Q1 2020 Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby and thank you for your patience.
[music].
Hi, gentlemen, thank you for standing by and welcome to the Seattle first quarter 2020, <unk> earnings Conference call.
At this time all participants on in listen only mode.
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Thank you operator.
Good afternoon, and welcome to this yet trusts first quarter 2020, <unk> earnings conference call.
I would like to remind everyone that endeavor. Most today. We will include statements that are considered forward looking statements within the meaning of United States Security slows.
Addition management may make additional forward looking statements in response to your questions.
Forward looking statements up based on management's current assumptions and expectations of future events and trends, which may affect the company's business strategy operations all financial performance.
Detailed discussion of the risks and uncertainties that the company faces is contained in its previously filed annual report on form 10-K, and quarterly report on form 10-Q that the company filed this afternoon.
Actual results may differ materially compose expressed or implied by the forward looking statements. The company undertakes no obligation to update well review any estimate projection or forward looking statement.
I would also like to note that future use its investor relations website to publish important information about the company, including information that may be deemed material to investors.
Financial and other information about skin trial is routinely posted and it's accessible on the Companys Investor Relations website at Www dot intra dot com.
Today on that coal rehab, Jeff Nugent interest chairman and Chief Executive Officer.
Little Gentris, Chief Financial Officer, Senior Vice President and Treasurer, and Cook goodness senior Vice President of worldwide sales I.
Ill now turn the call over to Jeff.
Yeah.
Good afternoon. Thanks Ali.
Thank you for joining us today.
I want to welcome you to our first truly virtual earnings call.
On the call today will review, our first quarter results and provide context and the impact of the code at 19 endemic to our business.
We'll also discuss or strategy and confidence on moving ahead, including the steps that we are taking to strengthen the focus on our core rest of products segment.
Well, we're helping our customers to drive recovery on an individual practice level.
Finally, we will outline measures, we're taking to preserve cash and financial flexibility through these uncertain times and to maintain the levels of operation necessary to position ourselves for the long term.
Before I discuss these issues I'd like to say that first and foremost like many of us today.
Our hearts are with those impacted by the Covance and dynamic.
We continue to prioritize the health and safety of our teams are partners and patients and have taken steps to ensure that restore essential workers and customers are mitigated.
We are constantly monitoring evolving situation in evaluating the impact on our business and we will remain nimble and our strategic responses and our ability to quickly adapt to these changing conditions is already provided increased credibility and competitive advantages as our markets begin to open.
With that said Oh shift to a discussion on our first quarter results.
The first quarter Central recorded net sales of $16.9 million.
4% decrease year on year.
Turning first to our breast products segment.
She intra recorded strong first quarter net sales of $12.5 million, which equates to a 28% year over year growth.
Growth was driven by exceptional performance on our core breast implants, and reconstruction related tissue expander segment.
Which excluding biocorneum grew at 32% year on year.
This demonstrates our continued strong market share gains, particularly during the same period, when our largest competitor announced us revenue declines of over 30%.
Our tissue expander segment experienced another record quarter on growth.
She intros Q1 breast product performance is clear evidence that the continued positive traction and market share gains we are seeing their best in class fresh products portfolio.
Still despite the relatively strong quarterly performance, we began to see a reduction in breast product shipments in the second half of March.
As result of the covert 19 and moratoriums on elective procedures.
This trend has continued and will impact second quarter revenue.
All will provide more details on these impacts in his remarks later in the call.
Despite the slowdown we were pleased with the consistent demand we were seeing before the covert 19 pandemic began to impact the overall category.
That said she entry remains open for business totally open for business.
Manufacturing facilities in Wisconsin meant Montana remain operational.
We continue to receive orders and supply product to our customers.
And we are taking measures to ensure that we are prepared to meet increasing customer demand as markets begin to reopen and normalize.
We've also implemented a field support strategy, which leverages the flexible nature of our commercial infrastructure.
Virtual capabilities, and our ability to adapt to changing market conditions to assist our customers to accelerate their individual practice recovery.
To this end we've taken the following steps.
We've initiated a new Sientra professional support program to stay closely connected with our board certified plastic surgeons and to provide them with assistance on some of the most critical issues, they're facing through this crisis.
We've partnered with you said in society to serve as the exclusive host of an ongoing webinars series to enable peer to peer communication training and education.
Which has been attended by over 4200 board certified plastic surgeons over the past eight weeks.
Many of whom are not currency intra customers, but in a poll conducted during the last women are.
