#43 - Anatomy of a startup - Discussion with the Vic Nunes, the CEO and Founder of QMed Innovations (58 mins)

Brought to you by Tiger Buford.

Welcome back to Inside Orthopedics. This is Tiger, your orthopedic industry insider and retained recruiter for early-stage ortho companies. This is episode number 43. Titled Anatomy of a Startup, a discussion with Vic Nunes, the CEO and founder of QMed Innovations. Transparency of device companies' instrument assets and implant assets has always been a problem. Once they're shipped out into the field, nobody really knows where they are. Uh, QMed solves this problem and more. QMed can give you 100% visibility of both the location and usage of each instrument tray wherever it is in the world. So this is gonna be really interesting. Enjoy this discussion with Vic Nunes.

All right, so we are live with Vic Nunes at QMed. Welcome to the podcast.

Thank you. Glad to be here.

Yeah, yeah. So I'll have to admit, I'm new to learning about QMED, so— and we'll get into the technology later on, but tell me, let's go way back in time and tell me about your early education and career in orthopedics. Sure.

So, Tiger, thanks for having me on, first of all. So, you know, went to Northeastern University. I'm a mechanical engineer by education. You know, got into management very early on. I won't say that I was like a super engineer because I wasn't. I started to early on in my career became an engineering manager, you know, stayed on the technical side and then I Eventually branched over to supply chain operations, manufacturing management. Spent the majority of my career out of school in orthopedics, primarily with J&J. When, you know, I still recall orthopedics had become a bit of an experiment investment for J&J. They, you know, they had a hip Later on, they bought a knee system. I'm sorry, they had a knee, then later on they bought a hip system. I was hired into J&J as a young design engineer, kind of supporting their manufacturing of casting tapes, synthetic casting tape that you mend broken bones with, to replace plaster repairs, if you kind of recall that whole field. So, so we had a casting division back then. I'm going back to late '80s, early '90s. And so my entire career in orthopedics has been over 30 years at J&J. Progressed through the ranks into management, touched all of the different divisions, you know, the knee division after casting. You know, ran a couple of facilities for J&J on the manufacturing side. Got into sports medicine, the neuro division. I ended up being a senior executive representing supply chain and operations for 2 of those divisions, sports med and neuro. Did a stint in spine. Then I got attached to A bunch of M&A activity. You know, I was part of the team that did the integration of the trauma division when we bought the Pew back in, I wanna say, '99. And then again in 2012 when we bought Synthes, I was part of the integration team. I led the global operations supply chain integration. of the pew and Cintas. So, and, and then 4 years after that, I retired. Retired from J&J.

Yeah, that'll do it to you.

Uh, yeah, absolutely, absolutely.

Completely different cultures, J&J and Cintas. I've heard lots of stories.

Very, very different. And, and maybe one day, um, I'll hire a ghostwriter and I'll end up writing a book about my experiences on, on, and in some of the madness, I would say, that I— of bringing 2 big giants together. And, you know, and of all of the interesting things, decisions that had to be made about, you know, duplicate manufacturing sites and distribution systems and IT systems. You can imagine, you know—

Yeah.

Everything down to the sales offices, right?

Wow.

Who keeps the sales office in each country. So that sort of stuff. But so that's been kind of my career in orthopedics, primarily with one company, but became very well-versed in the orthopedic industry, not just from the operational side, but because of my management board involvement, you know, the sales, the marketing side, the product development. In all of the support stuff. So it's been an interesting ride for sure.

Okay, so you're retired, and when did— where's the—

where did QMED come from?

What was the original idea, the inception?

So yeah, so the inception— I used to actually joke around, Tiger, when I was at J&J. I would sit on our budget meetings and we would constantly complain about how much money We were budgeting for instrument kits for the following year, how much we were deploying to the field. And it was a big number. And, you know, we'd look at that big number and we'd go, why do we need more kits in the field? Isn't what we have out there enough? I mean, we're only growing by 4% year over year. It's almost like we're deploying as many kits in dollars as we are growing in revenue. It's ridiculous. It was like a 1-to-1 ratio, right?

Yeah, yeah.

And, you know, and quite frankly, I mean, you know, we toyed around with RFID. We toyed around with Bluetooth technology at the time. In software, you know, there's a bunch of companies out there. And there's lots of claims, you know, there's lots of— Hey, we can tell you where all your assets are. We can help manage your inventory. And they do a decent job, an okay job, but we never found a system that was foolproof, that could really tell me accurately where my assets are at any given point, you know. If, you know, software was good to a certain point, but it required people to, to do manual entry, you know, to report in, you know, did I receive my kit, did I ship my kit, you know.

