Q4 2020 Inari Medical Inc Earnings Call
Ladies and gentlemen, and thank for standing by and welcome to the and already Medical Inc. Fourth quarter 2020 earnings Conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session and you will need to press star one on your telephone and now I'd like to introduce your host for today's.
Program Caroline corner Investor Relations. Please go ahead.
Thank you operator, welcome to <unk> fourth quarter, and full year 2020 earnings call. Joining me on today's call are Bill Hoffmann, President and Chief Executive Officer, and Michelle 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, including statements regarding the markets and the veterinary operates trends and expectations for non <unk> products and technology trends and demand for nice products and.
And I always expected financial performance expenses and position on the market and the impact of COVID-19 on and all of these operations and an artist customer's operations.
These statements are neither promises no guarantees and involve known and unknown risks and uncertainties that could cause actual results performance or achievements to differ materially from any results performance or achievements expressed or implied by the forward looking statements.
Please review and our most recent filings with the SEC, particularly the risk factors described and the nurse S. One filing and then and our annual report on form 10-K for the year ended December 31, and 2020 for additional information.
Any forward looking statements provided during this call, including projections for future future performance are based on management's expectations as of today.
And already undertakes no obligation to update these statements except as required by applicable law.
And I always press release with fourth quarter and full year 2020 results is available on and noise website, Www Dot and army medical Dot com under the investors section and includes additional details about <unk> financial results and.
And I always web site also has the latest SEC filings, which you're encouraged to review a recording of today's call will be available on our website by five P. M Pacific time today.
Now I would like to turn the call over to Bill for his comments and fourth quarter 2020 business highlights.
Thank you Caroline and thank you everyone for joining us today.
As many of you know based on our pre announcement of revenue and procedure volume in January we enjoyed a successful and productive fourth quarter.
Most importantly, we treated a record number of patients.
We are excited to share with you and some of the detail about on <unk> progress, including an update on all of our growth drivers, but first and is now officially tradition and our third earnings call as a publicly traded company I would like to share with you a patient story that will remind you.
About the powerful impact our technology and our team have on the lives of our patients.
Late in January.
A 32 year old mother of two young children and presented at a hospital and Pennsylvania.
With a systemic blood infection, endocarditis, and and infected blood clot or vegetation and her right atrium and on the tricuspid valve and her heart she was very sick.
Surgery, and which the chest has cracked the heart and size and the infected Claude is removed and sometimes considered for these patients. This young mom. However, like most patients with this condition with far too sick or the sort of surgeries and steel.
Steel her only chance for survival depended on removal of this in fact did clot.
The physician team opted to utilize the brand new and <unk> 'twenty curve. The curve is it 'twenty French aspiration catheter with and angled or curved distal and that can be pointed directly at the clot.
Which is often stubbornly adhere to the valve to aspiration passes well wishes as we call them through the curve and 20 minutes later the entire infected clot was extracted.
This eliminated not only the mechanical issues caused by this class, but also the source of the infection, enabling successful antibiotic treatment of the systemic infections.
And physician, who treated this young mom told me that without the curve. The only other remaining option was palliative care and we.
The patient would have been kept comfortable but with no expectation for recovery.
And the patient recovered fully and was discharged to her home and to her children. Just a few days later.
And this model is not alone we believe adjusted and the United States. There are approximately 20000 patients who present with cloud and transit, where Clos and the right side of the heart, either with or without endocarditis and vegetation and.
<unk> 'twenty curve represents a simple safe and highly effective solution to this complex problem and a very sick patient population with otherwise limited and poor treatment options.
In January we received an FDA clearance from.
The $2 20 curve, along with an indication specifically for cloud and transit.
The first such clearance for any thrombectomy system that does not require cardiopulmonary bypass.
The FDA clearance of the T 20 curve represents the first of several Tam expanding products and a very robust pipeline of new products at and Ari.
We will have more to say about this a bit later in the call.
As a reminder, we are treating fewer than 5% of all the patients. We believe can and probably should benefit from our devices and our core DVT and PE markets. We are still and the earliest phase of our mission.
And we remain committed to this cause and ways that are far more important to us and business.
I'd like now to turn our attention to our Q4 financial performance.
Our revenue in Q4 was $48 $6 million.
Up over 144% from the same quarter last year and up 26% from Q3.
As you know we pay close attention to procedure volume as this metrics more closely than any other aligns with our mission to treat our patients.
And over time, we believe it correlates strongly with revenue.
During Q4, our physician customers performed approximately 4600 procedures.
Up 156% from the same quarter last year and up 24% from Q3.
While a sequential growth of approximately 25% in both revenue and procedures was strong we experienced a number of important COVID-19 related headwinds, both anecdotal and measurable.
For example, the Covid surge pushed many hospitals beyond bed capacity, resulting and diversion of patients to other hospitals. When this occurred and our top centers, we saw measurable decline and procedure volume.
Many times all of the hospitals and an entire city had more patients and capacity.
<unk> and medical management of patients, who might otherwise have been treated with flow tree from a cloud trigger.
Similar to what we have observed earlier and the pandemic during Q4 and at least some geographic regions. We also believe patients suffering from BTG, we're likely reluctant to even present for care.
Finally.
We saw important restrictions to access to hospitals. This limited our ability to in service and educate non interventional stakeholders, including emergency physicians, Pulmonologists, Hospitalists and Intensivists and about our devices and the benefits to patients of the and already procedures.
Similarly, both physicians and administrators, often had limited bandwidth to discuss the establishment of systematic processes for identification and triage BTG patients that we will believe we believe will be important.