Approximately 60% of the respondents reported that they are interested in working with see entre as the reopened their practices.
We have plans in place already begun.
Our sales team to engage directly with these customers.
An extension of this program.
So the answer is also sponsored a series of practice management Webinars and one on one consultations with our loyal customers to ensure that the of the plans and programs in place to succeed in the do environment.
To date.
We trade hundreds of surgeons and practice staff members.
With a 91% out of 100 rating for providing content that was valuable in helping them plant for recovery.
We have already launched a new online web site.
Right the recovery Dot com.
Which contains tools and support to help our practices through this could pandemic and to prepare them to drive the re entry into the market.
I encourage all of you to visit the site to better understand how we are quickly adapting to the most important professional needs that exist today.
She entries also launched its digital patient acquisition pilot to create patient awareness and drive virtual consultations in our physician offices.
While early the results have been promising very promising.
We are seeing patients book virtual consultations.
Within days of the start to.
Which reinforces our belief that patient interest remains strong and will materialize into surgeries is individual practices reopened.
See entrant tends to extend the pilot two additional accounts through the balance of the year.
Although we are in the early initial stages of the implementation of some of these initiatives. We are already beginning to see results with account conversions and order placements and we'll continue to adapt as Wheeler.
Our expert sales team of plastic surgery consultants remains in the forefront of this customer engagement strategy.
They are completing extensive training to employ these initiatives and to help or surgeons rebuild their practices as surgeries rebound.
As these procedures increasingly come back online.
Which we are already see occurring in several regions.
We are supporting our customers with proven practice management strategies.
Patient engagement tools.
And do sales promotions to drive accelerated patient recovery as well as higher practice profitability on our premium products.
We believe that compared to our larger competitors. We are quickly adapting to come to customers real time priorities and to expect to be competitively advantage from a relationship building efforts through this recovery period.
The historical success of our marketing programs and our best in class for plastic surgery consultants support our continued confidence in our ability to drive market share going forward.
The cancellation of elective surgical procedures across the US has continued into the second quarter and we expect second quarter results to be heavily impacted by a decrease in breast product procedures.
With that said states are beginning to relax restrictions on these surgeries and we expect a list of states to grow in the coming weeks.
We believe our marketing initiatives will position see intra and our customers well for the expected return.
We continue to prioritize our reconstruction business, which we expect to be the in the earliest phase of market recovery.
And may benefit from a bolus of pent up demand as recent as restrictions on these procedures are lifted.
We believe our reconstruction business will outperform other elements of our portfolio through 2020 and beyond.
As we continue to benefit from clinical superiority.
With our implant and innovative elagolix to expand or portfolio.
As well as less selective nature of reconstruction procedures.
We're also excited to announce the beginning of the expansion of our best in class.
Most products into select international markets with the signing of a distribution agreement with medical Una in Japan.
And during first quarter in association with medical Una, we filed an application for approval with the Japanese pharmaceutical and medical devices agency.
And although approval timelines are hard to predict.
We expect to obtain approval in the second half of this year.
Turning to a mere dry segment.
We achieved sales of 4.5 million in the first quarter, which equates to a 43% year over year decline.
We believe the decline was primarily attributable to the impact of Copel 19.
Historically, approximately half of our mirror drive sales have come from outside the us.
With the majority of that share concentrated in the Asia Pacific region.
Which was impacted by coven 19, much earlier in the quarter than in the us and remaining markets.
The timing of the crisis in the US came during the final month of the quarter.
Impacting us console sales the bulk of which typically occur in the final weeks of any given quarter.
As a result of the impact on corporate 19, we anticipate that the high dollar value capital equipment sales industry.
Will materially impacted throughout 2020.
As systemic accounts pulled back kind of such investments.
In recognition of this changing market, we've refocused our mirror drive business strategy to drive success under existing customer base.
By concentrating on generating awareness and funneling those patients to our existing accounts, we will shift to driving growth in the high margin biotech segment.
The company will support existing customers to ensure that they have the most effective programs.
Have been proven to attract patients in order that they can continue to grow their mira drive revenue stream.
Leading up to the initial impact of Koeppen 19, we were seeing strong utilization growth in the first quarter, primarily in our plastic surgery accounts.
With over 1600 global console placements.
Absolutely 700 of which are in the United States, we have a large and rich opportunity to drive high margin recurring revenue.
With more cost effective commercial structure.
The company is reorganizing is global mirror try salesforce to align with this focus creating streamline teams of.
