Q4 2023 SI-BONE Inc Earnings Call
Participants
Saqib Iqbal; Senior Director of Investor Relations; SI-BONE Inc
Laura Francis; Chief Executive Officer; SI-BONE Inc
Anshul Maheshwari; Chief Financial Officer; SI-BONE Inc
Craig Bijou; Analyst; Bank of America
Drew Ranieri; Analyst; Morgan Stanley
David Saxon; Analyst; Needham & Company
Sam Brodovsky; Analyst; Truist Securities
Caitlin Cronin; Analyst; Canaccord Genuity
Ross Osborn; Analyst; Cantor Fitzgerald
Presentation
Operator
Good afternoon, and welcome to SI-BONE Fourth Quarter 2023 Earnings Conference Call. (Operator Instructions)
I would now like to turn the call over to Saqib Iqbal, Senior Director of Investor Relations at SI-BONE for a few introductory comments.
Saqib Iqbal
Thank you for participating in today's call. Joining me are Laura Francis, Chief Executive Officer, and Anshul Maheshwari, Chief Financial Officer.
Earlier today, SI-BONE released financial results for the quarter ended December 31st, 2020. A copy of the press release is available on the company's website.
Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. And any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking.
These forward-looking statements are based on the company's current expectations and inherently involve risks and uncertainties. These risks include SA bonds, ability to introduce and commercialize new products and indications, SA bonds, ability to maintain favorable reimbursement for its products and procedures, impact of potential economic weakness on the ability and desire of patients to undergo elective procedures as the bond's ability to manage risks to supply chain, the impact of future capital requirements driven by new product introductions and risks. The continued normalization of the health care operating income.
Other forward-looking statements include our examination of operating trends and our future financial expectations, such as expectations for physician training and adoption, active physicians, new product and clinical trial enrollment and are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties. It could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.
During this call, management may discuss certain non-GAAP measures, including the company's adjusted EBITDA results. For a reconciliation of these non-GAAP measures to GAAP accounting, please see the company's full earnings release issued earlier today. Accordingly, you should not place undue reliance on these statements.
For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission.
SI-BONE disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 26th, 2024.
With that, I'll turn the call over to Laura.
Laura Francis
Thanks, Iqbal. Good afternoon, and thank you for joining us. 2023 was a stellar year for SI-BONE. Our physician customers and their patients as we delivered record worldwide revenue and attained new heights and physician engagement for the full year 2023, we generated worldwide revenue of $138.9 million, reflecting 31% growth compared to the full year 2022. This worldwide performance was led by robust U.S. demand as over 1,600 US physicians performed more than 15,000 procedures.
We started 2023 with an initial revenue expectation of $124 million to $127 million. But the strong demand for our highly differentiated solutions, growing physician engagement and increases in our surgical capacity allowed us to significantly exceed that expectation the momentum in the business was clearly evident at our national sales meeting in February.
Our sales organization was not only enthusiastic about our performance in 2023, but was even more energized by the potential opportunity ahead of us in 2024, having been at the company for almost nine years, I can say the mood in the company and the confidence in our future has never been stronger.
Our foresight and discipline over the last few years in building scalable operating infrastructure in methodical fashion drove approximately 40% improvement in adjusted EBITDA in fiscal year 2023. We also reduced our cash usage while continuing to invest in R&D and clinical evidence to support the planned portfolio expansion in 2024.
Before I provide an update on our strategic priorities, I'd like to recognize our team working together to deliver 25% cumulative annual US procedure volume growth since 2018. Our 1st year as a public company is a testament to your hard work.
We transformed into a multiproduct company that is solving unmet clinical needs across multiple procedures. We're just getting started given the nearly 0.5 million target sacral pelvic procedures per year. Your focus on delivering for our customers is allowing us to capture this large market opportunity and deliver strong and sustainable revenue growth.
Now let me provide an update on our key initiatives as we look to extend our leadership position and drive strong long-term growth, starting with sales infrastructure, we're extremely proud of our sales and commercial team known for their industry-leading expertise and extensive experience across our target markets.