As we work to establish MRI and stroke like programs.
Still throughout Q4, we found the hospital environment, mostly constructive despite the important increase and even acceleration and COVID-19 diagnoses and hospitalizations.
As highlighted several times in the past to date the characteristics of our products and procedures have proven perhaps more resistant to the impact of the pandemic than others and the med Tech space and we have continued to find ways to execute effectively and the COVID-19 environment.
We believe this is reflected and our growth.
For starters, our procedures are simple require limited hospital resources and no ICU stay on.
All of which are important given the significant resources and requirements for Covid positive patients.
Our patients.
Most often present emergency so.
So our procedures, particularly pulmonary embolism.
Are not usually designated as elective.
Our sales professionals, who typically cover approximately 90% of our procedures and person are often deemed essential to the procedure by the hospital, which preserves valuable face to face time with our physician customers and Cath lab staff.
And we continue to use clot, where youre academy or zoom based training platform accompanied by our online educational portal to remotely communicate train and educate physicians nurses and tax and a highly effective manner.
I'd like to turn now to our key growth drivers and so the progress we have made on each of them and the fourth quarter.
First we continue to expand our sales organization to target new hospitals and physicians.
We estimate the size of our U S target addressable markets.
And then 460000 patients recently expanded to include the 20000 cloud and transit patients similar to the young mom, who story we shared earlier.
And this represents a $3 8 billion dollar revenue potential.
We remain very early and our effort to penetrate our core markets and the effort will require a lot more sales professionals. We continue to believe that when fully built out our sales organization will rival and size the largest interventional focused sales organization and the market. Today. We began Q4 as you know with 120 territories and we began.
Q1, with 130 territories. This is consistent with our historical cadence excluding earlier pandemic anomalies of adding about 10 territories per quarter.
Increasingly this expansion has and will provide opportunity to split territories to focus on our second growth driver, which is building awareness and driving deeper adoption at existing hospital customers.
We believe as many and 85% to 90% of <unk> patients, who can benefit from our flow treat per system are nonetheless treated.
With conservative medical management or anti coagulation alone similarly over 60% of DVT patients, who can benefit from our devices are managed conservatively.
Our goal is to access this patient population by educating and communicating regularly about the benefits of large volume clot removal with the non interventional physicians, who manage these patients again, such as the emergency positions Pulmonologist Hospitalists and intensive and we're.
And we're doing this in several ways.
We continued to leverage clot Warrior Academy and we've recently expanded it to include live cases, and local hospital clot, where Youre Academy Unplug sessions, and a leadership series for our key opinion leaders and both interventional and non interventional specialties.
Since its launch in March 2020.
What were your academy and engaged over 2800 customers, 70% of whom are physicians across 150 livestream events feature.
Featuring over 50 physician faculty members. In addition, our CWA online portal has received over 1000 unique customer visits to more than 100 online courses.
We are continuing to build our medical affairs team and capabilities.
We recently hired Dr. Venkat Tomorrow.
World Class high volume interventional radiologists as VP of medical Affairs.
This is a full time position and Dr. Tomorrow has exited his clinical practice.
His broad clinical skills deep technical expertise and strong social media presence and the interim interventional radiology community help further our ability to communicate with a broad customer base. He was previously a frequent contributor to clot and where Youre Academy and is now serving as co host of these events.
In addition to providing clinical support to customers worldwide as.
As we've discussed in the past we continue to see interest from customers to establish more systematic processes for identifying <unk> patients who might benefit from intervention and triaging and these patients to the hospital designated DTE experts such systems and processes are standard for heart attack and stroke patients, but are virtually nonexistent for <unk> patients.
And with the right resources and focus we believe we can have a positive impact on these dynamics.
Our third growth driver is to continue to build upon our base of clinical evidence lab.
Last quarter, we shared with you the interim results on 230 patients enrolled into a real world All Comer Flash registry for PGE.
These acute data demonstrated excellent safety and dramatic on table improvement and a battery of hemodynamic variables.
The day after our last earnings call and a 30 day follow up.
From the same patient population were presented at the American Heart Association scientific sessions.
We believe the 30 day data demonstrates potential for flow trigger to both interrupt and natural progression of the disease.
And impact patient recovery and positive and significant ways.
The results show just one GAAP at 30 days and a six 7% readmission rate over that same timeframe by contrast historical studies and registry and on similar patient populations treated with anti coagulation alone or with thrombolytic drugs have reported mortality of 5% to 15%.
And hospital Readmissions of at least 25%.
More recently, we also reported exciting results from cloud a real world All Comer DVT registry.
A sub analysis of challenging chronic clot patients showed that plot schriever could achieve a 90% median clot removal.
This was performed and a single 34 minute procedure on average with no thrombolytic.
And there were no device related major adverse events and the average blood loss was just 50 Ccs.
The results are even more remarkable given the chronic nature of the clot previous studies like attracts for example selected for patients with the most acute clot focusing exclusively on patients whose symptoms were less than two weeks old.
This cloud sub analysis selected for patients, whose cloth with at least six weeks old older cloud as many of you know and more firm.
And more adhered to the vessel wall.
And therefore more difficult to remove the other devices that rely on aspiration and <unk> thrombolytic drugs. The class III is purpose built for this sort of cloud.
It is designed to get between the vessel wall and the clot and the core of the clot from the vessel wall. This sub analysis firms that does this really well and are safe and consistent way.
