David Turkaly

Caitlin Cronin

Craig Bijou

George Sellers

Michael Matson

Brandon Vazquez

Justin Lin

Phillip Dantoin

- **Merger Completion:** Paragon 28, Inc. finalized its merger with Gazelle Merger Sub I, Inc., becoming a wholly owned subsidiary of Parent and an indirect subsidiary of Zimmer Biomet as of April 21, 2025.  **[0000950157-25-000330_ex10-1.htm:0]**   
- **Share Conversion:** Pre-merger shares were converted to receive **$13.00 in cash plus one CVR** per share under the merger terms.  **[0000950157-25-000330_ex3-2.htm:0]**   
- **Debt and Listing Actions:** Outstanding credit and loan obligations were terminated and fully repaid, and the NYSE has been notified to suspend trading and begin the delisting process.  **[0000950157-25-000330_ex3-1.htm:0]** **[0000950157-25-000330_ex3-2.htm:1]**   
- **Executive Changes:** The merger triggered significant executive restructuring, including the CFO’s resignation and amendments to employment agreements providing for tax gross-up payments.  **[0000950157-25-000330_form8-k.htm:0]** **[0000950157-25-000330_ex10-1.htm:2]**

Paragon 28 Completes Merger and Initiates Delisting

afe814789ec6962dfb24b179d1726ba3ff5fa2c90473164e2aa31be761cc1f23

- **Special meeting held on April 17, 2025** approved the merger with a Zimmer subsidiary, with approximately **78.46%** of votes in favor ( **[0000950157-25-000327_form8-k.htm:1]** ).
- The advisory compensation proposal for executive officers passed with roughly **71.06%** affirmative votes ( **[0000950157-25-000327_form8-k.htm:1]** ).
- The merger, having received necessary regulatory approvals, is expected to close on or around **April 21, 2025** ( **[0000950157-25-000327_form8-k.htm:2]** ).

Paragon 28, Inc. Approves Merger Proposal in Special Meeting

81811033215df7c66e7ea3d9699e1ebf7f5e54ab02756369aa903b54b8878aa1

- **Merger Agreement**: On January 28, 2025, Paragon 28, Inc. entered into a merger agreement with Zimmer, Inc. and its affiliates, with a definitive proxy statement filed on March 18, 2025, setting the stage for the company to become a wholly owned subsidiary of Zimmer’s parent.  **[0000950157-25-000311_form8-k.htm:1]**   
- **Litigation and Special Meeting**: The company disclosed ongoing litigation from stockholders alleging misstatements in the Proxy Statement and confirmed a Special Meeting on April 17, 2025, where the board unanimously recommends a **FOR** vote on the proposals.  **[0000950157-25-000311_form8-k.htm:1]** **[0000950157-25-000311_form8-k.htm:2]**

Paragon 28, Inc. Merger and Litigation Update

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- **Paragon 28** confirmed that the **HSR Act waiting period** for its pending acquisition by **Zimmer Biomet** has expired, marking an important regulatory milestone.  **[0000950157-25-000211_ex99-1.htm:0]** **[0000950157-25-000211_form8-k.htm:1]** 
- The merger still faces **additional closing conditions** including shareholder approval and further regulatory approvals before finalization.  **[0000950157-25-000211_ex99-1.htm:0]** **[0000950157-25-000211_form8-k.htm:1]** 
- The transaction is anticipated to close in the **first half of 2025**, pending the satisfaction of all remaining conditions.  **[0000950157-25-000211_ex99-1.htm:0]** **[0000950157-25-000211_form8-k.htm:1]**

Paragon 28 Announces HSR Act Milestone for Acquisition by Zimmer Biomet

59752659719a34f43e2eb701a6df7079c22a01111dbfbd0d78ec974051943ab7

Paragon 28 entered a merger agreement with Zimmer Biomet on January 28. The HSR Act waiting period expired at **11:59 p.m. ET on March 10, 2025**  **[0000950157-25-000211_form8-k.htm:0]** , meeting a key milestone. The merger is now subject to customary closing conditions, with an expected close in H1 2025.  **[0000950157-25-000211_form8-k.htm:2]** 

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{"headers": ["Company", "Year", "Details"], "rows": [{"Company": "Disior Ltd.", "Year": "2022"}]}

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The **Cost of Goods Sold surged in Q4 2023** primarily because the company recorded **non-cash inventory write-downs of $4 million**, which reduced the gross profit margin by **6.6 percentage points**; this effect was compounded by **higher variable costs** associated with increased net revenue and a greater proportion of **international sales that carry lower gross profit margins**.  **[0000950170-24-023050_fna-20231231.htm:160]** **[FNA_3377504_3]** 

Why did Cost of Goods Sold surge in Q4 2023?

The documents explain the Q4 2023 net loss factors compared to Q4 2022 rather than a change from the prior quarter. Specifically, the improvement in Q4 2023’s net loss (at **$19,559 thousand** versus **$38,763 thousand** in Q4 2022) was mainly driven by the **absence of a $27,000 thousand legal settlement expense** that was incurred in Q4 2022. Additionally, **revenue grew by 17.6% year-over-year** (boosting gross profit), although this was partially offset by a **$4,000 thousand inventory write-down** and a **10.5% increase in operating expenses** (SG&A and R&D).  **[0001193125-24-053378_d692216dex991.htm:6]** **[FNA_3377504_3]** **[0001193125-24-053378_d692216dex991.htm:0]** **[0001193125-24-053378_d692216dex991.htm:5]** 

If you are referring to the increase from Q3 2023 (net loss of **$8,332 thousand**) to Q4 2023, the documents do not provide direct commentary on that change.

What drove the sharp increase in net loss in Q4 2023?