Our execution has allowed us to build new markets and deliver several quarters of record revenue. We ended the year with 82 quota-carrying U.S. territory managers. We complement our territory manager bandwidth with clinical support specialists as well as a growing network of third-party sales agents for case coverage.
This hybrid strategy has worked well as we continue to see growth in revenue per territory in 2023, revenue per territory was $1.6 million, reflecting 39% growth compared to the prior year. We're confident in our ability to further increase revenue per territory and get closer to the high end of our $1.5 million to $2 million target over time. In addition to growing territory productivity, we plan to selectively add to our 82 territories over the next few years.
The expanded territory footprint will enable us to maximize the potential of our growing portfolio and facilitate deeper engagement with our physicians to capture the over $3 billion total addressable market opportunity moving on the physician engagement, we exited the fourth quarter with nearly 1,130 active physicians, an increase of over 200 active positions in the quarter compared to the prior year period. The 22% growth in US active physicians over the fourth quarter of 2022 was the 12th consecutive quarter of double digit year-over-year growth this elevated level of physician interest and engagement is a great forward-looking indicator and underscores the long-term growth trajectory of our business.
Patients suffering from SI joint dysfunction can undergo different types of care ranging from nonsurgical pain management for short term relief interventional procedures, which will provide medium term relief and surgical procedures that provide long-term durable pain relief over the last few years, we've seen an increase in interest and FA joint stabilization procedures from interventionalists, particularly for cortical bone allograft. Given that the SI joint fusion market is less than 10% penetrated today and the interventional spine physicians' growing interest in the space. We've expanded our engagement with the specialty. We believe the partnership with our surgeons as well as interventional spine physicians, which include anesthesiologists, physical medicine and rehabilitation specialists and interventional radiologists will accelerate our ability to capture this market opportunity.
Over the last 15 months, we've been targeting a subset of the estimated 4,500 interventionalists in the U.S., we have prior experience with other minimally invasive spine procedures. We've engaged and trained highly skilled interventionalist in our lateral technique using iFuse torque While still early, we're encouraged by the level of interest, the caliber of interventionalists we have trained and their pace of adoption.
Clinical evidence has always been an important part of SI-BONE commitment to its patients and physicians in June 2023. We also initiated the Stacey study, which is a prospective study on the use of IP's torque in patients with sacroiliac joint dysfunction by interventionalists. Enrollment is ongoing, and we expect to publish early results by the end of 2024 as the market leader, we believe that our broad product portfolio training expertise, clinical evidence, an experienced sales force are clear differentiators that are leading to strong interventional engagement going forward. We expect active physician growth to remain strong as we engage the nearly 8,000 target surgeons and 4,500 target interventionalists. We also expect our growing product portfolio and published clinical evidence to drive deeper engagement and increased procedures per physician over time.
Turning to products and solutions, we have a demonstrated track record of building innovative products and surgical techniques to address unmet clinical needs and improve patient outcomes. The robust procedure volume growth we've experienced in the US substantiates the value of our innovation in 2024.
We're launching new products in each of our target markets to further extend our leadership position within SI joint dysfunction and degeneration. I Phase 3 and ICs to our provider physicians with the most comprehensive solutions are for minimally invasive SI joint fusion procedures reimbursed under CPT code two seven two seven nine effective January 1, 2024.
The AMA adopted a separate CPT code two seven two seven eight to describe minimally invasive sacroiliac procedures. One performed using an intra-articular implants. Typically a cortical bone allograft placed directly into joined from a posterior approach. As I shared earlier, this technique is more commonly used by interventional spine physicians with the new CPT code two seven two seven eight established for both facility and off base procedures and with coverage likely available from some payers.
We expanded our interventionalist training to also include our new allograft product ICs, intra i2's interim built on ICs bone, which was launched in 2019 with enhanced surgical techniques that enable accurate placement of the implant into the joint using a posterior approach. We recently completed the first IPUs entered procedure in an office-based lab setting with IPs, torque and ICs intra. We now offer interventionalist multiple products to address their treatment preferences.
