Q4 2020 Sientra Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the C interest 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. The ask a question during the session you'll need the press star one on your telephone as a reminder of todays program is being recorded.
I would now like to introduce your host for today's program Oliver Bennett Chairman and CEO. Please go ahead Sir.
Okay.
Thanks, operator, good afternoon, and welcome to the center of fourth quarter and full year 2020 earnings Conference call.
I would like to remind everyone that in our remarks today. We will include statements that are considered forward looking statements within the meaning of the United States Securities laws.
In addition management may make additional forward looking statements in response to your questions.
Forward looking statements are based on management's current assumptions and expectations of future events and trends, which may affect the company's business strategy operations of financial performance.
A detailed discussion of the risks and uncertainties that the company faces is contained in the previously filed quarterly reports on form 10-Q, and its annual report on form 10-K that the company filed this afternoon.
Actual results may differ materially from those expressed in or implied by the forward looking statements.
The company undertakes no obligation to update or review any estimate projection or forward looking statements.
I would also like to note that central use of its investor relations website to publish important information about the company, including information that may be deemed material to investors financial and other information about the answer is routinely posted and is accessible on the company's investor Relations website at Www Dot <unk> Dot com.
Please note also that slides that accompany our commentary today can be found on our Investor Relations website, which we encourage you to review.
Today on our call we have Ron minutes at the entrance of President and Chief Financial Chief Executive Officer, and Valerie Mitchell Miller, Vice President corporate controller, and our interim Chief Financial Officer.
It is now my pleasure to turn the call of a two hour President and Chief Executive Officer, Rob Brown.
Thanks Ali and thank you all for joining us today on our fourth quarter and full year 'twenty 'twenty earnings call. The.
Before we begin the discussion on a strong fourth quarter performance of strategic priorities for 2021 I'd like to first introduce Valerie Miller, our vice President corporate controller, and interim Chief Financial Officer.
Val joined the entering 2017 falling of decades of experience at several companies, including Linkedin and mentor.
Her strong knowledge of our business and financial reporting standards I have great confidence in her ability to lead the finance team on the interim basis other.
The recruit a new chief financial Officer.
Also like to take a moment to thank Paul for his role and positioning of our company for future growth.
He leaves the intra with the strong balance sheet that will help accelerate our path to revenue growth.
I wish him well in his future endeavors.
With that I'll now move onto a summary of our fourth quarter results nor is the over of business and my vision and focus for the year ahead.
Without doubt the fourth quarter validated our decision to focus on our brass products business.
Net sales for the breast products segment totaled $17 9 million in the fourth quarter, not a record quarter, representing 40% growth year over year and 17% over the third quarter 2020.
Our growth was driven primarily by continued market share increase and overall market outperformance as augmentation remained strong against COVID-19 related pressures compared to the overall medical device space and within of Statics.
While market share growth within existing accounts continue to accelerate we also made incremental progress in opening new accounts.
Just in the fourth quarter, we added over 100, new accounts, which are defined as an account that has not border in the last 12 months, bringing.
Our total active account base to over 1800 accounts at year end.
Our growth validates our share taking strategy and our confidence the surgeons appreciate our partnership and the value of our products.
I strongly believe that our growth is indicative of the success of several elements of see interest current strategy.
Our goal is to drive further share gains in existing accounts of refocusing our digital efforts.
Growing the rep productivity and leveraging our relationships with plastic surgeons.
A great example of this happened in a very busy practice in the southwest area of the U S where it's the answer has a 90% plus market share.
A representative was persistent he leveraged our new programs to access the entering implants.
After the surge and continue to see very positive patient outcomes for <unk>.
Pace of using our implants accelerated the.
He has taken several calls from our sales team plus support for marketing and our medical Affairs group, but after six months CFO has now become her leading implant supplier.
From a marketing perspective, our approach of patients is to grow awareness and demand for C. Entering plants by widely broadcasting our unique product benefits.
Those benefits are focus around the interest safety profile backed by our leading platinum 20th warranty which of market research tells us as what consumers care about most.
Based on the internal data we have also seen that patients want to know about differences between brands and what's informed the majority of patients are likely to ask for CN for binding.
Meanwhile, amongst plastic surgeons surveyed 71% would add of new brand if more patients ask for it.
