Q1 2020 Earnings Call

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I would now like to turn call over to your speaker today, Jack Nielsen Vice President Investor Relations and corporate communications. Thank you. Please go ahead.

Thank you Chris Good afternoon, and welcome to our fiscal 2021st quarter Conference call with me today, or Scott War, CSRI, Chairman, President and Chief Executive Officer lender, Rob Chief Operating Officer, and Jeff Point, Chief Financial Officer.

Hopefully you've had an opportunity to review today's press release, you will discuss our first quarter results in detail on todays call. During this call. We will make forward looking statements. These forward looking statements are covered under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 include statements regarding <unk> future financial and operating results.

The other statements that are not historical facts actual results could differ materially from those stated or implied by our forward looking statements due to certain risks and uncertainties.

Moving that was described in our most recent Form 10-K and subsequent quarterly reports on Form 10-Q .

Yes, I disclaims any duty to update or revise or forward looking statements as a result of new information future events developments or otherwise.

We will also refer to non-GAAP measures because we believe they provide useful information for our investors. Today's news release contains a reconciliation table to GAAP results I will now turn the call over to Scott.

Thank you Jack.

Good afternoon, everyone and thank you for joining us today.

I'm pleased to report that the momentum and revenue we experienced throughout fiscal 19 has continued into fiscal 20.

In Q1 suicide produced double digit growth for the six consecutive quarter with revenues of 64.5 million, representing a 15% increase compared to last year.

Worldwide revenue increased our worldwide Clissold revenue increased over 10% to 45.5 million.

By 12% unit growth and our domestic orbital atherectomy business with strong performance in the LDL and the hospital cited service.

Worldwide coronary revenue increased over 26% to 19 million led by 10% unit growth in our domestic orbital atherectomy business increased sales of our procedures support products and continued adoption of orbital atherectomy in Japan.

Yes piece for both peripheral and coronary were stable and better than forecast gross margins remained above 80% for the quarter.

Q1 also represented a new high point for case coverage, let's see aside reps in clinical specialist president and 70% of our cases when orbital atherectomy was used.

Increasing presence in Cath labs, not only are schurz, great customer support. It also allows our sales reps to effectively introduce procedure support products to morphosys two more positions.

As of the one millimeter sapphire balloon to tell a core Microcatheter goodwill guide wires and our radio support products are continuing to gain traction and grew meaningfully in Q1.

With the approval of our north of our Knighton, all coronary Viper wire in September we are now able to offer physicians diamond back and a full complement of coronary procedural support devices.

We also launched the exchangeable atherectomy system in September and this novel device will allow the use of multiple crown's to enable complete like revascularization in a single intervention.

Finally, the commercial launch of orbital atherectomy in international markets continues to produce solid results, we achieved 3 million and international revenue.

Driven by strong adoption in Japan.

Market expansion in Asia Middle East in Europe .

In summary, she aside delivered a very strong first quarter, we are executing on our key growth initiatives, we continue to grow above market.

Sustained strong gross margins and we're making progress in expanding our product portfolio.

Rhonda will provide further detail regarding our commercial progress and R&D pipeline and just a few moments, but first Jeff will provide you with additional information regarding our first quarter results Jeff.

Thank you Scott and good afternoon, as Scott mentioned first quarter revenue of 64.5 million represented a 15% increase compared to last year.

In total we sold over 21000 orbital atherectomy device is during the quarter.

Representing a 17% increase compared to last year.

Worldwide peripheral revenue increased 10% to 45.5 million.

Domestic we peripheral yet volumes increased 12% as our strategies are driving attractive growth in both the RBL and hospital sites of service.

SP decline was in the low single digits slightly better than our expectations and recent trends.

Worldwide coronary revenue increased 26% to 19 million.

Domestic coronary revenues grew 17%, primarily driven by increased unit volumes and increasing sales of our procedures support products.

S. P is again declined modestly and consistent with expectations.

Revenue generated in the U.S. and international markets was as follows.

Total U.S. revenue increased 12% to 61.5 million.

Domestic peripheral revenue increased 10% 45.3 million and domestic coronary revenue increased 17% to 16.3 million.

International revenue totaled just under 3 million.

We continue to forecast fiscal 20 international revenue of 10 to 11 million.