Finally, we are excited to share that we recently saw a publication of the first ever study and which of his the pathological analysis was conducted on percutaneous leads tracking the o'clock schriever and flow trigger from DVT and PE patients.
The study showed not surprisingly that PE and DVT clause or sub acute to chronic in nature containing limited fiber and.
Because fiber and as the fiber pharmacologic target a thrombolytic drugs like Tpa and the limited fiber and content shown in this study suggests why these drugs have limited impact on PE and DVT costs.
We believe this is an important study and.
And the first of many and which increasingly interesting questions will be asked and answered about these clouds.
We'll have a lot more to say about chronic claude and the treatment of it in the coming quarters meantime, we continue to invest heavily and clinical studies.
And the production of data that is useful for expanding the market driving adoption and informing the design of randomized and controlled trials that we remain committed to executing.
Our force growth driver is to continue to expand our product portfolio on this front, we have enjoyed and exciting and highly productive few months earlier I shared with you that we recently received FDA clearance of our T 20 curve, along with the clearance for cloud and transit for the entire flow <unk> system. The.
And the ability of physicians to direct the large bore tip of the curve toward the clot has been useful not only for cloud and transit.
But also for treating caught and very large diameter vessels, such as the inferior vena cava and the most proximal pulmonary arteries.
We have included the curve and our per procedure pricing, so that it like all devices and the poultry per system.
It can be used for a single price. This ensures that physicians can make appropriate decisions about which tools to use it or procedurally based exclusively on clinical need.
And any concern from the impact on the hospitals procedural economics, we remain committed to the best possible patient outcomes above everything else.
Next.
We recently completed the limited market release of our flow spaces venous closure system.
Flow stasis represents a simple and consistent method of pension and the compression stitch often used to obtain hemostasis after our procedures.
We believe this device might have applications beyond and Ari procedures as there are many medium and large bore catheter based procedures and electrophysiology.
And structural heart that might benefit from a simple closure system that leave nothing behind and does not involve suturing into the vein.
And finally, we previously reported FDA clearance of our T 24 flex.
Which is a much more flexible flexible version of our 24, French aspiration catheter and you.
You might recall that this flexibility makes the device more trackable more deliverable and easier to use this.
And this has accelerated migration to the larger 24, French system and it is now used and more than half of our pay procedures. This is important because the larger the diameter of the catheter and the stronger is the force on the clock and the more cloud can be removed as you know we believe that maximization of clot retrieval is important to optimal.
Patient outcomes.
Looking further into 2021, and we're excited about the robust lineup of new products and innovation and our pipeline.
Our fifth and final growth driver is expansion into adjacent and international markets. We've made important progress toward expansion into international markets, especially in Western Europe.
We reported during our Q3 earnings call that we received and updated CE Mark for cloud fever.
We are pleased to report that we have now completed several successful cloud schriever procedures and Germany.
We are pleased also to report that we recently received and updated CE mark for flow trigger.
We are seeing considerable enthusiasm from both devices as many European physicians have seen the positive readouts from our flash and cloud registries and investigator initiated trials and they've heard positive anecdotal stories from their American counterparts.
Over the past year or two.
Lockdowns limited access and other challenges have caused caused by the pandemic has certainly created challenges for our initial European launch, but at the same time, we are encouraged by the interest we're seeing and the progress we're making.
We look forward to a much more constructive environment and.
And Europe soon.
Finally, and additions to our efforts in Europe. We have also begun work on the long path toward regulatory approval and reimbursement.
For our products and both Japan and China.
Regarding opportunities and markets adjacent to our core DVT and PE markets, we have identified multiple unmet needs and the venous space and and the vascular space more broadly and we continue to explore these ideas will have more to say about these and upcoming calls.
I'd like to conclude by reminding you that we are committed to our mission to save and transform the lives of our patients.
This causes bigger than ourselves and much more important to us and business.
We believe that nothing is more important and taking care of our patients and.
Any business success and consequent value creation that we might enjoy are nevertheless holes, but instead are merely byproducts and doing the right thing for our patients while taking care of our customers and our team.
<unk> made.
We believe we are and the earliest phase of our mission and that we can and will grow sustainably and aggressively for.
For many years to come.
And with that I'd like to turn it over to Mitch.
Thank you Bill and good afternoon, everyone.
And <unk> revenues for the fourth quarter of 2020 were $48 6 million compared to $38 7 million for the prior quarter and up $28 7 million or 144% from $19 9 million from the same period of the prior year.
This year on year increase was driven by the continued expansion of our sales force the opening of new accounts and deeper penetration of our products and existing accounts.
Revenue was split between the two products as follows 36% of our revenue was derived from the sale of <unk> products during the fourth quarter of 2020, compared with 38% and the fourth quarter of 2019, and 64% was derived from the sale of flow tree for during the fourth quarter of 2020 compared to 62% and.
And the same period of prior year.
Gross margin was 92, 4% for the fourth quarter of 2020, compared with 89, 2% and the fourth quarter of 2019 gross margin increase due to a modest 3% increase and average selling prices year over year as well as positive operating leverage in our manufacturing facility due to continuous.
Improvement initiatives and the addition, and a second production shift in Q4 of 2020.
Operating expenses were $37 9 million in the fourth quarter of 2020, compared with $16 6 million for the same periods of the prior year.
R&D expense was $6 $5 million and the fourth quarter compared with $2 7 million from the same period in 2019 to $3 8 million increase and R&D expense was primarily driven by an increase and head count as well as product development and clinical evidence development costs.
SG&A expense was 31 $4 million and the fourth quarter of 2020, compared with $13 9 million for the same period of the prior year.
