BoneChat #141 - Disrupting Surgical Visualization: Single-Use 4K Scopes with Richard McKillop

Welcome to BoneChat 141. Uh, today we have Rich McKellip, the CEO at Pristine Surgical. He's going to share a single-use 4K scope that can replace reusable towers. Contracts, repairs, central processing delays for every single case. I love this business. Rich only has 5 slides, and then we're going to jump into Q&A. So line up your questions. Welcome, Rich. Thanks for your time today, and the mic's all yours.

Appreciate it, Tiger. Thanks for having me on. Nice to see everybody. A little bit about my background. I've been in the mostly ortho world for 25-plus years. Started with a little company called Haumedica many years ago. It got acquired by Stryker. Um, I started on the marketing side actually as a hip product manager, and then I went over to, uh, sales for a while, sold for Wright Medical for 3 years, and then, uh, became the general manager for Canada where I'm originally from and, uh, headed up Linvatec ConMed up there for 12 years. And then I moved down to the US. I live in Florida now and looked after US sales, North America sales for ConMed for several years, then went to a company called OrthoSensor out of Fort Lauderdale, another company that got acquired by Stryker, and did that for, uh, 3 years and gave it a shot. Actually, I went back to ConMed for 6 years, ran their Latin America Canadian operation, and then went to an MSC, a medical sales college, for 3 or 4 years. And gave that a shot. And now I'm at Christine. So I've been here a little over a year and a half. So predominantly orthopedics, a little bit of general surgery background. So certainly understand all aspects of the ortho world and all the specialties involved. Let me just share my screen here.

That work?

Yeah.

See that OK?

Perfect.

Okay, so I mean, we take an aggressive stance here. We're looking to be fairly disruptive and displace traditional video towers with single-use, state-of-the-art 4K digital solutions. It helps with the OR flow, reducing costs, and we have— pardon the pun— but a pristine image every time. One thing that intrigued me and got me interested in this is I've sold a lot of video towers in my life. They really haven't changed a whole lot in the last 40 years. I mean, what's changed is the resolution of the image has gotten better. We've gone from 480p to 720p to HD to now 4K. But as you can see in the picture here in the middle, you know, that's pretty much the configuration you get in every single hospital. So typical analog signal going through glass rod lenses, So not really an ability with what you can do with a chip on a stick from a technology standpoint, especially in this day and age when AI is such a hot topic and the things that you can do with that. So our solution, we eliminate service contracts, the whole bundling. So whoever wins the video tower not necessarily needs to be winning all the implants and disposables associated with that. So we're kind of breaking that model up. No more scope repairs, no SPD costs because we never enter SPD, no capital initial outlay, and no delays. So it can also be a revenue generator so that you're never going to have to cancel a case. You will always be able to do those last couple cases at the end of the day and never miss out on them. So we now have a full array. This is our Gen 2. So we have a 1.9 30-degree for small joint, 2.7 for foot and ankle, 4 mil 30 and 70 for shoulder, knees. And we have extended lengths that you can use for hips as well. And we have a laparoscope for the lap chole cases that are done. Our target is primarily ASCs, maybe some small remote hospitals, but for the most part ASCs where they do these kind of cases. We can also use the 4 mil for ENT. So typically you're seeing 10% of the cases in ENT are done at a surgery center, maybe 50% ortho and probably 40% laparoscopic. And I know that varies depending on location and size of the facility, et cetera. And this is kind of the last slide and the money slide. Everything in green we can change as far as the number of cases per day, number of days they operate per week, number of weeks in a year, video tower cost. Scope cost, initial cost to buy one, number of times it needs repaired. We put in there like twice a month. Revenue that would be generated for not missing a case. What a typical service contract would cost to kind of insure that video tower. Rigid scope repair costs vary, but they're typically $500 to $1,200. Number of times it gets repaired in a given year. Your SPD cost per tray. We'll talk probably a little bit more in detail there around what goes into that from a sustainability standpoint. I think we have a good argument there around we use sharps so we can recycle things, and we're not using any more blue wrap or chemicals and steam sterilization and that, and saving, you know, millions of gallons of water every single year. So if you looked at the hard costs, which are the tower depreciation, I depreciated this over 3 years. the annual service cost for that tower, rigid scope depreciation costs, and then your SPD savings and your scope repair savings in a year. We call that the hard costs. And then down below, if we include time savings, so if we looked, and we are doing a study on how much time does it take to set up a disposable scope case versus a traditional tower case, which is obviously more complicated. You've got 2 trays of instruments, you've got to take things out of the trays, you've got to connect the light post to the scope, you need to connect the light cable, the camera cable, etc. And then the teardown and the wipe down is obviously a lot less with us. And if— so if we added in 1 minute of savings per case, which I think is very conservative, and we added in 1 extra case per week that they would not have to ever cancel a case, comes up with the soft cost totals there. So if you look down the bottom, this is for 3 OR rooms in an ASC average. So we would save hard cost out of the gate $133,000. If you added in the hard cost, it'd be $272K per year. And then if you multiply that obviously by 3 rooms, you can see the savings. So that's it in a nutshell. I could go in deeper in any of them. I've got some extra slides, but I thought I'd leave it at that. And we could kind of open it up for any questions.