Yeah.

And if you didn't do that—

Or scanner somewhere. Yeah.

Yeah, RFID exactly requires scanning, it requires infrastructure. And if you didn't scan it, well, then you didn't see it, right? So, um, so we've been aware of the problem for a long time, but it wasn't until about 2 years after I left J&J, I was doing a bunch of consulting and I was sitting on a couple of boards that I came across a technology guy who had spent his entire career in telecom. And he and I hooked up and we started talking about what he was doing, the technology that had— basically that entire IoT space that was born with 4G. you know, telecom. And I started to learn about it and talking to them, and I said, geez, you know what? You know, here's an application in med devices and orthopedics that we can take some of that know-how that, by the way, it's being utilized now for 2 or 3 years prior in other industries, in the fleet management industry, you know, for people to keep track of their—

Trucks.

To optimize routes and optimize fuel consumption and things of that sort. And so I started looking at that technology and saying, well, how do I repurpose this for orthopedics? How do I take this technology that's been proven in other industries and realign it? And that's kind of basically how QMED got started.

Okay, so it's a— so there's an existing problem, and then you met a guy that was familiar with the latest technology, and it was, well, here's the solution.

A marriage of the two, right? I mean, I was not a technology expert by no stretch of the imagination. I knew the industry, I knew the problem and the pain points that these companies are experiencing. He knew the technology. And he knew the players and how we can get. So when you marry those 2 know-hows, what comes out of it is QMED. It comes out with a product that we named Quest eventually. So that's our hardware. And then we have a software that we developed called QView. And the 2 act in conjunction to really provide a daily visibility of any asset a customer wants. All you got to do is take our device, attach it to the side of a kit, and it's on. There's no infrastructure required. There's no on or off switch. There's no change of batteries required. There's nothing. There's, you know, the unit is on. I hate to use the sort of term that sometimes we see in commercials on on TV where they say, well, you set it and you forget it, right? But in essence, that's what we're doing with our device. We mount it and it's on.

It doesn't require any human, uh, actions. Not at all.

So how did you—

how did you do a proof of concept? Did you— did you build a prototype and put it on a tray?

Yeah, so, so Great question. So, it's definitely been a learning process through the concept stages all the way to where we are today. So, we started by just buying product that had been out in the field in other industries, taking it apart, and reconfiguring it. Now, we knew one thing for sure, right? The device had to be autonomous, which these devices were. That we were getting, but they also have to survive autoclave cycles. Because once you attach it to the kit, it's got to go through wash cycles, it's got to go through autoclave cycles. So that's where the mystery kind of came in. We kind of had the circuit board with all of its firmware and program done for us because it's pretty similar. But how do we protect it from heat? How do we keep it functioning after it sees 500 cycles of autoclaving? So that was a bit of an R&D sort of design, right? A lot of experimentation with insulation, right? Looking at different fabrics, different foams, different liquids, different sprays to put on the board to protect it from the heat. Then we got into batteries. Okay, you know, in order to for this device to operate, the batteries had to have a certain requirement on pulse current and maximum capacity. But now we had a different element: temperature. Right? You've got 132 degree Celsius autoclave. We need batteries that can survive. and not be damaged, right? So we had to go after the right characteristics of a battery, right? So we had insulation and we had batteries to worry about in figuring that out. By the time we figured that out, which took us the better part of a year, we had a product that we were able to put out and do some beta testing with companies. We tested it with J&J. We tested it with Medtronic, and then there was a couple of other smaller orthopedic companies that we tested it with. Got a lot of really good feedback from them, mostly positive. Everyone was very excited at the fact that it's simple. I can attach it. I can rivet it onto my kit. I can see it right away. I didn't have to do anything. It tells me the location once a day, and then it provides a bunch of other data. Like, we get to count autoclave cycles and wash cycles that eventually we turn into surgical events. Okay?

Okay. And so, was it 2 autoclaves per surgery generally? The day before, and then it gets wrapped, and then The cleaning the day after?

