Q4 2020 Vericel Corp Earnings Call
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Okay.
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Ladies and gentlemen, thank you for standing by welcome to bear sales fourth quarter 'twenty 'twenty conference call. At this time all participants are in a listen only mode. I would also like to remind you that this call is being recorded for replay I would now turn the conference call over to Eric Burns Mary sales head of financial planning.
And analysis and Investor Relations.
Thank you operator, and good morning, everyone welcome to various sales fourth quarter of 2020 conference call to discuss our financial results and business highlights.
Before we begin let me remind you that on today's call, we will be making forward looking statements covered under the private Securities Litigation Reform Act of 1095.
These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations and are described more fully in our filings with the SEC, which are available on our website.
In addition, all forward looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.
Please note that a copy of our fourth quarter financial results press release is available on the Investor Relations section of our website.
We also have a short presentation with highlights from today's call that can be viewed directly on the webcast or accessed on our website.
I'm joined on this call by various sales President and Chief Executive Officer, Nick Cholangiole, Oh, and our Chief Financial Officer, Joe Mara.
I will now turn the call over to Nick.
Thank you Eric and good morning, everyone I'd like to begin by welcoming Joe who joined US in January from Biogen, where he held several finance leadership roles, including most recently Vice President of Finance and head of Investor Relations previously Joe served as head of global financial planning and analysis and strategic corporate.
Finance and also as divisional CFO for Biogen's U S business. We're excited to have Joe joined the <unk> team.
And he'll discuss our fourth quarter and full year 2020 financial results and our 2021 financial guidance later on this call.
Turning to our financial and operational performance, we delivered strong fourth quarter and full year results in 2020, despite the challenges presented by COVID-19.
For the full year, we achieved record total revenue and delivered record product volume and revenue for both May see an episode of <unk>.
The strong revenue performance generated significant profitability and cash flow as we reported full year positive GAAP net income for the first time in the company's history.
And generated over $18 million in non-GAAP, adjusted EBITDA and over $17 million in operating cash flow ending the year with $100 million in cash and investments and no debt.
We also had a strong finish to the year with quarterly records across several financial and commercial measures from a financial perspective, we generated record quarterly Macy revenue and total revenue in the fourth quarter record fourth quarter and the second highest.
Quarterly episode of revenue in history, as well as record quarterly gross margin net income adjusted EBITDA and operating cash flow clearly demonstrating the strength of the company's financial profile.
From a commercial perspective, we achieved record quarterly Macy implants in the second highest episode graph volume in history in the fourth quarter.
We also had a record quarterly high in the number of surgeons, taking macy biopsies and double digit growth in Macy biopsies, achieving a record quarterly high and of record monthly high for biopsies in December.
Despite the significant impact of COVID-19 on physician ex excess in elective surgeries throughout 2020, we exited the year in a strong position, we believe that our results demonstrate the resiliency of our long term growth profile and that our strong operational execution has positioned the company for a rapid return to <unk>.
To your revenue growth in 2021 and beyond.
Our guidance for 2021 reflects the return to Macy's pre COVID-19 growth trajectory as the underlying growth drivers accelerate over the coming quarters continued momentum for episodes.
In additional Nexobrid procurement revenue as we prepare for a potential launch in the United States.
As we announced this morning, we expect total revenue for 2021 to growth, 30% to 32% to approximately $161 million to $164 million.
Driven by May see growth in the low to mid 30% range and mid teens growth for episodes.
Joe will provide further details on our financial guidance in a few moments.
With respect to Macy performance and expectations are leading indicators remain strong and the commercial team continued to execute very well throughout 2020.
Overall, we received biopsies from approximately 500 surgeons in 2020, an increase from approximately 1400 surgeons in 2019.
Our 2021 guidance assumes that we will grow the number of surgeons, taking biopsies by more than 20%, which is more in line with the higher rate of growth that we generated in 2019.
While the average number of biopsies per surgeon decreased in 2020 due to the impact of COVID-19 by.
By the third quarter biopsies per surgeon had recovered the 2019 levels and we expect continued growth as we move through 2021.
Finally, even with the expansion of our surgeon base, we expect the biopsy to implant conversion rate to remain within the historical range.
We also expect to benefit from the United Healthcare's decision to expand coverage of Macy's to include patients with full thickness cartilage defects in the patella and multiple defects in the knee.
United Healthcare is the largest commercial payer in the United States covering more than 26 million lives and more patients treated with Macy are covered by United Health care than any other plant in the United States.
