Q3 2020 Acutus Medical Inc Earnings Call

<unk> Jude medical Inc. third quarter 2020 earnings conference call at this time all participant lines are in a listen only mode. After the speakers presentation. There will be a question and answer session to ask the question. During the session you won't need to press star one on your telephone please be advised that todays conference is being recorded.

If you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today Caroline corner Investor Relations. Thank you. Please go ahead ma'am.

Thank you operator welcome to acute this is third quarter 2020 earnings call. Joining me on today's call are Finch Burgess, President and Chief Executive.

The officer, Gary Doherty Chief Financial Officer. This call will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, all statements made on this call that do not relate to matters of historical facts should be considered forward looking statements factors that may cause results to differ from these forward looking statements are discussed under before.

Looking statements section in the press release attached as an exhibit to acute as this form 8-K filed with the FCC today and are also discussed in more detail under the risk factors section in acute as this most recent filings with the FCC, including the risk factors described in the cutest with form S. One and an acute as this quarterly report on form 10-Q.

For the third quarter ended September 32020, any forward looking statements provided during this call including projections for future performance are based on management's expectations as of today. It gives us undertakes no obligation to update these statements except as required by applicable law okay.

It gives a press release with third quarter 2020 results is also available on.

Thank you this website www dot acute medical dotcom under the investors section and includes additional details about acute as his financial result, there.

He this website also has a Q. This is FCC filings, which you are encouraged to review.

A recording of today's call will be available on the acute side by five P.M. Pacific time today.

Now I'd like to turn the call over to Vince for his comments on third quarter 2020 business highlights.

Thank you Carolyn and thank you everybody for joining us today.

Oh it is only down about two months since we updated you with our second quarter 2020 performance following our initial public offering.

In August of this year, our team has been hard at work and start installing councils right.

Alright adoption of our products with key customers and pressing forward on further expansion of our product lines through aggressive accelerated R&D efforts.

Before we get into our quarterly results Rick.

However, I'd like to share a couple of quick stories to remind you of why we do what we do here at acute us.

And why our company's mission to improve the way cardiac arrhythmias are diagnosed and treated is so important to us and to patients and to the physicians and the electric.

Physiology community.

As an illustration of how our technology is successfully helping patients and clinicians alike. Let me review two recent case summaries patient.

Patient number one is a 29 year old male whose heart at a young age had been surgically altered to bypass says.

Ventricle.

The patient subsequently develop significant April tacky cardio is extremely rapid heartbeat that would cause them to collapse catheter ablation was attempted using one of our competitors systems and late 2019, but was eventually abandoned because the conventional mapping system that was used.

As I was unable to handle the eight plus different each real Tech you party is that we're presenting in this one patient.

Sadly the patient's arrhythmias persisted and due to the pandemic.

UK Hospital, where he was initially treated was under a complete lockdown.

The Electrophysiologist felt strongly that the acute a system and it's super map algorithm would be able to effectively map the patients multiple complex tech Carty is giving hope for a successful outcome. She.

She appealed to the hospital and received special dispensation from the hospital senior leaders.

Chip team to perform a repeat procedure using the act you map system.

During the procedure 10 different Patriot Tech cardio is were identified and Ablated successfully restoring sinus rhythm in this young patients.

Patient number two is a 42 year old male with long stay.

Any persistent atrial fibrillation, who had already undergone to prior ablations.

Due to further recurrence of atrial fibrillation. He was scheduled for a third ablation. This time is to be guided by the accu map system.

Electrophysiologist use the map ablate Remapped strategy made.

Possible by the speed and ease of use inherent to the accu MEHPS system throughout the procedure.

The patient left in sinus rhythm at the end of the procedure and continues to do well with no recurrence of symptoms.

The electrophysiologist being both a social media enthusiasm and author of a recently published.

Standardized patient education book on living with a tough.

I was so excited about what he could see in the maps that he posted them on Twitter Instagram and linked.

His post generated over 2500 views and multiple comments and questions presenting him the opportunity to further explain and share information.

Even with the P. community.

Quoted from his linked in post.

For one of the first times, we can visually display one of the most chaotic heart rhythms a trial fibrillation in existence.

Using a technology called high resolution non contact mapping, we are one step closer to solving the puzzle.

Pub cardiac chaos.

Now that I've reminded you a bit about what we do I would now like to turn to our third quarter performance and highlight some key successes.

In the quarter, we saw strong execution by our commercial team and made considerable progress on key product development and operations.

Operational fronts.

Our revenues of $3.2 million were up 391% year over year and up 180% sequentially.

Despite headwinds from COVID-19, we continued to add new customers and aggressively upgrade existing customers to our groundbreaking.

Breaking second generation Electrophysiologist mapping system.

Bringing on a new customer in our business requires extensive cross functional collaboration with our customers and many members of our internal team.

The installed base growth that we achieved this quarter demonstrates enthusiastic.

Stick demand for our technology and terrific execution from our entire team during uniquely challenging times.

With each new install we are optimizing our account opening approach and improving our position and lab staff engagement.

As we better appreciate the opportunity.

Energy to grow our base and improve utilization across a large and expanding product line. We are pulling forward investments in our commercial organization and accelerating work on several important product development initiatives.

Our value proposition across a range of clinical scenarios is increasing.

The clear and our highly targeted product line expansion projects are progressing with great speed.

