Laura Francis

Good afternoon and thank you for joining us. We had another strong quarter as we delivered record worldwide revenue and hit notable milestones across all our priorities. In the third quarter, we delivered worldwide revenue of $40.3 million reflecting 19% growth. The record revenue allowed us to make dramatic progress on our profitability and liquidity goals. We were close to adjusted EBITDA breakeven and used only $700,000 in cash in the quarter.
To deliver sequential revenue growth and close in on profitability in the third quarter is a testament to the power of our expanding platform. This performance is impressive considering third-quarter industry seasonality as well as quarter end procedure disruption in certain markets due to hurricanes. Following on the phenomenal success of iFuse TORQ and iFuse Bedrock Granite 10.5 and 9.5.
In the third quarter, we received 510-K clearance for iFuse TORQ TNT. TNT is our second breakthrough device to launch in the last two years. The solution designed with leading trauma surgeons to treat patients with sacral insufficiency fractures, expands our presence in the trauma market with an anatomy specific implant system that complements the surgeon workflow.
We pride ourselves on disrupting traditional orthopedic and neurosurgical industry norms which are often burdened by low margins and undifferentiated products as well as large capital investment. With each new product launch, we are distinguishing SI-BONE as an asset light platform of anatomy specific products that are supported by clinical evidence and favorable health economics.
Looking ahead as we capture more of the nearly half million target procedures and expand our platform, I'm confident that we can deliver industry leading profitable revenue growth. Now let me dive deeper into our key initiatives as we look to extend our leadership drive long term growth and create shareholder value.
Starting with sales infrastructure. Our surgeons are not only drawn to our comprehensive solutions but also value the exceptional support provided by our highly experienced sales team which remains unmatched in the industry. The combination of our direct sales team consisting of 82 territory managers and an increasing number of third-party agents has accelerated market penetration and translated into significant operating leverage.
Our trailing 12-month revenue for territory increased 21% to $1.8 million. Given the breadth of our platform and the success with hybrid commercial models, we believe we can increase the overall revenue per territory beyond our target of $2 million.
Given the extensive position interest in adopting granite, we're actively building and in several instances, expanding strategic partnerships with large regional sales agencies. The launch of TNT, we're fielding interest from trauma specific agencies.
We've signed agreements with some large regional trauma agencies positioning us to increase our revenue in the estimated $300 million pelvic trauma market. On physician engagement, we're delighted with the positive trends across active physician growth, procedure utilization and cross modality engagement. We ended the quarter with over 1,200 active physicians, an increase of nearly 150 physicians.
Over a three-year period, we have nearly doubled our active physician base. We're seeing the results of our activities targeted to grow the number of physicians performing multiple procedure types and also increase the number of procedures per physician. In the third quarter, the number of physicians performing more than one type of procedure increased by 35%.
Additionally, our procedure volume from physicians who are active in both the third quarter of 2024 and the third quarter of 2023 grew by 25%. The expanding physician base, combined with our success in driving higher utilization and cross portfolio interest over time, gives us confidence in our long-term procedure volume growth, density targets and efficiency.
Finally, we're impressed with the adoption trends from surgeons we trained as residents and fellows. Year-to-date, revenue attributable from previously trained residents and fellows grew more than 75%. Turning to products and clinical evidence, let me start with TNT, our next generation pelvic trauma implant system. TNT received breakthrough device designation and it's specifically designed to meet the anatomical and bone density characteristics of the sacrum and ilium,
TNT is unique, that it extends across the entire pelvis and delivers different fusion structures for different areas of the pelvis with the goal to facilitate bone aggration. Front surgeon excitement for TNT was evident at the recent Orthopedic Trauma Association event in Montreal where there were multiple podium presentations highlighting the use of TNT.
The device design, it's simple instrumentation and its seamless compatibility with existing workflows, resonates with surgeons. Leveraging our experience in getting a new technology add on payment or NTAP for granted. We have initiated the NTAP process for TNT. If successful, the NTAP will take effect on October 2025.
Given the early demand trends, we're enthusiastic about TNT's long-term revenue potential as we go after the pelvic trauma opportunity. Given its versatility, we're aggressively growing adoption of TORQ across all procedure types and physician call points. TORQ continues to be the cornerstone of our interventional spine engagement strategy.
While we provide comprehensive training on INTER and TORQ, in the third quarter, the majority of cases performed by interventionalists continue to utilize TORQ. With the expanded iFuse platform, we have a comprehensive range of solutions that provides physicians with the flexibility to choose the best option for their patients when performing SI Joint fusion procedures.
On the clinical front, we've completed the enrollment of 110 patients across 15 states for (inaudible). A prospective study of lateral transfixing SI Joint Fusion using TORQ when performed by interventional spine physicians with zero reported serious adverse events. We're pleased by the early results confirming the safety of the procedure.
Turning to the spinal pelvic segment, we're excited to announce that we were granted transitional pass through or TPT payment status for Granite. This TPT payment status is effective January 1st 2025, and allows hospital outpatient departments and ACS's to be reimbursed for 100% of the Granite Technology costs they report to Medicare. This 100% Granite technology cost reimbursement would be made in addition to the typical APC payment.
In addition, CMS approved our request to remove CPT22848, the physician payment for pelvic fixation from the inpatient only list. Starting in 2025, surgeons will have the flexibility to report the pelvic fixation code in a hospital outpatient setting as well and now have the facility receive the TPT payment. We believe these changes will allow us to expand the market for Granite across multiple sites of service specifically as we pursue the 100,000 degenerative lumbar fusion procedures if they go to the Pelvis.
Our recent launched Granite 9.5 is exceeding expectations and accelerating the overall adoption of Granite across deformity as well as degenerative spine procedures. Based on the demand trends in the quarter, Granite 9.5 is on pace to surpass the success we experienced with TORQ and Granite 10.5. In the third quarter of 2024, not only has procedure volume grown, we've also seen a 40% increase in the number of stat Granite cases where multiple implants per side are used compared to the first quarter for 2024.
With Granite 9.5, we have an opportunity to increase physician engagement, drive more procedures per user and increase the overall procedure ASP, as stacked Granite procedures grow. On the clinical front, we're enrolling patients in PAULA, a multi center prospective study of Granite. We expect to publish preliminary results in the second half of 2025.
Over the next 18 months, we intend to launch a series of anatomy specific solutions that leverage our core competencies and learnings from TORQ, Granite and TNT. These solutions will have applications across our existing markets as well as position us to address unmet clinical needs and drive deeper engagement with our existing call points.
Before I hand it over to Anshul to discuss our financials, I want to thank our incredible team members, our success in identifying new markets, as well as building and then successfully commercializing breakthrough devices is due to your innovative ideas and unwavering commitment to patients. We're excited about the future we can build together.
With that, I'll hand the call over to Anshul.