Given the patient's desire for more information and the increasing likelihood of them performing their own diligence. We have the relaunch of modernized patient focus website in January it is built around our see yourself and Sentra campaign.
Since the World Web relaunch, we have facilitated thousands of direct referrals to plastic surgeons across the U S. We have also bolstered our social media presence to reach of more patients proactively and educate them on our products.
We believe that those efforts will continue to grow see interest Brent equity among amongst customers.
And lead to more patients asking for CRE implants from their plastic surgeons.
While augmentation of proved to be of more insulated from COVID-19 impacts in the key growth driver in 'twenty 'twenty Walter of your expansion within the reconstruction market of significant medium term driver.
We expect hospitals to sketch of more elective procedures and conduct more diagnostic testing of the pandemic impact decreases.
Despite of Covid impact increasing in late fourth quarter and into the beginning of this year, we expanded our presence and gain share within the hospital channel.
I had a further market normalization of 2021 we'll remain hyper focused on expanding our hospital account base by continue to capitalize on customer interest and the technical differences and compelling safety profile of our tissue expander portfolio, which is grounded by ex too.
We're currently selling the approximately 16% of 3500 reconstruction hospitals.
Given a renewed emphasis on data driven targeting and P. S. C productivity, which is our sales representatives will believe we will be able to expand that number this year and beyond.
As a reminder of 47 P. S. Six of our cross functional selling to both augmentation and reconstruction accounts, who have for additional managers focused specifically on the hospital channel.
Our fourth quarter performance, the recent industry trends and our strategy for 'twenty, one provided me with high levels of confidence for the year ahead.
In regards to 2021 I have identified three key strategic priorities and growth drivers for this year.
First we will fuel organic growth within argumentation, the reconstruction by growing market share within existing accounts and adding new accounts, while excel at accelerating efforts to be it top to implant and expander company in the U S.
Second we'll increase our focus on innovation and execute on the development pipeline for products, which will extend or evolve fee interest core offerings and third establish a culture of focus and accountability and make systematic investments to accelerate growth drive productivity and increase margins.
Taken together I strongly believe we are well positioned to meet my goal to become a leader of transformative treatments and technologists focused on progressing the art of plastic surgery.
In terms of our expectation for the full year 'twenty 'twenty. One. We're currently expect of cheap breath of product net sales between 70 to 74 million, representing 27% to 35% growth year over year.
We expect the mirror Tri net sales between eight to 10 million.
Together with project for 2021 total sales between 78 to 84 million.
Relative to breast product business. We are very excited to have started the year from a strong position.
Based on our current trends, we expect breast products segment segment net sales to grow in excess of 30% in the first quarter 'twenty, one compared to first quarter 'twenty 'twenty.
Our guidance does take in consideration of strategic prioritization of our breast implant business over a mirror of dry.
We do continue to consider all of options for mere drive for the mere drive business as we intend to achieve breakeven point for the segment this year.
With that I'll turn the call over to al for more detailed review of our fourth quarter financial results the results Val.
Thanks, Brian.
In the fourth quarter of fiscal 2020 Kantor of cheap consolidated net sales of $22 6 million of 2% year over year decline with the decrease driven specifically by the expected decrease in sales attributed to our current business segment due to the.
The impact of COVID-19, I can send you to just focus on my chip sales and the redemption of the overall level of investment in this business.
Net sales for the breadth of chronic segment totaled $17 9 million in the fourth quarter in 2020, representing an increase of 40 per cent compared to $12. Eight line for the same period in 2019, and 17% sequential growth over the quarter ending September 32020.
Net sales for the military segment totaled $4 8 million in the fourth quarter of 2020 at 54 per cent decrease year over a year and a 22% sequential increase over the course of any September 32020.
Gross profit for the fourth quarter 2020, once the 11 1 million of 48, 9% of sales compared to gross profit of $14 2 million or 61, 3% of sales for the same period in 2019.
Excluding impacts from our marriage of Hi segment gross profit for the fourth quarter of 'twenty 'twenty $113 2 million for $58 four per cent of sales.
These impacts include inventory reserves and the favorable overhead absorption versus the prior period relating to a decline in marriage right sort of protection.
Excluding restructuring charges of $1 1 million related to see interest organizational efficiency initiatives operating expenses for the fourth quarter of 2021 'twenty $8 2 million.
