Q3 2020 Earnings Call

Ladies and gentlemen, thank you for starting by and welcome to the cardiovascular system thinks fiscal year, 2023rd quarter inch conference call. At this time, all participants are no listen only mode. After the speakers presentation. There will be a question and answer session to ask the question during the sessions will need for starters and one on your telephone keypad. If you require further.

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This time I would like to turn conference over to your speaker today check Nielsen place precedent Investorrelations in corporate communications. So you still at Sir.

Thank you in good afternoon, and welcome to our fiscal 2023rd quarter Conference call with me today, or Scott Warden, C.S.I., Chairman, President and Chief Executive Officer, Wander, Rob Chief Operating Officer, Jeff points, Chief Financial Officer, and Doctor Reineck like Chief Medical Officer, approximately 30 minutes ago.

He issued a press release announcing our fiscal 2023rd quarter results you may find a copy of this release on the Investor Relations section of our corporate website. Here. You May also find in earnings presentation that includes additional details on our performance in outlook in a few moments C.S.I. management, we'll discuss our third quarter, which ended on March 31st.

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After our prepared remarks, we will entertain your questions.

During today's 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 C. aside skied your financial and operating results or other statements that are not historical facts actual results could differ materially from those stated or implied by our Ford.

Statements due to certain risks and uncertainties.

Those described in our most recent form 10 k.

<unk> quarterly reports on form 10 Q.

In particular, the covert 19 pandemic has created risks and uncertainties for our business results of operations.

<unk> condition and prospects, which we will discuss on this call c. aside disclaims any duty to update or revise our forward looking statements as a result of new information future events developments or otherwise we will also refer to non get measures because we believe they provide a useful information from dusters. Today's pressrelease contains a reconciliation table to gap results.

I will now turned the call over to Scout wart.

Thank you Jack good afternoon, everyone and thank you for joining us today I.

I hope that you and your families are healthy and that you are successfully navigating through this pandemic.

As we have previously disclosed our financial results in third quarter.

Lovely impacted by covert 19.

In January and February or business was performing in accordance with our plan. However, beginning the week of March 9th are cornering peripheral cases began to to trend downward as hospital stopped performing elective procedures.

Personal protective equipment became scarce patients became reluctant to keep their appointments and social restrictions increased absenteeism in <unk> in hospital calf labs.

During that period from March 9th March 31st our average daily caseload decreased approximately 25% versus the prior period.

Taxes also amplified due to the timing of the outbreak which coincided with the end of our quarter and some of our high volume customers declined to replenish their inventories at the end of March.

As a result, R.U.S. revenue is negatively impacted by $10 million to $11 million in Q3, and we finish the quarter with revenue of 61.2 million, representing a 3.4% decrease compared to last year.

Worldwide corrupt peripheral revenue decrease 6% to 42.6 million and coronary revenue increase 2% to 18.5 million.

International revenue increase 26%, two 3.1 million with steady growth in Japan.

Gross profit margin remained strong and 80%.

Due to the current uncertainty and volatility we have withdrawn our guidance for F.Y. 20.

But I do want to take a few minutes to frame up the impact of the pandemic on our cases during the month of April and our expectations for the remainder of Q. for.

Despite covert 19 are cases have steadily continued during the month of April while at a much slower pace.

Although our April caseload declined 53% compared to last year, we have seen a modest increase in our daily cases throughout the month.

Mainly in the treatment of critical Emma scheme yeah.

We have stated.

Well it was over 70% of our revenue split approximately equally between patience with critical Emma scheme, you and those with qualifications.

Our patience with seal I typically have long calcified lesions below the knee.

The most severe of those wounds could include what gangrene and intervention typically would not be postponed due to imminent risk of amputation sepsis and sometimes death.

We expect these cases will continue to be performed but at a slightly reduced rate from our normal pace.

<unk> typically have less extensive arterial disease, which may be more limited to proximal above the knee lesions and these patients experience pain on exertion.

Generally these are elective procedures that can be postponed a few months as a result, the treatment of <unk> has declined significantly and may not recover much during queue for.

However, we do expect that some of these patients will return for care and this will gradually occur over a four to six month timeframe.

Coronary cases contribute about 30% of our revenue and nearly all of these patients have unstable or refractory Angela.

At high risk to develop acute coronary syndrome.

Under most circumstances. These cases should not be postponed, but clinical decision, making and resource allocation have been altered during the covert 19 pandemic.

It has been widely reported that cardiac catheterization has declined significantly and STEMI activations are down approximately 40%.

As a result coronary cases have declined and have remained depressed throughout the month of April although we expect to treatment of severely ill patients with coronary artery disease to resume fairly quickly we do not expect a rapid recovery in the broader coronary segment in q. for rather we think it is.

Appropriate to assume that are coronary business will gradually recover over the next six months.

There are many factors that may increase our case loaded revenue in q. for including the easing of social and government restrictions on elective in semi elective cases.

Reduced patient anxiety increased availability of P.B.