85% of covered commercial lives in the U S have access to macy and more than 90% of Macy cases submitted to payers are approved.
We believe that the expanded coverage will not only improve access for United Health care of patients, but also reinforced with surgeons, the broad access and favorable reimbursement for macy and contribute to its strong growth in the years ahead.
With respect to episode of <unk>, We had a very strong finish to 2020 and achieved record fourth quarter and full year growth volumes and revenue.
Fact, we generated two of the three highest episodes of revenue quarters ever in the third and fourth quarters of 2020, we.
We believe that the leadership and sales force structure changes that we previously implemented which were in place for a full year for the first time in 2020 have yielded positive operational results across a number of important measures.
Despite significant hospital access restrictions in 2020.
The episode team generated orders from several burn centers that had never placed in FSL order or had not done so in several years we.
We've also seen an uptick in the number of treatments per patient and the resulting number of grafts per patient as our sales representatives and clinical support specialists work with surgeons to optimize <unk>.
Treatment protocols for episode patients with very large total body surface area Burns.
We're encouraged by these trends and we're optimistic that they can continue in 2021 of beyond and accordingly, we have increased our growth expectations for episodes in 2021.
In terms of Nexobrid extensive pre commercialization activities are underway to support the planned launch upon approval. In addition to the ongoing disease state awareness campaign that we launched last year, we continued to advance our commercial launch plans, including a number of brand development and market access initiatives.
Our medical affairs team is engaged with burn centers and training and educational initiatives through the next expanded access protocol, which we believe will be critical for nexobrid to potentially replace surgical excision is the standard of care for removing eschar in patients with severe burns.
We expect to recognize the remaining revenue related to the BARDA procurement of Nexobrid in 2021.
Based upon expected timelines required for PMT committees to review and ultimately approve inclusion of Nexobrid non hospital formularies following its potential approval, we'd expect a more meaningful uptake in commercial revenue for Nexobrid in 2022.
I'll now turn the call over to Joe to provide more details on our fourth quarter financial performance and in our initial 2021 financial guidance.
Thanks, Nick first I wanted to start by saying that I'm very excited to be part of the various L team and I look forward to getting to know many of you over the coming weeks and months.
Turning to the income statement.
Total net revenue for the fourth quarter increased 15% to $45 2 million compared to $39 4 million in the fourth quarter of 2019 and included $34 7 million of maintenance revenue and $9 $6 million of episode revenue compared to $33 6 million and $5 8 million of Macy's.
Episode revenue, respectively in the fourth quarter of 2019.
The revenue grew 3% and episodes of revenue grew 65% compared to the fourth quarter of 2019.
Total revenue for the quarter also included approximately $1 million of revenue related to the procurement of Nexobrid by BARDA for emergency response preparedness.
Gross profit for the quarter was $33 6 million or 74% of net revenue compared to $28 8 million or 73% of net revenue for the fourth quarter of 2019.
Total operating expenses for the quarter were $21 4 million compared to $19 6 million for the same period in 2019.
The increase in operating expenses was primarily driven by incremental employee expenses related to the Macy's sales force expansion expansion in 2020.
Net income for the quarter was $12 2 million or <unk> 25.
Per share compared to $9 5 million or 20 <unk>.
Per share for the fourth quarter of 2019.
Non-GAAP adjusted EBITDA for the quarter was $16 million or 35% of net revenue compared to $12 8 million or 33% of net revenue in the fourth quarter of 2019.
Our non-GAAP adjusted EBITDA of $16 million in the fourth quarter increased approximately 25% versus the fourth quarter of 2019.
On a full year basis total revenue increased 5% over 2019 to of $124 2 million driven by the growth in both Macy's and episodic revenue as well as revenue from the BARDA procurement of Nexobrid.
Net income for the year was $2 8 million or <unk> <unk> per share while non-GAAP adjusted EBITDA was $18 6 million of 15% of net revenue.
Finally, we generated $11 3 million of operating cash flow in the fourth quarter and $17 6 million for the full year.
As of the end of the year the company had approximately $100 million in cash and investments compared to $79 million as of December 31, 2019, and no debt.
Transitioning to our full year guidance for 2021.
We expect total revenue to grow 30% to 32%, which represents full year total revenue of approximately $161 million to $164 million.
Macy revenue is expected to grow in the low to mid 30% range over 2020.