Compared to $32 4 million for the same period in 2018.
Looking ahead of.
The company expects 2021 annual operating expenses to be in the range of 85 to 90.
Compared to $101 1 million in 2020, excluding impairment and restructuring charges.
Net loss for the fourth quarter of 2020 was $21 2 million or <unk> 42 per share compared to a net loss of $20 2 million or 41 cents per share for the same period of 19.
On a non-GAAP basis, adjusted EBITDA loss for the sweat point in 2020 decreased by 24, 6% to $10 5 million from $14 million for the same period in 2019.
Turning to our balance sheet, we ended the year with $55 million of cash and cash equivalents.
Moving to $63 5 million.
Given the FY 'twenty.
The cash balance as of December 31, 2020 does not include net proceeds from the closing of the company's public offering of common stock.
2021 of approximately $39 1 million.
As Ron discussed the company expects total of 2021 net sales in the range of 78 to 84 million compared to the sales of $71 2 million in 2020.
I will now turn the call back to the operator for Q&A.
Operator.
Certainly the ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone you for your question has been answered it yourself from the queue. Please press the pound key.
Our first question comes from the line of margin Xu from William Blair. Your question. Please.
Hey, guys. Good afternoon, Valerie good to meet share over the phone at least and nice to meet you.
Good for me to add.
So the the first question is just about the detail of of all leaving I know I read the press release, they've got a sort of asked the question if theres anything else around that and the second piece of that is because he's the guy that's really been trying to push you guys to operating profitability. So any color you can give around that.
Its commitment to net income.
Profitability in 'twenty, two still are we pushing that out.
Hey, Margaret this is rod erg, so first of all.
You know as you saw in the statement there's no.
The reasons are outside of personal reasons for Paul He means you'll be able to stay closer to home not have to come to Santa Barbara and he'd been announcements soon of his new opportunity.
So really it's a personal decision by Paul in regards to our commitment to really becoming.
Just to start with the breakeven we have not changed that debt is still my goal. When I came aboard in November and we have not changed that to be committed to by the end of 'twenty to 'twenty two the.
At least at close to breakeven for the business Okay.
Okay, great. Thanks for click and the straightforward App and then if we look at guidance at the brass products and kind of.
And for guidance as a much stronger than what we thought going into the quarter. So can you give us a little bit more color around the drivers of that I know you referenced rep productivity and so on but if I look at that that's close to $10 million of half corrupt the assuming you're still at about 47 reps.
So any color in terms of augmentation of the man standard rebound and then O U S sales that could be included within there.
All of that it'll be really first of all of reflection of our focus on breast products.
From the increase in Representatives, we're seeing you know usually you hear in the past it takes six months to see a per.
Productivity was seen the sooner than some of our new representatives, because they come to us with the vast experience in medical devices and also hospitals number two is additional investment in our marketing team, regardless of who focus on driving consumers into website Youll see all of that was seen that reflection of already in the first quarter and in that.
It gives us the confidence very confident on our performance in 2020, one sort of acceleration and sustaining our current argumentation of performance and obviously as the reconstruction business comes back in the late second quarter mid second quarter and then it depends on how soon and by the way some hospitals are already starting to open but its kind of every.
Hospital every state does of different pace, and bringing debt of recon business back on so.
And the other U S sales.
For U S sales, we haven't changed much of it was still a project for Japan too.
To be in the range of what we shared before.
It's going to be modest for us I think the opportunity for us is still very much in the U S. The driving that sales we do expect.
To hear back from Health, Canada sometime this summer.
So it's more.
Probably late 'twenty, one from the Canada perspective.
Okay, and then just a last one on mere try you guys said, you had or expecting $8 million to $10 million for the year is that assuming any kind of strategic change within the business sort of should we assume kind of that to the two 5 million of sales at quarter end.
And maybe any color of for whether you're providing any support to customers in the field or any of your distributors.
Yeah, we're still looking at strategic alternatives for the business that was stated right now we still have a strong business in Asia are driving a lot of the growth and once you have of growth growth coming from the U S as well.
As you know we minimize the cost structure of the mirror drawing of the same time, it's a nice little revenue and we do expect to breakeven they have of positive cash flow this year. So.
Okay. Thanks, guys.