Sustained cast lab and workforce capacity and improving sales rep access to hospitals to support cases.

We expect that hospitals and <unk> will continue to preserve their cash and they will not immediately replenish their inventories.

There we expect that are average daily sales will correlate more consistently with procedure volumes throughout our fourth quarter without larger stocking or replenishment orders that often occur at the end of each fiscal quarter.

We have been very proactive in preparing for this crisis and we are focused on three over arching goals.

First to assure our continued ability to serve our customers and support our <unk> our patients during the outbreak second to protect the health and financial security of our employees and finally to ensure business continuity.

I'm very proud of R.C.S.I. employees as we have continued to manufacture product and support cases throughout the C. 19 outbreak, we have faithfully fulfilled our mission and partnered with positions to save limbs and save lives. Despite this terrible pandemic, we are committed to protecting the health and safety of our.

<unk>, we are complying the stay at home orders and our office space employees are telecommuting.

We have safeguarded, our facilities and deployed additional screening and testing protocols to protect our manufacturing and other employees.

Our field employees, who continue to support cases and work in clinical settings are provided access to personal protective equipment and they abide by the local requirements stipulated by the healthcare facilities they serve.

We have implemented business continuity plans, we reduced variable spending I have voluntarily reduce my salary. During this uncertain time and we have taken other actions to assure that the strength and capacity of our business remains intact.

We have secured our supply chain and have been running our manufacturing operation to add or near full capacity as we have continued to ship product and to assure that we have the inventory required to support the anticipated rebounding procedures during the expected recovery period.

We are continuing to invest in R. and D. and we have retained all of our employees to assure that we have the strength and capacity required to achieve a rapid and sustained recovery.

In a moment Rhonda will provide additional information regarding our r. and D. pipeline and commercial progress. The first I will last Jeff to provide you with additional details regarding our third quarter financial results and our business continuity plans yeah.

Thank you Scott and good afternoon at every one.

Given the unprecedented nature of current events.

Remarks today I plan to provide my normal review of our third quarter financial results.

Line, how we are thinking about queue for.

In a dress her ongoing business continuity plans to make sure that you understand the steps we have taken to assure the financial stability of our business.

So looking at Q3.

Scott mention third quarter revenue of 61.2 million represented a 3% decrease compared to last year.

In total we sold over 20000 atherectomy devices during the quarter, representing a 3% decrease compared to last year.

Worldwide peripheral revenue decreased 6% 42.6 million.

Worldwide corner revenue.

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

Total U.S. revenue increase 5% to 58.1 million.

Domestically peripheral you have volumes decrease 6%.

Domestic coronary revenues declined two per cent from last year, primarily driven by lower atherectomy unit volumes, partially offset by an increase in revenue for coronary support devices.

International revenue increase 27% to 3.1 million.

In Q3 gross profit margin remained strong at 80 per cent.

Operating expenses are 51.7 million increased 1 million compared to last year, and where 6.3 million lower than cute you.

S. G.N.A. was flat with a year ago period, and declined 5.5 million compared to Q. too.

A decline in S.P.N.S. Benny versus cute too.

Primarily due to lower sales and other incentive compensation as well as actions, we began to take to reduce spending late in the quarter.

R. and D. expenses increased approximately 800000 versus last year.

Second quarter net loss was 2.9 million.

Adjusted EBITDA was a positive 1.6 million.

On the balance sheet, we ended the quarter with over 170 million and cash and marketable securities and no long term that.

Finally at the end of March we announced an amended lawn agreement with Silicon Valley Bank.

Madman extends the maturity date by two years to March 2022, and increases the maximum borrowings available under the revolving credit facility from 40 million that 50 million at very favorable terms.

There are no amounts outstanding honest revolver and during the first three years and disagreement we did not have this resource.

I should note that are capital allocation priorities are unchanged, we will continue to invest in our business to assure that we were able to support our customers and patience.

We are investing do retain our employees and the strength of our business to assure a rapid and sustained recovery.

That concludes my remarks, R. Q3 financial results.

Now I will provide some commentary on what to expect for Q. for.

As we discussed her expectations for Q. for.

Note that we're trying to find the right balance between between supporting confidence will not providing false utterances.

Along with the rest of the country.

Monitoring the many models that predict various scenarios for the severity and duration of the cope with 19 outbreak.

This is a very dynamic environment that is changing every day.

But at least you will know our perspective regarding our near term outlook.

As a reminder.

We issued an eight k. in March, noting that we were experiencing a disruption in procedures using our products as a result of the covert 19 outbreak.

And on April 1st we issued an eight k. with dry in our financial guidance for fiscal 20.

Scott describe our case load in the U.S. in April has declined 53% compared to last year.

And while we have seen a modest increase in our daily cases over the past month.

We do expect this trend to continue throughout queue for.

In addition, we expect that hospitals and Obiols will continue to preserve cash and run with leading inventories.

As a consequence, we anticipate that are queue for results will not benefit from large and of quarter orders, which typically drive higher revenues.