Highly motivated business consultants to drive patient generation to mirror drag counts.
This will result in a reduction of headcount.
In addition to the head count reduction that we made in connection with our organizational efficiency initiative, which we discussed in the fourth quarter.
We remain confident that these measures will create a simpler and more cost efficient operation and enable us to create value over the long term.
Paul will discuss the financial impact of these actions in his remarks.
With that I'll turn it over to Paul.
Thanks, Joe.
I'll comment on our first quarter 2020 results before speaking to our strategic response to covert 19.
And the financial applications of our incentives.
As Jeff mentioned in the first quarter 2020.
Thats right achieved net sales of 16.9 million, which equates to a 4% year over year decline.
Net sales for the first product segment totaled 12.5 million in the first quarter 2020, a 20% increase compared to 9.8 million for the same period in 2019.
First quarter 2020, net sales premier driver 4.5 million or 43% decline year over year.
Gross profit for the first quarter was 10.1 billion or 60% of sales compared to gross profit of 11.1 million or 63% of sales at the same period in 2019.
Operating expenses for the first quarter, 2020, or 37.1 million compared to 36.9 million for the same period in 2019.
Excluding a 6.4 million noncash impairment I've sort of intangibles lead to verify and restructuring charges totaling 1.7 million operating expenses in the current quarter decreased 8 million dollar compared the same period of 2019.
Net loss for the quarter 2020 was 28.6 million.
Or negative 37 cents per share loss compared to a net loss of 26.5 million or 91 cents per share loss for the same period end 2019.
On a non-GAAP basis, the company reported and adjusted EBITDA loss.
15.5 million for the first quarter.
That's an adjusted EBITDA loss of 21.1 million for the first quarter 2019.
Turning to cash net cash and cash equivalents as at March 30, Onest 2020 was 112 million.
Fair to 88 million as of December 31st 2018.
Hey, our financial Health, we are taking the following action.
We are reducing headcount by approximately 50 employees, including 28 relate to the mirror dry business part of the biotech utilization focus.
These reductions on additional reductions announced as part of last year's organizational efficiency initiatives.
We have placed employees on furlough and job responsibilities were not conducive to work from home environment, all from like a decline and workload the math.
In addition to a temporary reduction to executive compensation that was previously and now ranging from 10% to 25% we initiated a temporary tempress that salary reduction for all management level employees, we're controlling all discretionary spending including non essential travel and meeting related expenses, we are reducing capital expenditure.
And delay non essential projects.
You are taking these measures in addition to our organizational efficiency initiative, which prior to the enactment of these incremental measures was on track to reduce annual annual pre tax operating expenses.
Approximately $10 million and 2020 and another $5 million in 2021.
Taken together, we are forecasting 2020 annual operating expenses of approximately 105 million to 110 million compared to 140 million in 2019, excluding impairment and restructuring charges.
We've also identified additional content assays further cash preservation measures put necessary.
I'd like to note.
Allocating incremental dollars to our core press product segment to provide Maxim investments to drive recovery with our physician partners. We expect to continue driving share gains accelerated in 2019 and continuing through the first quarter 2020.
In April the company applied proponent of the small business administration Paycheck protection program.
According 19, ready and economic Security Act for $6.6 million, where we see the proceeds from this lower on April Twentyth.
In conjunction with the steps taken above we work with the long term debt holders.
To amend our existing 40 million term agreement.
As result of this amendment, we will pay down 25, known or the outstanding debt balance, we just minimal unrestricted and restricted cash amount of 20 million to 5 million and reduce the minimal net revenue requirements.
The amendment increases our trust me commitment amount from 10 million to 15 million extends across three termination date from 12 31.
2022 June Thirtyth 2021, subject to satisfaction of certain conditions, including future revenue milestones. We believe that the collective measures. We've taken to date will provide us with sufficient cash balances going forward and greater financial flexibility and manager operation for the remainder of the Kobe 19 pandemic and thereafter.
As previously disclosed we have suspended all 2020 year guidance.
What I can offer the following directional commentary.
As Jeff mentioned earlier, it's too early quarter Q1, our breast products business achieved strong continued performance things change in the latter part of March as practices Carlos.
Moratorium I'd like to procedure Atlanta effect.
In early April we saw a decline in breast products shipped mess.
And that stabilized during the month, well, we believe will be down by approximately 60% versus prior year in the month of April.