Moving to pelvic fixation. Based on the strong adoption demand and growing surgeon interest, we believe our breakthrough device ICs, Bedrock, Granite can become the standard of care for fixation and fusion of the SI joint providing a strong foundation at the base of long construct adult deformity procedures.
A recent publication with early Silvio results highlighted the prevalence of SI joint pain in 16% of the patients undergoing spinal deformity surgery, further underscoring the need for inclusion of pelvic fixation infusion as part of these procedures and the Granite line extension at the end of January, we received five 10 K clearance from the FDA from a 9.5 millimeter diameter implant with S. one and pediatric deformity indication. Since Granite was launched in 2022.
Approximately 40% of our Granite case volume has been in shorter two to four level constructs, which are generally degenerative spine fusion procedures based on published data, post-operative SI joint incidents and shorter level surgeries is estimated to be up to 20%. Additionally, some patients undergoing shorter level lumbar fusion procedures are at a higher risk of revision due to screw loosening and other hardware failure from underlying conditions such as high pelvic incidents, osteoporotic bone for high BMIs.
The current adoption of the larger diameter Granite in these shorter level fusion procedures illustrates the increasing interest among the surgeon community and including pelvic fixation in the high risk patients. We believe the availability of the smaller diameter implant will provide an offering for the approximately 100,000 annual degenerative spine procedures that ended the satcom as well as engage deformity surgeons who have expressed a preference for smaller diameter implants. We plan to launch the smaller diameter granted implant in the second quarter.
In trauma surgery, we've made significant progress over the last 12 months to develop the market for treating sacral insufficiency fractures we're engaged with major trauma center. Thought leaders are encouraged by the pace of i2's torque adoption for treating these patients. For the end of 2024, we will launch another product targeting the pelvic trauma market.
We believe the new product, combined with the initial results from a Saffron trial in late 2024, will be key to capturing the trauma opportunity with over 120,000 sacral insufficiency fractures a year and one year mortality rate of up to 25% for the patients who are treated with bad risks, the trauma market will be a crucial long-term growth driver for us.
With that, I'll hand the call over to Anshul to discuss our financial performance.
Anshul Maheshwari
Thanks, Laura, and good afternoon, everyone. My comments today will be focused on fourth quarter and fiscal year revenue growth, gross margin, productivity and liquidity. Additionally, all the comparisons provided while the versus the same period in the prior year, unless noted otherwise.
Starting with revenue growth, our fourth quarter worldwide revenue was $38.9 million, representing growth of approximately 22%. US revenue was $36.7 million, representing approximately 22% growth, predominantly from increase in procedure volume. International revenue in the fourth quarter was $2.2 million, representing approximately 12% growth. For the full year 2023, we generated worldwide revenue of $138.9 million, reflecting 31% growth.
Our US revenue grew approximately 32% to $130.6 million. U.s. revenue growth was driven by approximately 32% increase in procedure volume growth. International revenue for the full year 2023 was $8.3 million, representing 8% growth.
Moving to gross margin and productivity of gross margin for the fourth quarter and the full year 2023 was approximately 74% and 79%, respectively. The fourth quarter gross margin includes an approximate four percentage point impact from a $1.7 million excess inventory reserve.
To provide some context when we launched IP's torque in 2021, we introduced two designs fully threaded and a partially threaded Laggan plant to meet physician preference we are seeing physicians prefer the fully-integrated ICUs talk across all our target markets.
And in fact, demand for this implant type has exceeded our expectations. Accordingly, the reserve is related to our Laggan plant operating expenses were $41.2 million in the quarter, representing approximately 8% growth.
For the full year 2023, operating expenses increased approximately 4% to $156.4 million. The increase was driven by increased compensation, higher commissions related to revenue growth and research and development investments. Our net loss was $11 million or $0.27 per diluted share for the fourth quarter of 2023 as compared to a net loss of $11.2 million or $0.32 per diluted share in the prior year period.