As we look to the future. We are highly confident that acute is well positioned for growth in the years ahead.

During the quarter, we increased our worldwide installed base of second generation Acumera.

Tonsils to 37 as.

As of September Thirtyth 2020 up from 21 consoles at the end of the prior quarter.

The combination of new installs and upgrades from our first generation consoles brought the total global installed base of councils to 49 as of September.

32020.

Console placement activity was robust during the third quarter and we expect it to remain strong overall in the fourth quarter.

Placement activity in Europe is becoming more complex as cobot related travel restrictions are enacted and we have our eyes.

Is on that.

As always we strive to take advantage of our nimbleness and creativity during times of great change and we are planning our first fully remote console installation during the fourth quarter.

This will require considerable investments and remote training resources for third party.

I'd installation personnel in Europe and soon in Australia.

As for the US pandemic related logistics challenges are currently rare and placements are presently continuing at a rate in line with our internal expectations.

Moving now to case volumes.

We saw July and August E T lab activity comparable to what we observed in June.

Although we did see some normal seasonal impacts due to European summer vacations, which we would also expect in future years.

September was a record month for us in terms of procedural activity.

Overall, and the release of our commercial grade conventional contact mapping software suite during the third quarter.

Those early signs of this mapping load LNG, becoming a significant portion of our expanding procedural volume going forward.

Yes.

The inclusion of.

Vince will contact mapping capabilities gives customers a reason to use our system in even the simplest of the cases and is allowing us to leverage our existing mapper presence in the lab to cover multiple cases.

In a day and garner more case share and labs.

This increased fixed.

Exposure to our overall platform provides an excellent opportunity to grow revenue and makes efficient use of our map or resources.

Illustratively a major southern California Hospital is now routinely scheduling days with three or four cases with us, including conventional contacts mapping and non contact mapping.

Knowing we have unique capability to cover cases, calling for both as we continue to move forward and become a true work horse platform across all ATRIO arrhythmias.

Additionally, we are also starting to see use of our mapping system and cryo balloon cases.

And in ablation.

Patient cases that are done entirely without the use of X Ray based fluoroscopy, an emerging trend with EPS physicians, who are seeking reduced radiation exposure to their patients and for themselves.

As the third quarter began we saw most E P labs back open.

At or near full capacity as cobot cases slowed.

We were readily able to access hospitals in the us and in most of Europe, though a portion of the hospitals and the UK were slower to reopens.

With the recently observed rise and cobalt cases throughout Europe.

There are signs of regional slowing in the market.

Of particular note, France, the Netherlands, and Belgium appear to be curtailing elective procedures to some degree and the UK is slowing on a regional basis.

The prevailing current view is that we will not see full lockdowns on land.

Lab shutdowns as we experienced in March though.

Though in the markets. We just discussed there will likely be a slowing of case volume over the next several weeks.

We are making every effort to work around the obstacles that continue to be presented by the pandemic and real time, but wanted to make you aware of their existence.

Initial challenges we may encounter.

As a further example of the benefits of the breadth of our product line, our Transseptal access products are being very well received.

Only in EMEA ablation procedures, but also in structural heart applications, given certain work flow.

Safety benefits.

We believe our commercial team expansion will facilitate traction in this space both in accounts, where we have already and accu map console installed and in those accounts that do not yet have an accurate console.

In fact.

Through our.

Our customer outreach and sales efforts around that transseptal access products into energy and structural heart labs, we are capturing clinician attention for our accu MEP console.

We've seen some recent synergy here as a pair of Transseptal access sales calls have resulted in hospitals, and Arizona and southern California.

Kornya accelerating their efforts to bring in and ask you map console.

We continue to be pleased by our ability to attract and trained highly qualified clinical specialists and commercial leaders to the team.

At the end of September we had 24 fully certified and nine provisionally sort.

Parkside Mappers worldwide.

This is up from the 19 fully certified and eight provisionally certified members we had on June 30.

Given the success of our initial public offering during the third quarter and the account development opportunities, we are seeing across our large and expanding product line, we are excel accelerate.

Circling the build of.

Our sales force during.

During the quarter, we added top tier sales and sales management talent with Great track Records records and longstanding industry experience.

As another update on our commercial front, our bidirectional distribution agreement with Biotronic a large.

Great Avidly held the cardiology company that focuses primarily on cardiac rhythm management continues to gather momentum.

This agreement gives an acute us the ability to leverage bio tronics global sales distribution infrastructure and helps us more rapidly achieve truly global reach.

During the quarter, we completed the handover of existing acute us accounts in Germany, and Switzerland to Biotronic as Biotronic will be our exclusive distributor in these and 20 other countries.

We executed on an extensive remote sales mapper and technician training plan in the.

Quarter, focusing first on countries, where biotronic, we'll have regulatory approval for the system.

In addition to the CE Mark Acuitas had already obtained biotronic receive regulatory clearance and Australia for our mapping system and related accessory products and was granted special access approval and Malaysia.

I owe tronic and Acuitas are actively working in concert on regulatory approvals and other countries.

We continue to be very pleased with our relationship the biotronic and are encouraged to see strong engagement from local teams as we rely heavily on distance learning for our hardware software catheters and related case knowledge.

On the product development front in addition to releasing our commercial grade contact mapping software suite. We have made major progress on building out the scope of our left heart access product lines and on the development of our post field ablation technology.