Right. So we have a— we have logic in our software that once we capture through our hardware, once we capture a certain temperature cycle, we can tell the difference between a wash cycle and an autoclave cycle at a hospital, right? So because there's different profiles and temperatures, right? There's different time, pressure, temperature. So we capture all that data Within our device, and then once a day we dump all that data into our software in the cloud. And then we take that raw data and we start through our software. We have algorithms that will start to make sense of that raw data, right? So we can say, for example, when a kid arrives at the hospital, we know it's in a hospital and not at a 7-Eleven or at a Starbucks, right? We know it's a hospital. When it arrives at the hospital, it goes through the wash cycle. We know that. It goes through the autoclave cycle. We know that. And then if it goes through another wash cycle, then we know it's been in surgery, right? Because that's usually the sequence, right?

Yeah.

So, and we— and so when we see that sequence, we count that as one turn, right?

Cool.

So now we can do some cool things with the device, not only tell you where the asset is, but we can start running analytics about how often has your asset been utilized. And we can run calendar dates, last 6 months, the last 3 months, right? So now, now as a supply chain and efficiency, I want to know how am I using my assets? Right? Are they being utilized, or are they just sitting on the shelf at a hospital collecting dust, not being utilized? Right? So—

Wow. We were always— yeah, I remember working at companies, we were always trying to take trays away from distributors that weren't using them and give them to the people that were busy. We never could figure out, you know, What was actually being used.

Exactly right. And I think, you know, in my days, you know, our distributors and our reps, it was too easy to ask for more kits, right? I need more kits. I don't have enough to support surgeries, right? And we didn't have any way of knowing whether it was real or not. So our only answer to the problem was to build more kits and ship them out, right? And that comes at a cost. And so our system is really about logistics. It's about asset management efficiencies, keeping costs under control. I mean, we've talked to well over 150 companies in orthopedics today.

Sure.

And I have not had one company say, Well, I don't have that problem, right? Yeah, everybody has the same problem.

Everybody has the same problem. A quick story, I worked for a pretty large orthopedic company once, and we fired a distributor in a, in a major state, and we went in and audited him, and we couldn't find— 50% of the stuff was gone. You know, he had done horse trading with other Distributors, there was no— once things are out in the field with independent distributors, I learned the companies have no idea where anything is.

Well, Tiger, when you and I started in orthopedics, if you recall, we used to have gross profit margins well over 85%.

Yeah, good old days.

And back then, back then nobody cared about inventory or asset management. Right? Everybody was making too much money, right? You need more kits? We're just going to build you more kits. We're going to send them to the field, right?

Exactly.

You know, back then it didn't matter. Today it matters. You know the environment today. You know, no one's getting price on product, right? Your gross margins have shrunk from 85% where it was 20 years ago. Now they're somewhere in the 60%. if you're lucky, right? People have cut product development budgets to the bone, you know, sales forces to the bone, and we still manage the assets the same way that we did 20-some-odd years ago. But, you know, there's technology now that can help, right?

Yeah. Yeah, I was reading— I was reading Zimmer's balance sheet yesterday, and I don't know, it's— and this is a real number— they've got over $2 billion in implants and instruments. And they didn't, they didn't break it down, but I would suspect half of that's instruments. I mean, that is a lot of capital.

Yeah, I mean, I can tell you, uh, it's also public knowledge because these are public companies, but, uh, You know, at the Pew back then, we had over $2 to $3 billion worth of inventory, just inventory, because, you know, instrument kits are classified as assets on the balance sheet, right?

Right.

So yeah, these are big numbers. I mean, if you look at— I don't know if you're familiar with Avascene. They put out an annual sort of contract manufacturing report every year in orthopedics. These guys put out data that tells you that the industry, the orthopedic industry is spending $2.5 billion every year on instrument kits.

Wow.

Instrument kits to the field. $2.5 billion a year. The whole industry. Now, you know, the orthopedic industry is roughly what, $50 billion, give or take? If they're growing by 5% a year, they're growing by $2.5 billion in revenue a year. So it's literally one for one, just like what I was seeing at J&J when I was there, right? For every dollar of growth, we're spending a dollar worth of assets.

You can't— it's impossible to scale. If you're having to feed the system all the time.

It's not sustainable. And I think what happens is that, quite frankly, I think the larger companies, the market leaders, it's painful to them, but they've been living with this problem for 20-odd years. It's almost like it's built into their DNA. The companies that really feel it are the smaller, younger companies, the smaller, spine companies primarily, right? The $20 to $50 million spine company that, you know, is trying to get out in the market. They got some really cool stuff that they want to do, but they're deploying $10 million worth of assets. They can't afford— they really can't afford that, right?