Anshul Maheshwari

Thanks Laura. Good afternoon, everyone. My comments will be focused on third quarter growth, profitability trends and liquidity. Starting with the revenue growth. Our third quarter revenue grew by 19% to $40.3 million. Most of that came from the US which grew by 18% to $38.3 million. Towards the end of the quarter, we did see an impact to case scheduling and cancellations in certain markets that were impacted by hurricane Helene.
Our overall procedure average selling price in the quarter increased nearly 3% driven by our evolving product and procedure mix. Our international revenue in the quarter was $2.1 million representing 21% growth. The rebound in international growth was an outcome of a transformational effort in Germany and the United Kingdom.
Moving to gross profit and operating leverage. Our gross profit for the quarter was $31.9 million representing an increase of 18%. Our gross margin was 79% which was flat when compared to the prior year period. The gross margin was better than expected due to changes in product mix and benefits from supply chain optimization.
Operating expenses were $39.5 million representing 4% growth. Our year-to-date operating leverage in excess of 2x is the continuation of our progress on efficiency over the last several quarters. Our net loss improved by 34% to $6.6 million or $0.16 per diluted share. Our adjusted EBITDA loss was $200,000 reflecting a 94% improvement. Compared to the second quarter of 2024, our adjusted EBITDA improved 91%. As we look ahead, we're confident that revenue growth rate will continue to exceed operating expense growth rate allowing us to increase our adjusted without profitability.
Turning to liquidity, we exited the quarter with a robust balance sheet including nearly $151 million in cash and marketable securities. A quarterly cash usage was only $700,000. In November, we refinanced our existing term loan with a new term loan with SVB First Citizens Bank at more favorable terms. The new term loan extends a maturity to 2029 and reduces a borrowing credit spread by a 100 basis points.
The significant improvement in the credit terms demonstrate the strength of a longer term financial profile. With $115 million of net cash and a clear pathway to sustain adjusted even the expansion in 2025 and beyond, we are in a strong financial position to self-fund our strategic priorities going forward. Moving to our outlook for 2024, we are updating our 2024 worldwide revenue guidance to be in the range of $165 million to $166 million implying growth of approximately 19% to 20%.
We also expect to be fourth quarter adjusted even without positive. The strong start to the fourth quarter reaffirms our confidence in the underlying demand momentum. However, we have seen limited case deferrals at certain sites due to the IV solution supply issue. While we believe any impact is transient, we're continuing to monitor the situation.
With that, I will turn the call over to Laura.