The energy and pace of innovation here at acute.

This is really impressive.

As an example of the scale of our efforts. We have conducted 37 pre clinical labs since July onest, each testing, one or multiple new products features or elements of our full product portfolio.

Be it pulls field ablation.

This eventual RF ablation set, though crossing conventional contact and noncontact mapping and the like.

Moving on now to clinical and regulatory updates in the third quarter of 2020, we received a key us clearance on our accu map catheter 2.0. This.

This isn't.

Important product evolution on our core Noncontact mapping catheter as it combines a meaningful production cost reduction with enhanced capabilities, including handling advantages and faster acquisition times.

Our limited market release of the catheter has begun and initial feedback is positive.

In our clinical and regulatory teams have also been diligently working through the process to initiate three separate I'd. He studies for our therapy catheter lines.

For the US market, we plan to submit two separate trials for our Accupoint gold tip irrigated radio frequency for sensing ablation.

Others.

Both are now expected to commence in the first half of 2021.

As you may have seen with other medical technology companies, we have seen a regional systemic challenges related to sterilization of medical devices with ethylene oxide largely driven by local contract sterilized.

Cat or community environmental concerns.

As sterilization vendors coped with these issues has exacerbated by the pandemic completion of Validations for new products, such as ours tempting to commence IB trials can be challenging.

As a result, we are currently expecting our I'd.

Wise trial start dates to be pushed out roughly one quarter as compared to previous timelines.

The first of our trials, which is seeking a REIT detro flutter indication is expected to take about two years to complete and obtain a premarket approval or PMA.

Based on current timelines we.

That indication to be approved and commercially available in late 2022 or early 2023.

The second is seeking a PAREXEL and persistent atrial fibrillation indication in the us market and will likely take approximately three years to complete and obtain premarket approval, which means we currently expect.

Enter the us market potential in late 2023 or early 2024.

The third US trial involves our partnership with Biotronic and relates to acute as private label versions of a series of Biotronic source and CE, Mark platinum Palladium and gold tipped ablation catheters, which should take approximately.

Two and a half years to complete.

Which means we expect to receive premarket approval around the first half of 2023 in the us markets.

Looking ahead, we anticipate receiving CE mark on our Accupoint force for sensing ablation catheter within the coming weeks.

This will.

An important milestone for the company and we are looking forward to bringing this novel gold tip irrigated radio frequency for sensing ablation catheter and related accessories to see Egovernment markets.

Turning to the bigger picture and our longer term growth strategy I would like to remind you of the main red.

The new drivers for our business.

A major focus today on the commercial side is to grow our installed base of vacuum AFCAP consoles.

Growing in our growth solid growth in our installed base is foundational to our revenue expansion plans over time.

It is the razor of our.

For our portfolio of razor blades.

We are also focused on driving increased utilization of the consoles. This includes both the number of procedures and the types of procedures performed by clinicians using our system.

Increased utilization feeds into our third growth driver expanding the range.

A range of acute as supply disposable products used per case.

This includes various mapping therapy access septal crossing and diagnostic catheters.

Finally, before I turn things over to Gary I Hope you saw our press release today regarding the hiring of Dr., Steve Michelson as our new Vice President.

Entry Chief Translational Science officer.

Steve is a practicing electrophysiologist and a prolific technologist and inventor.

Notably he was a founder and former former CEO of fair pulse a pioneer in the highly promising field of pulse field ablation is.

He is a recognized.

Hi, guys thought leader in the field with an extensive clinical background and we are thrilled to have them as part of the acute his team.

We continue to be very excited about the possibilities and opportunities for pulls field depletion program.

And look forward to updating you on our progress on future calls.

With that.

I'll now turn it over to Gary for our financial results Gary.

Thank you Vince and good afternoon, everyone.

Our revenues for the third quarter of 2020 were $3.2 million compared to $1.1 million for the second quarter of 2020 and up two and a half million from point $6 million for the same period of the prior.

Prior year.

180% increase in revenues from the second quarter of 2020 to the third quarter of 2020 was driven by console sales increased direct sales of acute as disposables and distributor sales to biotronic. The 391% revenue increase observed for the third quarter of 2020 relative to the same period of the prior year.

Here was driven by the expansion of our installed base following our full commercial launch which began at the end of 2019 as well as the implementation of the Biotronic agreement.

Gross margin was negative 62% for the third quarter of 2020, compared with negative 251% in the third quarter of 2019 and negative.

135% for the second quarter of 2020 and.

In advance of and following our full commercial launch we have made significant investments in our manufacturing infrastructure to support future capacity requirements and position us scale production as our business grows.

As volumes increase we expect to see the benefit of these.

Investments and improvements to our margin profile.

Gross margin during the third quarter of 2020 was positively impacted by greater production volume and comparatively greater efficiency in our manufacturing operation versus the third quarter of 2019.

Headwinds from COVID-19 modestly impacted production levels during the second quarter of 2020.

Money, while production during the third quarter of 2020 returned to more normalized levels.

At this point I would like to take a moment to provide some additional color on our revenue recognition model for our consoles that are placed with customers and then paid for with disposable commitment deals.

Most of you are familiar with this model which is common.

In certain parts of healthcare.

But for those that aren't these contracts are structured so that the console is placed free of charge at the customer site and then title to the console passes to the customer after negotiated and contractually binding amount of disposables are purchased over the life of a multi year contract.