We are starting to see an increase activity in the past week of states have been some restrictions on elective surgeries made to date shipments are running approximately 50% higher versus what we saw on April although too although too early to tell at this represents a persistent trend. We know offices are opening and we do expect procedure case volumes to increase in may versus eight.
Hello, and again in June as remaining states left restrictions.
With respect to Mira dry as Jeff noted earlier, we began to see the impact of Cowen 19 in the APAC region first.
With the greatest impact in United States occurring in March when the majority of capital equipment sales typically take place.
Consistent with this trend and we are starting to see our military business pick up outside you outside the U.S. markets, especially in the APAC region, which has historically contributed approximately 30% of total mirror dry revenue.
We are thinking indicators in China, and Taiwan, Japan that mere dry treatments RV turning.
One of our largest half will change the Beijing has completed a mere dry procedures that pre cobot levels.
We have Q2 orders for Japan, Taiwan, and a handful of other APAC and EMEA distributors to date.
Aesthetic practices begin should we opened in the United States and our business consultants reengage within the United States, We hope to see a similar trend in the U.S., but increased utilization driving increased biotech sales.
We expect minimal sales and you less market for quarter, two with the majority of our revenue in quarter, two coming from the Asia Pacific and European markets.
I'll now turn the call Dr., Jeff for concluding remarks, Jeff.
Thanks, Paul.
Let me close today by emphasizing what is really unique about see entre and why we remain confident in our ability to emerge in a position of strength.
This is an extremely nimble company.
That is shown our ability to adapt to significant challenges.
The one we're facing now is certainly the most challenging.
We have quickly taken.
The immediate steps to build on our core advantages by taking the lead in filling an important real time need among our plastic surgeon customers and by concentrating our efforts on helping them to rebuild their practices more quickly which is opening more doors.
There's with new customers and earning increased loyalty from existing ones.
Sientra is clearly positioned to continue on this path at a time with the speed of adapting to new conditions is critical.
There are plenty of historic examples that proved that organizations, who respond quickly with meaningful points of difference succeed and win.
I wanted to thank all of our employees customers and shareholders for their support their patients and I wish you all well in the challenging times ahead.
With that let's open up the line for QNX.
Operator, thank you.
Ladies and gentlemen, as a reminder to ask the question do we need to press Star then one on your telephone.
Withdraw your question first the pound cake.
Yes, thats still wanting to ask the question.
Please standby, while we compared to Q.
My first question comes from the line of Margaret Caterpillar with William Blair. Your line is open.
Hi, Good afternoon, guys. Thanks for taking my question.
First of all thanks for the the comments on April and May and those are very helpful.
Yes, maybe we can go back a little bit further as well on that.
Yes, Paul you may have some context, it's getting your your time at our again, but now as we look at.
The old market models that we have going back 2000 for a minute seemed like even in counted Oh wait downturn, maybe you saw a couple of quarters of weakness down 30% or so and it seems that kind of rebound again.
Your comments on April and May.
Year over year basis, they're probably a little bit more discounting.
Offices are closed but.
Do you expect something similar I guess is what we saw no way to know nine and if you can kind of compare and contrast that to timing that would be helpful. Thanks.
Okay.
Yes, let me think I think as far as referring to great question, if you're referring to like the last recession. If you look at Sps data for instance.
Procedures were down 11% for the first year and actually fell off another 7% hereafter.
I think what's different this time is that it was still abrupt are the plastic surgery market. So we are your you get all the surveys we get as well.
Thanks for saying you know the procedure volume without any per se on April so wait and see that necessarily our businesses. We also have a fairly strong recon market.
I think right now its story to tell if it's going to follow that pattern or is getting more rather than that meeting here and then come back about back neatly next year I visit this is different.
Timeframe. This time is going to work I do believe what's going to change. So I think it's going to be a channel indicate channel went back we differently I think it was right brought back at last recession.
And based on plastic surgery procedures like and plan for the first and they might in the last out.
Other growth to date the last eight years, it's the on a non core markets I think the fact that we saw the plastics, where probably thats geared to recover got to you know under recovery occur or that they had a most diverse practice as our fashion the strongest they will probably are.
They were probably impacted.
The impact of this quarter, but they're going to be the best able to turn the thing around I think versus maybe like non core medix spot channel. So that's we're waiting for to see where you want to see how the opposite start opening over the next month or to oversee how we did a survey at 3% of our county, we're seeing doctors in April one of our technical survey from Jeff You May have some more note that the.
Yes, and I think part of this too is that I think we will see the service that indicate that at least 35% of the state.