Yeah, and I talk— yeah, I talk to a lot of startups and they hit the growth phase Like you said, the $10 to $50 million, and they have to put all their— they end up with cash flow problems because they can't build enough inventory to support the scaling of surgeries. It's a big problem. It's real easy to get to $10 million. It's really hard to get to $50 million in sales.

Yeah, I, I, um, so you, you know some of these companies that you know, they start out being sort of a regional company, right? They have a few distributors. They support, you know, the hospital groups in their area, and they slowly start to expand to a couple of more docs and, you know, and getting other distributors. You know, distributors are charging, you know, 35%, 40% commission to these small companies to start off with.

Right.

Then on top of it, they require all of these assets and inventory at their disposal, you know, to facilitate how they do business. And I get, you know, the story that you told early on about how you couldn't account, you know, for a percentage of the inventory assets. I had a customer I won't name on this program here just for privacy reasons. But I had a customer call me and wanted our devices because they were going through a sale of their business. They were a small— I want to say $20 million spine company, right? There's lots of those out there.

Yeah.

And they were looking to do a sale, and they couldn't account during an audit to reconcile their inventory. in their assets, and the deal was going to fall through if they couldn't account for their assets that they were claiming they had out there.

Wow.

So, I mean, unfortunately for them, they called me to see if they could use my stuff, and I said, of course you can. The problem is, if you can't account it, how are you going to find it to put my devices on it? Yeah, right. I mean, it's, it's Yeah, it was a big problem. But, you know, this stuff goes on all the time in this industry. It's, you know, you know the industry. I think, I mean, I've seen the progression of product development and procedure development. You know, I remember when a total knee system was well over 3-hour surgery. You know, now you're down to 45 minutes and you can hop off the table literally and go right into rehab, right?

Yeah.

It's a totally different game. So we made— orthopedics has made the progression and evolved over the last 30 years from a product standpoint to a certain degree, right? But we never evolved from a supply chain and efficiency of of how we manage our assets. You know, I think—

Are the turns faster now than they used to be?

Without my device, no. They're still the same. They're still blind. It literally, Tiger, it's like they're totally blind. And the bigger the company, the worse the situation is, right? You know, people are— You know, a company like— well, I'm not going to mention names because I don't want to pick on anyone particularly, but there's companies out there with 2,000 reps in the field, and everybody's got their trunk stock, and every hospital's got some consignment, and everybody's landing and borrowing, you know, and whatever, back and forth, what we used to call footballing, right? Now think about this. If you have a recall, how do you get the stuff back if you don't know where it is? You know, it takes 2 years to do a recall.

Yeah, yeah, there's— you'll get 80% of it, but you'll never get all of it, yeah.

What about patient safety? What about instruments that need to be resharpened? When do you find out that you need to replace an instrument? When it doesn't work anymore, and a doc in the operating room saying, hey, this thing doesn't cut, doesn't drill, doesn't tap, right? Or a torque wrench that's out of calibration.

Ask to have it, or reamers. Yeah, okay, this one's done, give me a, give me a new reamer set.

Yeah, yeah, go find me one. And, and then you end up bastardizing another kit because you took the reamer from that kit that you'll never replace it back.

Right.

It's— so all of these things with our device, we end up doing some cool things. Like, if you have a kit that, you know, say you have a torque wrench, right? And you have a torque wrench that has to be calibrated every 10 uses. Well, I can count the number of uses now of the kit. So I can send alarms, and I can say, hey, You've used this kit now 9 times. That kit's got to come back for calibration or for inspection or something, right? It's a way to proactively, you know, if we're in the industry where, you know, complaints, you know, turn into FDA audits of your facility because I've got too many complaints in the field about a specific instrument. That it's not working or it's not doing this or that. It's because we're allowing these kits to be out there in the field without coming back for inspection on a scheduled basis. And those are the things that we can provide. So it's not just about tracking, but it's actually managing your asset in a proactive manner.

Yeah, yeah. I think of it as asset transparency. You can— and I— so does the customer, do they have a dashboard in the cloud where they can see all their assets in one place? How does that work?

Absolutely. It's like, it's like Google Maps, right? We have a software that has the map. You can zoom in and zoom out as closely as you want. It shows you like little flags, all of your assets. You can You can tap on the asset. It'll tell you what it is. You can tap it again. It tells you its history, where it's been, how often it's been used, who's responsible for that asset. So, you physically— if you want the thing to be invisible, there's a way to do it. You take a sledgehammer to my device, and it's invisible. That I'll guarantee you. But other than that, if someone asks me that question, a customer asks, well, can someone fool it, you know, in hiding? I said, of course they can. Anyone who has an ill intention to do something can take a sledgehammer, smash the heck out of my device, and it won't transmit anymore. But I'll tell you what, I will tell you the last place that it was before it stopped working.