The lower annual net loss in FY 2023 was primarily driven by **revenue growth** and a significant **improvement in operating loss**. Specifically, net revenue increased by **$35,006** (a 19% growth), and the operating losses improved by **$24,738** largely because the **$27,000 legal settlement expense** that impacted FY 2022 was not incurred in FY 2023. These factors, despite some increases in cost of goods sold and operating expenses, contributed to the net loss decreasing from **$(67,326)** in FY 2022 to **$(47,841)** in FY 2023.  **[0000950170-24-023050_fna-20231231.htm:160]** **[0000950170-24-023050_fna-20231231.htm:178]** 

What factors contributed to the lower annual net loss in FY 2023?

The **Interest Expense, Net** for **Q2 2024** increased significantly because the company had **higher levels of outstanding debt** and was paying **higher interest rates** on that debt compared to previous periods.  **[0001558370-24-011606_fna-20240630x10q.htm:28]** 

Why did interest expense increase significantly in Q2 2024?

442915abc9ec126faa24ade3f0ad526f8b4030b518123ebd0cc23cd05d73ea81

The spike in **long-term debt net, less current maturities** for Q4 2023 is primarily due to Paragon 28, Inc. entering into a new credit agreement with Ares Capital Corporation. Under this agreement, the company secured a **$50 million revolving credit facility** and a **$100 million term loan facility**, from which it drew **$25 million** and **$75 million**, respectively. These drawdowns significantly increased the company’s long-term debt position, especially as the proceeds were used to refinance previous debt such as the MidCap Term Loan, resulting in an increase from **$42,288 thousand** in Q3 2023 to **$109,799 thousand** in Q4 2023.  **[0000950170-24-055595_fna-20240331.htm:10]** **[0000950170-24-023050_fna-20231231.htm:175]** **[0000950170-24-023050_fna-20231231.htm:196]** 

Why did Long-term debt spike so high in Q4 2023?

The marked increase in **Total Assets in Q4 2023** was primarily driven by several key factors. **Cash** saw significant growth due to financing activities—including the issuance of long-term debt and common stock—which bolstered the company's liquidity. In addition, there was a substantial rise in **Inventories** as the company built stock to support anticipated sales growth and mitigate supply chain risks. Moreover, increased investments in **Property and Equipment, Net** and growth in **Other Assets** contributed to the overall enhancement of the asset base.  **[0000950170-24-023050_fna-20231231.htm:175]** **[0001193125-24-053378_d692216dex991.htm:5]** **[0001193125-24-053378_d692216dex991.htm:6]** **[0000950170-24-023050_fna-20231231.htm:160]** 

What drove the marked increase in Total assets in Q4 2023?

The accumulated deficit deepened in Q4 2023 because the company incurred a **net loss of $47,841 thousand** during that period. This substantial loss was driven by several factors including a continued **operating loss of $37,309 thousand**, high operating expenses related to investments in research and development, selling, general, and administrative activities, as well as **inventory write-downs of approximately $4.0 million**. Additionally, costs related to **net interest expense of $5,165 thousand** and a **loss on early extinguishment of debt of $5,308 thousand** further contributed to the larger deficit.  **[0000950170-24-023050_fna-20231231.htm:175]** **[0000950170-24-023050_fna-20231231.htm:160]** **[0001193125-24-053378_d692216dex991.htm:5]** **[0001193125-24-053378_d692216dex991.htm:0]** 

Why did the Accumulated deficit deepen in Q4 2023?

The drop in **cash and cash equivalents** in Q1 2024 was primarily caused by a combination of factors. **Operating activities** used **$11.0 million** in cash due to a **$15.2 million net loss** that was partially offset by non-cash adjustments including **$4.3 million in depreciation and amortization** and **$3.1 million in stock-based compensation**. Additionally, unfavorable changes in working capital, such as a **$7.0 million increase in inventories** and a **$3.1 million increase in accounts receivable**, also contributed to the decline. **Investing activities** used **$5.8 million** in cash for purchases related to surgical instrumentation and other equipment, while **financing activities** led to an outflow of **$1.3 million**, mainly due to a specific payment related to the Additive Orthopaedics acquisition milestone. A **positive effect of $0.6 million** from exchange rate changes slightly offset these outflows. These combined factors resulted in a **$17.4 million decrease** in cash and cash equivalents during the quarter.  **[0000950170-24-055595_fna-20240331.htm:25]** **[0001193125-24-134185_d829713dex991.htm:5]** 

What caused the drop in Cash and cash equivalents in Q1 2024?

The **total liabilities** rose in Q1 2024 mainly because of a **substantial increase in accounts payable**—rising from **$21,696 thousand** to **$29,224 thousand** (an increase of **$7,528 thousand**)—which was the most significant factor. Additionally, there were smaller increases in **other long-term liabilities** (**$308 thousand**) and in **long-term debt (net of current maturities)** (**$48 thousand**), contributing to the overall increase of **$7,160 thousand** from the previous period.  **[0000950170-24-055595_fna-20240331.htm:4]** **[0001193125-24-134185_d829713dex991.htm:4]** 

Why did Total liabilities rise in Q1 2024?

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- **Supply chain headwinds** significantly impacted U.S. growth in 2023, particularly in the second and third quarters, and while management claims these issues have been largely resolved, there is a risk that these challenges could persist or recur, potentially impacting future growth.  **[FNA_3377504_5]**
- The company recorded **non-cash inventory write-downs totaling $4 million** during the fourth quarter of 2023, which reduced gross profit margins by **6.6 percentage points** for the quarter. Additionally, inventory levels increased significantly, reaching approximately **$100 million**, and there is a risk that continued inventory management issues could negatively affect financial performance.  **[FNA_3377504_12]** ,  **[FNA_3377504_5]**
- The company's aggressive investment in international markets could **strain resources** if these investments do not yield expected returns. **Regulatory delays** and complexities in international markets add to the risk that international growth may not meet expectations, potentially impacting overall profitability.  **[FNA_3377504_9]**

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Cash and cash equivalents (USD, thousands)

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Cost of Goods Sold (USD, thousands)

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Net Loss (USD, thousands)

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de5e95e676efd43bd7db3d3590ad65727b929182f8eb057fb11f89a72d4a426a