Are these kind of sales, which we expect.

Expect to be very common into Q is going forward, we recognize a portion of that future disposable revenue stream and 100% of the cost of goods sold for the console upfront while locking in a predictable high margin disposable revenue stream over time the.

The way the accounting plays out this results in unfavorable gross margins on the upfront sales.

All of the console that is more than offset in future quarters by a committed predictable annuity stream of disposable sales over the life of the contract.

For the quarter. It is important to note that margins on our line of disposables were positive we successfully converted several installed systems to disposable commitment deals and its just explained.

Lane recognized a portion of the revenue on each deal along with 100% of the cost of goods sold for each console in this quarter negatively impacting overall margin performance.

Despite underlying positive margins for our disposables.

Operating expenses were $24.3 million for the third quarter of 2020 compared.

With $29.5 million for the same period of the prior year.

R&D expense was $8.3 million in the third quarter compared with $20.9 million for the same period of 2019, which included a $15 million payment for the Biotronic force sensing product line excuse.

Excluding the Biotronic payment our income.

Crease inorganic R&D expenses, primarily related to spending on catheter developments and console enhancement projects during the third quarter of 2020.

SGN expense was $15.8 million in the third quarter of 2020, compared with $8 million for the same period last year.

The increase was primarily due to 5.4 million.

In noncash stock based compensation expense.

As was mentioned during our Q2 earnings call. This amount includes a onetime noncash 3.8 million dollar amount related to the achievement of performance conditions or restricted stock awards, which were met upon our IPO.

Also impacting spend was the expansion.

Of our commercial team in conjunction with our full launch and an increase in Gionee for public company related costs.

Commencing this quarter, we present, our net loss on a GAAP basis and on a non-GAAP basis to exclude items that we believe are not representative of our core operating results.

Net loss on a GAAP basis for the third.

Quarter of 2020 was $31.3 million or $1.95, a share compared with a net loss of $32.1 million or $47.21 per share for the same period of the prior year.

Results for the third quarter of 2020 included $6.4 million of noncash stock compensation expense a five.

In all $3.7 million fair value re measurement of our warrant liability.

$5.1 million change charge for the in the change in the fair value of contingent consideration.

Excluding such noncash items, our non-GAAP net loss for the third quarter of 2020 was $21.1 million or 90.

Cents per share compared to $30.6 million for the third quarter of 2019 or a $1.86 per share after giving effect to the pro forma conversion of our convertible preferred stock it.

It is important to note our warrants are no longer subject to re measurement upon their conversion to common stock warrants in connection with our IPO.

The weighted average basic and diluted shares for the third quarter of 2020 was $16.1 million compared to point $7 million for the same period of the prior year and pro forma shares of $23.3 million for the third quarter of 2020 compared to $16.4 million, assuming the conversion of our preferred stock for the same period of the prior year.

For a complete.

We reconciliation of our GAAP financial measures to our non-GAAP financial measures. Please refer to the tables included with the press release that we issued today.

Our total cash balance at the end of the third quarter of 2020 was $167 million as.

As a reminder, our August 5th initial public offering yielded 160.

Point 3 million in net proceeds and we believe the resulting cash on hand is sufficient to fund our current operating plans.

We also wish to advise that given the uncertainty from the ongoing KOVA 19 pandemic, we're not in a position to give forward guidance. At this time, we will update you when we have greater clarity around forecasting through the pandemic.

With that I'll now turn it back over to Vince for closing remarks Vince.

Thank you Gary.

In closing I would like to acknowledge and thank the investor community that has taken an interest in our story here at acute us to do so requires investment in getting up to speed on the electoral electrophysiology market we serve.

The significant opportunity that exists here to improve outcomes the efficiency and cost effectiveness in this segment of cardiology and on the differentiation and benefits provided by the innovative tools and techniques that we are bringing to the electrophysiologist community as a whole.

I have never been more excited about them.

Hi Tech company than I am about acute us.

The excitement comes from the fact that we are bringing new and highly novel tools to a field that needs them in order to attack longstanding riddles that remain unsold.

By challenging the current conventional wisdom in this space and collaborating.

Even with the best most creative minds and Electrophysiologist, we're confident we can and will bring much needed improvements in patient care and build a large profitable and highly valuable company in the process.

We are excited by the future and pleased to now have the resources from our public offering completed.

Just three months ago to fuel our plans.

With that I would like to thank you for your attention and I will now turn the call over to the operator for your questions.

Thank you as a reminder to ask a question will need to press star one on your telephone to win.

Your question press the pound key please standby, while we compile the Q when a roster.

Our first question comes from the line of Robby markets from JP Morgan. Your line is now open.

Great and thanks for taking the question.

Since I was hoping you could start out I'd love to hear.

Sure how the discussions have been going coming out of the third quarter here, you've now had about a month and a half.

We've seen a worrying.

Changing in the Cook situation, particularly in Europe and growing in the U.S. So I just.

Sure you said during the script you still see a lot of enthusiasm for purchases in the fourth quarter has the conversation changed at all.

In relationship to purchasing a units in the near to mid term in your view here. Thanks.

Yeah, Thanks, Robbie I hope you're well.

Hi.

I wanted to know.

In terms of purchasing or or negotiating contracts for catheter based commitments.