Yeah, yeah.

You'll know that evidence, right? There's evidence.

So yeah, so tell me about the physical device. So I, I've seen a picture on, on the website. So it's a little box that bolts on to the side of the tray right below the handle, usually, right?

So it's, um, yeah, that's where it's purposed, right? So, um, the box is about 2.4 inches by 2.9 by 3/4 of an inch thick. It's, um, so it's all— everything's self-contained. It has a bracket. The bracket is usually riveted to the end of the tray underneath the handle, like you said. We've had people putting them on the inside.

Do people do that? Does the manufacturer do that, or on-site, some in a warehouse somewhere?

So both. So a little bit of both. We've had customers that have brought kits to us or to a third party or, you know, or to their warehouse, and then we send our devices and we send someone there, or if they feel comfortable doing it, then they do it there. So we've had a little bit of a mix of both. To be totally transparent is that we're just coming out to market with the product.

Okay.

So we have several hundred units out on the market today. We have more customers signed up than we actually have customers with units today, just because we're commercializing the product, we're getting it out, but we've got a bunch of orders from really good customers, you know, anticipating the manufacturing of the problem— of the product.

Yeah. It's got to be a massive demand. Anybody in— Finance or logistics or anybody in sales management, it's got to be huge demand. So how's the— so as you're starting out, how is the product sold? Is it a hardware sale or a subscription for the software?

Yeah, it's actually a SaaS model. So for folks that don't understand SaaS model, it's a subscription like your cell phone plan. We basically— the cost of the device is incorporated into the monthly fee. So people really don't own the device per se. What they're doing is subscribing. We give them the device, they mount it, and they subscribe, and they're able to get the data coming out of that device, right? And we attack it like a— It's usually a 2-year with a monthly fee every month. So we try not to do, you know, capital outlay. We try to stay away from that. We try to make it as simple as possible.

Right. And so when a device is bolted onto a tray, then it's somehow scanned and linked to that tray forever until something changes.

Exactly. So our product has a 5-year life— lifecycle. And so if something was to happen to the device, all they got to do is pop it off. We send them a new device at no cost. They pop it back in, and it automatically— you know, we change it in our database. There's a new ID associated with the asset, and it keeps— Doing the same thing that the old device did.

Got it.

But—

5 years is great because most trays don't last anywhere as long as 5 years.

Well, so, yeah, interestingly enough, Tiger, I've had— you know, the big trick with this thing is the turns, right? So, you know, when I talk to customers and I ask them, so, well, what are you getting for turns, inventory turns, right? And they tell us, ah, you know, I'm getting, you know, Maybe once a— one a month, you know, or 12 turns a year. Well, with our device, it's really easy to go from one a month to 2 a month, really double your turns.

Wow.

So what that means is that when you double your turns, whatever capital you spent there, you're going to pay it a lot faster because you're getting more revenues out of it faster, right? But what it also means is that your kits are going to get used more often, which is what you want. will be a lot more wear too, right?

Yeah.

So I think you're right. I think the 5 years is plenty. But if it gets to the 5 years and they still have the asset, all they got to do is just swap it out, take our device out and put a new one.

Yeah. I'm sure your device will have an alert that says, my battery's running low.

We do. We have that on our software. We measure the power. And it basically shows you whether you're still within power or not. And once it gets to a certain area, it tells you, hey, you've got 3 months left. You better, you know, change the device.

Got it. Got it.

And that will help us too, because we'll see it. Everything our customers see, we see it ourselves. And we'll— we're writing different code on our end Where we're able to write reports of, give me a list of the batteries that are low within 3 months. And then we call the customer proactively and say, hey, there's a device there that we need to change. Because we're interested in continuing the relationship and selling the data, right? So it's— we have the incentive to let customers know that you don't want that gap in data.

Got it. So your customers have got to be the really big companies can benefit the most. But like you said, the growing small companies, there's a need there too. So who are you— who's most interested today?

So We have an agreement relationship with all of the market leaders in the industry today.

Okay.