For your models, we anticipate Q2 international revenue.

Of two to two and a half million.

As we have indicated previously timing of shipments to our distributors will cause modest fluctuations in our international revenue on a quarter to quarter basis.

In Q1 gross profit margin remained strong at 80.4%.

Operating expenses, a 57.8 million increased 8.9 million or 18% compared to last year.

R&D expenses associated with investments in new product development and increasing enrollment in the eclipse clinical trial increased 3.4 million or 46%.

As we shared with you at our recent pipeline update meeting at TCT, we are accelerating our investment in R&D broaden our product offering expanded use of orbital atherectomy and drive long term value.

SGN area increased 13% due to increased investments in clinical specialists, along with physician training and medical education investments to support our international expansion.

Finally, you'll notice that our PR BNL now includes a line for amortization expense. This is primarily related to our recent acquisition of the wire on embolic protection device.

For modeling you should anticipate incremental amortization of approximately 275000 per quarter related to this transaction.

As I mentioned on the call in August Q1, traditionally represents our lowest revenue and highest net loss of the fiscal year.

First quarter net loss was 5.8 million.

Adjusted EBITDA was a loss of 1.1 million.

We anticipate some sequential increases in revenue and improving profitability throughout the remainder of the fiscal year.

We ended the year with 105 million in cash and marketable securities.

The decrease in our cash position from Q4 was expected.

Was primarily related to three items.

Initial cash consideration related to the wire on acquisition.

Payroll taxes on stock vesting in August .

And yearend bonuses and commissions.

That concludes my comments on our Q1 financial results are solid first quarter keeps us on track to deliver fiscal 20 results consistent with our original guidance. We continue to anticipate revenues in the range of 278 to 283 million, representing an annual revenue growth of 12% to 14%.

Gross profit margin of 79% to 80%.

Net income of approximately breakeven, excluding approximately 1 million of intangible asset amortization and an additional million of direct expenses related to the wire on acquisition and positive adjusted EBITDA.

Roger will now discuss our commercial developments.

Thank you Jeff.

You just heard our first quarter revenue growth of 15% was driven by strong commercial execution and momentum in three of our key growth drivers.

We saw core domestic atherectomy unit growth of 12% fueled by key product launches that will highlight today.

Strong sequential and year over year growth in the steel procedure support devices and international revenue of 3 million representing 121% growth.

Starting in coronary our worldwide revenue grew 26% in Q1 as we've shared with you previously the strength and stability in coronary comes from several strategies that we've been executing now for over a year.

First as our patients increasingly aggregate at coronary centers of excellence across the country. We directed resources to enable an increased number of dedicated coronary sales representative and clinical specialists to support positions any facilities and drive growth.

And during fiscal 2000, we plan to double the number of dedicated coronary representatives to 40.

Expanding on our coronary channel positions us for the anticipated completion and read out of your clips results in fiscal 21 and portfolio expansion beyond.

In addition to providing a high level of service during the treatment of a very challenging patient population our presence in the Cath lab allows us to introduce new novel technologies that improve the quality of care and increase our revenue per procedure in Q1, we launched our new night coronary Viper wire advance wire with flex tip when combined.

And with the glider feature on our coronary atherectomy device the Sapphire, one millimeter balloon and the teleport Microcatheter, we now offer our physicians a compelling selection of tool for the treatment of their most difficult cases.

We believe this offering will allow us to drive deeper penetration into complex cases, and higher revenue per coronary procedure in the future.

International front, we've also seen success of combining orbital atherectomy the procedure support products in Japan, we call that we launched our coronary Oh, we ask for quite a script and the like no wiper wire in January since then we have experienced an acceleration in adoption and procedure growth in Japan, resulting in yes, I kept shrink 20%.

Market share in Q1.

In addition demand from international markets remains robust in Q1, we certified a total of 79, new physicians, including 57 in Japan alone.

Turning now to peripheral.

Our worldwide business grew over 10% in Q1, driven by 12% unit growth in the court direct domestic peripheral atherectomy business.

Our ability to drive above market growth comes not only from strong case support and producing best in class long term medical evidence, but also continued innovation on our core technology.