On balance I don't think Weve seen any any change there. We're we're really happy with the installed base we've put in place in.

Last quarter.

And.

I have to tell you I'm.

Really proud of my team.

For for making that happen to if you think about it to get significant teams of people on airplanes and ships ship consoles and whatnot across the country or around the world.

You know have.

In service meetings with large group of nurses and doctors.

In the context of a co the environment that we live in I think speaks volumes about how interested folks are how serious folks are about bringing this technology into their hospitals and their level.

The limit and our teams level commitment.

You know I would say.

There.

Think of one console deal in Europe, where we felt like it was very much going to be a fourth quarter placement.

And they they notified us a couple of weeks ago.

They felt like it was probably going to be a january install instead of this was an Italian site.

But conversely, we've actually had.

A couple.

Come in or we expect to come in a little earlier than expected. So from a placement standpoint installed base standpoint, we feel we feel good.

Yes.

Of course, you know subject to change, but we're not really having access problems to get our field service teams and to do the installs and doing in servicing.

The the comments in the prepared remarks were more.

More focused around.

Uh huh.

You know procedure.

Good volumes that are that are happening in any p. labs.

And there were watching that really carefully it is so regional.

I would say significant number the hospitals that were in regular touch within the U.S., they're kind of at their normal census, right now in terms of their their procedure volume.

Others.

Or are looking a little wobbly and then Europe, we're certainly still doing cases over there in central Europe, including in some countries where at a public level they have announced.

So dramatic slowdowns and in elective cases, and yet we're still doing cases so.

These are.

These are unchartered waters, we're watching very closely what's going on.

Great I appreciate the color and Gary.

Yes, I know you haven't given guidance for the year, but the streets sitting a little under 6 million for fourth quarter.

On.

Are you comfortable.

So with that number here and do you think we need to make any any more material changes to gross margin in the model going forward as you think about some of the unit placements here on contract versus catheter profits in the near term just trying to get the models straight in the near to mid term here.

Thanks.

Talk to your revenue.

We.

There might be in terms of the top line.

A benefit to employing a measure of conservatism little bit around some European impacts for case case delays in case postponements.

From a margin perspective.

I have.

Our plans are such that.

We're going to see all this sort of unfold the way we had originally laid it out to you.

We have a number of.

Cost reduction programs that are going to be coming online over the course of the next several quarters.

Volume will be our friends.

And you kind of put it all together.

In a bucket and you should be reasonably comfortable with the pacing that we laid out before.

Okay.

Okay.

Got it and if I could sneak one last one in here during this I can't remember if it was during a late second quarter early third quarter.

You guys put out a press release on your electroporation catheter and made it official.

This is a really exciting opportunity down the road it it could keep you write in the forefront not just with the mapping, but with the ablation itself.

I was hoping you could speak to this catheter.

Or where you stand versus the competition your expectations.

For the market to evolve thanks.

Yeah.

Sure. So this is this is a area with.

We feel and I. Thank all.

All participants in this field believe has just great promise two significant.

And lease speed procedure times and improve the safety profile.

Of these procedures it remains to be seen electroporation will change efficacy in any material way.

Speed and safety matters. So we're all over it and you saw the press release I think we.

We issued alongside our earnings release today with the hiring of Steve Michelson, Steve is really one of the forefathers of pulls field ablation. He was a founder of Farah poll several high profile company in this space and we've actually been working very closely with Steve for the last year.

On a consulting basis and he is so.

Enamored with this company and our approach to innovation and the speed with which we innovate that he's decided to come onboard full time with this company and is moving.

His home in Ireland to San Diego So.

So we.

We have a very talented focused team developing the hardware software.

The the pulse designs and the catheter set.

To be right.

Right in the mix with the others that are working and pulls field ablation today, we are not give.

[music].

Precise timelines or product strategies at the at the moment.

As we announced in our prior release.

Our plan is to come out of the gate initially.

Having pulls field ablation right on the back of our force sensing gold tip ablation.

Giving up.

So we think that is a nicely differentiated so.

Strategy as compared to what some other folks are doing and we obviously will have other products and the other catheter products in that portfolio as well.

But we're.

We're just extremely excited and very very happy with the progress we've made thus far.

We will be reporting on timelines and in future calls in the future press releases, but we're not getting into a lot of details as we sit here.

Great. Thanks, a lot.

Thanks Robby.

Thank you. Our next question comes on the line of Bob Hopkins from Bank of America. Your line is now.

Now Quinn.

Hi, there you actually have Brad hours on for Bob Today, I was just wondering what additional color you could give on procedures are kind of procedure per console was in the quarter. If there is anything nuanced about the pace of that over the quarter or where that kind of fell.

Fell in respect to your expectations.

Gary do you want to take that or you want me to take that.

No.

Got it.

Generally speaking the pace of procedural activity was was.

It was in the ballpark of what we were looking at from an internal expectation point of view.

We've seen.

Across all geographies in.

In particular, I would point out that the.

The Biotronic a range of accounts they took over during the third quarter performed particularly well on per unit on a kind of per box basis.

We're seeing a lot of uptake as we've mentioned in the script.

With.

And and.

And that's continuing.

Now I would say I would say these are early days for us and as we are or are building our expertise in rolling out new accounts.

We've we've have what I'm really excited about is as the release of our contact mapping so.

Never suite. So this is I think this is a.