Yeah, I've got one for you, Rich. So tell me more about your, your set. So you showed on the previous slide or a couple slides ago, you have different lengths and diameters. Are you— do you just have the camera or do you have the cutters too? And what happens with all the rest of that?

So what you see here is the camera head and the scope. So it's not like a traditional system where you've got an eyecup and the scope connects to the camera head. The camera head is usually autoclavable, et cetera, or they may have some kind of sterile transfer technique, or they use a camera drape to cover it. So this is all-encompassing. So on the right side there where you see the IPU or the CCU, whatever you want to call it, that's everything that you need. It's got your image capture, your light source, and the processor inside that box. And on the end of the scope that you see on the left is just a simple cable, looks like a USB, it just plugs into it. And then from the back of the IPU, it plugs into any 4K monitor. So pretty simplistic. So I'm not sure I answered all your questions, but the, um, the scopes have an integrated camera head in it. So some of the processing takes place in the camera head and some of it takes place in the actual box before it projects it into the monitor. So we don't make any other instruments. We don't make implants or any other disposables. So we're only looking at the visualization side.

Rich, Rich, can you walk us through, you know, a lot of us aren't, don't have a lot of experience with scopes and sports medicine. You walk us through a case from like start to finish with a traditional tower. And where are the minutes? Where do you gain minutes and where do they lose minutes?

I think we would probably be the same from an operative standpoint during the procedure. So there shouldn't be any differences there. This scope is a 4K image. It should perform exactly like a traditional scope. Advantage being it's always new. So you're never going to have a scratched objective lens that was done from the day before or a tray got dropped on a scope during SPD cleaning the night before. And now you've got 3 broken rod lenses in the scope. So the scope is gonna be brand new and looking great every single case. So the real savings comes in the setup and the teardown. So like I said, alluded to earlier on the setup side of things, typically the nursing staff doesn't like setting up for arthroscopy cases because you've got a number of things that have to be set up. And once they get it set up and the surgeon comes in and looks at the image, and if the first thing they look at is like, wow, why is my image so cloudy? I can't see what I'm doing. Get me another scope. It's a tough way to start the day, and that's when the phones start ringing. Call the rep. I don't know what's wrong with it. So then the rep has to come in if they're not already there and diagnose from the scope to the camera head to the light cable to the camera cable to the camera box, the light source box, and all the way up to the monitor. What's going wrong with this video chain? There's a problem here somewhere. It's usually the scope, but it's like I said, it's a bad day when you start out or you can't finish cases because they couldn't turn the scopes over fast enough and have to cancel the last case or last couple cases. I just heard the other day three canceled cases in one facility because they didn't have enough equipment. So the scope, once they do it, I mean, they're putting the scope in one of the portals. In a knee or a shoulder typically are the most popular joints that they're being operated on. And then they'll have another portal for what's called a working channel where they'll go in with instrumentation. They'll take it in and out. And they'll scope the area first to help diagnose what's going on in the joint. Is there a tear in the labrum or in the meniscus in the knee? Or is it an ACL? So it's all the surgery is done with basically 2 or 3 little slits on your knee or on your shoulder, and they typically go back and forth with instrumentation. Some of the other advantages that we have that I didn't talk about yet is, is the whole thing, and I alluded to with the AI. So we can do things with a digital scope that have never been done before, and that probably the direction we're going with our next generation. So we can start applying AI. We can measure 2 points in space, for instance. And that doesn't sound like a big deal, but there are tools out there that measure things. They go in. It's another instrument that gets reprocessed. And they measure, let's say, the length of the ACL tunnel. And it's 35 millimeters. They take that out. Yep, pass me the 35-millimeter screw. We could take the scope and point to the front, point to the back, and say, that's 35 millimeters, or the size of the tear in the labrum, for instance, in the shoulder. And say that that's a 1 or 1.5 millimeter tear and accurately calculate that. So there's that. There's different SLAM technologies and different things that's probably— we're seeing more in the general surgery side with ICG and lighting and stuff like that that differentiate between organs and nerves and things of that nature and where's the bad area versus the good area and the veins and vessels as far as to avoid. We can apply all of that certainly into orthopedics as well. So really start mapping an AI as the second they put the scope into the joint. So long-winded answer to your question, Tiger, as far as how to do an arthroscopy, but—

So there's efficiencies on both sides that you're saving. So who makes the buying decision at the— is it the owner of the ASC? It happens to be a surgeon sometimes, or—

It varies significantly across the country, depending on— more and more of them are getting bought up by groups. There's IDNs and GPOs that own them. There's PE companies that own all the ASCs. Some are still surgeon-owned. Our goal is to get in front of the real decision maker and not just somebody that's in charge of, let's say, SPD, and they see the advantage of it, but They don't really care on their budget what capital costs are, what a service contract costs for scopes or scope repairs in a given year. Scope repairs can be very significant. There's a lot of companies that just deal with scope repairs.

Yeah.