For the full year 2023, net loss improved by approximately 29%, $43.3 million or $1.13 per diluted share as compared to a net loss of $61.3 million or $1.79 per diluted share in 2022. Net loss per diluted share for Q4 2023 and full year 2023 includes the impact of increase in shares outstanding because of the follow-on stock offering in May 2023. Our adjusted EBITDA loss in the fourth quarter was $4.8 million compared to $4.2 million in the comparable period. Adjusted EBITDA loss in 2023 was $17.3 million compared to 33.2 million in 2022, reflecting approximately 48% improvement adjusted EBITDA for Q4 2023 and full year 2023 was negatively impacted by the $1.7 million inventory reserve highlighted earlier.
Turning to liquidity, we exited 2023 with a strong balance sheet including $166 million in cash and marketable securities. Our total cash usage in the fourth quarter was less than $800,000. Our strong liquidity position combined with our continued progress towards adjusted EBITDA breakeven provides us the flexibility to self-fund our long-term growth priorities.
Finally, moving to our outlook for 2024. As Laura noted, we have several tailwinds and growth initiatives coming into 2024, we expect 2024 worldwide revenue of $162 million to $165 million, implying year-over-year growth of approximately 17% to 19%. Our guidance assumes low to mid-single-digit ASP deterioration driven by site of service and procedure mix, modest impact from new product launches, accounting for timing of launch and pace of adoption and modest international revenue growth.
We expect 2024 annual gross margin to be approximately 78% based on current revenue guidance, planned product launches as well as commercial footprint expansion. We expect 2024 annual operating expense to grow approximately 9%. Considering the anticipated operating leverage in the business, we expect significant year-over-year adjusted EBITDA improvement for full year 2024, putting us within reach of our adjusted EBITDA breakeven goal.
With that, I will turn the call over to Laura.
Laura Francis
Thanks, Anshul. I hope you can feel our excitement and confidence built on consistent innovation and execution coming into 2024. We believe the procedure demand will strengthen in 2024 as we rollout complementary products in each of our target markets. With a strong balance sheet, I believe we're uniquely positioned to deliver sustainable growth over the long term and have a clear line of sight to adjusted EBITDA breakeven.
With that, we're happy to take questions. Operator?
Question and Answer Session
Operator
Thank you. (Operator Instructions)
Craig Bijou, Bank of America.
Craig Bijou
Good afternoon, guys. Thanks for taking the questions and congrats on a good finish to the year. And I wanted to start with kind of what you're seeing in the SI joint fusion market and with respect to the new allograft product. So does the recent focus on allograft by Pandox? Is that adding to say, joint fusion procedures or are they potentially taken away from the traditional implant market? And then maybe if you could just give us a little bit of more color on the strategy behind allograft and what do you expect contribution either on a procedure basis or from a revenue perspective?
Laura Francis
Yes, Craig, thanks for the question. And what I first wanted to do is just kind of wrap up it an outstanding year for hitting new highs on revenue, growing 31% worldwide surgeon engagement growing to over 1,100 surgeons territory productivity growing almost 40%. There and then the operating leverage, 48% improvements in our in our adjusted EBITDA.
So and what we're doing is we're coming into this business. Let's go to the line and the bottom line. And so what we're excited about as well is some of the opportunities that we have in 2024. So building on the momentum that we had in 2018 over to Roberto for building up the opportunity for underground Airgas, I Joint Commission and capitalizing on the launch of Granite's nine five in order to capture more of the opportunity. It's the same procedure and also with the new introduction of a product toward the end of the year.
But that's targeting sacral insufficiency fractures. And so when I when I talk a little bit about the the primary SI joint fusion market. We're the undisputed leader in that market space, and we were the original pioneer this here. And when you think about the patient journey in patients that are suffering from a joint committee just started. And what you're seeing is there's there's what I would call the continuum of care. And so they they start out with them and medications, physical therapy injections.