Particularly in June.

Turning to international most of our revenue isn't coronary specifically in Japan, where the impact of the outbreak.

Has had only a modest impact on procedure volumes, thus far.

The other international markets, we have seen a dramatic decrease in procedure volumes.

As a result, we now believe our international revenue for Q. for will be approximately 2 million.

Anticipated reduction in production in production volumes. Thank you for we'll have a negative impact on gross margin we call that a significant portion of our costs of goods sold is related to burden. So fewer devices manufactured is expected to resolving gross margins in the mid 70 per cent range.

As we begin to experience as we began to experience lower procedure volumes of March we implement that business continuity plans have reduced operate inexpensive and capital expenditures across the business.

For example.

Implemented a hiring freeze across the organization.

Eliminated noncritical consultants in contractors.

We reduce variable compensation as a result of lower anticipated volumes.

Enrollments in our eclipse clinical trial or suspended.

Traveling entertainment restrictions were implemented across the organization.

Conferences professional education and sales training events have been cancelled.

And a significant amount of other discretionary spending has been cut or deferred.

Overall, we expect operating expenses.

Q forward arrange between 44 to 46 million.

This level of operating expenses represents a decline of approximately 15% from the prior year and more than 20%.

Q on and cute you have this fiscal year.

Ongoing management of operating expenses combined with a strong balance sheet.

Positions. She aside a managed through this difficult time and be prepared to succeed as elective and not hers and procedures returned normal.

Throughout the recovery period and into the future we plan to continue to invest and drive grill in our core business innovate through our product pipeline.

Generate medical evidence.

Increase our commitment to medical education and expand their commercialization efforts internationally.

Rondo will now discuss our commercial developments.

Thank you Jackson good afternoon, everyone I will focus my comments today on a few key areas, including how C.S.I. has responded to the covered pandemic why we think our product offering is attractive in the post cope with 19 era and update on the status of our product pipeline and I will conclude with our thoughts on the C.P.T. code process.

As you heard from Scott protecting our employees in our ability to serve our patients are two of the key goal at C.S.I. as we adjust to the code that 19 environment, we began making adjustments to our business early and Q3 and elevated our response throughout the quarter.

The virus began to impact Asia and Europe, we pulled our employees are these market in early March we restricted domestic travel.

<unk> at our facilities in Minnesota in Texas, we elevated restricted access to ensure employees remain safe.

Let's stay at home recommendations and quickly pivoted to telecommuting arrangements for virtually all of our knowing manufacturing employees.

In the field, we successfully source P.P.E. to ensure that are feels feels representatives were prepared to safely support cases in facilities in which they were allowed in hospitals restricting access our sales representatives are doing what they tend to support cases sure virtual interaction with our customers.

Our customers have embraced new educational delivery model to access high value see assigned medical education programs.

During the quarter C.S.I. educate education team conducted for distance Proctoring sessions for new an advanced user.

Launched an extensive learning management system, which includes extensive taste based education modules.

And enabled virtual support to train new users and new accounts.

Examples like this solicit help and may provide a glimpse of how we will continue to provide high touch clinical and educational support wherever we are needed in a post covert 19 environment.

And we are needed the incidence of peripheral and coronary artery disease has not slowed down during the pandemic in fact, the steady either the study youth of our products. During the outbreak demonstrates the importance of orbital atherectomy, especially in the treatment of critical limit scheme, yeah, and we believe our provide product offering provide C.S.I. with competitive advantage.

Especially as sites of service begin prioritizing patients in need of treatment during covert recovery.

Orbital atherectomy provide the dual mode of action that combines differential standing at Tulsa tile forces to treat all calcium modalities, including nodular centric and concentric.

We believe are distinct ease of use and efficiency matched with differentiated clinical performance and complex patience will be even more valued as patients in waiting began to return for treatment.

Well covered 19 is in the community. We believe the importance of products that decrease procedure time and prevent the patient from meeting to return following treatment has increased considerably.

<unk>, we believe that offering low profile devices that allow for a variety of access points will be increasingly attractive.

Addition feet to treat peripheral reasons.

Reducing procedure time, and bleeding complications routine related to traditional for moral access.

As a result, we expect abusive radio access and other alternate sites have access that reduced beat bleeding complications and accelerate kind to Abby wage ambulance and we'll be further adopted to enhance a consistent patients from in picture just charge.

We believe this value proposition there'll be an important C.S.I. differentiate or in a post coven era.

The new cardiovascular Horizons, or N.C.D.H. Conference Conference, which we expect will be held in July we will share new data from the reached <unk> Radio study.

If you recall this study will prospectively evaluate a cute clinical outcomes.

Orbital atherectomy using radio access for the treatment of P. 80, we believe this study will demonstrate many of the known benefits of radio access such as low complication rates high cost effectiveness and short in time to emulation read out of this study looked up till nicely as we plan to begin introducing radio support products and fiscal 21, which I will do.