Thank you. Our next question comes from the line of Jon Block from Stifel. Your question. Please.
Great. Thanks, guys. Good afternoon, maybe the first one for both Ron and Valerie just if you could talk a little bit more about the opex I think each of the Opex was $28 million give or take for the quarter, but sort of impressed of 'twenty 'twenty. One of the Opex guidance I think it was $85 million to $90 million, you know call. It a run rate of low twenty's versus the 28 exiting the year.
And how do you achieve that while still making the investments that it seemed like you want to make in the breast business. So maybe you can just detail I'll talk about the reallocation of resources as you guys focus on breast. Please.
Yeah, and that's why because now you have very minimal cost structure for mayor of drive mostly dedicated to manufacturing and the regulatory for breast implants of the three key areas that we're continuing to feel those areas. One is our commercial team from adding new representatives when needed.
And of its very systematic and the approach to adding new P. S. CS we've added the P. S sees in Nebraska, we have added more in Chicago and down in Florida that will be based on the needs and to create the demand number two is more resources for our marketing team to create the demand from patients are patients actually use.
Company website as the number one of the number two source of information to decide which he plan of which surgeons, they're going to go see so if you go to our sense of dotcom, we'd be very impressed how dynamic the website is to attract customers lots of provide great information about the safety of our plants and also the safety of our Expanders as well.
And then finally.
The ex two more one is the manufacturing we have our manufacturing team the half capacity the Argos working seven days a week.
And they are really doing a great job back in the Wisconsin supplying our team in the field for the implants and then the last one is the new product pipeline, we had several projects to working through it with creative process, where the project goes through it a lot of those products would be probably 'twenty two early 'twenty two but now we have of system to.
The development of new products and submissions as well so that's the three key areas, we'll be continuing fast because not a halving of the mirror dry.
<unk> expenses, you'll see a very streamlined.
Ability to drive growth on the top line and also watch out at our expenses.
Great Okay, perfect and then maybe a follow up.
Two parter.
Disparate approach of your what you gave explicit top line and you certainly talked about Opex I just want to make sure did I Miss the gross margin number or range, maybe valerie that might be more for you and then run of you can just talk to the end of the push.
The poll dynamic that's going out in the field right. I mean, you know you guys have been gaining share for quite some time, but I think of a lot of it was going to the surgeons at highlighting your superior product and warranty et cetera, with everything that the unfolded in the marketplace do you feel a little bit more outreach from the plastic surgeon the community more company you guys wanting an alternative.
Due to some of the issues or challenges at some of your competitors of fish. Thanks for the total.
Well I guess of that of the pump to Valerie for in regards to the margins.
That story of shared about the southwest or that's just one.
Had several of stories and one from surgeons perspective.
Our persistence of our sales team and working very closely of marketing.
And also of medical affairs team are able to continue to expand our market share and they see the dedication who have two black plastic surgeons. They see we're focused on plastic surgeons, we are a plastic surgeons company with the.
Really the goal is to be seen of synonymous with plastic surgeons now they see that and also in the hospital environment, we're gaining share because the technical advantages of our products and the vast experience. The all reps have now in those hospital environments. So you combine the two in the combined also drive incentives for the commercial team with the.
In the hospital and surgeon, you'll see the catena share growth.
I can't comment what the competition is doing but the obviously have multiple other products to discuss.
With the surgeon, we really have two key products and were committed and focus of those two key products with our customers so that valent.
Comments about the margins.
The margins.
Sure.
Gross margin for Q4 of which force quite my interest.
If you adjust out some of the impacts for Amira in dry eye related to inventory reserves.
Of the absorption of overhead.
The has been at $58 four per cent for the quarter.
Of that slightly down from Q4 of 19 for the rest.
Of that differential is mainly related to timing of gallon comps.
The acquisition of the Franklin plants.
I don't really see the benefits of.
The lower unit costs out of the Franklin plant until we get into 'twenty two.
Some of you the true in terms of 'twenty, one and how to look at that we think.
We're going to see the upper fifth piece for the year.
Perfect. Thanks for the time guys.
Thank you.
Thank you. Our next question comes from the line of Richard <unk> from SVP Leerink. Your question. Please.
Hi, Thanks for taking the questions maybe just the follow up on the gross margin question. Thanks for that upper 50 than in 2021, I guess, just if we think of the trajectory I think in the past you had talked about getting back up the.