We are committed to developing low profile tools that deliver full leg revascularization and give physicians the option to use alternative access sites such as people to be all Unreal radio our continued above market growth rates in peripheral validate the innovation in this space is valued and that Cxi is advancing therapy standard to treat severely.

Calcified and long lesion.

If you keep developments to highlight.

First since launching in Q1, we are experiencing strong reception for our new peripheral exchangeable platform acquired assessed.

Devices designed to serve up to 50% of the peripheral patients that have multiple disease.

Third leg.

Exchangeable system consists of a single handle along with the crown handle enables the use of up to three croutons, where the second and third crown's are sold separately.

When a physician encountered the patients with multi level disease. The first crowd on a system can be renewed and a second crown other different size can then be attached to the handle.

Exchangeable physicians now have the ability to provide full leg revascularization with one device.

Exchangeable system sells at a premium and additional crowns are sold as a separate line item, where the sale of the second Crown is significantly more affordable then purchasing an entire second system, providing a more economical solution where more than one crown as needed in a case.

We are encouraged that some of our customers fetus value and are transitioning their entire peripheral line to exchangeable and as a result, our positions are treating more lesions with a system and we're generating more revenue per case.

Going forward. This platform will provide even greater flexibility as we develop a broader selection of crown sizes to treat smaller and larger vessels throughout the leg.

Second our radio device further position, so yes, I as a valued procedural partner in Cath lab by offering physician minimally invasive atherectomy tools that conserve a spectrum of vascular access routes, including people have you all radio or traditional small access.

Alternative access points have been associated with lower complication rate.

After kind to ambulation and greater patient satisfaction.

With five French access we offer the lowest profile atherectomy product in the market, which now enables a rail approach for treating above any reason.

Positions speak to safely treat a very difficult patient population are low profile device provide cxi with a sustainable competitive advantage.

And in the near term, we will support increased adoption of our radio device with medical evidence through our reach peripheral radial study we have now enrolled over 60% of the patients in reach and are on track to complete enrollment later this fiscal year.

As a reminder, this study will prospectively evaluate acute clinical outcomes of orbital atherectomy using radio access for the treatment of peripheral arterial disease. We believe this study will demonstrate many of the known benefits of radio access such as low complication rates high cost effectiveness and shorten time to emulation.

The benefits of orbital atherectomy are widely known and supported by the medical evidence shared in chief scientific venue.

And our first quarter and the three year outcomes of our litter Liberty 360 study were presented as a late breaker, most notably the away a sub analysis indicated durable outcomes with high freedom from major amputation and no additional amputation reported after the two year visit a.

The 1200 patients enrolled nearly 700, Rutherford four or five and six patients and the Rutherford four and five patients were 95% free of amputations at three years Rutherford six patients candidates for amputation had 89% freedom from amputation.

Developing long term clinical data supporting the short and long term safety and efficacy of our technology.

Yes, I apart from all of our competitors.

Incredible outcomes presented from Liberty 360 demonstrate that using orbital atherectomy, even on the most challenging patient can result in high freedom from amputation.

Data provides.

Their support of our leadership position in the study and care for patients suffering from peripheral arterial disease and critical limb ischemia.

Finally in light of the reduced usage of Paclitaxel for the treatment of peripheral arterial disease. We continue to experience a modest uplift in our peripheral business I'll remind you that this benefit as isolated to above the knee lesions in the hospital setting, perhaps 30% of our peripheral business.

However, in the absence of an anti reaching out this therapy and when treating calcified lesions physicians are turning to the best core technology for vessel preparation orbital atherectomy.

In conclusion, a productive and successful start towards fiscal 20, our strategies to innovate drive more revenue per procedure and expand internationally are working and making a difference in the treatment of our patients.

Looking ahead to Q2, we look to build on our momentum in coronary we will have the full market release of then you might know Viper wire advanced reflects chip and introduction of Ics and expanded offering of coronary angioplasty blends, including larger sizes up to five millimeters and are expected to help drive coronary revenue.

International we will continue to drive adoption with targeted physician training in several new markets and deepen penetration, where we have already launched.

In peripheral we will be introducing the next generation peripheral away I was glad to assist our 1.25 millimeter model.

Both sales and diamond back.