This guidance assumes that surgeons, taking biopsies will grow approximately 20% over 2020.
The biopsies per surgeon will increase above 2019 levels.
The stable conversion rate.
Importantly, our full year expectations for Macy and assume that the current overall COVID-19 trends do not materially worsen and that we continue to see steady improvements in COVID-19 cases, and hospitalization rates throughout the year.
In terms of the mix of Macy revenue across the quarters, we expect that Macy quarterly revenue generally will follow the seasonality pattern that we saw in 2019.
As mentioned earlier episode had a very strong finish to 2020 and we are optimistic that the positive trends described earlier will continue into 2021.
As a result, we are increasing our expected episode growth rate from high single digits to mid teens growth for the full year.
For next of brand, we anticipate the remaining $3 8 million of BARDA revenue.
To be recognized evenly across each quarter in 2021 and meaningful commercial revenue from an ex Brent the beginning in 2022.
Moving down the P&L.
We expect gross margin to be 70% to 71% up from 68% in 2020.
Full year operating expenses are expected to be approximately $115 million.
Overall, approximately 50% of the operating expense growth is driven by our non cash stock compensation expenses due primarily to the share price appreciation over the last 12 months.
Our operating expenses, excluding stock stock compensation are expected to grow by approximately 20% driven by a full year of our larger Macy's sales force.
An increase in next of bread sales and marketing investments and normalization of other discretionary commercial spend.
Non-GAAP adjusted EBITDA margin for the full year is expected to be 21% to 23% up from 15% in 2020.
This guidance is consistent with our expectation to convert approximately 80% and 50% of marginal revenue to gross margin and adjusted EBITDA respectively.
For the full year adjusted EBITDA is expected to increase from approximately $18 5 million in 2020 to approximately $35 million in 2021 are roughly twice the adjusted EBITDA versus 2020, which also points to continued continued meaningful growth in operating cash flow.
I'll now turn it back over to Nick for some closing remarks.
Thanks, Joe wanted to take a moment to thank all of our dedicated employees for their contributions in 2020, despite the challenges, resulting from COVID-19, our manufacturing and quality teams continued to manufacture and deliver our products without interruption in our commercial and clinical support teams continue to partner with.
Surgeons to ensure that patients in need had access to our important products. The entire of aerosol team looks forward to continuing to execute on our long term growth strategy provider of therapies to even more patients in need and in the process create significant value for both patients and our shareholders.
Thank you and now I'd like the operator to open the call to your questions.
Okay.
Adam Your line of to asking the question. Please press Star then the number one of your telephone.
Pat.
Please go ahead for your first question.
Ryan Zimmerman with <unk>.
Great. Thanks for taking the questions.
And Joe I wanted to start with next of bread for a minute and just get your sense around timing of that launch.
Obviously, the <unk> date was.
The assumes the January 2021, so maybe why why start expecting sales in 2022 and not maybe first half.
Excuse me the second half 'twenty one.
Yeah, Hey, Ryan it's Nick so just to be clear the Purdue for date, which remains the same as June 29 2021 January.
And so that remains the case, obviously, we're excited to have an opportunity to launch nexobrid in the U S. By the wound of course, who submitted the BLA.
He is working with the FDA during the review process and the process is moving forward as.
As we had talked about with the midyear approval you still go through a quarter or so of PMT.
Committee reviews at the individual burn centers.
And then go through the approval process and so we've been very consistent in saying, we expect a more meaningful uptake and revenue from <unk> in 2022.
Okay. Yeah. Thank you for correcting me.
The June 2021.
Second question is just around Macy.
You expect to get back to that kind of pre COVID-19 of growth rate of.
Above 30%.
Are we to assume that that's a sustainable growth rate, maybe looking out longer term.
On the Macy's business over time, and I think if I do the math correct and correct me, if I'm wrong, Joe, but the implied growth in Macy in at least the first quarters something from the mid teens based on that seasonality cadence.
The comments around around that business would be appreciative, yes, I'll start Ryan. So just in terms of the long term growth rate I think we've.
We've said pretty consistently that the increase in biopsies surgeons as kind of a good floor for.
Sort of the longer term growth rate, obviously to the extent as we've talked about previously that we will.
Get more biopsies per surgeon and we take a little bit of of price increase that is what sort of gets you from growth in biopsy surgeons to sort of the the revenue growth and an example of that was 2019, where we had 25% growth in biopsy surgeons, but because we got more biopsies per surgeon and then obviously.