So, you know, the top 7 companies where we have a relationship, we're either deploying units with them later this year or we are about to deploy or have an agreement in place. So the ones that are much quicker, you know, because the sales process is still— we're looking at a 6 to 9 month investment in the sales process, right? Establishing the relationship, you know, doing demos, doing a few pilots and things like that. The smaller companies are— We are maybe 25 to 30 companies in our sales pipeline of smaller, mostly spine companies, I would say, today more than anything. A few extremity companies, very few total joint companies, which is a bit of a surprise. It's a lot more active on the trauma and spine side.

Yeah. It's a— it— for exactly the reasons you said. There's just not many startup total joint companies because of the asset requirements. Whereas a spine, you can create a spinal cage and get to, you know, $5 or $10 million with just a few hospitals real fast, right, with less inventory. Yeah, fine. I think I, I used to count the spine companies. There's Somewhere around 250, you know, and most of them are small. Yeah, that makes sense. So are these—

yeah, no, it does— doing pilot—

they're doing pilot studies with— they're taking like one, uh, implant system, instrument system, and seeing what they can do.

So we have a— yeah, so what we have is we, we have a program called the Discovery Program, and I'll describe it real quick with you. It's very simple. Any company who wants to kick the tires with our product, they can get 5 of our devices, access to our complete software for 30 days for $1,000 flat fee. If you're curious and you want to learn about Quest and QMed and learn about the capabilities, we don't try aggressive sales tactics with people where we say, Oh, you got to do a deployment of 1,000 units or 200-unit minimum. We don't do any of that. Take 5 units, give me $1,000, covers the cost of the devices. Take the 5 devices, play around with it for 30 days, right? And it's a quick way to learn whether our technology is the real deal or not. Small investment. I've had customers say, Hey, I want to do 3 Discovery Programs and I want to do it for 3 months. Okay, we'll price it. So instead of $1,000 for 30 days, it's, you know, $1,000, you know, I'm sorry, $3,000 for 3 months and you got it for 3 months. Or we work out even better deals than that. Our incentive Right now is not necessarily to try to make money on the discovery program. We're focused on reaching out to customers, educating them on the technology, and make them into— and really have them become believers in our technology as a real solution to the problems that they have. The volume comes later.

Yeah, right. So that's— you're making it really easy to try. And then once they see the data, they've got to be hooked and they're going to want to extend it, I would think. So we didn't talk about funding. So how are you— are you privately funded or venture capital? And where are you?

So I'm trying not to be venture capital funded at all. So we started I started this by self-funding the company, and then we had an initial seed round with— it was like friends and family. It was 4 individuals who are close to the industry. I raised my first million dollars in 2019 to get us through the concept stage. We did a— A second seed last year in August, we raised $3.3 million and we're doing a Series A as we speak right now. We should be closing this round over the next 30 days or so. We're doing a Series A, $12 million round that we're raising. So this round is all about accelerating growth.

Yes.

You know, build inventory, that sort of stuff.

Yeah, most of that's got to go into the product, I would think.

Yeah, it's— so the fortunate thing is that QMed is not necessarily all about Quest. Quest is our entry point into the market. We're already starting to develop adjacent technologies very similar within— for orthopedics. And eventually for medical device, for orthopedics. For example, tissue, right? Being able to track temperature, be able to track the whereabouts, the expiration date of sterile products. We're taking that same technology, adapting them at a much smaller scale, and putting it on, you know, on sterile pack, on cold storage. Things of that sort, right?

Oh.

So there's a lot of other applications in orthopedics. Sterile implants, for example, we're tying in our IoT device with BLE, Bluetooth, and we're going to start marketing BLE tags for sterile implants at the SKU level talking to our device. So that you know where every SKU is, for example, inside of a tote of a sterile pack. Okay?

Wow.

So things of that sort. Yeah, it's quite exciting.

Yeah, tell the people that may want to know more about Bluetooth. So I think BLE is Bluetooth Low Energy. So how does that actually work? Does it talk to Wi-Fi or cell towers or both?

Yes. So we'll have a Bluetooth, a BLE antenna inside our Quest device as an additional component on our circuit board. And we are working with a company to gain access to a very cool tag, very small, that you can just stick it on the side of a sterile pack, as an example. And in those sterile implants that are inside of a tote, right? And our device, our Quest— we actually call it Quest Tote— will be inside. That will pick up every tag inside that tote and communicate back out to the cloud and say, okay, this tote is complete, or this tote is incomplete, it's missing this screw or this plate.

Now you're talking. Now you're talking inventory management. That's a different—

In audit.

That's huge in audit.

In audits, right.

And so the little tag doesn't have to— you don't have to worry about autoclaves anymore or the heat problem.