Laura Francis

Thanks Anshul. Going into 2025, we have a great set up to deliver strong profitable revenue growth, given the favorable underlying procedure demand trends, elevated physician interest and new product launches. I'm excited about our future.
With that, we're happy to take questions. Operator?

Question and Answer Session

Operator

(Operator Instructions)
Craig Bijou, BofA securities. Your line is open. Please go ahead.

Craig Bijou

Good afternoon and thanks for taking the questions. Maybe want to start on, I guess the quarter and guidance and appreciate the comments on the hurricanes and the IV shortage. But can you guys quantify what that impact is. And is that the only reason why guidance came down?

Laura Francis

Yeah, let me start and I'll have Anshul also provide some color as well, but I want to start with the quarter first and just kind of giving you an overview of it. I'm quite pleased with the performance in the quarter. If you look at our results, we achieved record revenue, a record revenue quarter and we were close to adjusted EBITDA break even given that we had nearly 4 times operating leverage in the quarter. And also what you heard is we use less than $700,000 in cash.
So, the procedure demand strength is reflected across all of our KPIs and that includes record active positions, increasing case density as physicians get seasoned and also our territory productivity. Now, with that said, we did see some temporary disruption to case scheduling as well as cancellations in the markets that were impacted by Helene.
And also we did experience a little higher summer seasonality mainly due to surgeon vacation, so that did impact the the revenue potential for the quarter. But overall coming into the fourth quarter, physician engagement and demand has been quite strong and that translates into strong top line and bottom line performance.

Anshul Maheshwari

And then on the guidance, Craig, as we shared in our prepared comments around the pockets of new case schedulings being paused or measured and existing cases being rescheduled because of the IV issue. Now that impact is limited to a few sites that are single source, but also to some larger hospitals that are being a little bit more cautious.
So as we were thinking about our guidance, we're looking at the feedback we got from the field around the seasonality strength of the fourth quarter, limiting the capacity at some of these sites to reschedule these deferred cases in Q4. So, while these are transient factors, we did incorporate that into our guidance. So our working assumption which is on the lower end of our guidance range is that not all the sites that have seen these deferrals due to the hurricane or due to the IV shortage, 100% of those cases come back this year.
We think in our assumptions here that several of those deferred cases may move to 2025 just because of capacity limitations on hospitals more than anything else. Now, assuming that is not the case, and the procedures do go back on the books sooner that could put us on the top end of the range. And you know, as Laura said, the momentum in the business is strong, but as always, we want to take a thoughtful approach based on some of the indications we have from the field and have reflected that in our guidance. But if things play out better, that could provide potential upside and play better than we expect.

Craig Bijou

Okay. That's helpful. Thank you both. I know you're not going to give '25 guidance, but maybe if you can talk a little bit about some of the puts and takes or how we should be thinking about your ability to continue the momentum on the top line. Certainly, but also, the assumption that you're going to have positive EBITDA in ['24] Q4, you know, how should we think about that carrying through into '25? And you know, could it be positive even for all of '25?

Anshul Maheshwari

Yeah, Craig, happy to take that question on 2025. You're right. We're not going to be providing 2025 guidance at this point. But, our focus is to deliver a strong 2024. And like I said, we're hoping that some of those thoughtful assumptions in our guidance play out better, so we can end the year strong. Now when you think about 2025 and you think about the growth levers in the business, some of these are long term and specific to SI-BONE.
So let's start with number one, it's the elevated physician interest that we're seeing that's coming through both on the training side, but also on the adoption side across surgeons and interventionalists. So that sort of sets us up really well.
Number two is the favorable reimbursement framework with the end NTAP and TPT for Granite. Now, the TPT may take a bit longer to play out, but that is a tailwind, the potential to get NTAP for TNT, which it's in its early days, but we're very encouraged by the demand that we're seeing there and the adoption trends. And then the strong reimbursement in [79], but also the potential for the 30% increase in 27278 reimbursement, which also allows us to go after interventionalists that may have a preference for an allograph. So it should be able to augment our TORQ initiative on the interventional side. So feel good there.
And then when you think about Granite, we're still scratching the surface with granite with the 9.5 roll out. So, with the expanded Granite platform, we do believe we can accelerate the capture of the pelvic fixation opportunity across deformity and degenerative spine. So that continues to be a big tailwind for us. And on the TNT side, we are going to put out more capacity in Q1, Q2 and we're very encouraged by the demand that we're seeing on TNT from the trauma surgeons.
And then the last thing I'd say is, we do expect to add to our sales force, we will be adding more heads there and that should allow us to go not just wider to get more surgeons engaged, but also be able to go deeper with our existing surgeons through the expanded portfolio. So that's on the top line. So a lot of tailwinds that we feel good about, a lot of them are playing out in the fourth quarter as well.
On the adjusted EBITDA side, we feel fairly confident that that top line growth should translate into good operating leverage. If you look at our year-to-date leverage, it's been sort of north of 2.5 times. So we expect operating leverage to continue next year. You'll see some seasonality, so you might see some first half, adjusted, EBITDA negative but a lot more second half bid, it adjusted EBITDA positive. But that should translate into full year adjusted EBITDA positive in 2025.