Why does this feature has been exceptionally well received by physicians treating calcified lesions and tortuous coronary arteries, given a similarly difficult vasculature below the knee, we believe physicians will find you're able to access and effectively treat challenging lesions with glasses.

These next generation peripheral devices.

Before I turn the call back over to Scott I will also mentioned that FIA site has now on Twitter. So please follow us at sea aside Threesixty that concludes my prepared remarks, Scott. Thank you Rhonda Wes as you've heard this afternoon, we achieved many great successes in Q1 and the consistent execution of our strategy now position see aside to achieve.

Hey objectives, not only in this fiscal year, but well beyond in us this quarter. Our strong revenue growth was supported by each of our three key growth drivers and we reached over 21000 patients worldwide.

We continued to grow above market based upon the strength of our core atherectomy business. The diamond back orbital atherectomy system is the safest and most studied atherectomy system with real world data on more than 5700 patients and more than 135 peer reviewed publications.

Exceptional manufacturing and quality operations teams continued to lower our cost of goods sold at a rate faster than he ASP erosion, we increased our investments in new product development medical evidence and physician education to accelerate our growth in the years ahead, we enrolled a 1000 patients.

And our landmark Eclipse study and we remain on pace to enroll 1500 patients by fiscal year end and finally, we updated you on a product pipeline and we reiterated our plans to achieve $435 million to $500 million in revenue in our fiscal 2003.

Guided by our mission to save limbs and save lives are exceptional team continues to make meaningful progress on our efforts to transform she ESI into our multi product company with global reach.

Thank you for your interest and see aside we look forward to updating you on our progress and the Asian months quarters ahead, we'll now take your questions. So Chris if you would please repeat the instructions we can proceed to accumulate thanks.

Certainly as a reminder, in order to ask your question do you will need to press star one on your telephone.

To withdraw your question you can press the pound or Heskey.

Our first question is from Chris Vizquel with Guggenheim. Your line is open.

Thanks, Congrats on nice quarter.

Scott I just wanted to circle back to Rob's comments around the back to Paclitaxel is having on your business Im just curious what the above versus below mix was a in the quarter and whether you see maybe any shift in the business because of that particular dynamic.

Yes, I think.

I'll, let Jeff address the mix in the quarter well, let me just talk to you a little bit about about the dynamic and what we see as Ron said the reason, it's really limited to that above the knee segment. That's that's in the hospital, you'll recall that roughly 60, maybe 60 40, probably two thirds of our business.

Below the knee and then about 25% of our revenue comes from the LPL segment.

Well go to balloons are generally not reimbursement in the LTL segment. So as a result are below the knee and the LTL segment of our business.

Generally isn't influenced by the presence or absence of drug coated balloons. So the above the knee segment is really the portion of our business that's available to be influenced and we do see physicians, there who are powerful actually using atherectomy to improve their ability to treat these lesions without generating any.

Dissections, if they can access the lesion.

Atherectomy is the lesion balloon and get out without any form of guys section.

They can have some confidence in particularly primary lesions that they may not need an anti recent else's treatment.

When there are secondary when they're secondary treatments in other words when it when a patient has reached the nose and they're coming back again, I think thats, where we continue to see now and increased utilization of drug coated balloons, and that's not unexpected that Jeff do you want to just picking I like the segmentation yeah. Thanks for the question, Chris We've we've historically.

Seen kind of 60, 40 split up 60% of our peripheral business below the knee and 40% above the knee.

We saw a little bit of a change then Q1, we're kind of looking at 59 41, now so just a slight a slight tick up.

Above the knee, but it was it was actually pretty consistent just moving by one percentage point in Q1 so.

Thanks, that's helpful.

And then just following up on the pipeline nice to see a point that we feel you get the whole bag in place on the coronary side and it feels like you're already starting to see some some decent traction there just remind us what are the timeline to get to similar points in peripheral where you feel like you've got all the products that you want to go after that additional revenue per case.

Yes, thanks, Chris for that for the question Yeah, We started with the launch of our civilians wires and those have been have been used with our peripheral cases, and then really starting in our next fiscal year and that's why 21, we will be expanding not considerably with the radial tool kits with.

With peripheral balloon and additional guidewires as well so really early next fiscal 21.

Okay. Thank you.