I have met the criteria from CDC in the White House.
And that number is expected to grow to 40 states within the next two weeks so.
We believe that Theres.
Theres similarities or differences here Margaret.
I do.
I'm encouraged by what I'm seeing.
Working closely with our.
We're plastic surgery group with some of the innovative.
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Programs that we've put in place.
That are geared at jumping in to give them the information that they need because.
They're not clear on what to do.
And I think Sientra has stepped ahead with some of our exclusive sponsorship of somebody is setting society programs close.
Number of other things that we'd be happy to share with you.
Okay, great. Thank you.
And just kind of that so my question from a narrower track perspective.
Yes, I think breadth tends to be a little bit more resilient patient to take some time to go through these decisions and make that decision usually try to stick with it.
As you look at mirror dry.
It sounds like your installed base still grew this.
Order that should we expect that installed base to continue to grow for years that can be maybe a trough in the coming back up and maybe a similar question on utilization, if you're seeing folks reschedule the seat.
Well the second 0.1st and we're encouraged by the increases in utilization which is.
Part of the.
Part of the basis for the strategic shift that Weve.
And when you look at it fundamentals remain intact.
Sure Mirror dry business model, but we're making adjustments to it to obviously focus on.
Balancing the.
Balancing the potential for growth while.
Increasing our ability to reach cash flow positive in 2021.
That is helping us focus on.
Okay, and just a tag on one more in the my last one, but I think Jeff you had referenced.
Striving for cash flow breakeven or positivity in 2021.
Does this change discover 19 change that path at all at this point thanks very much.
Did it really doesn't Margaret and in fact this.
What's behind our.
Greetings initiative that is what we found in dealing with a number of plastic surgeons.
Yes, there are two choices the each surgeon can choose one is too.
Right the recovery whenever that happens and.
The alternative is to be more assertive be more proactive.
In driving the recovery for their individual practice so.
That's the fundamental core of our.
Increased aggressiveness in driving this recovery.
And you will if you can take 510 minutes look at that drive the recovery Dotcom website, I think you'll see the the details behind it we put a lot of work into it.
Wonderful thanks, guys.
Thanks Mark.
Thank you Martin.
Next question comes from lot of Jon Block with Stifel. Your line is open.
Thanks, guys. Good afternoon. The first one in the breast division, which was.
Certainly very strong I think about 32% ex corneum.
Already we noticed an inflection point and market share so any color on that inflection point and then anything on the growth one to 20 brass between the recon division versus that of augmentation and then I've just got to follow.
John I'll start by just to.
Heating the fact that we have a consistent.
Momentum on the breast products side.
That is.
Has been led by this.
The increase superiority of our reconstruction portfolio.
However, we're finding balanced growth between the two different.
Components.
That.
There's really nothing new there then.
The increased attention prior to coded 19 hitting.
We saw the.
The strong growth continue.
We had some effect in the latter part of March.
But given that it's just a another validation of our go to market strategy working and as a.
Sometimes reluctant to point out.
It's an indication that when our largest us competitor is down by over 30% year on year were up over 30% year on here I think that generates a conclusion.
Well again.
We continue to be confident in the.
Okay. Let me turn asked a question maybe a different way sorry, so to your last point. It again I think yes, you have been taking share that's been clear, but this quarter. It seems like there was a step up in the rate of share gains. So clearly we're dealing with the koby 19 World Importantly, now and likely for several months at least who knows but we can't let me ask in India.
From way upon the resumption of any sort of normal see whatever that may mean in the marketplace are you as confident at the rate of share gains that we just saw that that's sustainable going forward I'm, sorry that I've got a follow up.
No John it's a it's a great question and.
You know that that really borders on guidance in terms of how we can predict continued share gains.
There's so many there's so much uncertainty in this.
No I can't be per se. So other than knowing that we are increasing the advantages that we have particularly with some of these recent initiatives that we've started.
I fully expect that.
That diversions of market share to continue.
That's very helpful. Thank you Paul just pick one of things more for you just yeah. That's results in the Opex guidance has really very impressive and I just want to be clear that the mirror tried capital reps I guess from the company's perspective, not move is permanent maybe that strategic move was accelerated by coping maintain but.
Focus on the consumable will remain in the U.S. postponement is that correct.
Yes, I think a good question I think the best way to think of it as the.
Mccain has made to move into the biotech. So we already got focused on this year, but because of Cowen 19, Thats. The field force. The U.S. For example, that's what we have we have now we're going to have 11 business consultants, we won't have more capital wraps now these business consultants will will sell capital equipment, when the opportunity arises, but our focus this year.