The $17 5 million increase was primarily due to personnel related expenses as a result of increased head count across our organization and public company compliance costs.
Net income for the fourth quarter of 2020 was $7 million compared with net income of <unk> 4 million for the same period prior year.
As I did with our Q3 results I'd like to make a quick comment on the company's positive net income during Q4.
As Bill mentioned, a few minutes ago, we believe inari is well positioned for quarters and even years of sustainable revenue growth, we're not optimizing the company operations to produce net income we plan to continue to invest aggressively and our growth drivers and we do not necessarily expect to produce positive net in.
Each quarter.
The basic and fully diluted net income per share for the fourth quarter, 2014, and 13, respectively and the weighted average basic and diluted share counts were $48, seven and $55 2 million respectively.
Paired with a basic and fully diluted net income per share of <unk>, <unk> and <unk>, respectively, and a weighted average basic and diluted share count of six 2% and $44 7 million respectively for the same period of the prior year.
The number of shares last year is significantly lower because of the conversion of the preferred stock and additional common shares issued as a result of the IPO.
In terms of our full year 2020 financial results revenue was $139 7 million for the full year 2020, representing an increase of 173% over revenue of $51 $1 million and 2019, our product mix remained constant at 37% of our.
Revenue was derived from the sale of Cott sugar products during 2020, compared with 38% in 2019, and 63% was derived from the sale of flow traders during 2020 compared to 62% for 2019 gross.
Gross margin increased slightly to 96% for the full year of 2020 compared to 88, 4% in 2019.
Operating expenses were $108 1 million for the full year of 2020, compared with $44 $4 million and 2019.
R&D expense increased by 155% to $18 $4 million, and 2020 compared to $7 $2 million and 2019.
SG&A expense was $89 7 million for 2020 compared to $37 2 million for 2019.
Net income was $13 8 million for the full year 2020, and net income per share was <unk> 43 sales on a weighted average basic share count of $32 million and 27 and says on a diluted share count of $51 6 million compared to a net loss of $1 2 million and a loss per share.
Of 20 cents on a weighted average basic and diluted share count of five 9 million from the prior year.
I would now like to move on to a few balance sheet updates on.
Our cash of $114 2 million and short term investment balance of $50 million at the end of the fourth quarter totaled $164 2 million compared to 168 million net.
At the end of the third quarter.
We have not yet utilized our $30 million revolving credit facility. Although we ended Q4 with borrowing capacity and a credit line of approximately $20 million.
Our cash flows from operating activities were $1 $9 million and 2020 compared to cash used in operating activities of $4 9 million in 2019 as I've mentioned in previous quarters, and <unk> continues to operate and grow with a relatively neutral cash flow profile.
I'd now like to turn to guidance, while we continue to experience COVID-19 related challenges and uncertainties. We are comfortable providing forward looking guidance as follows for the first quarter of 2021, we are guiding to $54 million to $56 million and revenue for the full year 2021, we our guide.
And Q2 hundred $25 million to $235 million and revenue.
With that I would like to thank you for your attention and I'll now turn the call back over to the operator for your questions.
Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one on you touched on telephone. If your question has been answered and you'd like to remove yourself from the queue. Please press the pound key.
And Jonathan this is Mitch from minority yet that I had mentioned that bill and I actually were just joined Baidu hikes, Who's our chief operating officer, and then by Dr. Tom <unk>, who is our chief Medical Officer, we thought there could be helpful. For some of the some of the questions that may be asked.
Certainly and our first question comes from the line up on <unk>.
Bank of America. Your question please.
Okay, great and.
Congrats on all the progress.
Two quick questions wanted to ask.
And yeah I hope you guys are doing doing well.
But the first thing I wanted to ask because I was just wondering bill if we could just sort of take a step back and maybe drew could chime in here too.
And clearly despite COVID-19 it looks like.
Things are just inflicting and your and your business and in this category generally so I was just wondering if you could maybe take a little bit of a step back for us and just highlight like where do you think is driving the inflection now is it maybe just the cumulative effect of all the work that you've done over the past 18 months and the U S or and I Wonder if anything wondering if there's anything more specific on that.
And because it really is quite a remarkable.
Last 12 months in terms of your performance and the United States. So just would love to start there with any kind of top down and comments.
Yeah I'll jump in first and then we'll we'll.
And we'll have drew fill in some details.
If you'd like so first of all thanks for the good words Bob.
It's been it's been a grind through Covid, which.
And we found ways to execute crisply I would say.
Let me just say two things first of all I don't think there are any.
Theres not one driver and we've said this about on a potential for growth going forward as well there is not an inflection point there is not a.
One binary sort of catalyst thats going to drive things for better for worse. This is a pure execution play and I think all the variables from data to new products to crisp commercial execution, and so forth play and equal role here.
I will say this also.
We had a VIP visit we do these pretty routinely and there was a physician here.
<unk>.
Just a few days ago and he was telling me about a patient that he treating.
And the patient was dying right. The patient had that look he said this patient has that look and the patient was dying and.
Everyone on the room knows that the patient recognizes is there potential to die.
He is right now and a few seconds later he took out a big chunk of plot and another few seconds. After that you took on another big chunk of Cod.
And the anesthesiologist.
On commented that the what did you do write that adopt the heart rate is down one pressures back up the patient's joking about dinner and how bad debt.
And the chicken sandwiches are going to be here at the hospital.
And the whole move changes right that is visceral frac that has nothing to do with data has nothing to do with the product per se or price right.