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Products like our new exchangeable platform that allows positions to perform full revascularization. During a single episode of care will also be adopted to limit the frequency that patients must visit hospitals and it'll be out.

As a reminder, our exchangeable platform quite assessed offers a low profile device designed to access the vascular churn through multiple access points.

This platform is designed to serve up to 50% of the peripheral patients that have multi vessel to view.

Out the led.

The system enables the use of up to three crown, so that a physician country lesions above and below the knee and provide for leg revascularization and inefficient single procedure. We think that this will be very well received by physicians in their patients who will be motivated to complete treatment in a single session as opposed to scheduling multiple interview.

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We thank her entire peripheral I think offering will continue to benefit from the ongoing data coming from our Liberty 360 study as we continue to disseminate the information from this all comers study, we are able to demonstrate how using orbital atherectomy provide hi freedom from major amputation at three years with L.A.S., even in the most complex patients.

In Rutherford six patients at 88.6% with no additional amputations recorded after the two year visit.

We have no Perry when it comes to developing long-term economic and patient outcome data and we were very pleased to learn that the one your data from her Liberty 360 studies in the top 10 downloads over the past five years from the journal of Endovascular therapy.

Important we we have recently submitted our liberty to your economic data and are waiting publication of the manuscript.

Turning to coronary third quarter was the first full quarter. After the launch of our new night and all coronary Viper wire similar to the products response in Japan feedback from positions in the U.S. has been exceptionally strong and how it enables access to more complex patience with treatment effectiveness, particularly in patients with tortuous anatomy.

Language, Sapphire, angioplasty balloons, and teleport Microcatheters and diamond back with quite assessed we offer physicians a compelling set of tools to treat their most challenging coronary patients.

As a result, we expect our strategy to drive increased revenue per procedure will continue to gain traction in the post covert 19 era.

And two three we sold over $2.2 million of procedure support products, including nearly 2 million of coronary products such as the Sapphire, Andrew plus people learn can teleport microcatheters.

No not all of these products are used exclusively in our coronary atherectomy procedures. However, we sold over $530 of support products for every coronary <unk> device sold during two three.

Mark the seventh consecutive quarter of increase coronary revenue per procedure.

We have significant opportunity to further increase penetration accounts performing complex coronary procedures and recall, we believe our support products could yield between $802000 per coronary Alas procedure.

In International we had another strong quarter of growth, particularly in Japan, where despite covert case volumes continue to grow with a greater than two times increase over case volume just a year ago.

Jeff noted case falling in Asia, and Europe, we're more impacted by the pandemic and our ability to access markets. An open accounts will be tempered in the near term.

R.C.E. Mark for coronary remains under active review and we achieved a number of regulatory approvals throughout the quarter.

He will have a more detailed I think next quarter as we learn about case resumption in the markets that we had targeted for lunch.

Turning out to our product and evidence type wine with respect to our pipeline, we had targeted introducing a radio tool kit at a broad line of over the wire peripheral balloons and ask why 20 or 21. However are indeed delays incurred in part due to <unk> have pushed out be anticipated timing of the launch date for these products, we know anticipate introducing these products in.

Second half of fiscal 21.

The wire on about like protection system, which we acquired last summer remains on track for a two one launch wire on as a wire agnostic device and works with any o. one for Guidewire about protection systems are used about one third of the time and above any atherectomy procedures and typically sell for about a thousand dollars per device belong to.

This product will be an important component of driving higher revenue per peripheral procedure in fiscal 21.

Finally, we are meeting regularly with the F.D.A. under developments ever mechanical circulatory support device, we continue to target for some human experience in fiscal 21.

However data presented in H.K. last fall in high risk P.C. I support space May increase the number of patience and length and follow up requirements in our pivotal I'd east today, if sodas could impact commercial tiny tiny, but we will provide additional update because we collaborate with the F.D.A. to determine the clinical trial requirements.

We've recognized the timing of these product development and launched Malstrom represent our best estimates at this time naturally cope with 19 and other factors could caused additional changes and timing.

On the clinical side, we suspended involvement in the eclipse trial and marks due to cope with 19.

Recognize that most hospitals were suspending elective procedures and non essential functions. So after careful consultations with our P., we decided to private moments. We don't have a set date to start restart enrollments, we will be watching for the renewal of research activities and say my urgent procedures across the country and will engage with our principle.

Instigators later in the quarter on planning this will certainly push out the timing of the read up on a clip, but with 1300 and 64 patients enrolled to date and that's important study we will remain patient and make sure. We can answer the question of how best to treat severely calcified coronary lesion.

Finally, just a quick update regarding the possibility and May may review, the lower extremity Endovascular procedure codes that.

Not an agenda items for the May C.P.T. editorial panel meeting. The next meeting is scheduled for October and the agenda for that meeting is expected to be available on July 31st we continue to believe that once initiated this could be a two to four your process before new codes are implemented.

Include my prepared remarks, I'll be happy to answer any of your questions and a few moments I turn it back to Scott.

