnect.