Q3 2020 AxoGen Inc Earnings Call
[music].
Greetings and welcome to the accident third quarter earnings call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is.
Now my pleasure to introduce your host Pete Mariani. Thank you Pete you may begin.
Thank you Omar and good afternoon, everyone. Joining me on today's call is guaranteed that already Axogens, Chairman Chief Executive Officer and President.
Karen will begin today's call with an overview of our third quarter performance and an update on the ongoing recovery in our markets.
Well then provide an analysis of our third quarter financial performance, followed by closing remarks from Karen and a question and answer session.
Today's call is being broadcast live via webcast, which is available on our investor section of the Axogens website within an hour. Following the end of the live call a replay will be available in the investors section of the company's website before I get started I'd like to remind you that during this conference call the comps.
And he will make projections and forward looking statements regarding future events. We encourage you to review the company's past and future filings with the FCC, including without limitation. The company's forms 10-K, and 10-Q, which identify the specific factors that may cause actual results or events to differ.
Really from those described in these forward looking statements. These factors may include without limitation statements related to the expected impact of Cove in 19 on our business statements regarding product acquisition and or development product potential regulatory environment sales and marketing.
Strategies capital resources, or operating performance and with that I'd like to turn the call over to Karen Karen. Thank.
Thank you Pete and good afternoon, everyone.
Our total revenue for the third quarter was $33.4 million representing growth of 17% compared to the prior year.
Our third quarter results were stronger than anticipated as we believe many of our hospital customers became more adept at operating under covered restriction and were able to successfully navigate local resurgence is a COVID-19 cases and continue to serve patients including patients with nerve injuries.
Additionally, we received some benefit during the third quarter from a catch up previously deferred procedures, which we estimate to be approximately 10% of our third quarter revenue.
Similar to our experience in the second quarter.
Our focus on the core trauma opportunity was the primary driver of the recovery in our business during the third quarter.
We believe that the lifting of COVID-19 restriction has led to an increase of daily activities from many people, which in turn resulted in an increase in traumatic injury.
However, we believe that our year over year growth continued to be dampened by lower E. Our volumes in the third quarter as a result of COVID-19.
During the quarter, we believe surgeons and hospitals continue to prioritize nerve repair procedures as elective surgical procedure volumes return.
Well nerve repair can result in positive outcome month after a nerve injury optimal outcomes are achieved by repairing the nerve in a timely manner.
Additionally, in the current environment, the desire to shorten procedure time to increase patient and health care worker safety and minimize resource utilization favors the use of our advanced nerve graft compared to surgically harvesting and autographs for the nerve repair.
Well, we're experiencing recovery and growth across our product portfolio, our advanced nerve graft has led our recovery.
Our friends Nerdy station business improved throughout the quarter with recent station centers resuming breast reconstruction and catching up on previously deferred procedures.
However, we also know that new cancer screenings were significantly reduced for several months during the pandemic and it will take time for the number of breast reconstruction patients to return to prior levels.
As such we anticipate that our breast and artist nation recovery may lag a few quarters.
Recovery and growth of oral maxillofacial nerve repair and the surgical treatment of pain continued to lag for the time being at these surgeries have been more readily deferred.
We understand that patients with nerve related pain have remained reluctant to enter hospitals for a surgical procedure choosing instead to continue reliance on pain medication.
We expect that nerve repair for our own math and pain applications will continue to recover as we progressed through the remainder of the year and into 2021.
[laughter].
Turning now the commercial execution.
Late last year, we rebalanced, our commercial organization toward our largest market opportunity extremity trauma and refocused our team on driving deeper penetration within our existing surgeon customers.
Throughout the pandemic, we kept our sales team and broader commercial organization intact and took the opportunity to provide extensive sales training.
Our sales team developed skills and shared best practices around remote case support or hospital access has been restricted.
We believe this remote support has been appreciated by customers and has expanded our sales teams ability to support surgeons during COVID-19 and beyond.
We ended the third quarter with 110 direct sales representatives in the U.S. a.
<unk> decreased two representatives during the quarter, our direct sales channel was supplemented by 20 independent sales agencies, so generally cover more remote geography.
Our independent agencies represented approximately 13% of our total revenue in the third quarter compared to approximately 15% in the second quarter.
As we noted in the previous call. We believe that the current size of our direct sales team managed by independent agencies provide the solid commercial footprint to execute our commercial strategy.
We plan to limit further sales rep headcount growth over the next several quarters.
We believe this will allow us to mature our sales team and stabilize our sales territory, thereby minimizing change and disruption to provide consistency of support to our customers and resulting in increased sales productivity.
In the third quarter, we had 875 active accounts.
An increase of 11% from 791, one year ago. This.
The top 10% of these active accounts continue to represent approximately 35% of our revenue.
We're pleased with the continued growth in our number of active accounts and our improved penetration of these accounts.
Turning now to our continued focus on building market awareness of accident and our product.
We recently participated in three clinical conferences that were held virtually the American society for surgery of the hand, the Federation of European societies for surgery of the hand, and the American Association of oral and Maxillofacial surgeons.
Nerf was well represented in each of these conferences, including numerous sessions on nerve injury nerve repair and the health care economics of managing these cases.
Axogens nerve repair portfolio was featured in clinical and scientific session of each conference with findings from independent investigator initiated research and from our Ranger unmatched clinical registry presented at a fish and assets age.
Additionally to build market awareness, we've expanded our digital marketing capabilities, allowing us to more fully engage with surgeons electronically.
These digital efforts provide an enhanced long term capability to supplement the efforts of our sales team and help us to engage with surgeons, where access to hospitals remains limited.
We also continue to raise awareness among patients and providers regarding the quality of life benefits of repairing injured nerves.
October as breast cancer awareness month, and we were excited to have breast and organization featured in the segment on the October 1st edition of the today show.
The segment featured an accident patient and her surgeons, who performed a recent station nerve repair to restore feeling to her breath, which were left no following the Stephanie.
This segment is available on our website and is an excellent illustration of the meaningful personal and emotional benefit the women can receive with the recent station technique.
Our efforts to educate surgeons and develop advocates continued in the third quarter.
Since canceling or in person surgeon and pellets education programs in March Weve.
Weve held several virtual education events led by surgeon experts in nerve repair.
We've been hosting an invitation only program for early career upper extremity surgeons, who are passionate about advancing the field of nerve repair.
Similarly, Weve held several surgeon led extremity trauma and Webinars Webinars open.
Open to all of our surgeon customers.
We're also continuing our commitment to educating hand, and micro surgery Fellows and have launched an updated training program being held virtually.
We continue to expand our body of clinical data in support of our product portfolio and increasing surgeon adoption.
We previously announced that our recon cynical study reached its targeted enrollment of 220 subjects in July.
Second is our phase three pivotal study supporting our biologics license application or B.L.A., which will transition our advanced nerve graft from a section 361 tissue product to a section 351 biologic products.
We can remain on schedule for completion of a one year follow up assessment on the last subject enrolled no later than October of 2021, including the allowance of a three month follow up window.
We continue to anticipate providing a preliminary report a trial data in the second quarter of 2022 and expect to file the delay in 2023.
The last three months have been very productive for our Ranger and match study team.
We were excited to see the recent journal of Hansard Republic came from the match study investigators.
The article titled a multi center matched cohort study of processed nerve allograft and conduit in digital nerve reconstruction compare.
Compared with the outcomes from an EPS nerve graft and manufactured conduits.
The study of 162 digital nerve reconstruction and gap up to 25 millimeters.
That advanced nerve graft demonstrated a significantly greater rate of meaningful recovery and a significant a significantly higher return of static two point discrimination then conduits.
Specifically, the advanced group reported a meaningful recovery rate of 88% as compared to 61% for manufactured conduit.
The average data point to the average static two point discrimination was found to have improved to 9.7 millimeters for a ban as compared to 12.2 millimeters for conduit.
Additionally, the study stratified injuries into gasoline groups of those less than 15 millimeters and those between 15 millimeters in 25 millimeters advanced outcome exceeded those of conduit and the differences were found to be statistically significant with meaningful recovery rates of 92%.
[noise] versus 67% in the less than 15 millimeter group.
And 85% versus 45% in the 15 to 25 millimeter group.
Importantly.
Meaningful recovery rate for advanced were found to be consistent across all the ghastly well conduit performance decline was increasing gasoline.
Actually didn't technologies were prominently featured on the programs at the fashion and asset change conferences.
I'd like to highlight three presentations that where a particular interest.
And at this stage the latest clinical data from the match at Autograft cohort of the Ranger Registry was presented comparing advanced nerve graft repairs to autograft repairs in sensory and mix Notre it make nerve injuries and the upper extremity.
The study reported meaningful recovery rates for 156 nerve repairs and found that both sensory and motor outcomes for advanced nerve graft were comparable to those reported for nerve autograft without the loss of function and risk associated with the autograft harvest.
Complementing the match clinical outcomes a study on nerve repair procedure cost was also presented.
The study evaluated payer data from 340 individual claims and found with the hospital facility procedure costs for advanced nerve graft were comparable to that of traditional nerve autograft.
This study included acute procedure cost only and does not consider the <unk> potential additional cost associated with the management of donor site complications.
At fish danger data from the Ranger study was presented on the use of advanced nerve graft for reconstruction following the removal of a painful neuroma.
Study titled what to do with a painful in the Roma resection and reconstruction with processed nerve allograft provides a promising solution to this dilemma.
Evaluated 36, neuroma resection, and reconstructions of the resulting gap with advanced nerve graft.
The study found that in addition to achieving a clinically meaningful improvement in pain scores.
Meaningful functional recovery was observed in 94% of subjects.
This approach offer surgeons with a new option for the management of these challenging cases and provide insight into the role of advanced nerve graft in the care patients with neural okay.
Repos are prospective randomized controlled study evaluating the use of extra Gardner cap in the management of painful aroma as compared to a standard nephrectomy procedure continues to enroll in the comparative phase and we anticipate enrollment will be completed in Q4 of 2021.
Uh huh.
For the pilot phase we've completed the last subject, though what visit and data analysis is underway to support a repos study.
I live phase manuscript.
We anticipate sharing the pilot study findings in Q1 of 2021.
We remain committed to providing meaningful and impactful clinical evidence on the utility of our nerve repair portfolio.
Despite ongoing corporate related challenges in the market. We are encouraged by the performance of our accident team.
To creatively adapt and adjust to these challenges.
We had learn new skills in supporting our customers and continue to advance our strategy focused on extremity trauma and driving deeper penetration with our existing surgeon customers.
We remain as excited as ever about the opportunity in front of US and we believe we are well positioned to drive continued growth as we emerge from the pandemic.
Before I turn the call over to Pete I'd like to spend a moment discussing our outlook for the fourth quarter.
Coming off of the strength in the third quarter, we see the momentum continuing in our business.
And absent a material change in the health care environment due to cope in 19, we do expect to see year over year revenue growth in the fourth quarter.
We anticipate the growth rate will be more moderate in Q4, as we do not expect to receive the same benefit from deferred procedure revenue that we saw in Q3.
And we believe that it's appropriate to expect club in 19 may continue to have a dampening effect on overall procedure volumes in the quarter.
Well, we remain cautious in the near term, we're encouraged by the strength of the business and our ability to execute our commercial strategy.
We remain confident that we will continue to be a long term growth company as we pursue our mission to change the standard of care for patients with nerve injuries.
Now I'll turn the call over to Pete for a review of financial highlights Pete.
Thanks, Karen third quarter revenue increased 17% to $33.4 million or revenue increase for the quarter was a result of a 12% increase in unit volume.
5% enough benefit from changes in pricing and product mix gross profit in the third quarter was $27.7 million.
Compared to $24 million in Q3 of last year gross margin was 83% for Q3 compared to 84.2% in the prior year.
Gross margin also improved sequentially from 74.7% in the second quarter as a result of restarting production at our previously idled processing facility during the third quarter and that was a result of increased overhead absorption due to higher production levels.
Total operating expenses in the third quarter declined 5% to $28.8 million compared to $30.2 million in the prior year.
Total operating expenses in the third quarter included $3 million in non cash stock compensation compared to $2.4 million in the prior year.
Total operating expenses were down primarily as a result of our cost mitigation efforts and the impact of prior year litigation charges, partially offset by higher variable compensation due to higher revenue in the quarter.
Sales and marketing expenses in the second quarter declined 3% to $17.7 million compared to $18.2 million in the prior year.
The decrease was driven by a reduction in travel and education programs, including in person surgeon education and conference expenses, partially offset by higher variable compensation.
As a percentage of total revenue chose marking expenses decreased to 53% for the three months ended September thirtyth.
Compared to 64% to last year.
Research and development spending in the third quarter was $4.2 million, which is consistent with the prior year.
Research and development cost include product development, which includes expenses in support of our belief romance nerve graft and clinical research product development expenses represented approximately 49% of total R&D in the third quarter compared to 51% in the prior year while CLO.
<unk> expenses represented the other 51% in Q3 of 2020 compared to 49% in the prior year.
As a percentage of total revenues research and development expenses were 12% in Q3 compared to 15% in the prior year.
General and administrative expenses in the third quarter decreased 12% to $6.8 million or 20% of revenue compared to $7.7 million or 27% of revenue in the prior year. The decrease was primarily related to lower travel and professional fees as well as the impact of.
Litigation fees in the prior year, partially offset by increased variable compensation.
Net loss in the third quarter was $1.5 million or four cents per share compared to $5.6 million or 14 cents per share in the prior year.
Excluding the impact of non cash stock compensation as well as litigation and related charges. We are reporting adjusted net income and net income per share in Q3 of 2020 of 1.5 million and four cents per share compared to adjusted net loss and loss per share in the prior year.
A 2.6 million and seven cents per share.
We also achieved positive adjusted EBITDA of $2.3 million during the quarter compared to an adjusted EBITDA loss of $3 million in the prior year. This adjusted EBITDA number also excludes the impact of stock compensation litigation and related charges.
Turning to our balance sheet on June Thirtyth, we announced two new seven year interest only financing agreement with Oberland capital, which provides up to $75 million in total financing commitments with 35 million drawn as of the end of Q3.
The portion of the interest incurred under this facility will be capitalized into the cost of our Dayton Biologics processing center during the construction period that was required under AOCI 35.
In the third quarter, we paid in capital was $490000 of encouraged as construction in progress or process and recognized and paid $397000 as interest expense.
The balance of cash cash equivalents and investments on September Thirtyth, 2020 was $106.7 million compared to a balance of $109.9 million on June Thirtyth 2020 the.
The net change includes capital expenditures for our new facilities of $5.2 million, including the amount of capitalized interest partially offset by positive operating cash flow of $2 million in the third quarter.
As anticipated we will soon be fully operational in our new Tampa facility and will make final cash payments for the facility totaling approximately $3 million in the fourth quarter.
And as previously disclosed we are resuming construction of our Dayton Biologics processing center in early 2021, we anticipate completing construction of the facility.
In the third quarter of 21, followed by one year Wallace validation process and expect to convert production to the New center in late 2022.
Our positive adjusted EBITDA of $2.3 million and operating cash generation of $2 million. During the quarter were primarily the result of strong top line revenue and the impact of our cost mitigation initiative that we implemented in April.
Cost mitigation initiative was designed to put us on a more efficient spend run rate, while also preserving our ability to support customers and patients and remain on office through the recovery. While we are encouraged by this results and believe that it highlights the underlying potential for strong profitability.
And cash flow generation and our business model. We would we would also caution that our positive cash flow in the third quarter was the result of this you need to influence of events that allowed us to over deliver from a profitability perspective, and we are unlikely to receive that same benefit over the next few quarters.
As Karen noted earlier, we expect to see year over year growth in the fourth quarter, but absent a material change in that home health care environment due to cold mid nineties, we anticipate the growth rate will be more moderate in Q4, as we do not expect to receive the same benefit from deferred procedure revenue.
That we saw in Q3, and we believe that it is appropriate to expect COVID-19 may continue to have a dampening effect on overall procedure volumes in the quarter.
Additionally, we restored the 10% to 15% salary reductions for non executive employees in August and are restoring the 20% reductions for executives and board fees at the end of October.
And we have begun to slowly ramp investment into projects that were previously on hold including certain clinical trials product development and marketing and administrative initiatives all of which are key to driving long term sustainable growth.
As a result, we anticipate that operating expenses will see a moderate sequential increase in Q4, and we will return to a moderate cash burn in the fourth core.
It is also important to note that several of the initiatives we have not been earlier in the year in response to COVID-19 have evolved into an improved operating model.
That may be more permanent in nature and put us on a path to improved productivity.
We are encouraged by the strength of our business in the third quarter as we continued to reel to realize improvements driven by increasing demand across our markets and by our teams improved commercial execution as the healthcare community in general and our business, specifically moves toward a normalized and buyer.
But we are confident that the operating improvements that we have delivered and the investments, we're making will position us to grow business meaningfully and emerge from this pandemic related downturn, a stronger leaner organization on a path to profitability.
And with that I'd like to hand, the call back over to Ken.
Thank you Pete.
Overall were pleased with our performance during the third quarter as our commercial team continues to execute with a renewed focus on our core trauma opportunity.
We are encouraged that our recovery progress faster than expected during the quarter.
And we are well positioned entering the fourth quarter and 2021 to continue developing the nerve repair market.
I'd like to thank the entire accident team for their dedication and resolve during these challenging times.