- **Launch of innovative products in high-growth segments:** Paragon 28 is introducing several new products in 2024, including solutions for bunion surgery like the PRECISION MIS Bunion System and the Bun-Yo-Matic Lapidus clamp. Additionally, they plan to launch the Smart28 platform mid-year, which is expected to create significant market interest and drive substantial revenue growth, particularly in the second half of 2024 and into 2025. These innovations aim to expand their presence in the foot and ankle market and are anticipated to contribute meaningfully to top-line growth.  **[FNA_3377504_7]**   **[FNA_3377504_13]**
- **Strong international growth and expansion into new markets:** The company reported a 44% constant currency growth rate internationally in 2023, fueled by investments in teams, infrastructure, and regulatory initiatives. Paragon 28 is focusing on key international markets by establishing direct or directly managed commercial models in countries like Germany, Italy, Spain, and Canada. They are also preparing to enter Japan by early 2025, the second-largest overall orthopedic market, presenting significant growth opportunities. This strategic focus on international expansion is expected to continue driving momentum in 2024 and beyond.  **[FNA_3377504_16]**   **[FNA_3377504_9]**
- **Improving supply chain conditions and positive financial outlook:** Supply chain headwinds that impacted growth in previous quarters have significantly lessened, with the company largely through these challenges. This improvement led to a record sequential revenue increase of 14% in the fourth quarter and sets the stage for expected 20% growth in the U.S. market in 2024. Additionally, Paragon 28 anticipates achieving positive adjusted EBITDA on an annual basis in 2024, driven by improved inventory management and operational leverage. This positive financial trajectory is expected to enhance operating cash flow and support the company's growth initiatives.  **[FNA_3377504_12]**   **[FNA_3377504_5]**   **[FNA_3377504_8]**   **[FNA_3377504_6]**   **[FNA_3377504_11]**

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| Name              | Is Executive | Is Board Member | Position                                      | External Roles                                                                                                                                                                                                 | Short Bio                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Start Date  |
|-------------------|--------------|-----------------|-----------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|
| Albert DaCosta    | true         | true            | Chairman, President, and Chief Executive Officer | None                                                                                                                                                                                                          | Albert DaCosta is a co-founder of Paragon 28, Inc. and has been leading the company since its inception. He has over 18 years of experience in the foot and ankle industry, contributing significantly to the company's development and leadership.                                                                                                                                                                                                                                                                                                                                                      | 2012        |
| Kristina Wright   | true         | true            | Interim Chief Financial Officer                | None                                                                                                                                                                                                          | Kristina Wright was appointed as the Interim CFO in April 2024. She has been a member of the Board of Directors since December 2021 and has held various leadership roles in finance and corporate development at Medtronic, plc, and other companies.                                                                                                                                                                                                                                                                                                                                                   | April 3, 2024 |
| Matthew Jarboe    | true         | false           | Chief Commercial Officer                       | None                                                                                                                                                                                                          | Matthew Jarboe joined Paragon 28 in December 2012 and has held various sales leadership roles, including National Sales Manager and Executive Vice President of Sales. He became Chief Commercial Officer in July 2018.                                                                                                                                                                                                                                                                                                                                                                                  | July 2018   |
| Robert McCormack  | true         | false           | General Counsel and Corporate Secretary        | None                                                                                                                                                                                                          | Robert McCormack joined Paragon 28 as General Counsel and Corporate Secretary in August 2023. He has held significant legal positions at companies like ViewRay, Inc., Cherwell Software, and The Spectranetics Corporation.                                                                                                                                                                                                                                                                                                                                                                             | August 14, 2023 |
| Drew Hill         | true         | false           | Executive Vice President of Research and Development | None                                                                                                                                                                                                          | Drew Hill joined Paragon 28 in October 2023. He has over 16 years of experience in the medical device, pharmaceutical, and consumer products industries, having held senior roles at companies like ViewRay and Philips Image Guided Therapy.                                                                                                                                                                                                                                                                                                                                                           | October 23, 2023 |
| Thomas Schnettler | false        | true            | Director and Lead Independent Director         | Vice Chairman of Piper Sandler Companies; President of Piper Sandler Investment Group, Inc.; Managing Director in the Merchant Banking Group at Piper Sandler; Board Member at Akoya Biosciences, Inc., Elligo Health Research, Moxe Health Corporation, Integrity Orthopaedics, Inc. | Thomas Schnettler has been a member of the Board of Directors since July 2020. He has extensive experience in advising life sciences companies and holds multiple leadership and board positions outside of FNA.                                                                                                                                                                                                                                                                                                                                                                                          | July 2020   |
| Quentin Blackford | false        | true            | Director                                       | President and CEO of iRhythm Technologies; Board Member at Alphatec Holdings, Inc.                                                                                                                           | Quentin Blackford joined the Board of Directors in August 2022. He has extensive experience in healthcare, operations, and finance, having held senior leadership positions at companies like Dexcom, Inc. and NuVasive, Inc.                                                                                                                                                                                                                                                                                                                                                                            | August 1, 2022 |
| Alfred Grunwald   | false        | true            | Director                                       | CEO of Black Forest One GmbH & Co KG; CEO of artprivat GmbH; Director of LIM Innovations, Inc.; Director of Starlight Cardiovascular                                                                                   | Alfred Grunwald has been a director at FNA since February 2017. He has broad leadership skills and strategic advising experience, with roles in various companies and organizations.                                                                                                                                                                                                                                                                                                                                                                                                                     | February 2017 |
| B. Kristine Johnson | false      | true            | Director                                       | President and General Partner of Affinity Capital Management; Chairperson of the Board at AtriCure, Inc.; Board Member at ViewRay, Inc., ClearPoint Neuro, Inc., University of Minnesota Foundation Investment Advisors | B. Kristine Johnson has been a director at FNA since December 2021. She has extensive experience in the medical device industry and serves on multiple public company boards.                                                                                                                                                                                                                                                                                                                                                                                                                          | December 2021 |
| Stephen Oesterle  | false        | true            | Director                                       | Director at Sigilon Therapeutics, Inc., Baxter International Inc., Peijia Medical; Advisor to Temasek Holdings LTD and EQT Partners                                                                                 | Stephen Oesterle, M.D., has been a director at FNA since January 2021. He has extensive experience in healthcare and life sciences, having served as a senior executive at Medtronic plc and as a board member of multiple companies.                                                                                                                                                                                                                                                                                                                                                                   | January 2021 |
| Meghan Scanlon    | false        | true            | Director                                       | Senior Vice President and President, Urology Division at Boston Scientific Corporation; Board Member at Medical Device Manufacturers Association                                                                 | Meghan Scanlon joined the Board of Directors in April 2022. She has extensive experience in engineering, sales, marketing, and general management, with leadership roles at Boston Scientific and DePuy Synthes.                                                                                                                                                                                                                                                                                                                                                                                        | April 1, 2022 |
| Chadi Chahine     | true         | false           | Chief Financial Officer and Executive Vice President of Supply Chain Operations | None                                                                                                                                                                                                          | Chadi Chahine was appointed as CFO and EVP of Supply Chain Operations in August 2024. He has held senior financial roles at Zimmer Biomet Holdings Inc., Stanley Black & Decker, and Smith+Nephew.                                                                                                                                                                                                                                                                                                                                                              | August 5, 2024 |
| Dave Demski       | false        | true            | Independent Director                           | Board Member at Alphatec Spine                                                                                                                                                                                | Dave Demski joined the Board of Directors in December 2024. He has extensive experience in the medical device industry, having served as President and CEO of Globus Medical.                                                                                                                                                                                                                                                                                                                                                                                                                         | December 10, 2024 |