So that we want to get in front of the decision maker that, you know, has, you know, the purview of the entire cost to do a case so that when we present a cost calculator, they go, I get it. You know, I'm responsible for that. So it needs to be at probably a 10,000-foot level versus maybe just an OR manager or an SPD. They help, they need to be advocates. So we usually start there. So we kind of have a bottom-up approach as well as a top-down approach to try to sell this. Ideally, we get in front of IDNs and GPOs that, you know, own hundreds of these, and they, they see the value in it. But like I said, I think this has already started. We're seeing more and more disposables on the general surgery side and in urology and that kind of space and ENT with the Ambus of the world and Boston Scythe and Stortz are coming out with disposable scopes. So they're kind of paving the way forth. It's just nobody's really done it in orthopedics before.

Got it. So we got questions lined up. Mark first and then Eric.

Don't we stop sharing? You want me to keep it up here?

Oh, you can stop sharing. We can see each other better. Mark, you're on mute. There we go.

Yeah, thanks. So I'm hosting a dinner in October in Atlanta for a new platform called Indie Community. And our focus is independent medical practices, like big ones or those that own surgery centers. And our goal is to bring those guys together so they can share ideas and become stronger and stay independent. And ideas like this make sense because there's hardly a bigger pain point than not having enough power tools or scopes and not being able to do a case. I know Pete's on the line and he's gonna have a lot to say, I'm sure. But we are— we're getting some pretty positive feedback from some of the independent surgery centers on disposables. But when you use this, when you use your scope, what happens after you use it? Do you just throw it away? Do you return it to the company? Are they recycled? Do you give them to industry? What's the thing there? That's one question. And the other is— How, how receptive are the decision makers that you've been talking to, to appreciating some of the soft costs you outlined, like sterile processing, water, energy, power, that sort of thing?

Let me start with the first one as far as what we do with the scope. So we have a program with sharps that we can put them in a, in a big pail for them, and they'll help You know, basically dispose of them. We're not at the point, and we, we are looking at different ways that we can, you know, take some of the expensive parts of our— That makes sense. Well, first, free look. Get some feedback here. Some, some, some of the more expensive components out of it to recycle them and repurpose them. We're not there yet, to be honest. So, you know, we've got a pretty strong, I would say, sustainability argument. When you look at all the blue wrap that's being used in a given day for all of these trays. And like I said before, the chemicals and the steam sterilization and all that is significant. So we believe we're better for the environment, especially if you look from an ESG perspective and you look at how glass rod lenses are made, which are typically in Germany. That is not a good thing for— that is a huge carbon footprint. To make glass. And there's only a couple locations that actually make glass rod lenses. So most of them are in Germany. So there's, there's a big argument there as well. So I think we feel comfortable on the sustainability argument piece of it. As far as adoption and at a high level, I'd say it's too early to tell. You know, up until this point, we've been around a number of years, but we never had a full offering of scopes until literally this past month. Where I showed all the different sizes, we had one size. We had a 4 millimeter 30 degree scope that we've had for trying to perfect over the last 5, 6 years. And that was our biggest challenge is just getting over the hurdles of getting the technology to the point of where we believe it is today, which is a very good 4K image that they go, yeah, that's as good. In fact, we just had a comment Monday from a surgeon that used it said. this is as good as my traditional scope system, and I would consider using this as my primary scope. So we're kind of in the infancy now that we have a full offering to have those kind of discussions with the bigger decision makers that control the budgets. So would love to get in front of that group that you talked about. I'm going to— you guys may be familiar with these, these Marcus Evans meetings where they kind of They are in the middle and they bring industry on one side and they bring hospital personnel on the other. I've been to a— the first one I went to was a CNO, Chief Nursing Officer, Chief Medical Officer, and they kind of do a speed dating during their conference. And you have 30 minutes with people that you pre-select and they accept you or not. So it's very much like speed dating. So I probably had 12 meetings with various individuals over 2 days. My next one I'm going to in October is the CFOs and the CEOs of hospitals and large ASCs. So I'll tell you in a couple months how that works out.

What's, uh, when and where is that meeting? What's the name of it?

Um, just look up Marcus Evans. They're a very big company.

No, I mean the, uh, the CEO, the ASC CEO meeting.

The CFO CEO meeting is in, um, it's in Red Rocks in Las Vegas mid-October.

Okay.

All right, cool. And I would invite you to go on LinkedIn, look up Indie Community, and it's a public group you could join. Okay, thanks.

Great. Thank you.

Terrific. Eric, you're up.

Great, Rich.

Good afternoon. It was like 25 years ago that I worked with scopes, so my questions might be 25 years old, you know, that may not be the best, but that technology is probably the same. Pardon me?

I say the technology is probably still the same on the traditional systems as it was 25 years ago.

I wonder. It, it was pretty cool. I was working with a company called Claris Medical Systems. I don't know if you've heard of them. I don't think they're around, but they had, um, a flexible fiber endoscope. So the thing was, it was, it was a little bit smaller than 2 millimeters, um, but within that they also had the illumination as, as well as irrigation, um, that, that, that we required. Do your scopes have, have that as well built in, or is that not necessary anymore?