As we remain committed to delivering innovative nerve repair solution designed to improve outcomes for patients surgeons and hospitals.
At this point.
I'd like to open the line for questions Omar [laughter].
Okay.
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[noise] [noise] alright. So thank you. Our first question is coming from Raj Denhoy from company Jefferies.
Hi, Good evening I can you guys hear me okay yeah.
Yeah Yeah.
Great Great maybe carriage, Sir with you on the revenue side show did you noted that about 10% of revenue in this quarter was probably catch up right. So I think that leave something around $30 million or so I'm just kind of the base in the quarter is that a good starting point for where you think you can you can settle or at least start in the fourth quarter.
[noise], well, you're right to back out the deferred procedures and thinking sequentially, what will happen because those were really injuries that happened in Q2, but I think were mindful of the impact on COVID-19, and and remember that usually were sequentially flat between Q.
Three and Q4, so so while we think will show year over year growth, we're not we're not anticipating significant growth year over year.
So your baby suggest something a little light from that just to kind of perhaps cobi, having an impact during the quarter.
Yes, so that 30 30 ish million, Okay fair enough.
Maybe Pete.
Let me try to parse it the comments that you made around expenses right. So.
You know the expenses in the quarter was not as low as its been in times past they get as a percentage of revenue was a little bit lower but it sounds like as you're going forward, maybe that that absolute number on expenses will will tend to drift upwards or really how do you think we should be modeling. This yeah that 20.8 million in operating expenses in the quarter is that sort of a baseline now in it and it goes up from there.
Or how should we really be thinking about it.
Yes, no that's right I do think it's going to continue to tick up now it's not going to go very quickly, but we're going to we've begun to make additional investments on projects that we put on hold and things that are pretty important around clinical trials and continuing to get back into growth mode HM.
We were encouraged about the growth opportunity of the topline Weve remained on all fronts from a commercial perspective with that we kept that team in place and these guys are doing.
Just a very good job of capturing the top line as we as the economy continues to recover and as hospitals continue to open.
We are going we put a hold on some of the other projects around the business clinical trials from marketing initiatives and other things that that will begin to start spending some money on.
But we'll do it.
The way that certainly keeps us on a much more sufficient run rate than we were on pre cobot.
Fair Fair enough and then maybe just one last one Karen so for you I guess you you highlighted that match.
Got a core to the Ranger study, you're getting the press release as well as the publication that came out just a quick question is really is there any reason why one could reasonably look at the results from that study as a as a good proxy for what we're going to see in the Recon study when we eventually get that data.
Well I think every study is it's a study so you can't assume that one study tells you the results from the next study, but but having said that yes. Its confirmatory to the data that we are.
Planned for when we put the the recon study together and we see those same types of results coming out in the match study.
Hi, good thank you.
Thank you and our next question is from Chris Pascal with Guggenheim.
Thanks, Congrats on nice quarter, guys I'm curious on the deferred procedure component how much visibility do you have into when blending injuries occurred are you confident that that 10% number is pretty solid or some guesswork involved there.
It's an estimation, but what we did see was a very noticeable surge and procedures done as hospitals opened up regionally around the country and so for a a discrete period of time, you see a big spike and procedures.
And that's what we're defining as that surge or deferred case volume, we supplemented that with going out and actually interviewing a surgeons to get their thoughts on where they are and catching up on their deferred procedures and we had and we've been doing this on a rolling basis and surgeons on push.
Pushed to get their nerve repairs done quickly.
Where we can really see the stability that we get and the productivity, we get without the disruption of lots of splitting a territory.
Great. Thank you.
Thank you in our next question is from rich neuter with C. R. S V P lyric.
Hey, this is an on for rats. Thanks for taking our questions. I was just hoping maybe and you could flesh out some of what's contemplated in the moderate growth outlook for for Kale.
Maybe just you know kind of across the different segments like trauma B R. N O M F N pain, and what kind of gross do you think you might get in those types of segments.
Sure if he if he looked at Nick's layer deep at our overall growth. The majority of our growth majority of our business is upper extremities trauma and the majority of our growth has been upper extremity trauma that's been.
Really the first segment to rebound and too.
Continue not only to recover from where we were from Covid, but to return to growth and and so we think that we will see what a typical trauma patterns in the trauma segments.
Perhaps dampened by resurgence of Covid regionally as we saw in Texas, and Florida that there can be shorter periods of time, we don't think hospitals will shut down in any way. So this is not a total return to what we saw in the April timeframe.