And there's a digital component to this and I think cannot be overlooked and I believe there's a cumulative effect to those and those sorts of experiences that are going on and Cath labs.
Oliver and all of the country.
And drew I'm sure you, probably something a little more.
Data data like no I think those are all the key points here I think it's the.
The aggregate impact of all of the growth drivers coming together so it's the expansion of the.
And the field team and the methodical addition of new reps and territory expansion I think we are making progress and driving deeper and deeper penetration on our existing accounts and some of the investments and programs. We've developed along those lines I think are really starting to bear fruit.
The new products and some of the new R&D investments that we've made.
And to improve the speed and the efficacy and the safety of the procedures and then the clinical evidence portfolio building along with that supporting.
All of the immediate impact that docs are seeing firsthand with hard clinical evidence that supports the impact we're having so I think it's all of those things taken together and Thats really driving the growth Bob Okay.
And I realize its kind of a softball question, but just wanted to get your profit if you take and the second question on what to ask really quickly is just on.
And you're starting to talk about some new opportunities both in terms of outside the United States, and then and the U S and specifically with with closure and I was wondering if you could.
You know put it and put any more kind of meat on the bone. If you will in terms of quantifying.
Quantifying the opportunity that comes from these new markets and and new technologies and you know specifically again with it with a finished closer system. Thank you.
Yeah. Thanks, Bob I think we're maybe a little too early to be talking about quantity quantifying. These opportunities I will say that we develop the flow spaces for our own procedures.
The full and tenant was just include this in our purpose seizure price.
As part of our flow Trevor pricing and system.
Certainly it looks like there are opportunities beyond our procedures. There are lots of structural heart electrophysiology and other venous closure type procedures for which we think this might be it might be useful.
It's a really simple message.
<unk> and the compression station that can be very often be used to close.
<unk> wounds and at the venous pressure is much much lower of course and so this is a really simple systems doesn't leave anything behind and it doesn't.
It doesn't kind of get into the vein and Theres no stitch into the vein. So we like the simplicity is a pretty interesting story here. It seems to work through our limited market release, but we are certainly and.
And the very very early stages here, we just completed our limited market release, we will be getting into.
More full full market commercialization will have more to say on that and upcoming.
Coming calls.
And if you included that in the guide that you gave to any meaningful degree.
No, we havent really quantified any meaningful revenue for flow spaces, certainly certainly nothing and the guidance would suggest there's a meaningful meaningful number for flow spaces.
Alright, great I'll circle back and thanks again.
Thanks, Thank you.
You. Our next question comes from the line of David Lewis from Morgan Stanley. Your question. Please.
Good afternoon, and congrats on the quarter and that's very constructive guidance I wanted to start with the guide and then I'll kind of maybe fall back up and bill, but just thinking about the guide here and I. Appreciate it's still COVID-19, but <unk> been doing anywhere from 15% to 25% sequential growth and obviously, 13% sequentially into the first quarter, even with you obviously a tough a tough January.
If you kind of take out the first quarter the guidance implies kind of <unk> to Q2 Q4.
A low single digit type sequential growth. So is there sort of anything momentum wise comp trends and the business that would drive that or is it just simply early in the year.
And we're still dealing with some COVID-19 dynamics, let me just sort of flush out how you see the bids.
And as sort of first half second half across the quarters, given that drop off here into the second quarter.
Sure David Thanks for that question.
As you mentioned, the Q1 guidance would be about sort of a low double digit sequential improvement compared to Q4, So thats something that we really feel comfortable and confident in this march 9th actually today is the one year anniversary of what we affectionately at and Ari call the meltdown and day.
Dave we were supposed to start our road show for the IPO last year.
We didn't really know what would happen after the meltdown day, we kind of shut things down a bit for those next couple of months and we felt fortunate that we're able to do the IPO in late May.
And really operated and into this COVID-19 cloud for the past on.
Three quarters now this is our third our third public report and I think we just wanted to kind of.
Start out with something and not get ahead of ourselves and we really look forward to updating our annual guidance as we move along through the year.
Okay.
That's super helpful. And then just a and my second kind of follow up question is really sort of two part if you think about sort of the trends and P versus DVT that we saw through the back half of 2020 is there any reason to believe theyre on a percent of mix.
And that P. DVT mix materially changes in 'twenty, one and sort of what's implied in guidance and then just bill wanted to push you on a more on this international question I mean it was on.
And our current estimates based on call for zero International revenue I guess, Kevin the approvals and some commercial agreements you signed here in the first quarter. That's looking a little conservative. So is there any international specifically modeled and your guide for.
For 2021 on those two questions and I'll jump back in queue. Thanks, So much congrats again, thanks, Steve Yeah. Thanks, David So with regard to the mix one of the characteristics I don't know that we would have necessarily predicted this.
The mix has been remarkably consistent from quarter to quarter.
With no.
Theres no emphasis on one product versus the other either nominally or through compensation or anything of that nature. I think both of these markets are growing equally based on the on the way that we've chosen to communicate our story based on the data that are emerging and and product development.
And it's being introduced into the mix and so forth. So we are not modeling any change in the percent of revenue or percent of cases represented by one product versus the other it's been pretty consistent they bounce around a percentage or two but thats no change.
With regard to international I think we've characterized this multiple times as being a measurable but not really meaningful so.
And I don't think I would characterize any of the any of the guidance as representing a significant chunk of of.
National sales and I think thats, a pretty healthy way to think about it.
Covid environment in and Europe is considerably more challenging than it is here in Europe I suspect youre hearing that from most of our peers and other med tech companies.
