Q1 2021 LivaNova PLC Earnings Call
Good day, ladies and gentlemen, and welcome to live and Novo's plc first quarter 2021 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Good question during the session you will need to press star one on your telephone keypad. As a reminder, this conference call is being recorded and.
And I'd like to introduce your host for today's conference Mr. Matthew Dodds live and our senior Vice President of corporate development. Please go ahead Sir.
Thank you Jaclyn and welcome to our conference call and webcast discussing leaving though of US financial results for the first quarter of 2021.
Joining me on today's call are Jamie Macdonald, our Chief Executive Officer, Alex Schwartzberg, our interim Chief Financial Officer, and Melissa Farina, our vice President of Investor Relations.
Before we begin I would like to remind you that the discussions during this call will include forward looking statements factors that could cause actual results to differ materially are discussed in the company's most recent filings and documents furnished to the SEC, including today's press release that is available on our website, we do not undertake to update any.
Forward looking statements on.
Also the discussions will include certain non-GAAP financial measures with respect to our performance, including but not limited to sales results, which will all be stated on a constant currency basis reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, which is available on our.
Website.
We have also posted a presentation to our website that summarizes the points of today's call. This presentation is complementary to the other call materials and should be used as an enhanced communication tool you can find the presentation and press release and the investors section of our website under news <unk> events and presentations.
At Investor day, leaving over Dot com with that I will now turn the call over to Damien.
Thank you, Matt and thank you to everyone for joining us today and welcome to our conference call for the first quarter of 2021.
And I'll start off by discussing some recent updates to our business.
And then moved to sales results focusing first on our primary growth drivers epilepsy and Ics and.
And then I'll discuss our strategic portfolio initiatives, DTD heart failure, and I wish I could.
After my comments, Alex will provide you with additional details on our results and reaffirm 2020, one and 40 year guidance on.
I'll, then wrap up by closing comments and moving to a Q&A.
And you were on modulation and cardiovascular business has continued to recover from the depressed levels of activity that began in the second quarter of 2020 and the first two months of this year procedure volumes and the U S was significantly impacted by elevated COVID-19 cash levels.
But trends improved in March and we exited the quarter with good momentum.
The rest of the World and Europe regions continue to experience high degrees of variability and many countries. So worsening sequential trends will shutdown for varying periods of time.
We continue to see market fluctuations related to COVID-19 case volumes and patients' willingness to seek treatment.
Despite this uncertainty, though we expect procedure volumes to improve as we move through the year.
Moving to recent events.
We achieved a key clinical milestone and our heart failure program with more than 300 patients now enrolled and anthem <unk> pivotal trial.
Once we followed these patients for nine months and randomized a total of 400 patients the resulting data will be reviewed and anticipation of filing with the FDA.
If approved for use by the FDA and this will become the first CNS based therapy for the adjunctive treatment of chronic heart failure in the U S.
Earlier this week, we announced that the uncover study in collaboration with Verily and a subset of the recover study enrolled its first patient.
Data obtained from Verily develop digital tools will complement the clinical that comes collected and the recover study providing clinicians with a more comprehensive view of depression patient biomarker us.
Okay.
And cardiopulmonary can be kept at a new inline blood gas monitoring system received five 10-K clearance earlier this month.
The system, which is integrated into our H L. M is designed to easily and accurately monitor blood gas parameters during pediatric and adult cardiopulmonary bypass procedures.
And enables a perfusionist to quickly react to parameter changes.
Be kept as a key development for H M M platform and the first of several new innovations, we expect to roll out as we make continued progress towards our next generation H L. M.
Also this month.
Five H L. M received five 10-K clearance.
<unk> features be kept us as a primary component along with new sensor technology and improved software.
These product enhancements and build upon our 45 plus years of safety and reliability.
Related to our heart valves divestiture, we amended the purchase agreement with Jairus and able to provide for a deferred closing as a subsidiary responsible for Sop management services at the Solutia campus.
We expect the initial closing of the heart valve operations in Italy, and Canada to occur on June one consistent with the timeline previously announced.
And this will be followed by closings of the sales infrastructure and the second half of the year.
Now I'll discuss our core gross drivers epilepsy and Ics.
Epilepsy sales increased 15% globally versus the first quarter of 2020 with gross across all three regions. This increase is attributable to improving market dynamics, mainly in the U S.
U S epilepsy sales increased 12% versus the first quarter of 2020 total implants improved versus the prior year driven primarily by replacements.
[noise] epilepsy sales and Europe grew 1% versus prior year levels led by France, Italy, and Germany offset by results in the U K. Meanwhile, we achieved growth of 69% and the rest of World region led by the Middle East and Asia Pacific.
For the full year, we continue to expect global epilepsy sales to grow 15% to 20%, including sequential growth and new implants as patients and they can give us return to in person patient physician visits in addition.
We anticipate a tailwind and replacement implants related to the backlog created in 2020.
Our progress is propelled by our U S go to market initiative. These dedicated teams now accounts for just over 10% of U S sales and their results are trending above the baseline business.
We've added one new chain and Q1 and expect to deploy three new teams during the second quarter.
ACS sales were $13 million and the quarter and increase of 24% from the first quarter of 2020.
Growth was driven by the continued adoption of livestock and an increase in procedure volumes.
We forecast Ics to grow at least 20% in 2020 one.
Yeah.
Turning now to D T deep sales and the first quarter were $1 million in 2020. One we anticipate DTD sales of approximately $10 million to $15 million from a combination and recover study and replacement implants for CMS eligible patients.