On the high margin bile tip business without any independent or any separate capital equipment reps.
That's the 28, we mentioned with the combination of U. S and X U.S employees dealing just within sales from your dry.
Okay.
Hi, guys I think the rest offline. Thanks for your time.
Thank you.
Thank you. Our next question comes from the line Richard Newitter STB Leerink your.
Your line is open.
Hi, Thanks for taking my questions Jamie on for right.
Hmm go back.
Just wanted to go back to some of the commentary obviously you mentioned you're thinking that the April trends progressed products were down about 60% year over year.
Did you get a sense of what that is I don't know maybe I missed that for the near Drybulk net what you're seeing from that presented that breakeven being down year over year on that.
Yes.
Thanks, John.
With that kind of going back to what Margaret was asking for.
Where have you seen that Q different types of procedures from ball for breast implant perspective, and something more in the near dry segment on the priority background with respect to how the procedures actually I'm Gatwick Hopper.
Uh huh.
Got you want to take this one.
Yes.
I'm trying to.
Trying to understand the question, but if you do Paul go ahead.
First of all I'd say, we then we gave more clarity on the press bit as as we can yeah, we see day to day and so you say probably what do we see in April we sold our reconstruction. So tie back to Doug's question, what do we see the first quarter growth.
We must 50 50 recon are both going at the same ranked in over 30% for implants Expanders a record quarter for 'em expanders. So ample we could see that the markets were completely shut down and we were at a nice shipments everyday level is reconstruction you can save one of the hospital influx.
So we get some visibility because the maritime business in the capital nature of it is still very back quarter loaded.
Our visibility right now as our distributors and so we can see is that a 30% our revenue premier dry at historically been Asia Pacific In Asia Pacific has also first back online we're comfortable that we're getting orders and for the APAC business I'm not given a dollar clarity on what that may or may not be.
Ross, we said it can be fairly quiet because the business consultant both are on furlough prior to recently now they're being coming back out of the Reengaging with our account. So the Mira drive business is is a little bit more hard to predict its fifth we actually definitely have revenue we have some significant revenue going to our APAC markets. If you remember Japan is our largest market outside of North America.
Thats, a $6 million last year, and so that business is back and running and again, if China, Taiwan as well so I would say at the quarter with a pack, but we're just not call that you guys until we see more what's happening, but again. This is not a fair quarter. The business is running and we're happy with what we're seeing to date business.
Well here, let me try and asset I just wanted to follow up so basically I was asking why did you guys mentioned the 60% decline further breath procedures in April that was the trend you thought that just curious what the same sort of trend in.
Year over year decline was for the U.S. maritime business.
On the procedure perspective.
Hi, Bob.
Yeah, if you had anything to you what.
Hi, guys have much color on that you us it's fairly quiet in April we saw about 20% of our.
Of our accounts or something my procedures, though that we're connected to our press connect a protocol, but aside from that right now we should reverse we have ordered in house for European and Asia Pacific distributors Am I right now, giving a percentage of what that is.
Okay. Thank you.
Thank you.
Our next question comes from the line of Chris Cooley with Stephens. Your line is open.
Thank you good afternoon.
A question.
Congrats aggressive cost cutting there as well and strong growth.
I guess just two for me I don't want to belabor the growth aspect of a little bit, but I do want to come back to breast business as you put up.
Very strong growth there, we'd look at last year alone.
Think about that business you saw foot roughly a 22% growth.
And centrally a flat market now once again, we put up very strong growth.
In a in a flat to declining market and where I want to go with this is X coded 19 or will it get to the other side.
Previously you all have talked about being a single digit growth over there.
And so maybe I'll phrased the question a little bit differently, but should we take those expectations higher and if so is it a function of growth and.
The recon component or is it it is a growth in dose of and recon overtime. Again. This is Joe X coded 19, just trying to think about kind of a normalized operating environment and I've got one follow up.
Yeah ill take that.
But.
Yeah, I mean, your last year, our implants expanders to about 32% actually year over year on your screen. The Biocorneum business. So it's incredibly strong growth last year in this current quarter again, we had a 32% implant and expand our growth as well so terms I wasn't tracking or single digit growth I've always said this business pretty Colby 19, as a 20% plus.
Business with the ability of but even in a flat market to take significant share from our competitors then what competitors out there any folks in the first quarter us up 32% in the U.S. Yeah. We're very we're very confident that our strategy of taking share a sound it and we believe that it will continue in the current environment. So we.