A little bit low single digit price increase we ended up with closer to 35% growth. So.
That's how we look at the business going forward, we think those growth drivers remained pretty strong as we talked about.
But again baseline over years, yes, I mean, we expect strong double digit growth.
Yes, Ryan so in terms of kind of the quarterly question I think going back of the guidance, we talked about kind of low to mid 30% range for the full year of Macy's in the prepared remarks, we talked about kind of of 2019 being a good kind of estimate I think at this point.
Yes, it certainly could still be some variability, but that's kind of of our best estimate of I think if you kind of get into the math you do get and you apply it.
The plan that next year, you get into the double digits in terms of Mesa in Q1.
Okay. Congrats again guys. Thank you.
Okay. Thanks Ryan.
Okay.
Your next question is from Daniele and totally with the SDP lyric.
Hi, Good morning, guys. This is actually the best kind of wrong for I don't know and thank you for taking my question I guess all of that.
The adoption.
Okay.
Once again, thanks, Dan.
The thing.
Okay.
Okay.
Okay, Great. Thanks, Neil Foundation for me.
Good day.
Thank you for Asia and the impact.
Over the last 12 hardware that can be early stage colon cancer.
Yes, so rebecca.
As we mentioned in 2019, the number of biopsies surgeons increased 25% over 2018.
In 2020, which obviously was a disrupted year, we still were able to grow those surgeons, obviously not at the rate we had anticipated prior to COVID-19, but we were up about seven or 8% to about 1500 surgeons.
We've mentioned.
And did so again today that we expect biopsies surgeons in 2021 to grow more than 20% over two.
2020, so you can kind of do the math and see that will end up somewhere around 1800 biopsy surgeons for 2021 would be our expectations.
Alright got it.
Thank you.
Another question.
Two apps.
Hi, Andrew.
The rats in Q1 can you give us the.
Update on that from.
Yes, well, obviously in 2020, we did a relatively meaningful sales force expansion from 49% to 76 territories and.
Our perspective is that that was where we would be for a couple of years. So we're not planning to expand the sales force again this year.
We will look at it at the ended the year, but this was intended to be sort of an expansion for two to three time of year time period at least.
Alright, thank you.
The next question is from Taylor from with.
The clarity.
Hi, guys. Thanks for taking our questions. The first has there been any update on next the grid pricing that you can provide I think historically you said maybe something in the range of $5 7000 does that does that range still seem reasonable at this point are you more comfortable at the higher low end of of that per page.
Right just any additional color there would be helpful.
Yeah, Hey, <unk>. Thanks for your question and yes that was.
Our perspective, when we sort of introduce the addressable market for Nexobrid and <unk>.
Really based on a benchmark product thats out there.
We're in the midst of a pricing study right now I think when we laid out sort of our pre commercial launch activities.
This was something that was going to be going on through the first quarter. So we haven't made any final determinations I would say, we're certainly comfortable with that entire range.
And really the question is what kind of premium will we ended up taking given the compelling clinical data for nexobrid.
Great No that makes sense. Thanks, Nick and then I think you guys have had a month under your belt now with the United Healthcare positive coverage decision I'm, just curious if you've seen any benefit or.
It sounds like you guys are pretty excited about it just how would you help us sort of frame up the opportunity there in 2021, yes.
So we actually are under a month, because we announced it in January but the policy went into effect on February one. So it's very early days, but the way we look at the opportunity is is first of all you can kind of look at our Tam and say that about 15% of our business is United Health care business.
20% of cartilage defects, our patella defects and so you can do the math and say if I wanted to look at it.
In terms of the Tam, it's probably a $60 million to $70 million piece of the Tam and obviously, we have some of that already because of patella cases were approved but just on a case by case basis for United So so thats kind of the market opportunity. We can then obviously look at as we mentioned before.
United Healthcare Patella cases were approved at a much lower rate than our average rate as I mentioned in my prepared remarks the.
The approval rates generally from ACR over 90% and it was much less for.
For Unitedhealthcare Patella cases, so you can look at that and say well that's business that you can expect to capture.
The bigger picture issue is that surgeons knew that the United healthcare didn't cover patella cases, and so the real question is sort of how many patients that they saw who were United health care patients with patella defects that they otherwise would have treated did the the not even bother taken biopsies for and Thats the bigger piece of it so.
That relates more to the Tam.