Right.
Amid the towards 70% range over the long run.
Just maybe maybe shave a little bit off of that into 2022 and beyond can we think of you as though theres a low six theater or are you still on track for that debt.
The 60% range.
Yes, we're still on track for the mid sixties in 'twenty two.
A lot of it was just exactly what the valves just said in regards to our the Costa and yield of our product back in Wisconsin, We're accelerating where given the resources to our team and the Wisconsin and we've seen some really great improvements in yield which can be translates obviously into the lower cost of goods, which will translate the as it does.
New implants start doing the selling through which would probably be the sub.
Sometimes this summer and to the lot of part of this year. So you'll continue to see improvement in margins for the latter part of 2021 and the go into 'twenty 'twenty, two with the goal of and getting to the mid sixties.
Okay. Thanks, that's helpful and just maybe two more one housekeeping one bigger picture on the bigger picture I guess.
For your market share kind of right now.
And where do you see the market.
How fast the estimate the market is growing and where do you think your market share can get to over the next the.
The next couple of years here and then housekeeping just in the past you've given breast implant growth versus the tissue expander growth of just wondering if you could break that down for us. Thanks.
Yes the.
The.
America societal best for plastic surgeons have not published the shares yet they usually do that in April.
But we are guessing based we were 7% last year were thinking of about 10% to 11% now.
And in regards to the the market the augmentation of based on my conversations on multiple plastic surgeons of the market augmentation of grew in the market and reconstruction of win.
Negative.
So we have a goal to get in the mid teens within the next 18 to 24 months and obviously getting to above 20% and 23 moving out of 2023, but that's kind of our goal that we have of to accelerate our growth into get within to become a top two company within.
Plastic surgery for breast implants and Expanders.
Thanks, and just the breast implant versus Fisher standard.
Right now because of what happened. The Covid is the 60 40 implants versus Expanders as a little air was actually a little higher but easily use of is it a little closer but from the implant as it was higher.
I'm sorry for implants that she was higher due to really the driven by augmentation.
Thank you very much.
Thank you. Our next question comes from the line of Kyle Rose from Canaccord. Your question. Please.
Great. Thank you for taking the questions.
So I just wanted to ask a little bit about some of the account additions I mean, obviously, you're very strong account growth.
Given the macro backdrop.
There is some disruption going on from from some of your competitors, but maybe help us understand how how you get confidence that some of the account growth is sticky and the share gains you're seeing are sticky versus maybe just some competitive trialing just trying to understand what youre seeing from of utilization standpoint in the accounts that you debt you've added this year as well as you know.
All of the historical.
The intra loyalists.
Yeah. If you look at from the implants are there are two key areas. The stand out in 2021 our sense of loyalists the grew quite a bit of double digit growth and our new accounts or new accounts as they jump in they can.
Two to expand market share it takes a little longer obviously because of the state of the example.
It takes a lot of resources from the team to expand the share but the data has proven to us once a surgeon tries our implants and see the patient's outcome he or she started to use more start recommending more sandra for their patients and so we're tracking all of those accounts and like I said with.
Or 18 over 18 of Hunter accounts, now and to see the sticky right to see which ones are sticky for us for longer but right now and a lot of the compensation for our reps is to add a certain number of accounts per quarter and also continue to expand share within their current accounts, but the two key drivers or new accounts and existing high support.
Orders of the centra products.
Great and then.
And the pre announce you talked about $1 7 million in revenue from.
Japan in 2020.
Maybe help us just understand how you expect that business to trend in 2021, you know how much of that was stocking versus sell through I mean, I think you had you had previously talked about Japan is and the $15 million opportunity if I kind of just annualize that 1.7 million net.
That gets me of three and a half millions of your 25 ish percent market share or is that a fair way to think about it how do we think about the trajectory there.
Yeah, we've had the.
The greening of our Japan out of their 80 representative they're selling in Japan. So we do expect to meet and exceed our goals for Japan, that's coming here, but at the same time, we're careful because it the market was quite impacted because it's all the construction by Covid. So you're assessing what happened in the first quarter to assess.
What would you have the rest of the year, but we're continuing best we have.
The look at different sizes for the Japanese market, they're committed to drive the business for their reconstruction business. So we do see within the guidelines we have for Japan for for this year.