And it's been.
And that's been a challenge and there's a lot of interest a lot of enthusiasm. These physicians have seen and heard about and Ari.
And <unk> devices through data releases and through anecdotal communication back and forth with their American counterparts for a year or two and it's been highly favorable and so it's a little frustrating that with 20.
21000 procedures total that we can't be on the ground training and and getting people through their learning for very quickly. So it's all zoom based and and those challenges persist so I would that.
That would just ask you you don't get too far ahead of us here on international as well because there are some things to torture and murder, including reimbursement as well so.
I'll leave it there.
Okay. Thanks, so much.
Yes, Thanks, David Thank you David.
Thank you. Our next question comes from the line of Larry <unk> from Wells Fargo. Your question. Please.
Hey, good afternoon, guys. Thanks for taking the question and congrats to a really strong 2020.
Thanks, Larry.
Two from me.
Let me start with just sales force adds and center adds that you expect in 2021 sales force ads.
Should we think about 10 per quarter and on center and I'm not sure I heard you give the Q4 number but it looks like you added about by my math call. It 400 centers.
In 2020 is that accurate and what should we expect for 2021 and I had one follow up.
What's your take balance yes.
So Larry on the sales force as you heard we added 10 heading into Q1, so exactly in line with what our historical kind of average cadence have been I.
I think we're going to reserve the right to fly.
<unk> that up or down depending on what we're seeing on the ground as we get into any specific quarter and what we're seeing and our target territories.
But I do think that that 10 per quarter is a pretty good starting point to how to think about the rest of the year keep in mind. If we bring on 10 incremental territories, we're actually hiring more bodies than that given our promote from within.
<unk>.
Kind of approach to sales leadership.
On the center ads.
I think the number you quoted is about right. We believe we exited Q4 someplace north of 800 active accounts using the technology and that's a combination of accounts that are using just flow Trevor just cloud schriever, where both technologies, we think about half of our accounts are using both <unk>.
Technology, So we have quite a bit of runway still even within that group of 800 accounts to pull in.
And the respective secondary technology, where that's an opportunity for us keep in mind. We think there is call. It 500 potential targets is 500, Cath labs and the U S. There's 1300, some hospitals with 200 or more beds, which would also be.
A way to gauge the ultimate.
Opportunity here. So we still think were and kind of early to mid innings in terms of the account penetration at this stage.
That's helpful Drew and second from me.
Could you talk about.
Other new products product launches in 2021 and data that we might see this year, just specifically on new products.
Could you give us an update on our flow safer thanks for taking the questions.
Well if theres one thing we've learned.
And early phase here of our history as a public company and don't over promise on new products.
On the stepped on that first opportunity we had on our on our first earnings call, we talked about flow favor and we were dealt a curve ball.
By by FDA, So we expect to see that little later on this year, but.
And probably we shouldnt make the same mistake and I'll tell you a month or week and date.
And so we'll leave it there, but there are a number of other products.
And flow favor that we like the pipeline is full and some of these products are inclusive and our purpose senior pricing, so there'll be and yet.
No new revenue like flight flow favorite perhaps.
For example, and and so and others will be Tam expanding but.
And we will have much more to say about those as we get a little closer there's FDA risk of course, there's <unk>.
On a risk what will we see will devices to be ready for prime time. So there's a few things to work through but we're very pleased with our pipeline.
And data Bill.
Yes, clinical we have and we continue to run thanks, Larry we continue to run our flash and our cloud registries and 500 patients plus we're going to expand our flash registry and we'll have more detail on that as it emerges here, but I think we'll see some additional readouts over the coming coming quarters. There are any number of investing.
<unk> initiated trials that we will get to get to the starting line so to speak here with regard to.
Submission and publication, so we'll have other readouts on data coming down the Pike here as well and again just as a reminder, we are.
None of them are inflection none of them will represent some sort of and important binary inflection point theyre all contributory to the same sort of story and execution play that we've been on.
Sharing with you all along.
Thanks for taking the questions.
Sorry, sorry.
Thank you. Our next question comes from the line of Bill <unk> from Canaccord. Your question. Please.
Hey, great. Thanks, Good evening and thanks for taking my questions.
A couple here just first and.
And I might've missed this was there any commentary regarding the flame study and have you begun enrollment on that.
You did not and if anything and let's let Tom take that sure. Thanks, Paul So.
Just to remind everybody. The flame study is our trial and massive pulmonary embolism and this is the most mortal of all p/e conditions and is planned to be the largest contemporary trial in this disease state.
A trial design has been completed and we are anxiously awaiting enrollment of our first patient.
Okay. So you have approval.
Approval and you're good to go and you're just waiting to get the first patient simple okay.
Great and then.
What is the size of this study are there any details you are willing to provide on time, how long do you think it will take to enroll and when we could see some of the first day after this.
So massive pulmonary embolism represents about 5% of all pulmonary embolism. So it is not very common and these are quite critically ill patients. So you can imagine enrollment in this study may be somewhat hard to predict.
Anticipate it will probably be 18 months to complete this study.
And.
We will we have.
No plans to.
Presents any preliminary data so we hope to complete that site.
Yes.
Okay and.
Then thank you for that and then on just.
And just wondering if you penetrated and <unk> hundred facility I think that was roughly the number last quarter.
And I'm trying to get a handle on is you look at those facilities that youre in.
Have you been able to fully penetrate and and if so what does that look like.
And how long does it take to get there.
From a dive Indra yeah, I think if you looked across those 800 accounts bill you'd see.