We've always said the positive fashion, we thought we did I hear what maybe high single digit market share and you know our goal is not to be a number three player in this market and we see a pathway to continuing both on Oregon Recon Recon strategy with.
With the Alex to pull in a German span and the contract sales force in place than our and our best in class.
Implant business, we are seeing a pathway to share we were continuing that model, where the market goes down or up we're going to take share and we will outgrow the market because of that share gain and it's consistent now lets me a third year running.
That helps Chris.
That's helpful compensated.
Just a follow up from the overdrawn business.
No.
Hi.
While the move to focus on the bio tips could you just maybe speak to what this now it looks like structurally when we think about the operating profit contribution from that business going forward not so much just from the product mix shift here in the short run, but more so again once we're able to sort of for the school that 19.
Penn didn't acute.
Materially reduced due to sales and marketing infrastructure. There. Okay. Let's just think about what the profitability of that business looks like now versus say exiting calendar 2019.
That's a great question. Thanks, So I would say flat you want to model the rest of the year we're thinking.
From my but there may be callers may.
Tim console mix, it's running at about 19% tests and 10% console to give you an idea we're talking about and in terms of the U.S. actually Wes we believe it's going to be 40% you at the 60% actually west for the remainder of the year with that said with this new focus.
On that tests, we are driving us toward a profitable or breakeven business in 2021 under this scenario knowing that we got a focus while the efforts on about business continuing to drive value on the air drive business right tip location, but by the fall by the structure, we're doing it where it will turn to lets call. It a breakeven in 2021.
One I know how remodeling our thought process.
Super and if I could just just one quick clarification and you stated.
The for this year 2020, you're looking for Bokee of about 105 to 110 billion Opex just want to clarify that excluding the impairment in the restructuring charges correct.
That is correct.
Well you both of those Chris Thank you congratulations thanks.
Thank you thank goodness.
Thank you.
Next question comes from the Mom, Alex Nowak with Craig Hallum. Your line is open.
Great Good afternoon, everyone.
Perhaps Ron Paul's Sameer dry apacs proxy and the best brass products business is there any reason that the APAC commentary in the relatively quick recovery there won't be a good reflection of the U.S. augmentation breast business and if they impact. It does hold is it fair to say, we could get back to a normal breast volume number and Sam.
September October timeframe.
It is certainly.
Within the range of the scenario. So we've looked at I think.
It's prudent to not be overly optimistic.
Because nobody knows the shape of this curve that everybody's talking about.
And they're going to be a lot of factors that affected.
I don't want to concentrate on the category.
Metrics per se.
Because we believe that theres going to be a.
A fairly broad range among those that are.
Driving their practice to recovery faster than others.
So.
We're looking at our core customer base, which we believe will outpace the average so you put all those factors into account.
And while the Asia Pacific leading indicator is encouraging.
But you don't have spend too much time in front of CNN.
Understand.
Other struggling.
With how to predictors.
But we're getting significant optimism from not only the individual plastic surgeons, but the leading societies aesthetic society Sps et cetera.
So its a.
It's not a tight range of worst case to best case.
So im not trying to for their Kate here, but I do think is.
We're making sound assumptions and preparing our resources to be able to take advantage of it.
As it occurs I hope that answers I mean, just add to that thats, great job and we talk about these different channels, but if you look at plus a static you'd look at the base a procedure, but I'll offer new Jersey, they're not a poster vitamins, Germany as an overnight last so as we're looking at this.
These are postpone that I can't tell whether some will be council theme, but they're postponed the same time as you're solving for law. The cities are shutting down it was a rush to get these procedures done. So August differ his thoughts are opposed to bother you might get from a non invasive procedure and then second if you look our portfolio how does recall how does augmentation, we believe the reconstruction.
Market is a lot more resilient you go back to the Sps data back in the last recession Recon group now coming up also reasons. One if it were still going to get it done because that does change you've got delayed doctors or might you at all maybe switched to recon. So we believe that given our portfolio. A 50 50 that does protect us quite a bit and outside of the mark.
Okay and just another segment I think plastic surgeons are going to come out this maybe different than other they've got their financial ability and the mix of portfolio I think they're the right channel to be and if you're having disruption to the marketplace piece in our opinion.
All right. That's very helpful. And then just a follow up to another question.
You're placing about 60 to 80 maritech hospitals each quarter, obviously some of that's Oh, you asked new last.