Craig Bijou

Thanks for taking the questions.

Operator

Young Li, Jefferies.

Young Li

Great. Thanks so much for taking our questions. I guess to start, I wanted to start a little bit high level, was curious if you can make some comments on the health and the strength of the SI Joint Fusion market in general. Where do you think market growth is? And if you can talk about if there's any incremental changes on competitive dynamics side?

Laura Francis

Yeah. I'm happy to take that question. So, we continue to be the undisputed market leader in SI Joint Fusion. We see strong demand from our surgeon customers. And as you know, we've also developed products and are working with interventionalists as well who have expressed an interest in SI Joint Fusion. So we now have our iFuse 3D product, our TORQ product and our INTRA product that all meet the needs of either the appropriate physician or patient for those particular products.
So, we're pleased with what we're seeing there and we continue to leverage our sales force, which is -- really helps the physician, whether it's the anatomy, the prevalence of pain related to the SI Joint, the initial diagnosis and ultimately the treatment of these patients. We take an educational approach to this as well. And we talked specifically about our [Stacy] study, which we just finished enrolling 110 patients with interventionalists using our TORQ product.
So, we're pleased with everything that we're seeing there on the SI Joint Fusion side. While also seeing the strong growth generators that we have in pelvic fixation with Granite as well as TNT and pelvic fractures.

Anshul Maheshwari

And then you -- just to add a couple of comments there, we talked about 150 active physician ads in the quarter on a year over year basis. What I would say is, over 60% of those active physicians added in the quarter did a combination of SI Joint Fusion as well as pelvic fixation or trauma procedures. So the growth in the active physician base is coming across all modalities.
And then the last thing I'd say is, when we look at even the interventional opportunity, we had a record number of interventional spine physicians perform a procedure in the quarter and that was led by TORQ. So, we're seeing good traction across both and all the training work, all the education work that Laura talked about that the fields engaged in over the last 12-months. You're starting to see the impact of in that adoption trend.

Laura Francis

I think the other thing that could be interesting here Young, is to see how this nearly 30% increase in the 27278 procedure plays out. As I said, we have the most comprehensive portfolio out there and the best commercial education and patient advocacy infrastructure in the industry. And although we've seen a majority of interventional spine revenue coming from TORQ, which is reimbursed under 27279, we have been training physicians on both TORQ and INTRA.
And there are a subset of interventionists who may have a preference for Allograft and for them INTRA is a great solution. So with the higher reimbursement for 27278, that was just announced by Medicare -- and there's some potential clarity from the max as well. We feel like we're best positioned to support the call point, irrespective of which product they use.

Young Li

Alright, great. That's very helpful. And I guess maybe if I can ask about the rep productivity, Good to hear that you expect them to generate more than $2 million going forward on average, any way to think about how productive they can get. And what's your most productive rep or territory currently generating? And maybe you can talk about the comment on increase in rep hire. How much and why now, given it's been relatively stable for like the past three years?

Laura Francis

Yeah, I'll talk a little bit to the rep productivity and then I'll have Anshul talk a little bit more about our plan for rep hiring for the future. So first of all, we're extremely proud of our sales team with a 21% increase in rep productivity in the third quarter. And it really is this hybrid model that's allowed us to nearly double our revenue per territory to around $1.8 million in the last three years. And as you can tell, it's driven dramatic operating leverage in the business as well.
So there's really an evolution of our platform that's happening right now. And we're leveraging a hybrid commercial model which is engaging both our direct sales team as well as third party agents. And we're now working with over 200 agents and they typically are covering pelvic fixation cases with our Granite products. And that helps to free up the rep time to sell to new physicians and also drive deeper engagement with our existing physicians.
So I'll let Anshul talk a little bit more about how we're thinking about growing territory.