And but there's there's also this interest in what I would call the next level or continue on that continuum of care, which are these post-acute care initiators and fusion procedures. And those are typically performed by interventional spine specialists and they are done with cortical bone allograft and many have the the traditional lateral procedure that we have pioneered with our IP. three D product and then more recently with our torque products. And so as I mentioned in my script.
Okay, third or for 15 months now, our Stacey study was working directly with those interventionalists and they were actually trained on our lateral procedure with torque. And we've seen good progress with that particular study.
Now at the beginning of the year, we actually launched a new allograft product called IP.s intra, and we think that it fit it act, fleet. It states that it's somewhere in between where they're receiving injections and where they're potentially receiving a lateral procedure at the end of their journey. So what we did is as the market leader, we want to provide a broad product portfolio.
And then what we do on top of it is use our training expertise, our clinical evidence and then our experience. It has to lead to strong interventional engagement. So we believe we've targeted we've taken a targeted approach, and it's really allowed us to thoughtfully leverage our experienced sales force to train this specialty medicine, Augment to our current strategy to reach more than the 280,000 target patients. But there.
Craig Bijou
Great. Thanks. Thanks for that color. And maybe for onshore, you guys obviously saw a tremendous operating leverage in 2023, and you're forecasting more operating leverage in 24, but not to the same extent. So that may just be conservative to start the year, but can you just talk about the guide and how you're balancing driving that top line growth and still working towards EBITDA breakeven? And I'm going to throw this in, could we see EBITDA breakeven come in 2025?
Anshul Maheshwari
Correct.
Thank you for that question. And in case it's difficult to hear because I started, please let me know. So we are really proud of the operating leverage that we've demonstrated over the last couple of years as we've benefited from the investments in the scalable infrastructure we build throughout the pandemic would be when you look at 2020 for corn because outpaces OpEx growth rate in and you can see that at the midpoint of our guidance range and the OpEx growth rate expectation of 9%. That's about two times operating leverage.
Now we do have a huge opportunity ahead of us, and we want to make sure we're making thoughtful investments to capture the growth opportunities. Laura talked about several of those coming into 2024, and we think that that investment will allow us to maintain that you may have to accelerate our journey towards adjusted EBITDA breakeven. So when you think about our guide at 9%, what does that incorporate? You've got the standard merit increase that you build in.
You've got the higher commissions and our strategy to add more territory, especially as we've expanded our portfolio coming into 2024. So we're going to add some more territories there. You've got some more sales and marketing spend. When it comes to the new product that we're going to launch, we'll probably have a lot of activity there, including training with the interventional side and then just R&D as we think about the portfolio into the future as well.
But again, we feel really good about being able to continue to get the leverage and stay committed to it now in terms of and in terms of timing, right, we're pretty confident that the operating leverage will translate into significant adjusted EBITDA improvement as we progress through the second, we have a strong fourth quarter of 24 up. Our approach to when we get to breakeven is just get there versus, you know, sort of project when that timing will be but we're really happy with the progress that we're making, and we have a clear line of sight to that to that milestone.
Craig Bijou
Great. Thanks for taking the questions.
Operator
Thank you.
Drew Ranieri, Morgan Stanley.
Drew Ranieri
Hi, Laura. Hi Anshul, and thanks for taking the question. Maybe just to follow up on one of Craig's questions about the on the allograft product that you're launching, it just to be absolutely clear. I just want to make sure that we're understanding this that you're not seeing really a significant change in underlying market dynamics from a from these products taking basically the surgeries procedures away from surgeons.
Just want to get a better read on that of like kind of what you're seeing on the underlying market? And then I'm sure you did talk about some investments you're putting behind on the IPUs Entra products. So maybe just help us parse out like how much is actually going to be hitting the OpEx? How much are you spending there to really kind of start this journey with this new specialty what is excited about the opportunity with interventional.