Well, we have fiber optic as far as lighting and all that, so you're not using an old xenon light that produces a lot of heat. But we do not have working channels. So scopes, just for everybody's purpose here, you kind of have a rigid scope family, which is what we focus on. And then there's flexible scopes. And, you know, some of the bigger companies like that play in general surgery, colonoscopies, cystoscopes, bronchoscopes, all those kind of things. They need to go down and it needs to flex and bend. And produce light, and it usually has a working channel where you can— when you can grab a biopsy is the purpose of it. So typically the way orthopedics works is the biopsies, you just go through the working portal and you grab a grasper and you just grab whatever you're looking for versus, you know, the other ones have to be all-encompassing. So you have to provide the image through the sensor, you know, the light through the fiber optic cable, and then there'd be another small portal Or they would stick some type of working instrument down there to grab it. And that's always been the challenge, is can you get the sensor small enough to accommodate all the other things that need to go into that scope? So they can only get so small, and the really small ones, the image is compromised. I mean, you're not going to get to a 4K image on a 1 millimeter sensor. You just, you just can't. They're not available today. So Really for us, it's really when you start getting closer to native 4K is when you're, you know, they've got some pretty good chips out now, 800 by 800, which you're now getting very close to 4K native quality versus, you know, upscaling it. So a traditional scope, just for everybody's purpose, I'll use this here as a trocar, a 4mm scope that I showed before, that's maybe 150mm long. It would be comprised inside is all it is is glass rod lenses. And spacers all the way back to the, um, the eyecup. And it has an objective lens on the end which has different angulations depending on the procedure they're doing. So it might have 8 rod lenses and spacers inside of it, and it's basically just projecting glass, the image through glass, and then it gets processed in the handle and in the console. Whereas ours has the the chip on the actual tip of the scope. So it's often referred to as chip on a stick. So the technology is right at the tip now, and then we're just running wires through the scope back to the handle and to the processor. So which one interesting thing for us is that we're actually able to bend the scope so we can take a bender and bend it, you know, probably up to 40 degrees interoperatively or in a diagnostic case, and it still works fine. So similar to this cannula here, You could bend it like that because these are just wires. If you try to do that with a traditional scope, you're going to break 5 of the rod lenses and you wouldn't be able to see through it.

Well, I can tell you, I know I can confirm that we didn't have 4K back then with this.

Not with 2.0 25 years ago. I guarantee you didn't. 480p wasn't even out then.

And what we ultimately did was we put that scope, since it was so flexible, we put that on The actual instruments that were doing the grabbing and cutting and whatnot. But that's why it needed the irrigation in it as well, because we were always getting the lens, you know, messed up. The other question I had for you, have you considered, or is there a possibility of making this a wireless system? So using Bluetooth to go from your handpiece—

Interesting.

Yeah, that's an interesting topic. There are some companies out there that are doing that right now that we're certainly familiar with. To me, at the end of the day, you're either one or the other. You're either completely wireless and you're untethered, or you're still tethered.

Okay.

So the ones I've seen, you know, you're still going to have to run irrigation to the scope. You can't make irrigation wireless. So you can have a wireless camera head, And there's some inherent challenges with that, especially with a lot of different noise going on and activity in the operating rooms and lots of signals bouncing around. You can get intermittent failures. So in my head, plus it's more expensive, much more expensive to manufacture that camera head to make it wireless. It's usually pretty heavy and clunky as well. So what are we really gaining if it's still ultimately tethered? To some type of a video tower anyway. So I don't see the huge advantage to that. I mean, I think the argument over the years is probably closer to power equipment. And I spent a lot of time there is, you know, we had a lot of success. I ran Hall for a long time, and pneumatic was probably the best power product ever made. You're running cold gas through a handpiece. The thing that the problem was is it lasted forever. We never repaired them. They— I had ones in that were out for 20 years before they ever got repaired. And then we moved to electric and we did that. But the same complaint, the surgeon was like, it's still tethered. And then ultimately I think the industry has landed on battery and battery has its inherent issues as well. But they all ultimately would like to have it free from being tied to anything. But the scopes out there that I've seen today, Still would have the flow. The irrigation still has to be connected. So you're still dealing with somewhat of a cord issue here.

Makes sense.

Great question. Are you familiar with Trice Medical, the MyEye 2? That, yeah, it's just a diagnostic, obviously, but I don't know. I haven't talked to them in a long time, but they were the first ones to do a diagnostic in the doctor's office with a disposable and an iPad, basically.

Yeah, that's another interesting topic. They've been around a long time, like you said. I think there was a couple inherent problems with that. To me, I think the patient would present a problem. Not many patients even like the sight of blood, let alone To when it's, you know, a size of a pencil, you're just not going to be able to get as much light.

Yeah.

So that's their other challenge they had. But I think the diagnostic for a knee, I think other things make some sense, like maybe ENT does a lot of it where, you know, they do a little procedure inside the office where they could just stick a scope up and take a quick peek. There's no fluid required. And it's a lot less invasive. So I think it's a combination of the invasiveness and probably the quality of the signal that why it never really took off 100%.

Yeah, the company had other problems. They lost their focus. They started developing things for other companies, and there's a lot— long story there. All right, Kyle's up. And then I'm going to ask Pete to jump in because he's in the same business. In a different area. Go ahead, Kyle.