40feffbd919b1e609b0587e155f418d4be933f96e411b3d81bb2e9c9f68c0f76

M&A Class Action Firm investigates the merger of Paragon 28 with Zimmer Biomet. Under the deal, all shares will be acquired at **$13.00** per share and a contingent value right may provide up to **$1.00** per share if revenue targets are met.  **[20250129DC07255:0]** 

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a7673482050dff08af1141db52df65ed3e9c027fb8cded6ec4c1a05fe0d85939

1. Given that you've moved away from the previous 80% gross margin target to a floor of around 75%, can you elaborate on the specific initiatives you're implementing to improve gross margins over time and the timeline you expect for these improvements?
2. Despite recent reductions, your days inventory outstanding remains significantly higher than industry standards; what concrete actions are you taking to further reduce inventory levels, and how do you plan to balance this with the need to support growth and product availability?
3. You've achieved adjusted EBITDA positivity earlier than anticipated, but considering the seasonality of your market with higher expenses in the first half of the year, how confident are you in sustaining EBITDA positivity throughout 2025, and what are the main challenges you foresee?
4. With 13 new product launches in 2024 and acknowledging a typical ramp-up period of up to a year, can you provide more insight into how these products will contribute to revenue growth in 2025 and what strategies you're employing to accelerate their adoption?
5. Competitors have reported softness in certain segments of the foot and ankle market, yet you've experienced choppiness that has since abated; how are you preparing for potential fluctuations in market demand, and what measures are in place to ensure continued growth above market rates?

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FNA is a leading medical device company focused exclusively on the foot and ankle orthopedic market, dedicated to improving patient lives. The company provides innovative orthopedic solutions, procedural approaches, and instrumentation to address a wide range of foot and ankle ailments. FNA sells surgical implants, disposables, and surgical instrumentation designed to improve outcomes and simplify procedures.

1. **Fracture Fixation** - Offers solutions for stabilizing and healing bone fractures in the foot and ankle.
2. **Forefoot or Hallux Valgus** - Provides products for correcting bunion and hammertoe deformities.
3. **Ankle Conditions** - Delivers systems for treating various ankle ailments and injuries.
4. **Flatfoot or Progressive Collapsing Foot Deformity (PCFD)** - Supplies solutions for addressing flatfoot conditions.
5. **Charcot Foot** - Focuses on products for managing and treating Charcot foot deformities.
6. **Orthobiologics** - Includes biologic materials to enhance bone healing and regeneration.

a6f4e0f56c7aa4c659dc10ecd703656dd40684c537030b9b4f40700ed379b445

- **Revenue guidance has been lowered, with the company now expecting full-year 2024 revenue of $249 million to $255 million, representing growth of 15.1% to 17.8%.** This implies a slowdown in growth to around **14% to 15% in the second half**, which is less than the first half despite easier comparisons, indicating potential market softness or company-specific issues.  **[FNA_3398343_8]**
- **Cash flow positivity has been pushed out to 2026**, with EBITDA positivity targeted for 2025. This delay in achieving positive cash flow and profitability suggests **ongoing operational challenges** and raises concerns about the company's ability to manage expenses or generate sufficient revenue growth.  **[FNA_3398343_21]** ,  **[FNA_3398343_9]**
- The company is implementing cost-cutting measures, including **workforce reductions and expense reductions in areas like travel, IT, professional services, and freight**. While aimed at improving profitability, these actions could potentially hinder growth initiatives and indicate the need to **optimize spending due to financial pressures**.  **[FNA_3398343_10]** ,  **[FNA_3398343_9]**