Where in mapping suite that goes to toe with the existing competitors in this space with their with their conventional contact mapping.

What it has the potential to open up for US is situations like we have.

For reference in the in the prepared remarks there is.

As opposed to trying to to get one complex case, a week initially and then too and then three overtime. This.

This opens up the opportunity for example in this this this hospital and Orange County, where we're having three and four cases scheduled.

In a day that may include some cases that.

Maybe aren't as complex and high revenue as a.

Complex.

Long term or persistent a sub case.

But it allows us to utilize and leverage the map or.

That we have in there to.

To get us involved in less complicated SPT cases, and the like and that's that's just not procedure volume and revenue that we spent a lot of time.

Mapping in modeling two in you know say.

Say a year ago, when we were kind of sketching out with this with this business and what the launch looks like because.

We just we didnt have a great handle on the release date of that contact mapping suite and on the the completeness of the launch so that that's really really exciting new element of this.

This this complete product portfolio for us.

Got you that's helpful. And then if I could have one follow up there just I was just kind of wondering how you think about it.

Installs that you're doing kind of giving.

The new model, where you can just given into the hospital.

How do you think that can accelerate your procedural uptick per console whether or not.

You're thinking that's going to accelerate that or just increase it on the space overall and then Thats all from me. Thank you.

Yes.

Yes.

You know for us, it's all about having successful installs and engaging with engaging deeply with the initial physician who is.

Is the champion that gets us in there in the first place and try and grab as much of that physicians procedural volume case share as we can and then trickling down going down the bench if you will.

Across the bench to other physicians and he piece within the lab and that we are.

Like I said, we're early days here, but we are definitely executing on that strategy and feel I feel great about about how that's going to roll out over time.

Thank you for your question.

Thank you. Our next question comes from the line of Margaret Kayser from William Blair. Your line is now open.

Hey, guys. Good afternoon, thanks for taking the questions.

Hey, Mark first of all I wanted to maybe touch a little bit on some of your intro comments, Vince you talked about maybe seeing books demand on the contact and on contact.

Having check I think you mentioned private lives as well and then seeing some uptick there so.

Can you give us any color in terms of how consistently that's happening outside of that that one example, maybe add what can that mean for you are you surprised I guess by it but that uptick.

[noise] if it's early days we.

We just launched our contacts mapping suite I think in the second or third week of September and are rolling that out into.

Multiple accounts and and rolling it out to different physicians.

As we as we speak.

So early indications are that I think that's going to give us a nice foothold into some.

With these more simplistic cases.

I'm, sorry, if you could.

If you could ask the SEC restate the second part of the question.

And just said you know why.

What that could mean for you guys were you assuming very much there obviously are accessible.

Yes, some of the more simplistic cases, but.

Check them out of the market so theoretically should be a good thing for you.

Yes, I think its just important for us to be a part of the fabric of the lab and not be.

The technology or the products that they roll in for the train wreck cases that just need.

The highly highly sophisticated system.

Len and I've lived this in the prior life at ball.

Keno when when we really just got off the ground. There we were pigeonholed into guiding imaging or left main coronary artery disease cases, which is 5% of the patient population.

And.

Atrophy and muscle memory sets in around how to use the system if you're only using once every couple of weeks in order to be really successful here, we want to be used Reg.

Regularly during the week, obviously, we think we're going to be used and some of this complex cases and reduce with great regularity, but we want the staff we want that.

Additionally, we want our map or.

To to to be using our system regularly so they understand cable all do the troubleshooting setup graphical user interface the interface with our catheters and the like so in order for us to really take full advantage of this opportunity here.

We think the.

The business is going to be healthier, it's going to be more sustainable and it's going to be more profitable as we as we grab more and more of those procedures and involvement there even if the the revenues in some of those procedures are lower just because they just tend to use less.

Lets disposables and lust, plus lower ASP disposables and some of those cases.

That that's just that's revenue and opportunity that we didnt spend a lot of time modeling in our prior.

Pardon.

Okay can you work that into some of these new kind of utilize.

Utilization focused contracts as well.

Yes, Frank total EPS.

Absolutely. It's that's a great comment and if you think about it if you're if you're trying to spread the cost of the console, including a gross profit we make we want to make over the the multiple years.

But these arrangements the ability to.

This makes the customer feel better as well the we instead of saying to the customer.

Okay, you've got to use X basket catheters, a quarter for wind months.

We can say you can you have to use X dollars worth of product per quarter over why months.

Spread across.

The tire catalog of acute as products. So that can be the basket catheter that can be the electrode patches that can be the left heart access products ultimately the therapeutic catheters and the like so just.

It lowers that it lowers the threshold lowers the barrier.

For the for the.

Customer as they think about signing a contract like that.

Okay, and then if I could squeeze one in just on the model that quickly.

And I appreciate the commentary on the uncoated and.

I appreciate the commentary on some of the international maybe slow down that you guys can't control, but does that impact at all the industrial.

It'll be towards the end of 2020 and more importantly, as we think about 2021.

Does that change kind of the disposable utilization or the ramp process that maybe we're sitting pretty thin.

Yes.

So.

Thank you asked three questions there does it impact the installed base presently presently.

That's all right presently we don't we don't believe it's going to impact materially the ramp of the installed base.

Present, obviously, it's an ever changing world of the settlement.

But thats, how it feels to US right now and I was on the phone with our head of Europe. This morning.