Laura Francis
If you think about our journey, we've been in business for 15 years at this point, we pioneered minimally invasive SI joint fusion. We've really built this market. We are the market leader in this space and yet we're less than 10% penetrated into the market right now. And so what we see is an opportunity in the third instance, our primary call point has always been spine surgeons, but we do think that we can reach more of these patients and by working with interventionalists as well as spine surgeons and having multiple products that will fit will meet their specific needs.
In addition, there's a lot of our food as my prepared remarks to seven to seven eight, which is specifically for these some post steer your procedures typically allograft procedures, the the the physician fee is around 40% less than what it is for a lateral to be economically done with our IP. three D or torque product. And then recently, so fees are around 20% less on. But with that said, once again, what it does is it gives us the opportunity in order to reach more of these patients and further build out the market.
So if you look at our performance in 2023, we had a great year and that that performance was driven by our core market in primary SI joint fusion as well as decent market. So pelvic fixation primarily as well as trauma which is developing. But so what we see is this opportunity to more rapidly capture this market opportunity that we've been pursuing for all of these years. And we're really excited to do it with that in both spine surgeons and international plants and it provides unique recruits?
Anshul Maheshwari
Secondly, Andrew, to your question on the OpEx side, you know, majority of our OpEx increase is just the commissions, the pay increases that come standard as well as some territory expansions that we had always contemplated as we think about a model where we can do 2 million per territory. We've always said in the U.S., we want to look at on the territories to have a business that can do 200 million of revenue. We ended the year in 18. And to do that, you're going to have some more training spend as well. But that's across the board between interventional and surgeons, especially with the DJ and opportunity with the nine five granted as well. So I wouldn't say that, you know, there is any material shift in our in our OpEx strategy because of interventional. We've just got the opportunities that we've always wanted to go after.
Drew Ranieri
Got it. And maybe just overall on some of the newer product launches, including it drove those small construct in the trauma product coming you laid out, you kind of expect another robust year of active surgeon adds. Can you be a little bit more specific there? And just how are you thinking about maybe the utilization or underlying utilization of active surgeons improving with some of these newer products. Thanks for taking the question.
Laura Francis
Thank you. Have some of the usage in both growing the number of physicians that we're working with, as well as increasing the number of procedures per physician as well. So you're talking about interventional by and large, those will be new physicians that are performing the procedure. So it gives us this opportunity. And as I said, there's around 4,500 interventionalists that are targets to this. And in terms of increasing the number of procedures. We have always focused on increasing the number of primary SI joint fusion procedures that our surgeons are performing.
And then with the addition of torque and with Granite It gave us the opportunity to further increase those number either in our primary market or in our backlog in that business permits are granted 95 product does is it gives us a product that's very specifically targeted toward these degenerative spine procedures and the market opportunity there. There's there's around 100,000 procedures per year, very short construct procedures that go to the safe grounds at. And so that's our bread-and-butter surgeon that that business some are already preleased and SI joint fusion. And now they have the opportunity to perform pelvic fixation with our new Granite product. So a great opportunity to deepen our relationship with our surgeons and increase the number of procedures that they're performing with us.
So quarterly annually.
Operator
Thank you.
David Saxon, Needham & Company.
David Saxon
Good afternoon, Laura and Anshul. Thanks so much for taking my questions. And congrats to a strong end to the year. And maybe I wanted to talk about torque to begin with.
And Laura, in your script, you talked a little about a little bit about Stacy, but I think another talk study SaaS front, and I think it's nearing enrollment. So how should we think about SaaS front as it relates to the market development for talk is that can that trial capitalized torque adoption? Or will it kind of continue to be more of a gradual ramp?
Laura Francis
Thanks for the question, David. So on torque, you're right. The state study was actually specifically engaging interventional spine, special local as for the implant arm. And as I said, that's going well. Saffron is actually a study that is engaging surgeons performing sacral insufficiency fractures. And so this is pelvic green fractures. It's a what we call our trauma product, and I do see a pretty significant opportunity there for us. Certainly with the expecting us to have a publication that shows the results from from Saffron by the end of 2024.