af78718891c280ff38d4b882f69b29e5781865ac6c8126dea825e0d64ca908e4

| Name               | Position                                           | Start Date         | Short Bio                                                                                                                                                                                                                     |
|--------------------|---------------------------------------------------|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Albert DaCosta     | Chairman, President, and Chief Executive Officer  | 2012               | Cofounder of Paragon 28 with over 18 years of experience in the foot and ankle industry. Previously held roles at Wright Medical, Pioneer Surgical, and Biomet Sports Medicine.  **[0001193125-23-094024_d458419ddef14a.htm:31]** **[0001193125-24-088613_d635138ddef14a.htm:14]** **[0001193125-23-094024_d458419ddef14a.htm:14]**                                     |
| Kristina Wright    | Interim Chief Financial Officer                   | April 3, 2024      | Interim CFO since April 2024 and Board Member since December 2021. Previously CFO of Cleerly and held leadership roles at Medtronic and PwC.  **[0001193125-24-088613_d635138ddef14a.htm:13]** **[0001193125-24-086631_d562814dex991.htm:0]** **[0001193125-24-086631_d562814d8k.htm:2]**                                                                       |
| Chadi Chahine      | Chief Financial Officer and EVP of Supply Chain   | August 5, 2024     | Appointed CFO and EVP of Supply Chain Operations effective August 2024. Previously Group CFO at Zimmer Biomet, driving record revenue and profit in 2022 and 2023.  **[0001104659-24-087271_tm2421069d1_ex99-1.htm:0]** **[0001104659-24-087271_tm2421069d1_8k.htm:2]**                                                  |
| Matthew Jarboe     | Chief Commercial Officer                          | July 2018          | Joined Paragon 28 in December 2012 as National Sales Manager. Promoted to Director of Sales (2014), EVP of Sales (2016), and CCO (2018). Oversees sales, marketing, and international business.  **[0001193125-24-088613_d635138ddef14a.htm:35]** **[0001193125-23-094024_d458419ddef14a.htm:32]** **[0001193125-23-080634_d458419dpre14a.htm:32]**                    |
| Robert McCormack   | General Counsel and Corporate Secretary           | August 14, 2023    | Joined Paragon 28 in 2023. Previously Chief Legal Officer at ViewRay and held legal roles at Cherwell Software, Spectranetics, GE Healthcare, and Covidien.  **[0001193125-24-088613_d635138ddef14a.htm:35]** **[0001193125-24-088613_d635138ddef14a.htm:40]** **[0000950170-23-061109_fna-ex10_1.htm:0]**                                                        |
| Drew Hill          | EVP of Research and Development                   | October 23, 2023   | Leads Engineering, Clinical Affairs, Disior, and Patient Specific Implants. Previously held leadership roles at ViewRay, Philips Image Guided Therapy, and GSK Vaccines.  **[0001193125-24-088613_d635138ddef14a.htm:35]** **[0001193125-24-088613_d635138ddef14a.htm:40]**                                               |
| Erik Mickelson     | Chief Accounting Officer and Controller           | April 2022         | Joined Paragon 28 in 2022. Previously VP of Accounting at Everside Health and held leadership roles at Molson Coors and Lignetics. Certified Public Accountant.  **[0001193125-24-088613_d635138ddef14a.htm:36]** **[0000950170-22-005697_fna-20220414.htm:1]** **[0001193125-23-094024_d458419ddef14a.htm:32]**                                                   |
| Matthew Millard    | Chief Human Resources Officer                     | N/A                | Serves as CHRO at Paragon 28. Specific start date not provided in the documents.  **[0001558370-24-011606_fna-20240630xex10d1.htm:22]** **[0001193125-24-086631_d562814dex101.htm:5]**                                                                                              |
| Matt Brinckman     | SVP of Strategy and Investor Relations            | N/A                | Serves as SVP of Strategy and Investor Relations. Listed as investor contact in filings as of January 2025, but specific start date not provided.  **[0001104659-24-127486_tm2430705d1_ex99-1.htm:2]** **[0001104659-25-002879_tm253028d1_ex99-1.htm:2]**                                                                   |
| Dave Demski        | Independent Director                              | December 10, 2024  | Appointed Independent Director in December 2024. Former President and CEO of Globus Medical and board member at Alphatec Spine and Axonics.  **[0001104659-24-127486_tm2430705d1_ex99-1.htm:0]** **[0001104659-24-127486_tm2430705d1_8k.htm:1]**                                                                         |

5d93a31855cbfff47832b45991e924ad9b534d0bf837bf4d29cae879e3fb88f4

4039c2651b91a021756312ec80d6c3cdb5af39bffeebb15cd185d11d76e6d867

- The company is prioritizing profitability, aiming to achieve **EBITDA positivity in 2025** and **cash flow positivity in 2026**, supported by operational efficiency initiatives and cost savings programs, without compromising growth. Management emphasizes this as their **top priority**, indicating strong financial discipline and commitment.  **[FNA_3398343_21]** ,  **[FNA_3398343_10]** ,  **[FNA_3398343_11]** ,  **[FNA_3398343_9]**
- Strong performance of new product launches, such as the **PRECISION MIS Bunion System** and **Bun-Yo-Matic**, which have **exceeded expectations** and are driving positive momentum. More meaningful contributions are expected in the **second half of the year** and into **2025**, indicating that the company's innovation pipeline is effective and will continue to fuel growth.  **[FNA_3398343_8]** ,  **[FNA_3398343_19]** ,  **[FNA_3398343_11]** ,  **[FNA_3398343_18]**
- Despite macroeconomic headwinds and market choppiness, Paragon 28 achieved robust **19.7% constant currency growth** in **Q2 2024**, outpacing competitors, and remains confident in achieving its full-year revenue guidance of **$249 million to $255 million**, representing **15.1% to 17.8% growth**. This demonstrates the company's resilience and strong execution.  **[FNA_3398343_8]** ,  **[FNA_3398343_19]** ,  **[FNA_3398343_16]** ,  **[FNA_3398343_10]**

db7d11803d48b9563cdf31c585f3e0cff0ff70d0522395aac27c5863d48a8e91

**Quarterly guidance for Q4 2024:**
- **Operational excellence**: improved earnings and free cash flow sequentially  **[FNA_3408200_4]**  (no prior guidance)

**Annual guidance for FY 2024:**
- **Revenue**: $252M to $256M (16.5% to 18.3%)  **[FNA_3408200_4]**  (raised from $249M to $255M (15.1% to 17.8%)  **[FNA_3398343_6]** **[FNA_3398343_8]** )  
- **Gross margin**: 75%  **[FNA_3408200_3]**  (no prior guidance)