Just.

Checking in one last time, and so that we do feel good about that.

The utilization per console.

Absolutely. It is there in Europe for example, but we.

In one country has come down pretty hard on elective procedure.

Just because we only have one console in that country, so that may not be as material.

We're watching daily trying to understand the impact on.

Procedure volumes across all of VP and how it affects us specifically.

Some of the back some.

Some of the factors here they are not necessarily.

The obvious that that if that affect this right. It's.

It's.

On the one hand, you have patients and families that may or may not want to get anywhere near hospital. When there is a lot of patients. There on you have situations where anesthesiologists.

They are hard to find and particularly in the United Kingdom and.

Some hospitals, because theyre busy taking care of coke and patients.

And that affects the ability to general anesthesia in P. ablation cases.

On the other hand, we.

There was there were a lot of patients with arrhythmias that were not.

Treated in the spring and summer and this is these are not.

Clinical situations you as a patient you want to tolerate indefinitely, so and a lot of these folks are just trying to get in and get them to get them.

Selves treated so that's going to be some of the positives we can't delay this indefinitely.

And.

On our physicians many of our physicians don't want to do.

Delay the Ablations they don't they want to do their work and they want to get in there and and the other thing to think about here is.

The industry.

The hospitals and we have all adapted over the last four to six months so where.

Graz in March and April of last year, we had fairly sparse dispersion of mappers in in Europe and the us.

And so it was difficult to get people traveling around go into cases.

Getting on airplanes and all that during that time, we have much better coverage now both in the us and in Europe and the hospitals.

Have developed.

Our tactics and strategies to get people in and out of the hospital without having to do an overnight stay.

So everybody is kind of working together to figure out how to keep this industry Roland.

And on balance I feel good about that.

All.

All right thanks very much.

Okay.

Thank you. Our next question comes from the line of Bill Plovanic from Canaccord Genuity. Your line is now open.

Hey, great. Thanks, Good evening can you hear me okay.

Yes, how are you bill.

Hey, good good thank you.

So a couple of questions.

Gary just eat yes, I'm sorry.

Vince as you launch a new product right, you're always learning new information upon which to kind of refine that launch strategy in better hone it and make it more efficient and productive and you mentioned that a bit I was wondering just what it what specific.

Physically or anything you've learned in these early days that you're doing to improve that efficiency and getting those accounts up and operational as youre rolling them in.

Yes, great Great question.

I'll be I'll be honest with you. After we got the deal done I put on a you.

I grabbed my suitcase and.

Jim in the field. So I've spent I don't know maybe a third of the last quarter, maybe 40% of the last quarter.

On airplanes in.

In Greens with led on Nick standing shoulder to shoulder with my Mappers and our commercial team to get at exactly that question and you.

I think and.

So obviously, some either colleagues and management and as an aside we were told multiple times that.

Senior management from exactly no other ERP companies were doing anything like that so we.

We were you know as we always are were out front and center.

Kind of leading the charge here.

I think one of the.

My biggest takeaways Bill was as we roll into an account if you think about we we have the opportunity the obligation to train.

On a whole bunch of different things when we do a launch we're not just training on a on a mapping software user interface. We are trading on a cable allergy in the car and the and.

On the console and all of that and we train on the modifications. We suggest in terms of procedure when you use our system and.

When we train on capital management, and troubleshooting and for one person to do that as you roll into an account in the first lets say for six weeks.

While they're running the mappings.

System, and it's hard to keep an eye on.

What's going on with the physician.

As they are manipulating catheter when you're running the mapping system and looking at these.

Incredibly.

Complicated electric grams and whatnot.

And what that one of the key learnings I took away from that was.

When we launch we want to have multiple bodies in the account so that we've got somebody over the shoulder of the dock talk.

Talking to the dock talking to that I was talking to the tax making sure their mid affiliating catheters prop properly.

Emphasizing some of the key points and learnings on the screen that we bring out that maybe the.

Senators down at all that Mappers running the mapping system, so as you're doing that that bring up of these accounts.

I think we are going to want to come in a little heavier with that initial.

Product introduction phase and that team. So that's that's one of the reasons that I referenced that in.

Compound.

In the prepared remarks that we have made the decision to pull forward some additional hires.

As compared to what our plan was so that we could so that we could make sure that we can properly staffed those early cases now do we need to have that kind of body count and.

Currently in these cases no absolutely not once they take once the docket staff with figured out the cables and catheter management everything else, we believe that our our basic commercial structure remains unchanged over the medium and long term, but in those early days.

We're going to come and heavier with our staff that we had probably mapped.

Yeah.

Okay, No thats, yes, thats understandable when you bring in a differentiated technology and.

And then.

This one was for Gary is as we think about I don't know if I missed it but did you give us a ballpark on the mix of capital.

Versus disposable in the core.

Quarter end or geographic mix.

It's all in the queue.

For capital it was roughly 31% of the total.

And us revenue was about.

59% of the total.

Relative.

And then.

And the last question just in it it's been asked a little but.

Is is we think of the accounts that you're targeting to bring on line and I think you had a pretty deep pipeline of those that you have.

Has that have there been any significant change.

Changes to kind of those targets over the next couple of years over the last couple of months or.

Yes, lifting lowering bringing in new what have you any any just qual.

Qualitative would be helpful in kind of that pipeline because I think that's that's the real key here is getting the accounts on and getting them productive.