Sorry if this is a silly question. I do not know the sports medicine world great, but I'm in orthopedics, so I know it a little bit. And then the rest of the areas that you're in are, are very foreign to me. But when I look at the system that you're offering, it would seem that the vast majority of times that it would be used, it's going to be in conjunction with something else, right? A staple, a suture, an anchor, something else is going on. Otherwise, you don't need to just look. Most procedures you're looking and then you're going to go do some sort of repair, right? So a question for you is, if you guys are in essentially the video business, the single-use video, but you can use some of the equipment that's out there, who is like a target distributor or rep for you that you can get access to that doesn't have a conflict, but then can also have some of the widgets to go along with, uh, with the use of a camera?

I, I think you answered your own question there. I think, um, We are targeting companies that probably inherently are not conflicted with carrying big video. Then they also have a reason to be in the operating room. So they've got something else to sell. We're just a means to the operation. I mean, we should be a non-player. We're just there to show a clear image. Sometimes surgeons go in, just want to take a quick peek, see if there's some type of a floating body inside the joint that just needs to be removed that broke off. And then imaging's gotten pretty good and MRIs and all that. So they typically know pre-planning what they're going to see when they get in there. But there's always this level of surprise where they'll end up, they'll go in and then they'll want to do the ACL once they're in there. But to answer your question, the distribution model for us is I've got some W-2s that are out there with a lot of experience and we go there to help, you know, do the initial cases, get the contract, and then hand it off to 1099s. We don't sell it for enough money to have a full sales force of W-2s. So we're looking for people that have typically OR experience, that have a reason to be in the room and actually stand there for the next 2 hours while they sell their anchors or screws or implants or whatever they might be, you know, osteochondral defects. There's all kinds of products out there. So that's kind of our business model.

Okay, so something I would suggest that you keep an eye on is the ankle arthroscopy space. It is really emerging. Some doctors are doing it kind of diagnostically before they go repair fracture to see what they're dealing with at the joint. And it is actually a procedure where there isn't necessarily hardware involved. They're taking a look at that mortise joint before they open things up, and podiatrists do an awful lot of work In that realm, might be some very low-hanging fruit there.

Yeah, that's what we have, a foot and ankle scope. The 2.7 is typically used for foot and ankle, maybe elbow. So those are the primary indications for it, and we made it a little shorter for that reason.

Cool.

Pete, what do you think?

Yeah, first off, good afternoon. And Rich, it's real interesting to see your slides because it almost looks almost identical to a lot of our information in terms of the value proposition. And I think you've learned, or some of your learnings where you say that in the last month or so you just got to where you have the full suite of solutions was really key for us. I mean, over the last couple years, it's really been micro changes to our product to get it up and over and above what traditional power is in the field in terms of power and performance. Because if you don't have those pieces, if you don't have all the attachments that are needed for the particular type of procedures we're trying to do, it really just ends the dialogue really early in any type of customer engagement. So I think that part, we're on the same page in terms of getting that focus done first, because if you spend too much time on the commercialization upfront, but the product's not there yet, doesn't really make a lot of sense. I'd be interested in understanding from your side on the value proposition, right? It's so much driven around cost and it's a different way to deliver the product. Again, we're almost identical when it comes to the actual clinical use. We're pretty much the same as what they're used to using from the surgeon in the OR, it's really how's it delivered and how do they pay for it and having the, we'll say, unlimited capacity to use our tools. So if something breaks, something falls on the ground, they just, they're up and going, continue on. So there's all those benefits. But, you know, the reality is when you go out, there's the upside and the downside with the ASC that we see. ASC is absolutely our target, same as you guys. But when you're trying to sell that value proposition, I'd be interested to get your feedback on, you know, the sophistication financially of the people that you're dealing with has a huge impact on whether they want to add all those numbers together and understand the pain points that they might see as, yeah, we wait, you know, we delayed 30 minutes, or we delayed 2 hours, or we canceled the case. Some people don't assign dollars to those. Whereas others do. And I'd be interested to hear your challenges on that because for us, absolutely, it's a matter of who are your call points. And then even if you're getting to the right people, do they have the financial wherewithal to really understand the full value proposition?

Yeah, I would say the majority of people that we probably call on don't have the total picture. And I think that We tried to simplify the cost calculator as much as possible. So that one sheeter I showed is the only sheet we have. There's not multiple tabs to it or anything like that, and allow them to put their own numbers in there and say, what are your numbers? What did you pay in scope repairs last year? What did you pay? What are your SPD costs? Do you agree it's $125 a tray? Well, then put whatever your number is. Put all those variables in, let them own that sheet. And then they'll probably push it up. You know, to me, it's, it's a committee sell at the end of the day, not just a VAC committee, but there's probably, you know, 6 or 7 different spokes in this wheel that have to get together and go, yeah, this makes sense. So that's why I'm, I'm very interested to see how this CFO meeting goes for me with Marcus Evans in October, because that's really, to me, the, the key. If you get their buy-in and they understand the big picture, they're going to drive it down and support it. Things are going to get done a lot faster. There's a lot of wasted time in the VAC committees. We call them the committee of no. It starts with no, and you've got to hopefully get to a maybe at some point. But that's their job. I get it. But if they don't have an appreciation or, you know, responsible for a budget that doesn't entail all of the buckets of the value proposition, then you're just kind of spinning your wheels. You do need an advocate. You know, a lot of them figure it needs to be the surgeon. In some cases, it could be SPD, especially in ASCs where SPD is not— you know, they don't have the capacity. They were never built to handle an extra 12 trays of instruments because total joints are being done there now. I mean, they're small typically, and there's a lot of pressure on SPDs, especially in ASCs, for those reasons today. So, There isn't a magic solution here, Pete. I mean, it's just, I think, you know, when you get in front of the right person, if it's an ASC that's owned by a doctor, that's a whole different story. If they can call the shots, then that's great. But I think to both of our points, it has to be clinically— the efficacy of the product has to exist. It has to work as good. Nobody's going to tolerate something less. Nobody wants to go backwards. So it has to be at this level, which is what we fought with for all these years. We believe we're finally at this level. And by the way, It has to also have this array of different options within it all at that level. So that's the given, that's the starting point now, which is where we're at. So I'm anxious to see, you know, the traction we're going to get when we get in front of the right people. And I think I've got the right team in place to get in front of the right people. And that's what I said at the beginning of this. I'm kind of hitting it from the top down. I've got a lot of people from the bottom up, and I've even got some on the sides. So it's, it's not a simple sell, that's for sure.