A portion of obviously, but yeah. We're excited about it we think it will allow us to not only capture more United health care of patients, but there's kind of a halo effect of just continuing strong reimbursement and access from AC.
Great. Thank you.
I'm, Chris Cooley with Stephens.
Good morning, and thanks for taking the questions and congratulations on the litany of records. There I think I lost track of the number there in the fourth quarter.
If I could just follow on.
Question for my first when you think about.
The change in the United Health coverage policy do you think that will be more impactful going forward within the sports med or the general orthopedic surgeon community I'm just curious if.
One was a little bit more skewed and as a result of that could be maybe more beneficial from the.
Uptake standpoint, and then I have one quick follow on.
Yes, I don't think we feel like there is of particular segmentation I think the benefit will apply across the board to our 5000.
Surgeon targets and again Thats almost a 60 40, roughly 50 50 split of sort of designated sports Medicine Surgeons versus general orthopedic surgeons. So.
So I wouldn't say it skews one way or the other I think it's the benefit that we can realize across the board.
Understood and then just looking back at the episode growth in the back half of last year, which was obviously very impressive just curious if you feel like this is now kind of the overall level of productivity that we should think about on a per rep basis or is there still.
Leverage there are opportunities to improve that going forward here in calendar 'twenty one.
Independent of the mix of bridge loans.
The hitting right now or is there still some still some room to go there I guess in short.
Well I would say we are always careful about calling trends with episodes just because of the.
Small numbers and variable nature of the severe burns, but I do think we've pointed folks to look at and <unk>.
<unk> in 2019.
We had three quarters that were below $6 million and then the the record quarter of $9 $9 million of the third quarter.
And that was in an uninterrupted year. When you look at 2020, where clearly there were access issues and things sort of ground to a halt in Q2 each of the quarters was above 6 million other than.
The second quarter, and so we do think that theres, probably a stronger baseline there.
But we by no means feel like we're done of our capped out our goal obviously would be to continue growing episodes.
On its own and we think with an expanded sales force ahead of the Nexobrid launch that will get further uptake for episodes as well.
Thank you per se.
Alright, Thanks, Chris.
The next question is from Jeffrey Cohen with Ladenburg Thalmann.
Hi, Nick and Joe how are you.
Good Jeff great. Thanks.
A few questions from sort of very strong margins for Q4.
Whats the whats the.
Pull through on the the margin potential should we still be thinking about.
Low seventies as per your guidance.
Two or three years out or just for.
Part of drive those revenues.
Here or keep them kind of in the same bridge.
Sorry can you repeat the second part of the gross margin.
Right.
How that looks in 'twenty, two and 'twenty three and the ramifications from an extra burden on us.
Call it low to mid seventies.
Yes, so I would say.
Go back from our guidance, we talked about from a gross margin perspective of being in that 70% to 71% range for the full year. Obviously it was kind of strong in the fourth quarter of 2020, and when we typically see higher revenues.
More broadly I would say and we've talked about this in the prepared remarks. So as we move forward. We are still kind of focused on as marginal revenue comes in I would say approximately kind of 80% of that converting the gross profit line and also about 50% on the adjusted EBITDA. So those those remain kind of the longer term goals.
Both of them both from 'twenty, one and certainly beyond.
In terms of next of Brad there's kind of two components. There on the margin is the royalty, which is kind of in the high single digits and then there's a fixed cost components. So I think for.
From a P&L perspective that kind of fits in with our current portfolio. So we expect that to the consistent from the margin perspective relative to where we are now.
Okay got it and just to review your commentary on the the.
Of the Opex, where you said was the 115 and that's a GAAP number and that's inclusive of approximately 16% stock comp is that correct for 'twenty one.
Yeah.
I think what we said was so year over year about 50% of the increase so when you kind of look back at 2020 versus the guidance on 2021 is related to stock comp in that kind of if you exclude that stock comp component of the underlying growth rate is more of like 20%.
Okay got it and then any read into.
Conversions over the past few quarters, Nick it sounds like.
There is some strong trends, but any read recently into.
Uptick or downtick or throughput or the time from biopsies through many.
The manufacturing.
No I think we've said in this underlies our assumptions for 2021 that the.
Biopsy to implant conversion rate has remained relatively stable within historical ranges, even though we're adding obviously a large number of new surgeons, who typically have lower conversion rates as the engage with the brand and then sort of move up.
As they become more experienced and higher volume users so I'd.