It's a hard one because of the impact of Covid in Japan, the first quarter.
Great. Thank you for taking the questions.
Thank you. Our next question comes from the line of Chris Cooley from Stephens. Your question. Please.
Good afternoon, and thank you for taking the questions maybe just personally one of the housekeeping.
It wasn't.
Low crude or when we're thinking about for the growth for the breadth of products.
Category.
From the aggregate for 2021, it's a very healthy growth rate, but I wasn't clear. If you were still assuming that kind of 60 40 balance between.
The Oregon Recon revenue.
Earlier this week of historically some of it doesn't.
The reconstruct the reconstruction of the excuse me the assumed the click of greater.
Waiting in the.
For more of a primary driver in 2021. So just if you could just get some clarity around that and then I had a couple of quick follow ups.
The unexpected first quarter is still a 60 40 very similar to fourth quarter. We do expect as the recon market comes back sometimes second quarter and obviously for the summer to go back to 50 50 in the second half of the year.
I stated, we're very focused on gaining additional accounts from the hospital perspective, so as they come on line those hospitals, who will generate a quite of growth during the second half for us.
But that's what the second half 50 50 for the next this quarter definitely be 60 40.
Understood.
On the.
I wanted to follow up on your commentary regarding one of the new product pipeline.
If you could just maybe give us some of them will do.
So the color just as how we should think about prioritization of spin.
From an R&D perspective, it sounds like with these products coming in calendar 'twenty two but.
We should think of the uses more of.
The five 10-K, so maybe more of a tool the nature. Just curious if you think you need to put a.
Greater focus on kind of transformative types of products.
In consideration of some of the competition, which you will ultimately be sort of you seen outside of the United States.
Here in the U S. Most likely as well within the next 24 months. Thank you.
Yes, the current products, we're looking at as more of the focus of our core business and our support of core business. Some of them of line extension of some of them will require.
10 can't expansion submission.
But really at the end of day supporting of course, the business and bring the new technology that they're really improve our current technology from expander and also sizes of our current missing the construction for us.
For me looking at 'twenty, two of definitely where the dive in into additional areas that may be within plastic surgeons plastic surgery that are kind of the transformative from.
Adjacencies and also from growth perspective, but the focus in 'twenty. One is how do we get all of the products that we need.
To meet all of the demand one and number two the right products and the improvement of the current technology and the advantage we have in the hospital environment. So that's the.
Really the demand of Gulf of this year.
And now the launch in 'twenty, two 'twenty 'twenty two.
Thank you.
The queue. Our next question comes from the line of Alex Nowak from Craig Hallum. Your question. Please.
Great Good afternoon, everyone.
You've been the CEO now for almost of about five months can you maybe walk through what you've learned since joining the company specifically about the plastic surgeons category share interest specifically it sounds like one of the first efforts Youre doing here is doubling down on the patient marketing experience, but what else do you want to do over the next several years to really reshape the answer to your <unk>.
Sure.
Yeah.
First of all is really allocating the resources on the right places is the stated before the commercial team of.
Our supply manufacturing backroom, Wisconsin, the lot of folks working hard, but they needed the resources to make sure. They are I call of feeding the beast and they're doing great job now what the resources to manufacture and have the right.
Skus for our team.
And in another part of is also the product development expedite and created a rigor and of process for the development. So we go through we submit the right time and who have approvals as we plan in the next 12 to 18 months from the next four of five years is really find a way to come up with new technology and find ways of.
Support the art of plastic surgery, how do we.
<unk> closely with the plastic surgeons waterways. The partnership is there's a lot of times partnership does not necessarily.
Spending more money if final way what their needs are.
The plastic surgeons light the educate each other from latest greatest technique.
Sometimes you do go to tender for plastic surgeons, you'll see 10 different ways to do the same surgery, how do we help facilitate them sharing those best practices.
And a lot of times ideas for new products come from plastic surgeons themselves, they're always looking for new ideas new ways to improve the patient outcome. So for listening if we're talking to them a lot of times when we can get those ideas to help them develop some new products and we really focus on that as well. So you see some things that we're working on it the ideas from plan.
Ex surgeons and they understand our focus on plastic surgery, so they own or partner with us for new ideas of new products moving forward so for us to become.