Yeah.

What's, what's, what's the sell cycle? Is it, is it 6 months, 9 months, 18 months?

I mean—

Shouldn't be that long. No, I mean, depends on the level of pain. It's the pain points that you have to discover at a surgery center or a small hospital. They go, hey, I don't have any money left, or I want, I need new video equipment. I don't have any. you know, perfect target for us. Or they just like, boy, I'm so tired of repairing these 1.9 scopes. I look at them and they break, and they're, they're literally lasting like 3 cases, and they're paying another $1,300 to repair the scope. You know, repair costs are part of it, or they're tired of canceling cases. So it's, it's trying to get that right customer that has the right pain levels that match our solution.

It's driven. So, Dr. David Kay is a BoneChat member. He owns— he's a clinician. He owns a hospital in Akron. And he keeps telling us that SPD is their bottleneck for the entire hospital. If people call in sick, or, you know, it's Lucy and the Chocolate Factory, if they can't keep up, then they have to cancel cases or move them. And Yeah, and it's a tough job. Nobody wants to do it. And it's, you know, so reducing the burden on SPD is a huge value. It's just hard to put that in numbers.

You know, it's—

that's really interesting.

I mean, we attribute $125 per tray, but it's greater than that. Yeah. I mean, If we matched— if we again go to the ESG argument around manufacturing glass broad lenses, if you measure the amount of carbon footprint that's being produced every single day with reps driving around the country, around the world, with repair loaners and scopes, or borrowing something from one hospital, bringing it to another, it's going on as we speak, I guarantee you, across this country. And whether it's power equipment or video equipment or whatever it is, They're bringing either trays or they're bringing implants and they're just, you know, for solving problems as they should. But if you can eliminate that completely and never enter SPD, I mean, that's, that's got to be a huge benefit to them. And they extrapolate that over multiple years.

What about Europe? Because I know Europe's more interested in ecological, you know, things and carbon footprint. Are you in Europe yet or are you Okay.

We're not.

Okay.

No, I think there's certain markets that are good for us. I think Latin America is probably a decent opportunity as well. They typically don't buy video equipment down there. They put the burden on the distributor and they have to bring it in every week and take it out at the end of the week. So I've had discussions there. Certainly I've had discussions in Canada, having been from there, know that market very well. Interestingly, up there, more and more private surgeries are starting to pop up. They're still pseudo-government-owned, or they're paid by the government, but they're privately owned. And this is a pretty good solution for them up there. But we've got enough to do in the US for now.

Interesting. Pete, are you in Europe or outside the US?

Yeah. Interesting thing is when we sold the first generation of our product, which was a disposable, we had more sales outside the US than inside the US. But the reality is the bar in terms of product performance was different when you get outside the US. So we made the choice to upgrade the product and focus primarily on the US. And then with our model, which is slightly different than at least where Pristine is today, we call our single-use recyclable. So we collect the product, we reprocess. That footprint and that model makes it more difficult to sell outside the US without larger investments. So we have a few countries that are on our radar that we're starting to look to move into. But to do that, we actually have to set up a physical footprint in that space. So that makes it a much bigger venture than when you're just shipping product over there. But definitely, you know, there's a handful of European countries, and now we're getting some interest in some Asian countries. But that's, that's a tough market for a whole range of things. But South America, there's some, some opportunities there as well, longer term.

Interesting.

Just the bigger thing for us, Tiger, is we're not CE marked at this point either. So it would limit us in Europe.

That makes sense. Got it. And it's, uh, the CE marks getting harder all the time too. Um, Kyle?

So, Rich, in order to use your camera, you've got that control unit, and then you need another— you need a monitor, and you can plug into any monitor that's in the room. Is that the end of the list? You don't have to have anything else in the room unless they're planning on using shavers and cutters and other things?

So they'll— we'll consign the IPU actually. So all they're going to pay for is this disposable scope. We'll consign the IPU and there's usually enough monitors kicking around that they can find a 4K monitor to plug into. We do have also a 4-in-1 solution, I call it, which has a touchscreen monitor, slightly smaller, it's 26-inch. So you have your IPU, it's kind of like the old Mac Not laptops, but the desktop Macs that had everything all inside of it. For the right clinic, it could be a good solution. But any hardware they don't have to pay for, just the disposable scope.