**Annual guidance for 2025:**
- **EBITDA positivity**: 2025  **[FNA_3408200_4]** **[FNA_3408200_3]**  (no change from prior guidance  **[FNA_3398343_21]** **[FNA_3398343_11]** )  
- **Market growth expectation**: outpace the broader foot and ankle market in 2025  **[FNA_3408200_4]** **[FNA_3408200_6]**  (no prior guidance)

**Annual guidance for 2026:**
- **Free cash flow positivity**: 2026  **[FNA_3408200_4]** **[FNA_3408200_3]**  (no change from prior guidance  **[FNA_3398343_21]** **[FNA_3398343_11]** )

d64023de2d75595fde8431ffa7ccb15ea7fd436293b52f564ae4bddfc3ba326a

d91e4741276ab0915708480c2af458e7b9fe0b51934cbb4533e1c1c516e290dc

be1cde69866b233c2f6e6d76438c76254c76501c1641b247f5bb7a911bd8f33b

- **Paragon 28 is experiencing strong growth from successful new product launches**, with **13 new products launched in 2024**  **[FNA_3408200_1]** **[FNA_3408200_6]** , exceeding expectations and driving momentum into 2025.  **[FNA_3408200_9]**  The recent launches, such as the **Fibula Nail** and **short stem tibia component**, are already off to an **incredible start beyond expectations**  **[FNA_3408200_9]** , contributing to an **increased sales rep productivity by 4%**.  **[FNA_3408200_11]**
- **The company has achieved positive adjusted EBITDA in Q3 2024 ahead of schedule**, marking an **inflection point** and demonstrating significant improvement.  **[FNA_3408200_8]**  Paragon 28 is **exceeding operational goals** and is on track to be **EBITDA positive in 2025** and **free cash flow positive in 2026**, without the need for additional dilutive capital.  **[FNA_3408200_8]** **[FNA_3408200_7]** **[FNA_3408200_14]**
- **Paragon 28's diversified product portfolio across all sub-segments of the foot and ankle market** allows it to **grow through market softness** and **outperform competitors**.  **[FNA_3408200_13]**  Despite competitors reporting market softness, Paragon 28 has **grown at 2x to 3x the market rate**  **[FNA_3408200_6]** **[FNA_3408200_14]** , attributed to its **focus on innovative technology and addressing high complication rates**.  **[FNA_3408200_6]**

17c88245c464c4b7edfc83a9e79c9fc80640a44e6686fdebded74cae4b498be2

- **Strong revenue growth and confidence in guidance**: Paragon 28 reported record Q1 2024 revenue of **$61.1 million**, showing **17.4% constant currency growth** over a strong Q1 2023 comp of **27% growth**. The company also saw a sequential step-up from Q4 to Q1, which is uncommon and indicates strong momentum. Management reaffirmed their full-year 2024 revenue guidance of **$249 million to $259 million**, representing **15.1% to 19.7% growth**, expressing confidence in achieving these numbers.  **[FNA_3387791_18]** ,  **[FNA_3387791_4]**
- **Positive reception of new product launches and strong pipeline**: The company's recent product launches in high-growth areas like bunion and forefoot have generated significant excitement and are expected to contribute meaningfully to revenue in the latter half of 2024 and beyond. The products are exceeding expectations, and Paragon 28 has over **25 active projects in development**, including several tied to **SMART 28**, positioning the company well for sustainable long-term growth.  **[FNA_3387791_15]** ,  **[FNA_3387791_6]** ,  **[FNA_3387791_2]**
- **Strategic investments driving future growth**: Paragon 28 has made purposeful investments in expanding their commercial team and R&D to accelerate growth. The company increased their U.S. producing sales rep roster by **6%** and saw an **8% increase in productivity**, with a **12% increase in their surgeon customer base**. Management expects these investments to help the company **grow faster** and to generate operating leverage over time, leading to improved profitability.  **[FNA_3387791_18]** ,  **[FNA_3387791_5]** ,  **[FNA_3387791_13]**

02b88376247a47beaa4b9574a52e604a0c730bed424c6e3a6cf9d8c596ac51d5

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

6d6cd1ef8f136afbb8feb7884283a87aacf21d110fb0e464ccef5aaebfd7c237

1. **EBITDA Timeline and Investments**  
   **Q:** Has the EBITDA breakeven been pushed to 2025 due to investments?  
   **A:** The company acknowledged a slight push in the EBITDA breakeven timeline but emphasized that the investments made in Q1 were to **help grow faster**. They invested in the commercial team and R&D, committed to spending every dollar to improve the business and drive growth. They are always looking for efficiencies to manage capital better and expect to leverage these investments for sequential improvement over the year.  **[FNA_3387791_5]** **[FNA_3387791_7]** **[FNA_3387791_11]** 

2. **Sales Guidance and Confidence**  
   **Q:** Is there any change to the revenue guidance for the year?  
   **A:** The company remains confident in the revenue guidance set out in February, expecting net revenue between **$249 million to $259 million**, representing growth of **15.1% to 19.7%**. Assumptions haven't changed, and they are thrilled with the Q1 performance, which saw an uptick versus Q4 despite fewer selling days.  **[FNA_3387791_4]** **[FNA_3387791_17]** 

3. **SG&A Expenses and Operating Leverage**  
   **Q:** How should we view the SG&A spending and its impact on profitability?  
   **A:** SG&A expenses increased due to investments in the sales force, R&D, and professional services. However, the company expects to start leveraging these investments, reducing operating expenses as a percentage of revenue over sequential quarters. They anticipate improved efficiencies and operating leverage as revenue grows.  **[FNA_3387791_7]** **[FNA_3387791_9]** **[FNA_3387791_10]** 

4. **Sales Force Expansion**  
   **Q:** What is driving the investment in sales force expansion?  
   **A:** The excitement generated by new product launches has opened up opportunities to bring on talented salespeople. The company is committed to investing in the right partners who align with their clinically oriented approach. These investments are aimed at helping the company grow faster and are expected to contribute to future revenue growth, both domestically and internationally.  **[FNA_3387791_8]** **[FNA_3387791_12]** 