And leader in the transform it changed from the transformational technologies. The key is to come up of products.
Between the next for five years the for.
What the physicians need I think improve the patient outcome.
Okay. That's helpful and maybe how do you see the as the overall market for implants changing here coming out of Covid. If it does change at all the.
For the category got hit back and toy line came with the safety concerns and then it got initially dang tier in 2020.
More so on recon and then on.
The Where's the market shake out in 2020. One does it go back to 2018 levels or is it something new.
Yeah, I talked to over 45 classic surged in the last four five months now there are 7000 of plastic surgeons out there. So it's 45 and has a small N, but I can tell of the majority of those surgeons had if not their best year ever closer to best year ever for augmentation.
So you'll see argumentation it'll be interest to see when the data comes out next month to see if the overall market. It was negative for Dow So and if you and I talked to those surgeons now if you try to schedule of visit with the surgeons now.
You'll probably be may or June before you actually sit down and have the initial consultation so first quarter, they're still very busy just like fourth quarter fragmentation for reconstruction, that's where we obviously waiting to see happening as states open up as the Covid impact decreases we expect it to.
Now moving of different direction, so as we look in 2020 one.
We don't know yet, but based on the conversations was 45 surgeons reconstruction was probably the negative number will probably be positive.
Well I doubt you'll be net close to <unk> 2019, because think about the first quarter still very similar to fourth quarter in regards to impact of Covid, but for.
For augmentation I'm as excited as you are to find out of what's going to happen because.
The my conversation is was a very healthy robust market in 2020.
Even though most surgeons had somewhere between three to eight weeks with the office completely closed in second quarter 'twenty 'twenty.
Okay got it that makes sense and then I might have just completely missed this but again what happened the mere dry it specifically in the guidance. It looks like it's getting cut by about half and I think you did about 4 million. The marriage of business last Q4 here and that was already after you've made all of the commercial changes I'm just curious why it's taken them.
Other stepped down.
Again.
Well just like anything else of you invest less of you're going to get less coming back. We again, we are having the very healthy revenue coming from Asia and they'll continue to do so in the could you just saw in the first quarter I think the impact of C is 100% focused on making selling chips in the U S.
That's sort of commitment we're manufacturing.
We have still six representatives, our practice development managers there have to have the 50% of the time they'll help out of the mirror of dry so that's why you're seeing the lower demand.
And number three the first quarter, you still have a little bit of impact of.
The COVID-19, but the main thing is lower investment, but its still a very nice revenue and I stated before we expect to have a breakeven point this year.
Okay helpful. Thank you very much.
Thank you and our final question for today comes from the line of Anthony Vendetti from Maxim Group. Your question. Please.
Hi, this is not all of them on for Anthony Vendetti I just wanted to quickly touch on what your plans are for the sales force in 2021, if you could briefly talk about some of those educational peer to peer initiatives mentioned in the press release.
Yeah, so for our sales force.
I have Uh huh.
Have told our head of sales Kurt the.
He has the ability to add represented based on the needs and demands.
Margaret said something about a certain number of dollars we strive for the certain number of dollars per rep per track. It every week I have a dashboard of review every Monday.
And we have a goal to add reps based on the needs.
Like I said before we added somebody in Nebraska somebody in Florida, and as the business continued to expand we had more in regards to the hospital business we had to.
Reconstruction account managers, who now have for because obviously, the adding more hospitals and as we continue to increase the number of hospitals and some more GPO contracts, we're going to look at that as well the very systematic very methodical based on we're seeing the demand.
So that's kind of going from that perspective, regardless of peer to peer plastic surgeons are very similar to a lot of specialties, where they like to share best practice I'd like to talk to each other and our goes to be help them facilitate the discussion that's really at the end of the day the slippage of discussion as the physicians teach positions.
We're gonna be there topic by the end of the day.
We like to help them teach each other so.
We'll get into debt as a part of our focus on surgeon and the second of plastic surgeons of second half of the year. We spent a lot of time. This first for five six months and creating patient demand.
And hence the or social media spending and then we will shift to a surgeon focus quite a bit in the second quarter and third quarter of this year.
Great. Thank you that's helpful.
Thank you. This does conclude the question and answer session as well as today's program. Thank you ladies and gentlemen, the for your participation in today's conference you May now disconnect. Good day.
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