Well I will close are are prepared remarks today by sharing some thoughts regarding how the recovery may unfold, we look to the future with a sense of competence coupled with the readiness for the challenges the lie ahead.

We expect a covert 19 will continue to have an acute short term impact on our business and q. for we expect to the recovery to begin in earnest in June and July was steady improvement continuing through December.

At this time, we expect that Q1, F.Y. 21 procedure volumes will be below normal and that Q2 could return to weigh more normal pace, assuming that procedure volumes normalize patient competence improves referral pipelines are restored and Catholic capacity returns to normal.

In the near term, we expect that the below the knee seelye segment of our peripheral business will recover the quickest followed by the above the knee patience with qualification and a slow gradual recovery and the coronary market.

Court cases, maybe slaughter recovery to recover to a steady runrate due to patient anxiety competition for calf lab time reduced to hospital the hospital referrals and physician reluctance to fully re vascular rise difficult cases under these circumstances.

Would you not anticipate a large backlog of coronary or seelye patience. Many of these patients have either been treated suffered death or in the case of seal I patients. They may have had an amputation.

We expect that many of the postponed clauda can procedures may still be performed over the next four to six months.

The recovery may be a symmetric across the U.S. with the northeast progressing much more slowly than the Midwest or the south.

Generally we think hospitals in the hardest hit areas will be cautious about using restricted access, but these restrictions will ease over time and our sales rap raps will be routinely invited back into most calf labs as the crisis subsides.

We expect that patient referral channels will be restored and over the next few months patients will once again moved from clinics diagnostic catheterizations to intervention.

Oh be l.'s that are limb salvage clinics focusing on the treatment of seelye have generally remained open throughout the crisis and they will most likely lead the way in the recovery.

We believe cope with 19 may become a catalyst to accelerate patient migration to obey cells.

Selecting a patient preference to avoid the hospital setting.

As a result of yells may come back faster than hospitals and are likely to play an important role in fulfilling capacity requirements for seelye and clonic and patience.

We do not expected vaccine or other therapeutic options will be available in 2020.

So some disruption will continue for the foreseeable future.

We also do not expect that the virus will return in the fall with the same intensity, we experienced over the past few months.

These assumptions are best estimates at this time.

Enclosing.

Our confidence is rooted in the resilience of our employees.

Size culture, and our collective dedication to our mission.

Through the first two thirds of this fiscal year, we reached nearly 60000 patients in need and achieved double digit revenue growth.

Although the pandemic, we'll have a negative effect on our short term financial performance a long term fundamentals of our business remains strong.

We serve large and growing markets and perform coronary artery disease, we derive significant competitive advantage from the safety and efficacy profile of <unk>, we have a large and robust sales organization with deep clinical Akkuyu men.

We have stayed close to our customers throughout this crisis and we are well prepared to support the rebound during the expected recovery period.

With a solid balance sheet access to capital no long term debt and strong gross margins, we will persevere through this pandemic and resume or double digit growth trajectory when covert 19, subsides and the healthcare system recovers.

Thank you for your attention. This afternoon, we will now be happy to take any questions. You may have so even if you would please repeat the instructions for the <unk> that would be great. Thank you.

If it was like that's the question over the phone lines. Please press stars in one on your telephone keypad. He will pause for a month composites one day roster.

Your first question comes from Daniel <unk>.

Philosophy of S.C.D.

The lyrics aligned so.

Thanks, So much guys for taking the question and thank you so much for the the color that you provided on the recovery Scott Rhonda as we think about Q4 or however, you they talk about not having the benefit of these large end of court orders can I guess my first question is can you.

Quantify that a little bit you know how much of that is normally.

Oh, what percentage of two for revenue with normally these end of quarter bulk orders and then I have one <unk>.

Sure Daniela I think the the way that I would look at Q4 is that we are most likely to see organic revenues throughout the quarter. So in other words are device sales will probably correlate quite well with the are the cases that are performed and as Jeff said you know so far.

Through the month of April we've seen about just over a 50% reduction in case volume and we pretty much expect that that's going to continue through the quarter now as I indicated there are factors that could accelerate our growth and those are you know as I described a number of the environmental factor.

That may improve over time, but right now I think that that's a reasonable estimate for how we will what you can expect us to to do.

Okay. That's helpful. And then my next question is on the the backlog. It first first part of that is that right to interpret that April and the bottom that Nader and while you expect a significant reduction you're seeing improvement from here and then the second piece of the question where does the where does.

Feel I'm sorry, the qualification Haitian that could be made up that back while the patients that could be made it where did that fall in the priority at procedure backlog work down for a castle.

That's trying to make up procedures against across a bunch of service line thanks to much.

Yeah, Thanks, Danielle I, I think actually as I said it it it.

The majority of the impact on our part of can patients principally comes from their anxiety to present at the clinic.

So the the patient population as you've seen not just in C.D. or P.H.D. that kind of across medicine has demonstrated some reluctance to come to a hospital or to come to clinics and that's really the major impact on.