To drive the disposable so I think to me that sticky at least.

Yeah, I would say.

Punch line would be no no material changes to how we are thinking about that the one sort of a new wrinkle for US is if you think about it there are 700 empty labs in the country.

And.

Those are all targets for us.

In addition, now that we have the septal access left heart axis product line that really.

I'll tell you our conversion rates on demo for that product line are phenomenal and they're using these products and not just an ablation cases button watchman cases, and lighter equipped cases, unlike anytime they want.

To get across that's up to them to do a procedure there are.

There is some overlap there is considerable overlap, but there are accounts out there.

The.

Don't have a mapping system and on our radar to drop a mapping system in any time soon.

[music].

We are going to be.

Spinning up.

And buying regularly those was left heart access products. So that's a nice additional revenue driver for US I will tell you that that product is also I believe it's going to be a great brand ambassador for us in those accounts.

Because that gets our reps and our folks in front of cardiologists interventional cardiologist structural.

Our hearts people each people all of whom are colleagues typically within the same cardiology practice. They all talk and we've already had a couple of examples where theres great Cross pollination, there where somebody wasnt really even on our radar yet about getting a mapping system and they heard about acute as they use the product. We saw this as a slick little product.

Oh never heard of this company before do you guys do you.

You're mapping system to tell me about that and then it just.

Then it Cascades and Flywheels from there. So I think that's a that's a really interesting opportunity. It's early days.

We havent modeled that out to any great degree, but I think thats something else, we'll be talking to you about overtime.

Great.

Thanks, Thanks for taking my questions.

[music].

So.

Thank you. Our next question comes from the line of Marine evolve from LTI. James Your line is now open.

Hi, Thank you Vince very for taking the question Tonight I appreciate the time.

I will.

I started here I guess with the forthcoming CE Mark you had coming on the accurately for Centene catheter can you talk a little bit about.

No.

Customer anticipation of that over in Europe, and then sort of thoughts on.

Procedure revenue given that milestone I know that sort of adding a new product too.

Due to the procedure and away so any thoughts there.

So yes, we're we're we're very excited we think we're well down the road and getting that CE Mark.

You can ever.

[music].

Robert until you actually you get to a piece of paper, but.

But we feel like Thats coming in very short order.

The.

Therapy being in this is a big moment for this company to be a bit to become the therapy company.

And any country, where.

We have a CE mark and we'll be going direct in all the countries where.

We're direct over there and.

Biotronic, we'll be launching these products in the markets that they have.

But it is definitely a it's has the potential to be a game changer for us.

As number one I think it's a great product and it's not really just.

It's not so much just a just a catheter bill.

Because one.

When we when we get approval on the catheter that allows our or Mappers in our commercial team to walk in and present the hospital with a complete ablation system. So we we already have approval and CE mark on the related accessories, and what I'm, referring to there is our force sensing.

Unit, which is a small electronic box, which measures the course tip of catheter.

And our and an RF ablation catheter and irrigation pump in a stimulator and a controller that we distribute for biotronic.

This in my opinion is the most modern electronic stack and all of the peak.

It's.

That's a great answer a small footprint. It is a recently designed and executed.

Electronic sort of.

Of electronics that are very very well tied together.

Electronically and from an integration standpoint, and then you plug in the gold tip for sensing.

Yes, catheter, which has distinct advantages, we think over the competition and it just presents.

Really great looking product to the customer.

So we think that is going to you know.

Elevate our image in the field, we think that's going to get physicians nurses hospital administrators.

Think about us differently as compared to coming in as a company that has mapping and other accessories to being a true full service ERP company.

So just really really excited too to get started there and we think thats going to drive great revenue I would point out that we do expect.

Correct.

That will drive revenue.

On the therapy side in.

Hospitals, where we have mapping systems.

And in those cases, where they use our mapping system. We also because of the design of our system. We also believe we will derive revenues on therapy.

Where we don't have mapping systems or where they where they have the system, but they happen did not need to use a mapping system like in a simple SPT case.

Our competition doesn't necessarily.

Do that or allow for that and we're really excited about that.

The strategy launch on strategy and that capability.

That makes sense. Thank you for that and then another question here you know during the quarter, we saw some FDA approval.

New catheter there.

Therapies to the persistent AF population.

Your thinking on that and how that.

With that all that.

You know.

How you sell the ASCII, Matt just on my own thoughts on sort of anything that improves the out.

Outlook for some of these persistent and patients as a positive for any player, but I'd love to hear sort of your thoughts on that.

Yes.

My read on those approvals if I'm thinking about the same ones that you.

Thinking about.

Is those are.

Approvals for the indication for the use of those ablation catheters in persistent cases.

Where there was no explicit approval for saying historically.

The basis upon which those approvals were granted I don't.

I believe was based on any significant or notable increase and outcomes.

It was the the comparative core in those trials and the the sales.

Clinical efficacy threshold I believe was 50%.

So.

And I believe the outcomes.

Were were modestly.

Higher than that but there were to my knowledge there were no.

In each of those trials there were no notable stepwise improvements in outcomes and the persistent patients.

It was just.

Hey.

They were they were studies that.

Assess the safety and confirm the efficacy was no worse than a 50% threshold if I have that right.

Makes sense, thank you for that.

Yes.

Yes.

Yes.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

[music].