We're encouraged by what we're seeing currently with that and then in terms of also what we're seeing on trauma, as I said, toward the end of the year, we expect to launch another product to the theater. And so I think given that these patients that have sacral insufficiency fractures there around 120 associations per year in the United States, they typically are treated in rehab, say they're conservative care they're typically not treated surgically.
There's a big opportunity that's here for us. We do think the clinical data is going to be really important. And because of the fact that surgeons typically don't treat these patients. We want to show the efficacy of infection. So it's will important there. And then I'm not giving much information about the new products, but the new products will be another important part of targeting that particular market. So really excited about how we're going to finish 2024 in trauma and the opportunity to see that as a significant growth driver in 2020. Bye.
David Saxon
Great. Super helpful. Thanks for that. And this one's probably for onshore. I wanted to ask about the cadence of revenue throughout the throughout the year. Is there anything to call out in terms of seasonality? I think consensus is about $37 million for the first quarter, so down kind of mid-single digits sequentially. I think in '23, you're actually up in the first quarter than sequentially. So anything to call out from a cadence perspective on any we added into that this quarter?
Anshul Maheshwari
Yes, Dave, thank you for that question. So from a seasonality standpoint, for a company in our stage of growth and innovation, we believe our seasonality in 2024 will continue to be impacted by the timing and pace of the rollout of the products, not different than what we saw in 2023 that the seasonality was not comparable to what we've historically seen from our perspective, we don't believe this should have the right way to look at the business and given the initiatives in 2024. But from a modeling standpoint, if you're looking at a proxy, the Q1 tends to be about 67% lower than the fourth quarter. So yes, that's a good enough proxy. And then our focus on productivity is that through execution, we can improve on that. But I would say that historical trend of 6% to 7% is a good proxy for Chicago, Illinois versus Q4?
David Saxon
Yes. Okay. Great.
Laura Francis
Thank you.
Operator
Thank you.
Sam Brodovsky, Truist Securities.
Sam Brodovsky
Hey, thanks for taking the question. I guess just first one on the short power short contract launch on, can you kind of just walk us through the puts and takes on that rolling out in 2Q versus the initial longer contract up launch that we saw with Granite? And how should we think be thinking about the impact of that versus the initial rollout?
Laura Francis
Yes. Good question, Sam. So I think that you'll see a more rapid rollout here. First of all, we were a little surprised at how quickly we received clearance.
Operator
Please standby, your conference will resume with her and Shannon.
Laura Francis
So we are ready.
Operator
Hello, you're coming in loud and clear.
Laura Francis
So. Okay. Thank you.
And Sam, I'm going to answer your question once again on that. So what's the cotton? What's the bid.
And so on the short construct lines, I was saying that he actually was surprised at how quickly --
Operator
Bill, please stand by. Your conference will resume resume in a moment. Please standby, your conference will resume shortly.
Anshul Maheshwari
We didn't Andrew stage either because you were not speaking or because of a bad connection to disconnect, press one to record your message two, are you still there to disconnect, press one to record your message, Chris, it was previously follow question 20, given that no one, truly like what you're coming in loud and clear right now.
Sam Brodovsky
Okay. Can you pass me, you are live your life loud and clear.
Laura Francis
Thank you. Sorry about that. Some technical difficulties at Sam, I'm not sure would you comment on your question on short construct? Would you like me to restate that? Or did you cap and capture most of it?
Sam Brodovsky
I think it would be great if you could just run it backwards.
Laura Francis
Great, great. And so a store concept launch Tom, we were actually quite excited about the opportunity we have with our grant at nine five products. The product was actually cleared earlier than we anticipated. Just a great team effort here with our product team as well as our regulatory team and the clearance, it was a line extension for us. And so we added a couple of different some areas to the high, if you first of all, this S. one trajectory, which is really targeting shorter constructs and then also pediatric deformity as well.