The treatment of of <unk> I think for most of the sites that we interact with that are either hospital.

Centers or O.B. else, who treat plot of could patience I I believe that for those sites. The treatment of these patients is relatively high priority.

Difficult challenges convincing that patients to come back into the system and really to replenish that referral channel network. So so that is the that's the major impact that that we will feel and and like I said, a restoration of that will probably occur over a four to six.

Timeframe. So we think that's going to take some time.

What was the first question <unk>.

Backlog on patients.

Oh, sorry, I think Daniel what was your first question I missed it yeah, I think [laughter] just is that right.

I couldn't you remember cat is it right to interpret April as the the Nader and it's stable to improving from here or do you think it could get incrementally worse from here I guess, that's what I.

I think that that I I think that that's fair and as we indicated although it's early as we indicated we have seen a modest increasing cases.

As as we came to the end of the month of April. So I think right now it's fair to <unk> to assume that that would be the nader.

For the corner.

Great. Thanks, so much.

Thank you.

[noise] shorten that's question comes from the line of <unk>.

Oppenheimer Carolina's open.

Good afternoon, everyone hope, everyone, a safe and healthy thank you for taking my questions.

Scott extra give me just just hopping on in between multiple called so in case, you mentioned this and I just briefly her again you'll talk about.

Quarter in in Tory I guess more broadly speaking.

Average level of inventory in the field that you guys think about and could you help thread the needle as you talk about coronary volumes returning to normal you know within six months or so just kind of help us hi, both of those together.

Yeah, I think it's difficult to do that as we as we talked about inventories we normally wouldn't wouldn't disclose what we what we think are inventories in the marketplace, mainly because we don't always have perfect.

Visibility to that number I think as we as we think about coronary you know the impact on on our corner business really is not related to inventories most of our the hospitals that we interact within coronary don't keep actually very large inventory of our product. The challenge that that we have in coronary is as such.

Thing, that's now being seen across the entire market and that is this.

Rather remarkable reduction in patients presenting T.E.R.'s, there's been a large reduction in STEMI activations and honestly, we we've seen a a a large reduction in diagnostic catheterizations. So as a result, the pipeline of patients in coronary is depleted.

Honestly were were perplexed by this we don't understand exactly right now what has what is happening in the corner and marketplace. I. This is something that will just have to watch over the next couple of months as more states, a resume and return to more elective procedures as patients.

<unk>.

Increased confidence and and are willing to come back to hospitals and finally as Catholic capacity continues to improve. So this is just to something we're gonna monitor a here in May and June and we'll give you further updates on that the next time, we meet.

Got it is scuttled finally, my my final question.

You guys have your own <unk> standalone reimbursement codes on the on the pad and the cat side hopeless understands you know how you see procedures returning to normal.

Within the let's say pond or can do you will see the same level of return for your competitors also.

If we could compare and contrast, how C.S.I. is positioned versus versus others. In these two segments also more longer term, how do you see the pricing power.

You know as hospitals come out of isn't the the financial devastation what does the impact on pricing power vis, let's say you guys devices and others more broadly. Thank you for taking my questions.

Yeah I would.

So in terms of the of the pricing power that that we may see in the in the marketplace.

It's difficult to predict at this time, because we generally focus on patients that have more severe disease I mean, our R.C.L.I. patient population R.C.A.D. patient population is a group of patients that have a have a high degree of I met medical need and you know we expect.

That these procedures will will continue to be performed and and we'll be and will continue to be paid for we have enjoyed a very stable reimbursement environment over the course of the past six years and we do anticipate that that that will continue for the foreseeable future.

You know as as we think about the competitive environment quite frankly, I'm I'm a bit hesitant to comment only because we are so focused right now on managing our own business through there's a covert 19 pandemic.

I can say that I think it's an important competitive advantage for us that we have products that can improve the efficiency of tear I think that most.

Physicians will be seeking products that allow them to reduce the length of stay for their patients and reduce the likelihood of of Rehospitalization. So as Ron dimension. You know the are are the ability of our product to be used for radial access and it's your other access sites will <unk>.

Celebrate a patient throughput in a lot of these clinics by speeding time to emulation, reducing bleeding complications.

We also expect that our our exchangeable device will be very important as a physician's are more likely to treat patients fully to fully revascularizations their patience and not bring them back for multiple episodes of of care. So those factors you know the the the fact that are.

Really.

Is itself so that more efficient type of care combined with the the fact that we have very stable consistent and well known reimbursement I think positions us quite well you know our competition has has those same characteristics to varying degrees, but I I can't I can't really.

Comment on on how they'll come through this at this time.

Thank you.

Okay.

You are and that's question comes from.

<unk> question comes from a line of Chris Pastel of <unk> shoreline. It's open.

Thanks, Scott teams worth that are down 53 per cent number in April between the critical point area. So it must have business just to give some sense of of how they each fair.