I would say to be remaining stable as good now but of our three drivers of adding new surgeons getting more biopsies per surgeon and then increasing the.
Conversion rate over time, right now growth is clearly being driven by adding new surgeons and getting more biopsies per surgeon overtime as we saturate.
Our current 5000.
Surgeon target Universe, you would expect those latter two drivers to really start to take prominence in the in the outer years.
Okay perfect. Thanks, again for putting out of 'twenty 'twenty, one guidance, it's appreciated in particular questions.
Okay. Thanks, Jeff Thank.
Thank you.
Your next question is from Kevin the leader with Oppenheimer.
Hey, guys. Thanks for taking my questions maybe the first.
The one.
I appreciate the guidance very strong.
Net can you provide an update as to how youre thinking about the.
The percentage of the sports medicine.
Yes, the portion of the Tam that you think you're penetrated and as we think about that.
The 20% year over year growth in <unk>.
<unk> sorry, James.
The those increasingly look for the mix shift a little bit more towards general orthopedic surgeons or do you think sort of the historical mix of new sort of again ads.
SKU of sports medicine of sell the right way to think about Hey, guys I'm just trying to get the same.
Kind of ordering patterns and whether there might be some differences in those new docs composed of that.
Longer term sports Medicine, Docs, yes, well I'll just go back and sort of give you the historical background as I get to the answer of your question, which is we started with 3000 target surgeons. When we launched in 2017 and those were principally those were folks who were.
Used car to sell in years gone by and then.
You can go to the sports medicine societies, and sort of get the list of surgeons and cull through them and so on and so it was probably.
Obviously more heavily focused towards sports medicine surgeons, when we launch, but I wouldn't say it was exclusively so.
We penetrated call it roughly 50% of that initial 3000 targets.
2019, when we said we had.
Got biopsies from about 1400 surgeons and now we've expanded to 5000 surgeons. So I guess if you just look at it proportionately there were still 500 of those original targets, we hadn't penetrated yet plus 2000, new general orthopedic surgeon, so roughly evenly split in terms of potential new customers.
And I think thats, probably the best way to look at it.
Super helpful.
And maybe a follow up on that for the past My second question. The follow up is just.
Have you seen any differences historically in terms of kind of.
The conversion rates or other features between the two of Bulls sports Medicine and.
And general orthopedic Surgeons and my separate question is.
On the open sale.
Tremendous results, particularly against some of the industry commentary cards.
Decrease and an overall sort of burn volumes related to COVID-19 restrictions and portions of.
2020, and I guess my question.
The salary does your guidance imply.
From.
Yeah rate of some of their burn standpoint of return to kind of pre COVID-19.
Dynamics in terms of the macro market margin.
How do I think about any any seed for from.
No really behaviors and the size of the overall addressable market.
In the guidance.
Alright, well.
Well I'll start with Macy and just the conversion rate historically versus new customers.
You started with the bit of an enriched pool with the original may see users right because they were car to sell users typically sports medicine surgeons had pretty high volumes, obviously more so than the new users in either case.
So that skewed it a little towards heavier volumes with with the sports medicine surgeons, but when we did our sales force sizing.
Exercise with the <unk> Associates, we were really look we had the claims data in.
The new Surgeons, we added were really high volume cartilage repair surgeons that did open knee procedures and when you think about sort of the low levels of utilization from AC generally doesn't take many patients to become a pretty pretty important volume users. So I think there is potential across the board.
With with the surgeons that were calling on.
In terms of episodes, just sort of the dynamics, we had a lot of discussion sort of when in the early days of COVID-19 about what the impact would be when you had reduced industrial activity.
And maybe reduced sort of activity generally and then folks who were going to be at home more often and what we said back in sort of the the midst of all of that was we really didn't see a change in the top of our funnel of the mix might have changed.
Think of couple of our burn centers, who are typically.
A lot of industrial accidents, the activity went down a little but obviously it was made up in other areas and thats because these unfortunate accidents happen.
For many reasons at home or at work and so we really didn't see a meaningful change in the top of the funnel I think driven episode as we said was getting business from some new centers the way our new sales force structure and leadership is approaching the treatment protocols for how you treat these patients with severe burns.
So we're seeing some more re treatments.
And then more grafts per patient and I think thats, a pretty focused effort on our on our behalf.
Thanks and congrats.
Great job guys. Thank you.
Thanks, Kevin Thank you.
The next question is from.
Volume per caller lumpkin with HC Wainwright.