Your next question is from Danielle Antalffy with SPV Leerink. Your line is open.

Hey, good afternoon, guys. Thanks for taking my question congrats on another strong quarter.

I was thinking.

No problem.

Hoping to.

Follow up on that.

Yes.

Faired segment this quarter and also just to get a sense of how durable.

I think it's been in the mid high 20% range I look forward.

Three for that segment.

So Jeff will give me a Canada details on LDL Danielle but.

Okay durability, we think the growth or is he is very durable I know the same amount you are always a little bit slower in any of these segments, but.

As we look at the LTL segment, we believe that well something we believe there there is an epidemic underway in the United States in peripheral arterial disease in these patients have to be cared for in treated.

It's just there just isn't capacity in hospitals and elsewhere. So we do think that de leveraging these office based labs and these.

Alternate.

Treatment side is going to continue to be a trend not only in peripheral arterial disease that probably in other areas of complex killer medicine. So.

We do expect that LTL segment to continue to expand in terms of the number of accounts and also we expected to expand in terms of they.

The treatment of of increasingly more complex cases, there. So Jeff do you want to comment on the yeah, Jason absolutely. So Danielle we actually had another strong quarter and you'll be also as you mentioned the prior three quarters, we had grown that 25 plus percent.

It up at 16% growth and you will be also very it's still very attractive growth than on the flip side, we actually grow hospital business.

Even more in Q1 than we had in the previous several quarters that was in the in the high single digits. So.

Very strong quarter in both sites of service.

Got it. Thank you so much for that.

On the coronary segment.

Sure.

It sounds like you're seeing a lot of success there just curious.

All the tax rate.

For selling.

Support products into these cases.

Right.

Yeah, we continue to have good progress there yet the our ability to penetrate accounts continues to grow.

And we're really pleased with with that.

With the launch now than I know a.

Viper wire than our Knighton all coronary guidewire.

As Chris indicated earlier, we now have this full product offering out there and so I think what we're seeing is an increased adoption across the full spectrum, mainly because we now can offer everything from the.

Our port Microcatheter, the balloons wires and then we haven't course glide assessed and all of the the importance of those combined really gives us the synergy now too.

Not only accelerate growth the increased penetration so.

We we are seeing increased.

Titration and feel good about where that's headed down if we sort of TC takes about nearly half of our coronary accounts are now using our I asked Steve.

Perfect. Thanks, so much.

Thanks Danielle.

Your next question is from Frank the Kevin with Lake Street Capital. Your line is open.

Hey, guys. Thanks for taking my questions just a couple of for you here.

First on the reach steady I believe I heard you say complete by the end of this year I assume that was by the end of this fiscal year.

Correct enrollment that it's okay, and then could you provide us any anecdotal feedback you've heard from physicians in the field.

Got to getting them over the tipping point with that specific data.

It might be looking for.

Good morning, tipping point moving their pockets over to the radio outside more.

Sure I mean, I think there there's a significant evidence body on the coronary side and so I think kind of the concept of radio was is very intuitive for physicians to use it but the reality is that there's this is really never been done before in the peripheral space and so you know as we reached out to physicians have started talking about the access route I think that there's a general.

Well, I acknowledgment and feeling that they're going to be lower complications.

Greater patient satisfaction faster emulation, but we just want to produce.

Some initial data to take a look at that will get the read out from that and that's why 21, and then make a determination if we want to collect more but it's really building not that first foundational evidence that this does not exist today in the peripheral space because it's never been able to be done before.

So frankly, I think thats less he is getting that evidence of making it available. The other thing has been key and we've talked about this over the past several quarters is just being a full product offering out there the bloomed wires and catheters and you may know that job promo recently released their misaka stent, which is also important and so having that that full price.

Picked offering doesn't make a difference because.

You know physicians for example, if they if they have a complication they will want to be able to drop a sentence they need to the treated just section and so on so having the full our product offering is is key and that'll probably be the most important factor in and driving radio adoption.

Great. Thanks, and then second I'm looking a little bit further out to your fiscal year 23 guidance between for 35 in 500 or can you share with those two different puts and takes between the low wind in the high end of that given its such a large range.