Got it. So what's your stage then you guys are in? Show some, show some growth, leverage that into raising funds to then try and scale, or what's your trajectory here?

Well, fortunately, we have a very strong PE partner that's pretty much singularly owns our company now, and they've been very supportive of us. And we are just starting to ramp things back up on the revenue side. So literally as we speak, we're, you know, for the— we only got the product a month ago as far as all the different sizes. And internally, we're working on our next generation as well.

So that's interesting. PE usually doesn't get involved in early commercialization. So has this company been around a long time, Rich, and they basically recapitalized it and brought you in a year and a half ago? Is that—

Yeah. So they invested in the company 5 years ago or so, I think. And then I think they strongly believed in the vision, what we're doing, and recapitalized things last September. And that's why they, you know, and they're funding it since. So pretty much a sole PE that's there. We're not doing raises or anything at this point.

Wow, that is interesting. That is really interesting. And Pete, you're venture-backed, right?

Correct. And it's really more, I'll say, family office type investors. So range, and it's went from, you know, in our early stages it was more bootstrapping and small investors and then kind of jumped to family office dollars. But the interesting thing is when you talk about PE, there's a range of entities that are getting interested in some earlier stage entities. It just depends on a broader theme. So I think single use in general is becoming something that's very interesting because a lot of parties, both within orthopedics and outside, are seeing a lot of movement in that direction. But of course, the general pathway for PE, even if they were looking at smaller companies, right, they're going to have a platform company and then build on top of that. So those are things when we look down the road, And what we're looking to is maybe different than 4 or 5 years ago, what I would have looked at in terms of an exit. I think there's a much bigger opportunity, and some of the things that we're doing build dramatically on the core opportunity. When we have the core tools, we're seeing a lot of— not already seeing, it's already happening now in certain partnerships where there are certain things that can be I'll say physically attached to the tools, in some cases not necessarily physically attached, that when you have a broader solution than just the power tool, it's becoming very, very interesting. And especially with our ability to bring that in as a single-use solution. But the technology starts getting higher than the, say, simple power tool. Power tool is not as easy as it might look on the outside to make it work. The way you want. But getting beyond that and adding other technology, um, is expanding the market opportunity beyond what we would have calculated a few years back.

Interesting.

Kyle, do you have a question or a comment or— okay. Did you guys— Rich, have you thought about partnerships? Like, um, because sales is always hard, you know, tend to find the 1099s, you get 1% of their mindshare, you know, and Vegas, you don't really get the person, you know. But if, if you could plug it into a large distribution network and it's compl— the product's complementary, have you, have you gone down that path?

Um, if you've got anybody in mind, let me know. I'd be happy to have those discussions. But it's hard. Yeah, it's hard when the fact that people that are, you know, that big that play in this space are probably working already for one of the big strategics, which we'd be conflicted with. You know, we're— I think we definitely— we've got some strong 1099s that, you know, that are not conflicted. I don't think there's— there may be some companies out there that it could make some sense if they had some extra room on their plate that may have a complementary type of a product, maybe a pain management type of thing, or they're a bracing or something like that. Ideally though, they would need to have OR experience or a reason to be in the OR. Although I could argue that this product almost fits into the Replas model because, you know, you've got your circulator plugging it in. Now with the assumption nothing goes wrong, If something does go wrong, you peel open another pouch and you plug in another camera head and scope. So you really don't need to be there for the case. So there could be an argument that it doesn't have to be an in-plan or disposable rep. But yeah, I mean, again, we haven't got to the point where we've looked at a national partner, but we do have some pretty good 1099 distributor partners that are in place that we feel good about.

Regionals. Yeah. So, uh, there's 2— here's 2 resources for you. So one of our BoneChat members is a guy named Mark Copeland, and everybody calls him the Vac Whisperer. He's— so if you have—

Yeah, I know Mark.

Yeah, Mark's great.

And if you—

he's, he's kind of like, um, a hitman for hire. If you have a vac committee that's just driving you crazy, he can, he can help you get through. You know, he's not a magician, but he can probably help you get through 3 months earlier by, by how the— by how it's presented and narrated and, and the numbers. He's, he's just really good at it. He eats and breathes vax all day long. And the other one is Mike Minette. So we had Mike Minette on 4 weeks ago. I think he's, he's kind of a He's the king of dealmaker deals in ortho. So he's bought and sold and partnerships, licensing, M&A. He's done like 130 deals. A lot of them are in ortho. So probably wouldn't be bad for you to reach out to him. He's done distribution agreements before. Those are 2 ideas I have to help you kind of grow. And you already know that, Cole.

Yeah, I know Mark pretty well. I know Mike's name. I don't know if we've ever spoke or not, but sounds like an interesting person to get in touch with.

Yeah, I'll, I'll, I'll send you his contact information. I'll also send you the, the, the BoneChat video we did with him. So he's, he's impressive.

Okay. Yeah, we have had some discussions with another company. In the fluid management arthroscopy space that could make some sense. It's just, we're just in such the early stage here that we don't want to compromise what we're focused on by being distracted with another product that could potentially fail or be— have a fiddle factor that makes the evaluation go awry. So we're in the stage of figuring all that out, but I think by the end of this year, We'll have a clear picture on that. You know, it could expand beyond just looking for 1099s at a regional level.