Evidence of accounts at different stages of their evolution.
And how they're thinking about <unk> you would certainly see group of accounts that are just starting their focused on initial outcomes, they're getting used to the technology, they're adopting and into their existing treatment per.
Erudite and you'd see a group of accounts that are abreast past that are in the middle.
They are trying to understand the economic value proposition and at that stage, there probably more proactively trying to identify these patients there may be refining their clinics.
Clinical care pathways at the account level and really trying to proactively.
Investigate and invest in these and these patients and a way that was not like the head thought historically and then the last group of accounts are at the final and of their evolution and they are accounts that have.
It really made a proactive commitment to Vijay program development like you've seen with <unk> stroke for instance.
And they have a very sophisticated approach to this patient population.
And they are making significant investment and time and other resources to manage these patients.
And if you looked at our product adoption across those phases, you would see obviously growing adoption across those phase and at least and that last group of accounts you'd see our technology is being used frontline.
As standard of care as the go to option for both DVT and PE patients that evolution takes.
A different amount of time based on the account dynamics and specifics.
We have seen accounts kind of move methodically through that evolution that gives us some confidence we are developing a systematic approach to helping support that evolution with different programs and different investments and learning how to help support accounts moved through that process.
Great.
Today or what percentage of your accounts do you think has kind of hit that endpoint to the final phase and you.
The penetration you're looking for.
Bucket, the beginning middle and.
So that last group has got to be our top probably 10% of accounts.
And that final group. So we've got a small number that have made that evolution. It gives us some confidence that we're.
We're doing the right things, but there's not many that have.
Navigate their way all the way through that debt evolution, yet if I could add just a bit of color there was.
There was a paper just presented out of.
Yes.
Published out of University Hospital, and Cleveland, which is a very old established per pulmonary embolism response team on <unk>.
Graham and they show not surprisingly that patients who are admitted to the hospital or who see come into the hospital with pulmonary embolism and see the per team.
Hospital designated pulmonary embolism experts may not surprisingly do well on almost by almost every measure and almost every clinical measure you can imagine the problem is that 70% of the patients who should have been.
Seen by the purchase by their own admission by their own criterion.
Not seen my per and <unk>.
That's the challenge that we face even and the best our best centers and the.
Consistency with which these patients are identified and triage and to the BT experts remains.
And.
And it remains limited those arent problems that you face and that we see and <unk> drove most of those problems certainly and <unk> have been fixed a long time ago. So theres a lot of heavy lifting to do with regard to surfacing.
Identifying and triage and these patients consistently through systems and processes, and we're spending quite a bit of time and energy with that kind of that last bucket that.
Net debt bucket of customers that have progressed at that point.
Got you and Thats very helpful. Thanks for taking my questions. Thanks.
Thanks Bill.
Thank you. Our next question comes from the line of Danielle and healthy from SVP Leerink. Your question. Please.
Great. Good afternoon, everyone. Thanks, so much for taking the question congrats on a really strong year, despite COVID-19 and.
I just have two questions. So my first question probably for you and it's around.
Just on it a little bit, but like how do you think about the guide.
Guidance and the Covid situation, we're in now and the Covid recovery and I. Appreciate a lot of your patients are urgent classroom lash and merchant, but there is some component of the business, that's likely driven by a patient getting diagnosed and getting into the system and I guess, that's more what I'm focused on and is there any.
Sort of recovery baked in to the guidance or is it kind of just sustaining momentum from where we are today and there is no sort of backlogs that we should be thinking about here and if there is that sort of upside and that's my first question, Yes, Yes, I know the question you're asking thanks Danielle.
<unk>.
I think.
The short answer is there's no backlog approximately.
Approximately 70% of both PE and DVT patients and the studies that we've conducted and the wafer we keep track of these things for flash and cloud for example.
Presents through the ER, so they are emergent and by that definition.
So I think this has protected us in ways that many of our peers and other med tech companies.
And he can benefit from from devices to treat that sort of patient population. So we have benefited from that through.
And through the pandemic, our our procedures were probably a little bit more insulated from the pandemic challenges and the challenges that elective procedures faced for example.
On T. He cannot be.
You either treated at the at the moment that the PD presents or there's very limited capacity to treat it later.
DVT on some some cases can be delayed for a week or two but the problem is even once patients may have been entering a hospital that was on diversion for example, and you can come and with a painful really painful and swollen leg and were sent home simply because there was no capacity I don't think most hospitals have any mechanisms for keeping track of those patients.
And so.
And the short answer is I don't think we're going to see a bolus of patients coming down the pike here for.
For 2021 or beyond I think those patients screened and treated or not okay.
Okay totally fair and then my next question and it's a two part question.
I'm really asking three questions not too so and so.
This is probably for you and.
Both of these are probably.
And you're.
And your accounts, so just trying to get a sense of same store sales versus the new center adds and how to think about how that.
Progressed in 2020, and and how that will progress in 2021 sort of what's reflected in guidance anything you can say there.
Yes, I think the short answer is we like what we're seeing we think the growth we're seeing is sustainable and.
And not overly weighted towards.
The addition of new accounts I'll give you a couple of metrics that I think support that belief and Q4, we believe about 90% of our cases and that quarter came from existing customers only 10% came from new account adds and that quarter and if you look at it through the lens.
Of growth and cases sequential growth and cases that we saw incrementally in Q4. It was balance about 50 50 between existing accounts and.
And brand new accounts acquired in that quarter.
So we like what we're seeing there we think there's a nice balance where we are seeing evidence of success and supporting accounts for broader and deeper adoption of the technology I think you'll see that reflected in those metrics.