Yeah, I I can't give you the exact numbers, Chris but generally the way I would look at it is that are seelye business. The critical him a scheme yeah patient population I remained quite steady throughout the month of April these patients when they present don't provide the option.

<unk>.

Postponement. So you know that is read that remain quite steady the coronary patient population dropped fairly significantly and the <unk> dropped the most I mean, I think our our clonic and pay the patient population subsided quite substantially so I would give you.

Kind of those three ranges with seelye being fairly steady coronary being somewhat in the middle and then caught a camping lowest.

Okay.

And then I'm curious, how you reps and finding environmental restricting access to cast Wow.

<unk> in particular requires a fair amount of sports for many functions how difficult has that been to.

Current.

Some of that virtually in that potential risk in terms of utilization, where doctors or perhaps not picking up your devices, because we don't feel as comfortable maybe with some of that supported place.

Yeah I, it's a great question, Chris <unk>, you know first of all it's been absolutely remarkable in quite rewarding to see our sales reps respond to this challenge.

Our sales organization is rapidly adopted virtual training tools, we we have Ah successfully now.

Supported cases remotely we we have conducted education programs remotely.

And and frankly have have a responded quite quickly to this you know it's interesting when when faced with this type of challenge I've also seen that our customers have been much more willing to adopt these tools and it it strikes me that perhaps some of the challenge we've had with this over time is that physicians have not been.

As willing to adopt remote education tools and now in an environment, where sales reps and other support or not present in the Catholic you know, they're very willing to adopt that and to contact our people in stay in close contact throughout a procedure. So I think it's I think we're we're getting we're.

Doing pretty well with it as we as we look at how this might affect us going forward.

Two two comments number one as states are coming back on line and allowing elective procedures to continue we are seeing hospitals established procedures for sales reps to re enter the hospitals, they're varying they differ in various places some hospitals are requiring sales reps too.

Bring all the P.P. they need a others have other requirements, but but we are seeing that open now in cases, where there have been you know where the the virus has more severely affected the population, let's say in the northeast we do expect the restrictions will stay in place for awhile, but in other places like the Midwest in the south.

Oh, the restrictions either never were put on or or now I have been used so I think we're going to see that he's probably over the course of the next several months and as we get into that September October timeframe, I think the vast majority of hospitals will be allowing.

Sales rep accessed once again.

The last point I would make is that what we have found during this crisis is that.

You know for the most part our procedures have continued many of our sites have continued to perform procedures when <unk> when required and they've done so mainly because they're strong believers in our technology I mean, it's remarkable that R.C. a lie business really sustained itself throughout this crisis and with that tells me as we.

Treat a very important medical need our customers are very comfortable using our product and our product is really important in providing care for these patients. So I I hope that answers. Your question I I can't get a whole lot more specific than that Chris I'm sorry.

No that's helpful. Thanks.

[noise] once again, if you'd like to ask the question over the phone lines to suppress star than one on your telephone keypad <unk>.

And that's question comes from the line of <unk>, a fleet Street capital for lines open.

<unk>, So I was curious.

What's your C. in terms of response from physicians in terms of.

Has there been any transition from kind of a panic mode.

Wired to some kind of.

Or glasses and all the approach to pacing <unk>.

Beginning of May.

And if not already so d. would 'cause paid any.

Fundamental change in the landscape as it relates to locate you know procedures way procedure.

Itself.

Okay cool.

Yeah. Thanks products. So yeah, we have seen a response from positions I think at this point most of our customers are beginning to transition to the recovery phase <unk>, we are through a variety of surveys and other tools staying and very close contact.

Act with our customers and I I think that there is a a rising amount of expectation now that they will ah resume procedures here in the.

May June and July timeframe, so as I said on my comments, we do expect you know this recovery to really begin in earnest in in June and July and and I think a lot of that is driven right now by by rising level of confidence amongst the medical community.

Regarding the any fundamental change I I don't know that I would refer to it as a fundamental change, but we do think that they they this covered 19 crisis could serve as a catalyst to increase the number of patients treated it office space Labs, I I do think that the obiols can provide a.

Source of patient care to off load capacity from hospitals, and I think it maybe a a sight of service where patients feel more comfortable presenting for intervention knowing that they're they're only for a short period of time and they're not having to expose themselves to the hospital environment.

Not in our view that isn't necessarily a negative thing, but I I think patience may perceive a obey all environment as being safer for their intervention.

So you know, we we may I I don't think it would be a fundamental change, but we may see and increased number of patients treated in <unk> and there'll be else may play play a really important role in providing this capacity, especially during this recovery period. So.

That's that's that so where do you any other questions.

Thank you very much for your thoughtful.

Okay, great. Thank you.

You are and that's question comes from line of Jason Bedford of Raymond James Your line is open.

[noise] good afternoon. Thanks.

She quick questions can you talk about new centre ads and is it safe to assume that you've seen a bit of a slow down in new center as and when do you see folks coming off the sidelines.