Anshul Maheshwari

From a growing territory perspective, Young, you're right. We're really proud of how the commercial teams executed to get the leverage that we're seeing on the sales force. To your question on how much higher can we go beyond $2 million? You know, we're not talking about that yet, but we've very rapidly gone from sub a million to $2 million over a three-year period. So really good momentum there.
We've got territories that have gone as much as $4 million in annualized revenue. So we know that there is ability to do that, especially when you leverage the hybrid models, which could be a combination of agents more than a single junior rep, you could have two junior reps in those markets. So there's various permutation combinations that can get us higher there.
From a business strategy perspective, we'd like to get to about 100 territories over the next I'd say, 18 to 24 months. And part of that is just as we think about the expanded platform that we have today and also the new product that we want to be able to get out over the next 18 months, we believe having that sales -- those number of territories will allow us to maintain our educational approach, build stronger relationships with those docs and not only drive deeper density with those docs in the number of cases that they do, but also potentially with the expanded platform, be able to provide them more solutions.
So we're thinking about it over a two-year horizon, combination of the existing platform and the new ads that we expect to come.

Young Li

All right. Thank you very much.

Operator

Matthew O'Brien, Piper Sandler.

Unidentified Participant

Hi, thank you. This is Samantha on for Matt today. I guess one of our first questions was on the TPT status for Bedrock Granite next year. And maybe what that -- can how that can help you grow the top line that looking at next year.

Laura Francis

Great Samantha, happy to talk a little bit about that with you. We are really excited about the transitional pass through payment for Granite starting January 1st of 2025. It's a really important milestone for Granite and its clinical significance and sacral pelvic stabilization Fusion. So, when they finalize their decision on the TPT award, CMS actually provided a unique code for hospitals to use when reporting the use of Granite implants.
Additionally, what's really important is that CMS granted a $0 device offset. So that's very important. And what it allows for hospitals to do is fully pass through 100% of the Granite technology costs that they report when they're actually using the product. So then with the zero offset, the entire device costs qualifies for the TPT reimbursement. And with the TPT award Granite full cost is eligible for that TPT payment. And that helps to enhance Granite's reimbursment profile. And it also is underscoring the unique clinical value that it has in the sacral pelvic space.
So just to be clear today, almost all Granite cases are inpatient. But we anticipate more cases using Granite migrating to hospital outpatient and this is either because of surgeon experience with the technique or for less severe cases involving shorter construct spinal fusions. And so TPT, the TPT is going to give patients surgeons and the hospital administrators the confidence that they need to do the procedure in the appropriate setting and receive the appropriate reimbursement.

Unidentified Participant

Great. Thank you. And one more for us. We were just wondering how the early use of your pelvic fracture device is going and any feedback you've gotten from physicians?

Laura Francis

Yeah. So I had mentioned in my prepared remarks that we actually did a launch at the Orthopedic Trauma Association meeting in Montreal in October. And so we're really excited about TNT. It's another example of our ability to develop a unique anatomy specific solution that addresses an unmet clinical need. So in this case, TNT is designed to meet the specific anatomical and bone mineral density needs of the sacre manum. And it will serve as a next generation technology for pelvic fragility fracture fixation as well as SI Joint Fusion.
So from a usage perspective, we're still in the early launch days, but the [KayWell's] feedback has been quite strong. So TNT fits well within the workflow of the surgeons and we believe that we have the best product on the market. We're also attracting attention from multiple regional distributors who they've expressed interest in building agency partners to enable trauma surgeons to get access to our unique solutions.
And then finally, with the [BDD] designation for TNT, we're leveraging our experience on the Granite untap and evaluating the pathway for TNT to get an NTAP. And it's successful that it'll be effective in October of 2025. So in summer, we think TNT has the potential to be a great growth driver to penetrate this nearly $300 million market opportunity. And the initial feedback has been very strong and positive.

Unidentified Participant

Great. Thank you.

Operator

Drew Ranieri, Morgan Stanley.

Drew Ranieri

Hi, Laura. Hi, Anshul. Thanks for taking the questions. Just maybe Laura for you first and I apologize if I am misremembering this number. But I think you said basically same surge in sales growth in the quarter from a volume perspective was up 25% year over year, blended procedure volume was up 15% year over year for the quarter.
Just maybe talk to us about like, what's it really going to take to get to that average up to some of those higher volume surgeons? And as you're looking into 2025 do you think you have all the pieces in place to really kind of get to that level of growth?