Yes that was very helpful. And then last question for you you gave some good color on half half. The accounts are using both devices and just curious what percentage of the accounts youre and today are not using flow through <unk> and what's the barrier to getting them to adopt that is it just a matter of time getting them to adopt flow retriever and.
Obviously, asking because it feels like that's where the longest growth runway is and where you guys. Obviously have the biggest I think competitive advantage and price.
Advantage there so thanks so much.
Yes, no I understand where you're coming from I'm not sure.
Completely agree with with.
And with some of the things that were kind of folded and there maybe.
Maybe first of the 50% of accounts that aren't using both technology its really a mix of accounts that.
And I have adopted just cloud treatment or just flow traders. So we don't see it necessarily bias towards accounts, just starting with cloud <unk> and pulling and flow through it's really a balance between the two and.
And I think going forward, we would anticipate.
<unk> kind of balance between the two.
We don't necessarily need to manage the growth of one of the platforms versus the other at least historically, we haven't they've really developed and grown organically right alongside each other at roughly the same growth rates and I think that would be what we would anticipate going forward as well.
Okay. That's fair thanks, so much.
Thanks Danielle.
Thank you. Our next question comes from the line and Marie Thibault from <unk>. Your question. Please.
Hi, Good evening. Thank you for taking the questions and they'll match drew and Dr. Too congrats on a very strong year.
I wanted to ask one more follow on here on guidance.
I Wonder if you could parse out for us a little bit more and be COVID-19 impact you've seen so far and Q1 and then the cash.
We haven't seen.
And you as a public company.
And without Covid impact and I'm wondering if you can sort of set out for us and <unk>.
Seasonality or sort of how we should think about cadence throughout the year going forward.
Yeah, Thanks, I'll dive into that.
We got the seasonality question, maybe not surprisingly good and asked quite a bit we don't we have not seen it thus far but I just was peaking at some numbers this morning and our.
Q4 of 2019 was the last quarter, and which there was no COVID-19 impact from for all of this of course.
In 2019, we did less revenue.
And then we are projecting for Q1 and the entire year of 2019 with less revenue that we're projecting for Q1 of this year and so the point here is that we really don't have anything to compare to right. We don't really know what a non COVID-19 or post COVID-19 environment looks like.
So will we see seasonality, we have not seen it thus far and is that because.
We are insulated from it and some way or is it because we were just very very early on our growth phase and you will start to emerge.
And some other some other moment.
I think we just don't know and so with regard to guidance, we want to make sure that we're not getting out ahead of ourselves on.
And because theres any number of things that.
There's any number of potential risks and we've learned one thing through depending on what we learned many things I guess, but humility is one of them. So it's one of the little thoughtful about the way we are.
We're thinking about guidance and Marie if I can add to that just a bit in terms of some of the signals that we see for Covid impact actually is due is talking about our accounts, we see the case mix fluctuate in the accounts, sometimes a week to week, sometimes definitely month to month depend.
And depending on the relative sort of impact of Covid on that hospital and that's something that we've noticed you see the the case mix for the year as a whole.
The $54 46 thing, but we sometimes see the case mix fluctuated and there could be.
Sort of a disproportionate number of PE cases and some.
<unk> and some hospitals and.
That tends to correlate with a higher amount of COVID-19 impact and that hospital, but then sometimes when the when the ICU beds kind of go down then the case mix kind of returns to the historical relationships.
I don't know when.
And I don't think we went into that really loved the detail, though in terms of thinking about how that would play out through the remainder of 2021 and as I mentioned, we're hoping to continue to update as we go along here.
Alright, Thats really helpful and I understand that there's no easy comparable so I. Appreciate you helping me make sure there's nothing on the line Lucky here I guess my follow up would be around gross margins.
Q4, gross margins again, very stellar and I know in the past.
And then I'll talk about pricing trends and that gross margins arent necessarily going to this day at this.
Very healthy levels. So I wonder if you could help us think about that given some of the new products you have on rolling out and then.
And your earlier comments on the international opportunity. If there was any change there on the gross margin outlook sure I can start that Murray.
We're pleased obviously with the 92% plus gross margin for the quarter.
And just a bit as we think about 2021, and we had a very productive Q4.
On the efficiency of our manufacturing operation.
On second shift we added in and we're continuing to build up inventory I think I think we've announced that we're moving into a larger office here in Orange County kind of midyear in 2021. So we are taking steps to prepare for that move.
Some of the things that we think and.
And we're in a great position in terms of our average selling prices they were up just a bit.
In Q4, as well and so we feel like we're in a very strong position should we ever need to respond from a competitive point of view to price.
And pricing we could we're not currently seeing that and I think we've been successful selling our services to the hospitals based on the value of the.
Value of the procedure essentially compared to the alternative interventional techniques, which.
And all involve ICU stays so they're not really positive contributors from a hospital point of view from a future.
Thinking point of view as we put more products into the flow cheaper price per procedure bag, that's something that could have a drag on the margin I think as we're continuing to build our international business that could likewise have a drag on the margin as we go forward and we've talked in a longer term sense about a kind of a low to mid 80% gross margin target for the.
I think it may take us.
And some time to get there I don't know if its going to be one or two years or if it's going to be more like a three to five year thing, but that's kind of how we're thinking about the business over a longer term from modeling purposes.
Oh, that's great Alright, I appreciate the time Tonight. Thank you.
Thanks Marie.
Thank you this day.
Does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen for your participation you may now disconnect. Good day.
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