[laughter] Yeah. It is also I guess, when we look out that far I don't consider to be that large of a range, but it would it it'd be difficult to provide all of the puts and takes it kind of building to that you don't we have we have a very broad and extensive portfolio of growth drivers, including a variety of new ERP.

Products were bringing forward of course additional medical evidence in NRT clubs clinical trial in PV I radial trial on additional peripheral trials in the future.

We also of course.

Have our international expansion and and all of these are no. They form of a great basis, a strong portfolio of growth opportunities, but to kind of go through how they all might play out against each other would be quite an extensive exercise. So I'll just say that across that portfolio. We remain confident that we can we can land in that.

For 35 to 500 range.

Okay, great. Thank you.

All right. Thanks.

Your next question is from Matthew Buck that with Stifel. Your line is open.

Good afternoon, everyone.

It was a housekeeping question for Jack I made a mistake, but did you quantify the contribution from the procedure support before portfolio in the quarter.

No I did that in my comments, there was a round 1.8 million Matt in total for procedure support products in Q1.

Okay. I appreciate that and then just a couple of quick questions with the stable pricing commentary, particularly in P.D. with a nice there's a surprise how sustainable is that trend and as we think about the remainder of the year and if theres something specific driving up and I've got one quick follow up.

Well you know.

We've always said, though we anticipate that kind of mid single digit price erosion in peripheral and I think we continue to expect to see that going forward.

We operate in a competitive marketplace, there and peripheral and.

We continue to increase utilization and Obiols, I think well well continue to drive that so I I think it you I would stay with our original guidance as it being.

Probably more like to mid single digits.

Okay. I appreciate that's gotten in the last question, how should we thinking about that dedicated coronary sales force expansion relative to coronary franchise growth. It is that sort of a growth sustaining move or could that potentially accelerate the growth we've been sitting in that.

In that segment.

So I guess my answer to that would be yes.

The in the near term. It certainly is intended to help us sustain our growth in hand and contribute.

To the growth of our of our business as we currently stand but have you looked at our portfolio over the course of the next let's say three to five years.

With the introduction of eclipsing the eclipse results and then the launch of our Pea that device late in that period, we will dramatically expand our offering to our coronary call point and really overtime will be transforming our coronary business from from being a business that.

Focuses on atherectomy to being a company that focuses on the care of complex coronary patients. So you can expect to see US just continue to build that franchise in a responsible way, but but in a way that you know allows us to sustain our growth today, but also prepare for the future.

I appreciate that Scott congrats on another strong quarter.

Okay. Thanks very much.

Your next question is from like Mattson with Needham and company. Your line is open.

Oh good afternoon. This is David on for Mike. Thanks for taking the questions first I just wanted to quickly follow up on one of Daniels question.

On the gross.

60% was the reason for the slowdown solely due to seasonality or were there any other dynamics at play.

Well keep in mind, a 16% is year over year, so seasonality would have existed in both periods.

I mentioned earlier that we grew 25 plus percent over the last three quarters. So we were we were comparing against.

Kind of the time that were really ramping up that that revenue and I'll be Allison.

Four quarters ago, So 16% are still really attractive growth with a with nominal ASP erosion that we mentioned.

Okay. Thanks, and then on so you have 20% share in Japan. So just wanted to see how you're thinking about the pace of market share gains.

Just given the training dynamics there.

And then Oh, one quick follow.

Yes, I think we'd expect that continue to grow I mean, we we still are actually quite early in our launch there and you know as I've said before our launch in Japan is really dependent on peer to peer training and so we had been.

Expecting and.

Forecasting for some time that as we continue to make progress in peer to peer training and the opening of new accounts that we would see continued growth overtime. So we're now just kind of coming into the.

Portion of of our growth curve, where we do expect to see that continue to accelerate so we are very confident in our business in Japan the Japanese.

Eventual cardiology community is a heavy adopter of imaging and they make a strong use of of of atherectomy and orbital atherectomy now.

To prepare vessels prior to the placement of stance and remove kelsen to modify plaque so.

We are we continue to be confident in our Jeff in our business in Japan and believe that we'll continue to see strong growth there.

Okay. Thanks, and then just lastly can you give some more color on.

<unk> discontinued the laser atherectomy program.

Well I will tell you.