Exactly.

If it's— yeah, interesting. Yeah, I worked for Wright Medical and we had, uh, we had a graft jacket, uh, and it had to be refrigerated and we could ship it by FedEx and then it had to go right into a refrigerator again. And boy, we could have used something like this because we never knew if it was sitting in a car in Phoenix for 24 hours. I mean, it was hard to know that.

Yeah, so we understand. You know, when I talk to customers, I always tell them, listen, we are not a technology company. Try to find a market That can fit our technology. That's not who we are. We are orthopedic medical device people that have access and knowledge of technology, and we're designing because we know the industry. We know the end user. I look at myself as the customer. I am the customer. When I look at my product, I say, do I— would I buy it? Would I use it if I was still at J&J? That's how I think about this. And it's a— there's a big difference when startups, young companies, come from within an industry that they're solving a problem for that industry versus a technology company that's out there looking for markets that they may or may not understand, trying to, you know, put a square peg in a round hole, right?

You're starting with the problem. Yeah.

Exactly, exactly. When I first, you know, as I said, you know, we were self-funded, so I put my own money into this very early on. And when I did that, I had certain rules. And the one rule that was not even bendable, that I would bend, was that this product had to be fully autonomous.

Fully.

If it required anything, like if it required me to change a battery, I was out. That product's not going to work because I know the industry. I know the sales forces. I know distributors. I know the warehouses. I know how things happen, right?

Yeah.

And if you could fool it, if you could— if you need to, you know, turn on a switch or whatever, Then it's not autonomous, I'm out. I'm not even investing a penny into this thing, right? But so, but that's because we knew the industry and we went from the problem to the solution, not create a solution, try to find the problem.

Well, the clever thing that I see is that since the product talks to cell towers once a day, And that's all of a sudden, that's the whole world. It doesn't matter if you're in India or Europe or Asia. If it's going to ping a cell tower, even if it's 3G, then you're going to get the data because most hospitals are in urban enough areas where there's always cell towers.

So our device has what we call a multi-SIM card. And a multi-SIM card in the U.S. means that my device can pick up AT&T, T-Mobile, and Verizon. Those 3 carriers, right? Those 3 carriers in the U.S. have partnerships with over 600 carriers across the globe, okay? So that if you travel internationally, you can use your AT&T phone as an example, right?

Right.

So our device operates the same. So from a U.S. perspective, we have— we're better than a cell phone because we may be in a weak area for AT&T, but we're in a strong area for Verizon or vice versa, right? So it doesn't really matter in the U.S. because we carry all the carriers. Globally, the same thing. Now today, we're only offering in the U.S. Europe— has other requirements that I have to comply with, and they're not hard to comply with, but I need to get there. But I'll tell you, if you'll indulge me, I'll tell you this really quick story. Something happened with one of our clients that has our devices. They had it on a very expensive implant tote. Somehow the tote went missing with our device in it.

Oh my God.

And a week later, it shows up in Hawaii, and our device alerted that that was in Hawaii. By the time they contacted Hawaii to figure out why it was there in the first place, the device had moved and showed up in Australia, and we picked it up in Australia with our device. And then they finally retrieved it and brought it back to the U.S., right? But as you know, Things disappear all the time, right? They end up in places they're not supposed to, or nobody says anything, and so forth. We had another customer that the rep swore, he swore that he didn't have the kit. He needed a replacement. He didn't have it. He swore he didn't have it. And we, We had our device on it. This was during a pilot that we did back in 2020, and we had our device on it, and we said, gee, we actually see it. And he says, well, great, because I don't know where it is. And we said, well, I forget the address now, but we actually spelled out the address, the physical address, the street address, number, And the rep says, well, that's my house. That's where I live.

It's in his garage.

It was in his garage, exactly. Now, maybe he didn't know it was there. That's fair enough. But so, you know, I mean, this device is accurate within 50 feet, right? So we can't tell you what floor of the hospital we're in, but we can tell you what corner of the hospital you're in with good accuracy.

Yeah. Wow. Interesting. Well, this is great. So where are you guys going in the future? So you talked about tags for tissue.