But there are cases, where they become overwhelmed and especially these level one trauma centers, which also often are some of the large.
Centers, and a particular region, which would treat covid patients. They may have to defer cases are move cases other hospitals are ambulatory surgery center. So so we're trying to be mindful of that in queue for that there might be some shifting.
In the breast reconstruction segment, we're seeing a recovery in third quarter to start.
But what we're hearing from our surgeons is because there were mamograms that we're done for several months that there is sort of an air pocket in the pipeline of of patient flow and that that's going to take a couple of quarters to get get all the way through to the reconstruction because it can be three to six months between.
Diagnosis before they may have their full breast reconstruction and so we think the next couple of quarters will be dampened.
We again saw some recovery in Q3, we may see some continued recovery in queue for but not returning.
To the continued growth rate until we get into sort of.
The mid to latter to mid part of next year.
Or a medical facial and pain.
Against smaller segments oral surgery, we believe will continue to be somewhat dampened because of covid until covid starts to back down on people are seeing the dentist less they're having less dental procedures.
The dentists or <unk>.
Delaying if they can benign tumors malignant tumors are still going forward, but delaying the benign tumors and that's a direct effect of Covid and that this is high risk procedures for disease transmission. If the patient is positive and so we think that the oral maxillofacial segment.
We will continue to be.
Depressed until the resolution.
A vaccine essentially.
In the coming year, and then the surgical treatment of pain, it's a little different dynamic that the same timing sort of mid year, where we think will start to see more return to significant growth in paint and the surgical treatment of pain. This isn't really new market for us it's new for a lot of patients to even think of having their their pain treated surgically.
And what we found is that in this environment, they're concerned about coming into the hospital to have a surgery and instead are willing to continue reliance on on pain medications for a period of time not planning to never do the surgery, but willing to postpone it until they feel more comfortable coming into the hospital setting.
And so that's another segment that we think will continue to be relatively low growth until until we get into the mid year timeframe.
Okay, great. Thanks, and then just one more quick one for me.
I was just wondering if you could maybe shed some light on what you've seen in the first couple of weeks of October given the recent rise in cases have you heard any feedback from customers, indicating that there is a slowdown or.
That some of the elected procedures may need to be start to be deferred again. Thanks. So much.
Well of course everything that happens in COVID-19 is very regional.
We've seen strength and to October from the in the same way that we saw it in Q3, but we have heard of hospitals that are starting to to signal that they may need to defer some elective procedures, including in this case and again typically trauma is not considered elective but in this case they would look to see if that can differ.
<unk>, even traumatic injuries from nerve repair.
So while we haven't seen anything to date that that I would consider substantial.
As we look at the chart and as we talk with her.
Hospital administrators, I think that there's a possibility that procedures will get deferred in some locations.
Okay, great. Thank you so much.
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Eight your line is in your question Q. Our next question is from Carl rules Karen Court.
Zero in for Kyle.
Or to piggyback off the previous Salesforce questions.
Just how do you think about driving utilization an existing account versus focusing on getting those new users I think you mentioned.
Top 10% of the town for 35% of sales again are those surgeons using events for 100 per cent of their procedure is there an opportunity to grow that at all it seems like that's been.
Fairly consistent here, even with the Covid destruction as well any color that would be great. Thank you sure yeah, No. We're really clear that our best opportunity is to drive penetration with our existing users.
An existing account will continue to see expansion of accounts, but our focus is really on driving adoption among existing users because most of our users are extremely lately penetrated and with the data that we've put together today and the strength of some of the <unk>.
Benefits I think that we provide even in this covid environment, where we shorten procedure times compared to them.
An autographed.
And and allows them to do procedures in a more effective way, we think that there are real reasons to help push that adoption and to do it in in particularly in this environment, we provide real benefits over what they've done historically.
Perfect. Thank you.
There are no further questions at this time I would like to take.
The floor back over to their yummy for clothes or comments.
Well he'll be Karen and thank you everybody.
And thank you Omar I want to thank everyone for joining us on today's call. We look forward to speaking with many of you at the upcoming virtual conferences, we are a pending including the Jeffries virtual London Healthcare conference on November 18, the Canaccord Genuity virtual Med Tech Diagnostics Forum on November 19th and the Piper Sandler.
32nd annual Healthcare Conference December 1st through the third thank you very much.
This concludes today's teleconference. You may disconnect. Your lines. This time. Thank you again for your participation of have a great evening.
[noise].