Laura Francis

I'll get started at least on the question and then I can have Anshul talk a little bit further to it. There are a number of ways that we're addressing the opportunity that we have. So for physicians that were active in the quarter, if we talk about cross modality procedures, we actually had a 35% increase in the number of physicians who perform more than one type of procedure.
Now, generally, that's going to be surgeons that are doing si joint fusion and doing pelvic fixation procedures. But this is a significant opportunity for us at this point, given that we have three different procedure types that our physicians can perform, they can perform an SI Joint Fusion with us and many have been working with us for a very long time.
Granite presents another opportunity, and we have been penetrating the opportunity with adult deformity with our original Granite product. And we're just starting to penetrate the degenerative opportunity that we have here at this point. And those degenerative spine procedures, those are the type of procedures that our physician that do SI Joint Fusions are typically performing on a daily basis.
And then finally, we have the TNT product that addresses fragility fractures. And certainly we're working with trauma surgeons, but we also see spine surgeons performing those procedures too. So we're really pleased with the different opportunities that our physicians have to work with us and we're starting to see that growth.
Now, if you think about us overall, over the last three years, we've actually consistently seen double digit growth every single quarter in active positions. So you know, we're seeing this elevated engagement and interest and it really reaffirms that our overall strategy with anatomy specific solutions is working.
And then, you know, ending Q3 with over 1,200 active physicians, which is an increase of 150 really puts us into a nice spot. And as I said, if we can continue to see this momentum with our surgeons adopting additional procedures from SI BONE, especially with the 35% increase that we saw in the quarter. That's really going to bode well for our future growth in 2025 and beyond.

Anshul Maheshwari

And then Drew to add, you know, how could we get that higher? Like Laura said, we've got the portfolio today that can allow us to go deeper. And what's very encouraging for us is that the statistic that we shared, which was the 25% growth in surgeons who are physicians -- sorry, who are active both in the third quarter of last year and this year, that's actually very encouraging for us because we've always said that as the surgeons get seasoned, there are going to move up the volume scale and we're sort of seeing that happen.
So when we look into 2025 the two most encouraging factors for us as forward-looking indicators are, are we adding more physicians to our family in terms of adopting a procedure? The answer to that is, yes. All through this year which is encouraging. We're training very, very record number -- a lot of physicians near record number of physicians a quarter this year. So that bodes well for activations but just not in the fourth quarter, but 2025.
And the fact that as those physicians are getting seasoned, we're seeing a 25% increase in volume growth versus the average, that now gives us more confidence that going into '25 and then also to '26 you should start seeing that productivity number go up, especially as Granite 9.5 continues to become more part of the workflow for the degenerative spine procedures.

Drew Ranieri

Got it. Thank you. And maybe just a follow up, this might be more for you Anshul. But I was thinking ASPs maybe for the back half might be more flattish and I think you said up 3% for the quarter. So can you just talk a little bit more about the product procedure mix strength there, maybe some of the dynamics happening. And then as we're thinking about the fourth quarter, I mean, should we kind of be expecting like a similar rate or should fourth quarter be mainly driven by utilization gains if we kind of assume like you're going to add another 50 surgeons? Thank you for taking the questions.

Anshul Maheshwari

No worries. So, on the ASP front, we're really pleased with how the ASP trended, you know, historically, we've always seen an ASP decline in each of the years over the last few years. The last 12 months, we've been working really hard on a couple of things, one, to maintain our pricing. So the commercial organization has done a really good job on doing that.
But the biggest driver of the ASP improvement has been the addition of Granite. As you know, a lot of those Granite procedures tend to use four implants when you're doing deformity. What we saw was with the launch of 9.5. And I think Laura shared this in our comments, we saw a 40% increase in stacked Granite cases. So these are cases where they're using more than, more around four implants per procedure, two on either side and that is reflected in our ASP.
So a lot of that is just the procedure mix that's happening there. On the SI side, we've been very disciplined and being able to hold that pricing as well. And TNT is a premium price product too for us. So I think overall the ASP is trending better. Now, we always tend to be conservative when we're thinking about ASP side of service, the procedure makes the number of implants can have an impact. I would say, going into the fourth quarter, I'm not going to provide specific guidance on ASP, but we're feeling good about the trend we've seen.

Operator

Caitlin Cronin, Canaccord.