Actually our new center additions, Jason we're we're doing quite well up until about a march 9th. So we we're we're on track with a new centering Roman I mean, clearly sense that new centered enrollment as as nearly stopped in fact I would say that it has we we simply haven't been in Rolling news.

Since then and and I would I would expect that we would not see a resurgence of newscenter enrollment until we see the restrictions lifted on sales rep access so that we can get into sites and training educate sites I do think that there is a demand for training and education that is out there.

And we've witnessed that as we have run are virtual training programs for a new customers. We've had very large attendance on these programs and have a large backlog frankly have accounts that will be training and educating when we can get back into sites. So no.

I think it at this time, you know new centered enrollment as has stopped but we would expect that it would resume as we can get access to sites again, Jason I can actually provide the actual new accounts for the quarter if you wish.

Peripheral we opened up 37, new accounts and 21 on the corner inside.

Okay. That's all for those are not too far off from from normal numbers. So.

Okay.

The other one just in terms of the cadence here.

In response to.

Trends in April.

Like Seelye was steady coronary drop fairly significantly, but claude <unk> above the knee, let's call. It the most but then it thought earlier comments from me ramp perspective.

Steady I thought above the knee would wrap a little quicker than coronary is that a fair characterization of what you expect.

Oh that is correct yeah, Yeah that you you you have stated that correct.

So why the the lag in coronary going forward relative to above the knee versus what you saw in April.

Yeah, I think what what we're saying is that what we saw on April was a a <unk> at feel I remain fairly steady Claude <unk> dropped off mainly because the treatment of that patient population is a more elective procedure because patients are basically experiencing pain on exertion.

Physicians can postpone the interaction.

A a with that patient for a a little longer period of time. So as a result, many of those patients are known their identified they're waiting to come back in and when procedure starred we expect that some of those patients will will come back out over a period of four to six months, we think that.

The medical while back half option will be able to address that that full capacity backlog in the case of coronary in this circumstance you know a lot of these patients with the reduction in STEMI Activations.

And a reduction in the diagnostic cats out there.

It's it's rather studying that these patients are not coming to the hospital when they have an M.I., but you know this is being observed across the country. So as a result, the referral pathway or the the the referral of these patients seems to really have been depleted and as a result, it it's going to take time to.

Build that back up and and that is we expect they'll take about four to six months. So there's a there's an underlying I think what might be the source of confusion here. Jason is that there's there's an underlying population in the coronary segment of our market that presents with STEMI or.

Unstable angina and must be treated quickly that is kind of a baseline that always is going to be there, but when you think about trying to restore that.

Patient pipeline overtime, you think about restoring that referral pipeline that will take longer. So that's why when when you think about the reduction in April it it went C.L.I. coronary.

Clauda can't when we think about the recovery, it's going to go see a lie clotted can coronary.

Okay.

Yeah. It does I'm guessing there's there may be a sight of service.

Going on as well, meaning obiols opening up a bit earlier than hospitals.

Yeah, I know there could be I mean, they're they're also will be competition for calf lab time in hospitals, and and you know there'll be other factors that will that will favor the old yells Ah over the hospital, probably early on as well.

Okay alright, thank you.

Thanks, Jason.

Because your final question comes from the line of Margaret Cats or of William player. Your line is open.

I think for taking the question. This is branding on for Margaret kind of following up on on the last discussion there and you have any idea of what kind of treatment passed away or the diagnostic pathway is for some of these delayed peripheral procedures and by that I guess, what specific we need the lines of from diagnosis treatment.

Just trying to understand are we with senators close right now re kind of building maybe like an air pockets that we might see going forward to the next few months given the lack of patient pipeline being built so any color around that would be helpful.

Yeah, we're in that I I think would you can expect to see in in a C.L.I. is that those patients are rapidly move through the system. Many times. They may present at the E.R. and other places and and and their rapidly move forward for care and the in the case of plastic and patience.

We'll be talking about a month I think you can think about this as as two to three months from the time of patients is for scene as they move through clinics diagnostics.

Monitoring other a test and then onto an intervention for their qualification. So probably you know that two to three months time frame for that population.

Okay. That's that's helpful thing and then just one other one for me as we look at you guys are obviously uniquely positioned kind of in the L.B.L. outpatient setting <unk> I guess this is you with your kind of the sense in the field the O.B.O. <unk> market have the capacity.

To kind of take on meaningfully more cases, so we take two to three months of cases and push them forward will be well they'd be able to take the capacity it'd be spread out over a long period of time any any details run that would be helpful. Well. Thank you.

We do believe the day that there is adequate capacity in the O.B.L. segment to to contribute to the recovery. So yes, I I think that there is adequate capacity and you'll be able segment.

Thanks.

Okay. Thank you.

There are no further questions over the phone lines at this time I turned to call back over to Scott word for final comments.

Hi, very good he and thank you well since there are no further questions will conclude today's call. Thank you everybody for joining us and please stay safe we look forward to updating you again next quarter. Thank you.

<unk> comfortable you may notice or not.

Oh.

[noise].