Yeah.
Your line is open.
Hello.
Sorry about that.
Good morning, Nick and Joe.
A couple of quick questions base based on your guidance.
It looks like you're looking for like 2019 like growth.
So.
Can you highlight for us from some of the things that you are looking at which is kind of giving you of the confidence.
Pretty much.
The quite close to the pandemic situation.
Yes, well I think RK will.
Good morning, and thanks for the question well, what kind of take a look at both products. So for episodes of obviously as we mentioned on the call. We've had two of our three highest revenue quarters ever in the back half of 2020 of nicely. So I think bumping our expectations from high single to low double digits to sort of mid teens just reflects.
Kind of how the the product has been performing through the pain.
Pandemic year, so so that one is pretty straightforward.
With respect to Macy, obviously, we have a.
View in the part of the business through the biopsies in sort of the conversion rates.
And then in light of sort of how that performed in 2020. So using models that have served us pretty well.
We're able to have a pretty good feel for where things are going I would say.
Obviously.
In terms of reasonableness of assuming 30% plus growth for me see.
We have it's a very large market, obviously as I mentioned early innings of relatively low penetration. So there's a lot of room to grow both on surgeon penetration patient penetration. We've got a larger sales force now that'll be in place and has experienced there'll be in place for the the full year.
And then obviously more surgeons to call on as well so we think it's pretty.
The reasonable and I would say if you look if you look back at sort of our initial guidance last year, which was in the $141 million to $146 million range and how we sort of characterize that you would've expected may see in the mid 100 teens rate on 115, or so so to say apply.
The 30% to the $94 million from this past year.
And the kind of in the mid Twenty's, so of $10 million uptick with all of those dynamics at play we're pretty comfortable with that.
Yes.
So a couple of things of that.
And so the kind of tease them up a little bit so on episodes.
Congratulations on two quarters.
Yes.
I'm not sure two quarters makes the plane, but suddenly.
Of the promising.
What were the drivers for some of those claiming that never.
Hi.
All of the episodes.
For them too.
No.
On the.
In terms of sales force expansion for the <unk>.
<unk> franchise in 'twenty, one should we expect.
Are the least March along with the.
What are you expecting for Nexobrid as well.
Yes, so just in terms of the dynamic of new centers.
First of all as I mentioned, we brought in new leadership in 2019, we restructured the sales force into sales.
Representatives and then clinical support specialists. So it's always about having the right people in the right roles. When we brought we brought on a few new representatives. They obviously come to the business with existing relationships. So I think it is just.
Very strong sales execution.
And obviously good work in explaining the profound benefits with episode to the centers who may not.
Have been using it previously so so that's I think really the explanation for for why we're seeing that.
Perfect.
And then.
And it's been fixed on the sales force expansion for the bone franchise, specifically or yes, you know of.
Probably the we're planning to.
Follow the same playbook that we've done when we expand Macy's that when we get closer to a potential launch.
We will end up bringing the reps on ahead of that so they obviously can get trained up do the home study either.
Office study in the field training.
So we would expect to do that of course.
<unk> ahead of launch so.
We're kind of entering that zone hopefully.
Okay. One last quick question.
Congratulations on the United Health care coverage.
So should we expect additional.
Hey ourselves of to jump in.
Net of health care.
In 2021 are you of.
The other folks.
Well as I mentioned, we have outstanding access for Macy's, so more than 85% of covered lives in the U S.
Have access to meet all of the major plans. The nuance here was that when Macy was approved all of these plans had existing medic.
Medical policies that were really based around the Carter, So label, which was more limited in that it was only for the FX on the femoral condyle or part of the D was the second line therapy. So macy as the first line therapy.
<unk> to cover defects anywhere in the knee had a much broader label and the plans just took different time periods of time frames or time to get there some of them reviewed the macy label and updated their policy immediately some just took it off the investigational list, but didn't update.
Other parts of the policy and so this was really just.
An update we had mentioned a couple of years ago that Aetna Cigna had done the same in the United was really the last of the major plans to kind of just mirrored the policy to the current Macy label. So we'll continue to focus on any incremental enhancements, but theres no sort of big one left out there that we're waiting on.
Great. Thank you very much for taking all my questions Nick.
Okay. Thank you.
At this time there are no questions.
Great well I just wanted to thank everybody for joining us on the call. Today. We appreciate your continued interest and support and so have a great day and look forward to talking to you again soon thank.
Thank you.
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