Caitlin Cronin

Hey, thanks so much for taking the questions. You know, just want to talk a bit about inventory set build since the broader launch of 9.5. Seems like it's going really well. Have you had to build out kind of additional Granite sets into the field or do you expect to do so going forward?

Anshul Maheshwari

Yeah, Cait. Happy to take that. So let's just start with 10.5 is doing really well for us. So that's been a grand slam for us. And 9.5 has actually exceeded all our expectations in terms of the adoption trends we're seeing. So we're feeling really good about the Granite family usage trends that we're seeing. So that's number one.
The beauty of granite 9.5 is, it actually uses the same instrument sets that go with the 10.5. So we have an opportunity to drive higher utilization of our instrument sets in the field with the availability of both different 10.5s and 9.5s. So we feel good about that. We are putting out more capacity each month, each week, almost each day to be able to support the demand that we're seeing in Granite, especially as we continue to penetrate the degenerative spine opportunity. But we've got the supply chain framework in place to be able to meet those demands. So we feel really good about that, especially as we go into 2025.

Caitlin Cronin

That's great. And then just in a similar vein, any build out kind of needed for the TORQ TNT product or will it use, kind of a similar instrument set to traditional TORQ? And then, just thoughts on since it is the next gen of TORQ, how it will help drive kind of innovation within the more traditional TORQ procedures.

Anshul Maheshwari

Yeah, sure. So on the TNT side, you're right. It is a new tray. We've been rolling out those grades in the fourth quarter, we were in limited launch. So we'll continue rolling that out. We've got a lot more capacity coming online in 2025 as well. Again, we're being very thoughtful because the early indicators are very strong and we're seeing good momentum there.
So you will see us sort of continue to build capacity there on the TNT side to support demand, especially as we start seeing some of these large regional agencies of distributorships come online. We want to make sure we can support that demand.
Just at a very high level as well, and I'll let Laura take the comments on the TNT innovation. But if you think about our CapEx footprint, we're relatively asset light, CapEx model. Our annualized CapEx is around $7 million to $8 million a year and we can be very, very efficient on our trade cost as well as the terms that we're getting there. We're starting to improve on that front too.
So, with $7 million to 8 million even including new product launch, we feel really good about the asset light model that we have.

Laura Francis

Caitlin. I think that Anshul got to most of your questions, but just from an innovation perspective, TNT is just the next step for us, right. We started out with iFuse 3D, moved to TORQ, then Granite, including Granite 9.5 INTRA and now TNT. And two of those technologies, Granite and TNT are actually breakthrough devices.
So it's very -- we are showing that we are a company that develops innovative products around unmet clinical needs. So TNT really just continues that. And we're proud of what we're accomplishing here.

Caitlin Cronin

Awesome. Thanks so much.

Operator

Richard Newitter, Truist Securities.

Richard Newitter

Thanks for taking the questions. Maybe I just wanted to ask on provider economics or the profit profile potential from Granite especially if there's going to be potential migration at the outpatient care setting with the TPT. Can you talk about that a little bit and help us think through that, how it changes the facility?

Laura Francis

Yeah, I'm happy to. So, just thinking about what our expectations are with hospitals and surgeons and how they respond to reporting for Granite procedures in the outpatient setting. So there was an announcement by CMS that CPT 22848, which is pelvic fixation. It's an add on code for performing pelvic fixation and it's typically associated with S2AI screw deployment. It is an exciting development. It will allow surgeons, the option of whether to perform pelvic fixation, SI Joint Fusion or both using Granite implants.
And our indications for (inaudible) allow for fixation or SI Joint Fusion. So considering the TPT that's now available with this news, it gives them the flexibility to consider Granite in the different types of situations in different configurations and now in two different settings of care, hospital inpatient, as well as hospital patient. It does, by the way, also allow for the ASC as well.
And so as I said earlier the payment to the facility for a a pelvic fixation procedure is an appropriate payment already. But now what you have is this additional transitional pass through payment, which basically will cover 100% of the cost of Granite as well. And the reason why the timing is so important here is, when we launched our Granite 9.5 product, the 9.5 product really was targeted toward more degenerative spine procedures. So these shorter level constructs or degenerative procedures that our surgeons are performing pretty much on a daily basis.
So we now have the product that is appropriate for shorter level constructs. We now have the appropriate payment at the outpatient site of service. And just as a reminder of the overall market opportunity that we have for Granite, we estimate that there are around 130,000 potential cases that we're targeting or $1 billion market opportunity that's here. And most of those, around 100,000 of those procedures are actually the degenerative spine procedures that will use a product like Granite 9.5 in a site of service like hospital outpatient.