Yeah. Thank you very much all in the softer run in a moment, but this is principally an effort on our part to continue to manage our portfolio into sure that we're investing in products that are going to drive the growth of our company and provide the best return on investment.

And I'll, let you comment on the combination of that.

Competition with this device versus other products yeah sure. It was really just you know a horse race between the laser and our directional atherectomy system and.

MS discussed earlier that a T.K. peripheral segment is sizable and we felt that with our progress that had been made technically with regard to the metal cutting mechanism that our engineers have developed the onboard aspirations system being able to serve a broad vessel range broad sites of service with the structure of that program.

It just made the most fan to invest in that technology. You know, we obviously looked at the market on the market sizes for each of those capital equipment expenses and just felt it was the best financial decision for see aside.

Great. Thank you.

Your next question is from Merck are concerned with William Blair. Your line is open.

Hi, Good afternoon, guys. Thanks for taking my question.

Yep.

For me is a little bit of a follow up on the clinical specialists. Once you referred to on the press release from around the corner wraps, which I think you guys said I mean call are going to double this year. So how should we think about rep productivity from somebody some coming group you know where are they focused on that and if I guess, how much of a hiring you guys trying to keep up with a.

Growth that you're saying, which has been exceptionally strong versus more offensive base.

On the opportunities you see.

Okay. So a lot of good observations and questions or market. Thanks. So first of all as you know we've been adding clinical specialists for sometime now we started that actually a couple of years ago and.

As we reported last year I, we do think that the addition of our clinical specialists hubs has improved the productivity of our sales channel largely because we get great case coverage and as I said in my opening comments. We now are they have a sales rep or clinical specialist president and about 70% of our cases, which is real.

Marketable and we think that is really an important competitive advantage for us having clinical specialist cover those cases, we have a the ability to introduce a individual to our customer that has very deep clinical acumen. These clinical specialists, usually come out of cath labs themselves and they're able to contribute very.

Quickly to assure that we get great outcomes, and and to support cases and support positions and and staff Thats present, so the presence of our clinical specialists, making important difference in enhancing sales rep productivity in terms of of our coronary.

Addition, we are we're still a bit nascent there you know we're moving from 20 to 40. So it's not like we have a really large channel at the present time and as a result, theres a lot of opportunity across the country to dedicate these reps, where we know we have large accounts that were currently not providing sufficient support to where we're just not present. So as we look at really the high.

Volume accounts in the United States, where patients are aggregating.

To receive care for really complex calcified lesions in many cases, we just don't have strong enough coverage so by being very.

Well I pull and deliberate about where we position these sales reps by hiring reps that already have expertise in this space, we can bring reps in and rapidly.

Get them up to productivity.

It is a it is as you've heard us talk about in the past it is a difficult market. So the time to productivity. It here is is slow it takes some time to these reps to ramp up.

But overtime they are experiences that they have and we have been pretty careful about this we rolled out the first 20, we learned a lot about that.

And then you know now we're we're adding 20 more and we'll continuously alone and improve our targeting and are on a placement of these reps, let overtime, we'll see continuous improvement in and sales rep productivity and so well I think we'll really see some dramatic improvement is Ed we released.

Eric hopes results and the of course you know this is the channel as I said earlier, but also we'll be looking after complex patients when we launch our Rob our hemodynamic pump program. So that's really how all of that rolls together I hope that answers your question.

And I. Thank you you got all three of them in there and I guess, the only call up a specific to that line of questioning was in terms of kind of the ratio of true wraps around Oh excuse me relative to clinical specialists that are you guys in a in a good spot right now or do you think it's it's not really a ratio again. This is a you know account coverage hunter gatherers game.

Well I think it sort of I think it's actually a case coverage. That's what we're really trying to achieve this case coverage you know what we're trying to be present.

When our physicians are caring for our patients when that patient that has a complex coronary or peripheral lesion is any cath lab customers President we want to be there to support that case to enhance pull through of our other products and to assure that we get great outcomes. So you know that really is the essence of our.

Our strategy and because we're focused on this week, we don't necessarily sell a bundle. So the way we break the bundle is to assure that our customers know us as the company that provides the best support in the market and that's what we're trying to do I think we're we're doing a good job at that so right now I think we have about 100.