And to get at your question of rollout this is a little bit different than the original grant at launch, primarily because the instrument trays that are currently in the field that are meeting our demand for our current Granite business, we will use those same instrument trays. So we already have the trays out in the field. The our territory managers have been speaking with our our surgeons on these topics we are in these hospitals on the approved list. And so we are we think that this should be a more rapid rollout. And ultimately, the goal primarily is to go after these 100,000 short construct cases in the U.S.
Sam Brodovsky
Great, thanks.
And then just a last one on Entra as well. Just in terms of the pricing relative to our views Can you level set us there and how that's factored into the pricing?
Anshul Maheshwari
I'm sorry, what was the question?
Laura Francis
Sorry?
Sam Brodovsky
Just in terms of pricing for the allograft, you just level set us where that is relative to our views.
Anshul Maheshwari
Yes, from a pricing standpoint, what I would say, Sam, is you've got to think about it as a construct pricing in terms of what a construct would be for a multi implant primary SI joint fusion procedure, and our expectation is that should be pretty comparable.
Sam Brodovsky
Appreciate the questions.
Operator
Caitlin Cronin, Canaccord Genuity.
Caitlin Cronin
You may have received prior to taking the questions and congrats on a great quarter. Just that, you know, touching on the new focus on interventionalists. So we are training them in lateral procedures, figure training them in 3D and torque. And then it's the new allograft products employing a posterior approach.
Laura Francis
Hey, Caitlin, thanks for the question. We're actually training them with our torque product for the lateral procedure. And then we are also training on the allograft product, typically not the ICUs 3D triangular shaped implant given the the needs of interventionalist.
Caitlin Cronin
Got it. And then so the revenue per procedure would that be less for an interventionalist versus a surgeon that perform that procedure?
Laura Francis
The pricing is similar.
So on with the last question that we got from Sam, that was asking about allograft pricing. But the pricing overall is very similar. Whether we're selling to interventional or to spine surgeons.
Caitlin Cronin
Okay, got it. And then just on briefly on the OUS business, what is your expectations for this year? And when do you expect clearance for torque in Amea that happened?
Anshul Maheshwari
Yes.
So the OUS business, Caitlin, is about 6% of our worldwide revenue in 2023. And when we think about the guide for the year in France has been performing really well for us last year and the recovery in some of the other markets like UK and Germany, they will take longer than we had previously anticipated. And what our current guidance for the year at 17 to 19 does assume a low to mid single digit year-over-year increase in international revenue. So US revenue will be closer to 18% to 20%.
Now the international market is important for us and the team's been doing a lot of work around training, new physicians, modifying our go-to-market models up, which should reap benefits in 2025. And then in terms of torque, we are working really hard to get talking to EMEA, which we believe could be a growth driver for the business, but likely to be in early 2025 when you start seeing any impact from that just given the regulatory process.
Caitlin Cronin
Got it.
Anshul Maheshwari
Thank you.
Operator
Thank you. (Operator Instructions)
Ross Osborn, Cantor Fitzgerald.
Ross Osborn
Congrats on the progress and thanks for taking the questions.
And maybe just one for me. Would you discuss the pediatric deformity market just in terms of size, the current standard of care and where you see GRANITE playing a role?
Laura Francis
And if so, and it's small is a short answer to I think the target market size is around 10,000 procedures per year, Ross. And so it's not it's not a big area of focus for us. The the opportunity in DJ and spine is 100,000. So it's 10 times that size but we have received inquiries from pediatric deformity surgeons who are interested in pelvic fixation. We wanted to make sure it was an option for them on label.
And so the new grant at nine five does provide that for us.
Operator
Thank you. Now I will turn it over to Laura.
Laura Francis
Thank you so much for your time. I really apologize for the technical issues. I hope that we've given you all the answers that you need. It is, as I said earlier, we're thrilled with the year that we just came off of and really excited about 2024 with all the new opportunities in front of us and building on the momentum that we generated in 2023. So thank you again, and goodbye.
Operator
Thank you for your participation. You may now disconnect.