Richard Newitter

That's really helpful. Thank you. And then Anshul, just maybe going back, I know you're not providing explicit '25 guidance. But can you talk about some of the components within the P&L if nothing else directionally like gross margin, just how should we think about that directionally up or down verse '24?
And then also you're clearly committing to further operating leverage and profitability on a full year basis, just to make sure we're all focused the same page that's likely going to mostly come from SNM leverage. Is that correct? And then also I know that you have -- your term loan is going to carry a lower interest rate. So maybe just quantify or give us some directional color, what to think about in that line as well. Thank you.

Anshul Maheshwari

Sure. So let me just start with the operating leverage question. You know, obviously we're not going to be providing guidance, but on a gross margin side, we feel really good about our ability to maintain gross margins through 2024 which has been flat year over year, if you think about where we ended the third quarter. So feeling really good about that.
Now, you know, I won't be specific to 2025. But if you think about the next two or three years, what we have said in the gross margin side is, we expect gross margins to sort of stabilize in that 76%, 77% range over time. Part of that is driven by the continued efficiency that we can get gain from scaling of Granite and TORQ, right. That should bring the cost of those products down. But offsetting that is some of the new products that we want to launch over the next 18 to 24 months. So you'll see some puts and takes there. So that's step one.
On terms of the operating leverage, you're right. A lot of that operating leverage will come from sales and marketing and G&A. R&D dollars will grow as well, but you will see R&D dollar growth rate also be lower than the operating revenue growth rate. So you will see operating leverage across the P&L. Now, is it going to be 2x is going to be 1.5x, that will vary from year to year depending on the kind of R&D activities we're engaged in at that point in time and also the sales and marketing efforts that we have in play for new product launches.
But we feel really confident that revenue growth rate will outpace operating expense growth rate each year going forward and that should translate into adjusted EBITDA profitability in 2025 but also adjusted EBITDA margin expansion beyond 2025.

Laura Francis

Thank you.

Operator

Ross Osborn, Cantor Fitzgerald.

Matthew Park

Hey guys, this is Matthew Park on for Ross tonight. Thanks for squeezing me in. Just wanted to start off talking about your interventionalist call point. And can you guys walk us through how you're planning on leveraging clinical data such as Stacy to drive adoption amongst the rest of the interventionalist channel?

Laura Francis

Sure, happy to do that. So, we've been working with interventionalists for the year of 2024 and we're finding a very receptive audience with interventionalists given that we are the market leader in SI Joint Fusion. They have a strong interest in performing SI Joint Fusion procedures. Some of them are interested in our TORQ technology. And you had asked a question about clinical data. We just finished enrolling our Stacy trial and that is using TORQ and a lateral trajectory, 110 patients. Zero serious adverse events and what's important to interventionalists is to see the safety profile of that product while being used by other interventionalists.
So, we're excited about publishing the results of that study and also seeing how the data develops on the efficacy of the product as well. We also have interventionalists that are more interested in our INTRA product or think that INTRA is the more appropriate product for their practice. In some cases, they can use the product in an office based lab. And we have a solution for them as well.
So regardless of what interventionalists are hoping to achieve in their practices or with their patients, we have the solution for them. And and we feel quite good about the relationships that we build, the commercial traction that we're getting as well as the strong positive clinical data.

Matthew Park

Got it. That's helpful. And then just one more for me, apologies if this was already answered on the call. But regarding the sequential step down in R&D in the quarter, is there anything to call out here? And how should we think about a near term spend here as we transition to 2025? Thanks guys.

Anshul Maheshwari

Yeah. So in terms of the sequential step down in R&D, there's not much to read. When you think about our R&D spend, it's bucketed into different phases of product development and all the different phases of clinical research. Some of them is that is just timing of when, at what stage we are in both those metrics.
When we think about how the years or even for 2025 we expect R&D dollars to grow, simply because we've got a very active pipeline of products that we're working on. As we look to launch them over the next 18 to 24 months, we got a lot of clinical work that we'll be doing to support those products as well. But again, that growth rate should be slower than the revenue growth rate that we expect going forward.

Matthew Park

Great. Thanks, congrats again on the quarter.

Operator

Thank you. And I would now like to hand the conference back over to Laura Francis for closing remarks.

Laura Francis

I'd just like to thank you all for participating in today's call and we look forward to seeing you at the upcoming Piper conference. Goodbye.

Operator

This concludes today's conference call. Thank you for participating and you may now disconnect.