30 clinical specialists in the field and we have right around maybe maybe 200 now a 200 plus sales reps. So that gives you an idea of our ratio. It's a it's it's a little over a two reps to one Oh clinical specialist I think we'll continue to see that ratio increase.

Yes overtime or decrease I guess will will probably move towards that one to one type ratio overtime, and we will probably do that as our different territories grow an increase in size and warrant that type of additional support.

Great and then on just a question on Japan, and I'll hop off but I wanted to follow up because I think in my opening comments you guys said that you thought you had 20% share gains in Japan already which I find it and correct me if I'm wrong I think that would be original guidance for the year that I mean, while you're training more and more dock so bad why shouldn't we see an increasing.

In guidance for that for this year. Thanks.

[laughter].

Well, it's early in the year and so we aren't increasing guidance right. Now we have a number of different factors that are that are going we're very well for us right now but at this point in time, we feel like our guidance range remains appropriately placed.

And and the but that said a you're correct. We did indicate that we thought we'd have 20% share by the end of year in and we are we're progressing ahead of schedule in Japan, So our Japan business, our international business continues to to do quite well and we're pleased with the progress we're making there.

Thank you guys.

Okay. Thanks.

So last question comes from Jason Bedford with Raymond James Your line is open.

Great. Thanks, Good afternoon, just a few questions maybe just a follow up.

In terms of the 20, new corner expression that you're adding this year, how many you added to date.

Roughly.

We've added about 10, so far this year Jason.

Okay.

Thanks.

Just getting back to the benefit from the drug coated balloon shake up there.

Yeah increased market share or is it more of a general rising.

The jurors because there's fewer DCB being used.

Yeah. So you know this is.

As we've said we said there's kind of last quarter. What we're seeing is is not necessarily some dramatic rise in utilization.

Of atherectomy because of the issues of drug coated balloons, what we what we are seeing if you went out and talk to our sales reps or if you talk to customers. They are now probably not but maybe you know, but if they are doing one or two more per month and we have to wanted sales reps out. There you could tell that you know you you're going to see an increase in and utilization of out.

Direct to me at a macro level, perhaps not at a micro level. So that's really what we're seeing it isn't a in a small segment of the business, but we are seeing increased adoption and where that I think is coming from is that physicians are returning to where it what they were originally trained on which is you know to.

Access that lesion to remove calcium from the lumen to prepare that lesion too.

Treat the calcium that is in the immediate portion of the vessel to do all of that without creating to sections or injury balloon. It and then try to get out and leave nothing behind with a primary lesion. They still are doing that and that's what we're seeing kind of the increase utilization of our device.

I think that we're seeing that because we have you know the safest atherectomy device out there and as a result, that's why you know physician Jerre I, probably beginning to utilize this device more often.

In those primary cases.

We're still early days you know this kind of started in March we reported first at the end of our our fourth quarter and.

And we would just now kind of reporting that we continued to see that benefit flow through our peripheral business at this time.

Okay.

That's helpful. Maybe the last one scar.

You mentioned growing above market.

Secondly, obviously, the certainly seems to be the case.

Referring but be coronary.

And I realize this was a tough comp.

I don't really market growth.

As the market growing faster and just any comments on the competitive landscape in coronary would be helpful. Thanks.

Yeah, I think as we said I mean, I think this is above market growth.

And we feel in particular on the overall business as it certainly is above market.

As you know and we've talked about this before.

Getting very detailed in specific information about each and every quarter in both coronary and peripheral atherectomy is difficult because most of our competition does not report at that level of detail based on the information we have.

We we believe that this is above market growth in both coronary and peripheral so yeah. We continue to feel pretty good about that our coronary business growth was was strong and as you look on a global basis. Obviously it was very strong so.

We're we're confident in our corner business at this time so.

Good.

Right. Thank you.

Okay. Thanks.

Ladies and gentlemen, this does conclude the today theories on I'll turn it back over to Scott Ward for any closing remarks.

Okay very good so with no further questions. We'll conclude today's call. Then thank you all for your participation and we look forward to updating you on our progress next quarter. Thanks, everyone.

Ladies gentlemen, this does concludes today's conference call. Thank you for your participation you may now disconnect.

Okay.

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