And that's just prior to call that both the new sales strategy and once we recover from Kobin, how long will take that they'll ramp the tip utilization to make up from the lower cost of revenue and then with bigger focus on the on the utilization now where do you stand on new product development to go onto the marriage I Council.
I think the best way to put that is that.
We're constantly looking for ways to improve.
Improve the basic functionality of the equipment, but the.
Well, we found is that.
There is a consistent.
Reliability and improvement in terms of procedure time et cetera.
Which is our primary focus and again going back to pull it indicated what's driving this is that we're certainly focusing on a strategy that is going to balance our ability to continue to grow.
While achieving cash flow positive in 2021.
And there are lot of pieces behind that but that's the fundamental objective and we think we're making the right close to be able to achieve that.
Okay understood. Thank you.
Okay. Thanks.
Thank you.
As a reminder, ladies and gentlemen, that's all I want to ask the question.
Our next question comes from Atlanta, Anthony Vendetti with Maxim Group.
Thanks, most of my question I can ask maybe Paul if you could talk a little bit a ball.
Martin profile of nerd dry going forward.
Mark similar both except that higher margin, but as as we move into.
Next year, let's say 2021, what what was that profile look like a little.
So you broke up a little bit there, obviously, you're saying it has hit the profile going to change had 2021 on how or what are what our revenue mix looks like versus 2020.
Right for for a mirror drive, particularly.
No I say right at least at this point.
At this point right now are our focus and it's going to be.
On biotech.
Working and making our existing customer base successful and put our efforts there, but thats where does that put that focus on the team is going to be there as well so that if that won't change dramatically next year that unless we decide to change, but that's our focus right now we're going to remains that business differently, we're managing it from a tip utilization almost only and so the placements will occur.
Sure, but LCOS only.
Right criteria that by an account we normally think immediately turn around and drive utilization of otherwise this is going to be a primarily a tip realization business.
This year our next.
Our next okay, and just to remind to remind everyone <unk> gross margin on that.
Approximately one.
90% on the tips and about 30% of the console actually you as you've got about 35, 40% discount because of distributor markets on the Teps.
So a tip Abbas attempt to 12 in a box 12, and a case supported our the TEP.
So nice margin business.
The focus on.
Okay, great. Thanks.
Thank you.
Thank you next question comes from a lot of power Rose four landfill.
Great. Thank you very much for taking the questions just one for me and I wanted to talk a little bit about the recount business can help us understand where youre at from a utilization perspective with respect to implant and expand there are still being used it can't happen I guess, just we're trying to parse out is how much.
The opportunity within recon is still like low hanging fruit, if you simply capturing the implant share of that business and what needs to change to get closer to what 100%.
Let me answer that Paul because.
We don't want to disclose the specific mix between the two.
But the strategy is to use the superiority of or tissue expanders.
To get into these hospital chains based on the overwhelming superiority.
Of those expanders.
The best way to put it is.
That we have significant opportunity to.
Balance the implant with tissue expander. So in addition to.
Drawing in new accounts.
Primarily hospitals.
There is that upside in addition to and I don't want to quantify it right now, but there is a very significant opportunity to match it plans with the Expanders.
To.
You know at some point, we'll be able to share that with your right now again, but it's a big opportunity.
I would add that I think were less than 15% penetrate into hospital market at this point given the Catherine the contract friend.
So, let's say or about.
8000 hospitals out there about 40, 45% on which to reconstructive surgery. We think we're in about 15% of though so we think the penetration as far to go.
Great. Thank you for taking the question.
Thank you.
I'm not showing any further questions I'll now turn the call over to Jeff engine for closing remarks.
Sure.
I want to thank you all for your your continued interest in support of Sientra.
These are extraordinary times that we're all very well aware of.
And.
I hope that we have.
Right.
Added to the reason to believe what is different about see entre.
I have never been more confident in terms of the advantages that we have right now under these extraordinary circumstances were continuing to gain significant market share.
We've adapted very quickly faster than any of our competitors you had to be able to provide real value added services to our.
Plastic surgeon customers.
That is being.
It's being replay to us with increased support and dose commercial results. So then even I want to to share with you the the additional initiatives.
And like I said, if you have an opportunity to.
Just try out the drive the recovery Dotcom website, I think you'll see a better.
Delineation of what some of those initiatives are so again I. Thank you all and look forward to talk you soon.
Stay healthy and to.
Period. This the priority right now thanks guys.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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