Yeah, yeah, you're— the product's got to be right. Like you said, it's got to be equal to the reusable products or it's just a nonstarter. And it's such a small industry that people find out if a product's not working, everybody knows. So that's, that's really smart. Yeah. Where are you, where are you strongest in the US? What, where's your presence? East Coast or just spotty?

Well, I would say for the last several years we, we've had a pretty good, I would call it friends and family trying the product throughout the country. Currently I'd say we're probably strongest on the East Coast, but One account could change all that. One big account.

One big account. Interesting. Is there any— do you have an ask of the group here? Is there anything we can help you with, Rich?

I think maybe just from a networking perspective, you know, if there's people out there that you think could be a good match for us from a distribution standpoint and It doesn't necessarily have to be orthopedics, to be honest. I mean, if it was something on the urology side, you know, that, that sold similar technologies or had a reason to, you know, they have all the same relationships with the OR managers and SPD, etc. Any other kind of disposables could be a good tuck-in for us as well in their bag.

Interesting.

Yeah, I don't know anything about urology, but I could, I could certainly write an article on OrthoStreams and about Pristine and, and at the end of the article say, hey, they're looking for, you know, Rich is looking for more distribution and you'll, you'll definitely get some, you'll get, you'll get some contacts from that. So I'll do that for sure.

All right.

I appreciate that.

Yeah. Pete, did you learn anything from You know, bone cutting versus video images is— it's similar and it's different.

Yeah, well, definitely a ton of similarities from the— I'll say the high level, the theme and what we're going in and doing. Then when you get in the details of the procedure and the complementary products, that's where things might differ a bit. I know from us when we're talking about You know, sales channels and how do you sell a product? Our initial assumption is always the the reps that are selling implants are the best choice for us because they know the surgeons, they know the facilities. I'll say learning over time was they're not necessarily the best reps because the selling process is very different than selling a joint implant to a surgeon and having that surgeon pull that through whatever facility they're operating in. Versus going in and having your call points be different, and selling our product is is definitely different than selling the actual implant. And it sounds like what what Rich is doing—they're they're going down. What what I would have recommended is to you know you know you need the people that are that are used to selling to the broader audience. It's a more complex sale, selling to CFOs, knowing that there's four or five people involved in a decision. So I have one. One set of value prop that I'm talking to the surgeon about, something different to the SPD. But then you're talking to CFO and you're able to walk through those numbers. If you don't have that from a rep side, you're you're going to be in trouble. I mean, you'll get doors open, but then ultimately you won't get across the finish line. So definitely a lot of learning. I appreciate being in being here and learning about your side of the business, Rich. If you ever want to talk separately offline, again, a lot of commonalities, and I think. some interesting things to talk about that could be common amongst the two of us, even though the end usage is a little bit different, but a lot of the value prop is very, very similar.

Yeah, and like I said, I sold Hall power for 20 years, so I have a really good understanding of what you're up against.

Yeah, the big incumbents, they don't want to look at stuff like this because they've got you know, hundreds of millions of dollars of inventory all over the world and they can't even reinvent their own product, much less make an acquisition, you know. Yeah, it's the big guys. It's so hard dealing with the big guys. It gets worse every year. They can't make decisions. They're burdened with legacy products.

Yeah.

Drives me crazy.

It's all that, that should be our advantage, right, for the smaller companies is you got to leverage that and the fact that they move so slowly. Now, in the bigger organizations or the big, you know, big hospitals and anything that's tied into, I mean, HCA, for us, we don't even waste our time because it's essentially all those things are in there protecting the big incumbents. Luckily, with the ASC space, there's a lot of minimalization of the bureaucracy that allows the smaller entity to come in. But the fact that we can react quicker, we look at that as our number one strength.

Do you guys— I'm gonna ask Rich and Pete, do you guys have a list of every ASC in the country? Is that publicly available, or do you have to sniff them out kind of MSA by MSA?

No, I can get those lists pretty easily.

That's great.

So, you know, I know we have a list that was— I can't remember if it was Becker's or someone published something not too long ago that had everyone doing— they were actually AFCs that are doing total joints. So for us, very, very helpful. And many of them, we already have the information, but a ton of new information as well. So that's helpful. We know where to go. It's a matter of the Going and executing, having the right people on the front lines that are opening the doors.

Yeah, we— it seems like sales is the hardest part now. You know, it used to be patents and regulatory and designing complicated products that work easily. Now sales is always the hardest part because it's so much noise out there and there's so much— the big guys have captured so many of the customers. that you don't have access to now. Um, yeah, interesting. ASC is the way to go. Well, thanks. This is— this has been terrific, Rich. Thanks. Uh, well, thanks for having me. Yeah, love the business. We're pulling for you. Come back anytime. Uh, maybe—

Well, maybe when we, um, yeah, we get a little further down the road, we'll come back and give you updates as to how we did and directions we're going. But Um, the next 6 months should be exciting.

Yeah, yeah, you're, you're really poised for success. All right, thanks, thanks guys. Well, it's a wrap.

Nice seeing everybody. Take care.