5. **New Product Contributions**  
   **Q:** When will new products contribute meaningfully to revenue?  
   **A:** While recently launched products are already generating momentum, the company expects more meaningful contributions from them in the latter half of the year and into next year. The reception has exceeded expectations, and upcoming launches like the **SMART 28** are on plan and expected to perform well.  **[FNA_3387791_6]** **[FNA_3387791_10]** **[FNA_3387791_17]** 

6. **Bunion Market Growth**  
   **Q:** Are new bunion products gaining market share?  
   **A:** Yes, the company's forefoot franchise, including new products like the **MIS bunion portfolio** and the **BunYo-Matic**, is growing nicely and taking market share. These products have been well received, exceeding expectations, and are hitting a sweet spot with patients' interests. The company has high aspirations for upcoming launches in this segment.  **[FNA_3387791_10]** **[FNA_3387791_13]** **[FNA_3387791_17]** 

7. **International Business Performance**  
   **Q:** Is international growth driving overall revenue growth?  
   **A:** The international business is performing exceptionally well, with higher growth rates than the U.S., though on a smaller scale. Investments in the international business are paying off, and the company is thrilled with the global reception of their products. They view global participation as essential to their mission.  **[FNA_3387791_4]** **[FNA_3387791_12]** 

e5af9d01f89960397c7e3217522dd1fee6129ac2e48590b331d5830fda3e8de8

- **Paragon 28 has lowered its gross margin expectations, moving away from the previous target of 80% to stabilizing around 75%**. The CFO stated they are "moving away from the 80%" and that improvements will "take time" due to factors like supplier negotiations and inventory optimization. This suggests challenges in returning to higher gross margin levels.  **[FNA_3408200_16]**
- **The company has high inventory levels, with 545 days of net inventory outstanding, significantly above orthopedic industry norms**. The CFO acknowledged that reducing inventory will "take time" because they "need more inventory in the field" due to the unpredictable nature of trauma cases. High inventory levels tie up capital and may impact cash flow.  **[FNA_3408200_10]**
- **Seasonality and higher expenses in the first half of the year may hinder consistent EBITDA positivity in 2025**. The CFO mentioned they "tend to have a lot of our expenses happening in the first half of the year," indicating potential challenges in achieving steady profitability throughout the year, which could impact investor confidence.  **[FNA_3408200_8]**

48bad687537de0c627e2c90e1f9f864d123f8837b6301a7180860ae12133ddd6

1. **Revenue Guidance and Growth**  
   **Q:** Why is growth slowing and guidance lowered?  
   **A:** Management acknowledged experiencing choppiness in the second quarter, which is factored into their guidance of **$249 million to $255 million**, implying **15.1% to 17.8%** growth on the high end.  **[FNA_3398343_8]**  Despite this, they remain confident due to new product launches driving energy and are carefully monitoring macroeconomic conditions.  **[FNA_3398343_8]** 

2. **Path to Profitability**  
   **Q:** When will you achieve EBITDA and cash flow positivity?  
   **A:** The company's top priority is to achieve **EBITDA positivity in 2025** and **cash flow positivity in 2026**.  **[FNA_3398343_9]** **[FNA_3398343_11]** **[FNA_3398343_21]**  They are implementing operational efficiencies and anticipate annualized savings of about **$8 million** from headcount optimizations, contributing to this goal.  **[FNA_3398343_9]** **[FNA_3398343_11]** 

3. **Operational Efficiency and SG&A**  
   **Q:** How will cost-saving measures affect growth and SG&A?  
   **A:** Management is optimizing every dollar spent without compromising growth.  **[FNA_3398343_10]**  They are focusing on areas like travel, freight, professional services, and medical education spend, ensuring these measures enhance operational efficiency without affecting their ability to grow and hit top-line numbers.  **[FNA_3398343_10]** 

4. **Inventory Burn-Down Plan**  
   **Q:** How will the inventory burn-down affect cash flow and margins?  
   **A:** The baseline gross margin is around **75%**, accounting for increased pricing from inventory build-up in 2023.  **[FNA_3398343_14]**  The company plans to **sell more and order less** to burn down excess inventory accumulated due to prior supply chain issues, anticipating modest positive effects on cash flow in the second half.  **[FNA_3398343_14]** 

5. **Market Choppiness Impact**  
   **Q:** What is causing the market choppiness, and how is it affecting you?  
   **A:** Management observed week-to-week choppiness, possibly due to seasonal factors like vacations.  **[FNA_3398343_8]** **[FNA_3398343_13]** **[FNA_3398343_16]**  They did not see significant differences between elective and non-elective segments, with balanced growth across the entire foot and ankle spectrum.  **[FNA_3398343_13]** **[FNA_3398343_16]**  They are carefully monitoring macroeconomic conditions.  **[FNA_3398343_8]** **[FNA_3398343_16]** 

6. **New Product Launches**  
   **Q:** How are new product launches contributing to growth?  
   **A:** New product launches, especially **six key products** in Q1 focused on the forefoot space, have exceeded expectations and are driving momentum.  **[FNA_3398343_11]** **[FNA_3398343_19]**  The company expects more meaningful contributions from these products in the second half and even more so in 2025.  **[FNA_3398343_11]** **[FNA_3398343_19]** 

7. **Sales Force Productivity**  
   **Q:** How is sales force productivity evolving?  
   **A:** Sales force productivity increased by **7%**.  **[FNA_3398343_12]**  Productivity is driven by new product introductions and investments in medical education, influencing both existing and new users.  **[FNA_3398343_12]**  While new hires may temporarily lower average productivity, momentum is expected to carry forward.  **[FNA_3398343_12]** 