Yeah. So we're doing some partnerships with different companies. We've just expanded our software offerings. If you classify our device QView as asset management, as a competency or a tool, we now expanded into surgery and case management and also implant and inventory management. So we partnered with a company called MTS that has a product called iTracer, and we're bringing iTracer in and we're combining it with QView So as we deploy this to the sales force, they get the complete system. They can reorder implants. They can replenish it. They can schedule surgeries. They can see where their assets are, or if they need one, they can put in a loaner request and it gets it for them. It does the complete, you know, soup to nuts. That's on the software side. On the hardware side, As I discussed, we're moving to combine technologies. We're trying to take our device, miniaturize it to create a cellular IoT device that's about the size of a credit card that could be used as a label that you can put on an implant as an example. Okay? You know, you won't need to go through autoclaves. It doesn't have the temperature requirements, but it basically Could manage, you know, expiration dates, right? It could help you manage, you know, where that implant, that sterile implant is, whether it's a bone screw or a total knee system, right? So, we're going into this multitude of ways, and we're also working with a container company, a sterile container company, Because we see the possibility of putting our device on a sterile container, and the sterile container becoming more than just a sterile container per se, but also be a transporter so that you don't necessarily need the outer shell of a kit. You can just take the inner trays and put inside of a sterile container and go straight to the hospital right into the autoclave.

Wow.

Without having to be blue-wrapped and all of that. So we're going in a lot of different— we're going a lot of different directions within software and hardware and within orthopedics and medical device. But I want to be at the implant level. We want to be at the instrument level. We want to be at the tissue level. We want to cover all of that.

Yeah, you're gonna, you're gonna, uh, help companies manage their cash flow dramatically. I mean, just the example you said about doubling turns from 1 to 2 turns a month, I mean, that's, that literally just doubles your, your inventory right there just overnight.

Well, the, the one other market that's, that we're very curious about, and we're actually talking to a few companies to create a partnership and go after that market is the ASC market.

Right.

As you know, ASCs are performing more and more surgeries, right, moving out of the hospitals into ASCs. Well, the ASCs don't have the luxury that hospitals have with the SPD departments and the space to inventory all these kits and everything. So the whole last mile concept on how to get product to the ASC the day of surgery and get it back out after surgery, right? Be able to support that sort of last mile of supply chain, give the ASC what you need when they need it, and get it out of there when they don't need it and go use it somewhere else, right? In order to do that, to perfect that model, you need technology. You need data. You need awareness. You need visibility, right? And that's where we come in. So we're looking at partnering with third-party logistics companies that are willing to invest in that space to be able to provide that new model in value to the ASCs.

Yeah, ASCs have a completely different level of efficiencies that they still have space. people, uh, or autoclaves a lot of times, you know, big, big autoclaves. Interesting. Well, this is great, Dick. Wow, I totally get it. Uh, so where would a listener, uh, how would they find out more about QMED and Quest?

Uh, sure. So yeah, we're very active on multimedia. Specifically in LinkedIn, I welcome anyone to follow us on LinkedIn. We're constantly putting stuff out on our website also at qmedinnovations.com. You know, we we are in the educating business right now, promoting our technology, educating customers on what's available and how this can make. their lives easier. We provided the right tools to make it easy for someone to take 5 devices, kick the tires for a bit, make their own opinion. I'm not a sales guy. I— nowhere in my background have I ever sold anything to anyone. I'm an operations guy. I'm the type of guy that says, show me. And I'll believe it. I need to see it. I need to play with it. And that's what we do. We put product out, give folks the flexibility to pick it up and play with it. But yeah, through our website, through LinkedIn, that's probably the best way to get in touch with us.

Perfect. Well, thanks— well, thanks for your time and thanks for sharing everything of where you've been and where you're going. I can't imagine a company not interested in one of your technologies. So appreciate your time. I know you're a busy guy. Oh, go ahead.

Thank you. I really appreciate it. I think, you know, customers, I think they all get it. Some customers are at different places. They may be busy with SAP integration or ERP integration, and they can't do everything at the same time, but that's okay. We all need customers tomorrow too. But I have not had anyone say to me, I don't have this problem, I don't need a solution for it. Not yet.

Yeah, the problem is well known. It's just everybody's just looking the other direction because they've done it that way for so long.

We'll be at NASS this year, and we're always at the Academy in March, and we're also at LogiMed when we get out to San Diego in March. Just look us up. We'll have a booth at those 3 trade shows, or, you know, search us out on LinkedIn or our website.

Well, great. Thanks, Vic. Thanks for your time. I know you're busy. CEO, but I really enjoyed learning about QMed and and and the journey.

Thanks. Thank you. Thank you for for giving us this opportunity, and I really enjoyed this conversation, Tiger.

Yeah, yeah. Thank you.

Okay, you take care. Bye bye.

Okay.