8. **Smart 28 and Bun-Yo-Matic Launch**  
   **Q:** When will Smart 28 with Bun-Yo-Matic fully launch, and what's next?  
   **A:** The pilot launch is underway, with early feedback from key surgeons being very positive.  **[FNA_3398343_17]** **[FNA_3398343_20]**  They expect to move forward nicely in the second half of this year and plan to expand Smart 28 to all aspects of foot and ankle procedures.  **[FNA_3398343_17]**  The system is designed to be user-friendly and enhance surgical planning.  **[FNA_3398343_20]** 

9. **Capital Position and Cash Flow**  
   **Q:** How are you managing capital given cash flow positivity pushed to 2026?  
   **A:** The company is confident in achieving EBITDA positivity in 2025 and cash flow positivity in 2026, making this their top priority.  **[FNA_3398343_21]**  They are focusing on acceleration in EBITDA and cash flow in the back half of the year, contributing to their confidence in hitting these performance metrics.  **[FNA_3398343_21]** 

10. **CFO's Role in Operations**  
    **Q:** Is it effective for the CFO to also handle operations?  
    **A:** Management believes that having Chadi Chahine as CFO and COO is beneficial due to his diverse background in finance and operational efficiency.  **[FNA_3398343_15]**  Improving operations is a company-wide priority, and Chadi is committed to strengthening processes and systems to move from goals to deliverables.  **[FNA_3398343_15]** 

7f97604c4f504f0d393b8ce2bd96237671ed5b926a57b420e3d4ff03a149275a

1. **EBITDA Positivity and Cost Savings**  
   **Q:** Will you achieve EBITDA positivity in 2025 and provide details?  
   **A:** The company confirmed it is on track to achieve EBITDA positivity in 2025, having already reached it in Q3 2024.  **[FNA_3408200_8]**  They implemented a restructuring program targeting **$8 million** in annualized operating expense savings  **[FNA_3408200_7]** , with most benefits realized in Q4 2024 and some continuing into 2025.

2. **Market Growth Outlook**  
   **Q:** What are expectations for foot and ankle market growth in 2025?  
   **A:** Management expects the foot and ankle market to return to normalized growth of around **7%** in 2025.  **[FNA_3408200_6]**  Paragon aims to grow at **2-3 times** the market rate, supported by a strong pipeline of product launches.  **[FNA_3408200_6]** 

3. **Impact of 2024 Product Launches**  
   **Q:** How will 2024 product launches affect growth in 2025?  
   **A:** New products launched in 2024 are expected to significantly boost growth in 2025, especially those introduced in the second half.  **[FNA_3408200_9]**  These products typically have a **6-12 month** ramp-up period, and early performance has exceeded expectations.  **[FNA_3408200_9]** 

4. **Gross Margin Improvement**  
   **Q:** How will gross margins improve toward 80%?  
   **A:** The company is focused on improving gross margins from a floor of around **75%**  **[FNA_3408200_16]** , aiming for incremental improvements in 2025. Initiatives include negotiating lower supplier costs, reducing freight expenses, and minimizing inventory adjustments.  **[FNA_3408200_16]**  Returning to **80%** margins will take time.

5. **Inventory Reduction and Free Cash Flow**  
   **Q:** How are you reducing high inventory levels?  
   **A:** Management is laser-focused on reducing inventory levels over time  **[FNA_3408200_10]** , recognizing inventory days are still high. Efforts include optimizing capital deployment and improving efficiency  **[FNA_3408200_10]** , aiming to enhance free cash flow and achieve cash flow positivity by **2026**.  **[FNA_3408200_14]** 

6. **Segment Performance Amid Market Pressures**  
   **Q:** Are you seeing pressure in any foot and ankle segments?  
   **A:** The company has not observed significant pressure in any particular segment.  **[FNA_3408200_13]**  Their diversified portfolio across all foot and ankle sub-segments has enabled growth through market fluctuations  **[FNA_3408200_13]** , with new product launches driving strong performance.

7. **Sales Rep Productivity Increase**  
   **Q:** What is driving the increase in rep productivity?  
   **A:** A **4%** increase in rep productivity was driven by adding new producing sales reps and the successful timing of product launches.  **[FNA_3408200_11]**  This enhanced penetration in existing accounts and overall sales effectiveness.

8. **Progress of SMART 28 Launch**  
   **Q:** How is the SMART 28 launch progressing?  
   **A:** The SMART 28 system has been well received, with surgeons considering it transformative for forefoot procedures.  **[FNA_3408200_15]**  It offers detailed deformity analysis and patient-specific solutions, making it hard for surgeons to revert to previous methods.  **[FNA_3408200_15]** 

9. **Short Stem Tibia Market Potential**  
   **Q:** What is the market potential for the short stem tibia?  
   **A:** The short stem tibia component targets patients with complex deformities in total ankle procedures.  **[FNA_3408200_12]**  While specific market percentages weren't provided, it's a critical addition to the total ankle franchise, enhancing patient care and complementing existing options.  **[FNA_3408200_12]** 

55cd80f3230cbac461652a7bbff54acf196aa61555c4d9fb400c6676174c20ba

- **Delayed EBITDA breakeven expectation**: The company has **slightly pushed out its expectation for EBITDA breakeven in 2024**, indicating a longer path to profitability.  **[FNA_3387791_3]** ,  **[FNA_3387791_5]**
- **High operating expenses impacting profitability**: Selling, general, and administrative expenses increased by **$10.4 million** or **23.7%**, accounting for **88.8% of net revenue** compared to **84.2%** in the prior year period. This significant expense level is affecting profitability despite plans to leverage these investments over time.  **[FNA_3387791_3]** ,  **[FNA_3387791_11]** ,  **[FNA_3387791_10]**
- **Softness in U.S. revenue growth**: U.S. revenues were described as **"a little light even considering the selling day and the comp impact in Q1"**, potentially indicating weakness in the core U.S. market.  **[FNA_3387791_18]**

e96517c2fd26442c3c8fe89eae9a91a80a823a1be02aeff06f63e387dfb63655

Company not found (FNA)

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