And we're encouraged by our sequential acceleration of patients consenting into this study and we continue to expect to implant 250 unit, Paul the patients and or 150 bipolar patients in their respective recover arms by year end.
And heart failure, the anthem Heifer F. U S. Pivotal trial continues to make progress ahead of expectations with enrollment surpassing 300 patients.
As previously said, we believe and we start analyzing the interim data and the first half of 2020 two.
We also continue to make progress and OSA since submitting the <unk> for approval in late December we've been responding to additional questions and still expect to stop the study in mid 2021.
So the cardiopulmonary business sales were $109 million and the quarter, a decline of 10% versus the first quarter of 2020.
Oxygenator sales declined in the mid teens globally with the U S and Asia Pacific reforming better than Europe and Latam.
H M sales increased and the mid single digits and was favorably impacted by better than expected S. Five sales and the rest of world and U S regions.
Moving to heart valves sales for the segment were $21 million and the quarter, a decrease of 19% versus the first quarter of 2020.
I'll now turn the call over to Alex for an overview of the financial results I'd like to thank you Damien I'll discuss our first quarter results in greater detail.
Sales and the quarter were $248 million, a decline of <unk>, 4% versus the first quarter of 2020.
Cardiovascular sales were $143 million down 9% from the first quarter of 2020.
Neuromodulation sales were $104 million and increase of 15% compared to the first quarter of 2020.
Adjusted gross margin as a percent of net sales in the quarter was 68, 6% up 30 basis points from the first quarter of 2020.
The margin increase was primarily driven by sales mix offset by unfavorable manufacturing variances.
Adjusted R&D expense for the first quarter was $42 million compared to $41 million in the first quarter of 2020.
R&D as a percentage of net sales was 16, 9% for both periods.
Overall, R&D is increasing behind continued progress and the anthem <unk> pivotal trial and the recover study.
Adjusted SG&A expense for the first quarter was $96 million compared to $104 million and the first quarter of 2020.
SG&A as a percentage of net sales was 38, 9% down from 42, 8% and the first quarter of 2020 behind continued focus on cost containment measures.
Adjusted operating income from continuing operations was $32 million compared to $21 million and the first quarter of last year.
Adjusted operating income margin from continuing operations was 12, 7% compared to eight 7% and the first quarter of 2020.
The adjusted effective tax rate in the quarter was 10, 8% compared to eight 2% and the first quarter of 2020.
The higher tax rate is primarily attributable to geographic income mix.
Finally, adjusted diluted earnings per share from continuing operations in the quarter was 35 cents.
Compared to 33 and in.
And the first quarter of 2020.
Moving to cash flow and.
Our cash balance at March 31, 2021 was $253 million in line with our cash balance at December 31, and 2020.
Net debt at quarter and was approximately $503 million versus $505 million at year end 2020.
Our adjusted free cash flow, excluding extraordinary items through the first quarter of 2021 was negative $10 million as compared to the first quarter of 2020, our free cash flow was largely impacted by cash interest payments and divestiture related expenses.
Capital spending for the first quarter was $8 million, which was flat to the first quarter of 2020.
Now turning to 2021 guidance.
As Damien mentioned, we are reaffirming our previously announced full year sales and EPS guidance to recap. We are forecasting 2021 sales growth between eight and 13% on a constant currency basis, which assumes a 1% tailwind from exchange rates.
We're projecting adjusted diluted earnings per share from continuing operations and the range of $1 40 to $1 990.
Adjusted cash flow from operations, excluding extraordinary items.
And is expected to be and the range of $30 million to $50 million.
For modeling purposes, we assume sales and the first half will be lower than the second half due to softness in several international markets, including Latam and Europe, primarily related to the impacts of COVID-19.
Additionally, we expect EPS and the second quarter to be roughly in line with the first quarter, primarily related to the phasing of spending for pipeline clinical studies.
With that I'll turn the call back to Damien for some final comments.
Thanks, Alex.
We remain optimistic that we will deliver on that pipeline commitments and full year guidance led by our focus on execution and as COVID-19 infection rates improve.
Additionally, we continue to take actions to further streamline our business lower costs and improve free cash flow.
As procedures return, we believe the work we've been doing to improve margins will become clearer.
We look forward to updating you on our continued progress to improve the lives of patients and drive shareholder value and with that Jacqueline we're ready to answer questions.
Thank you if you have a question at this time. Please press Star then the number one key on your Touchtone phone if.
If your question has been answered or you wish to remove yourself from the queue. Please press the pound cash as we enter the Q&A session. Please limit yourself to one question and one follow up question and then return to the queue. If you have additional follow ups first.
First question comes from Rick Wise from Stifel. Your line is open.
Hey, Rick good morning, and good morning Damien.
Just lots of obviously lots that they get into here.
Maybe let me start off with Oh, the epilepsy business and general it's great to see the progress across the board and.
Particularly and the epilepsy.
But help us understand maybe.
And just as we look at the rest of the year the impact of your steadily evolving dedicated sales teams and the U S.
10% of sales.
Today, you're adding three reps.
Talk about the impact on volume that we could see you know.
And maybe flesh out the progress you're making.
And entering.
Those level four centers et cetera, just update us there.
On the outlook and a little more detail if you could thank you.
Sure Great.
Great question, Rick and sorry, it's so early in the morning on the East Coast.
A few things that look I'm really pleased with how that team is evolving and executing and you know the ability for us to add talent into that pool is a program, where we've enhanced our sales and marketing approach to drive new patient growth.
The first thing and the teams, which is having a key account leader and M. S. L and medical science liaison a T C. The therapy consultants, whose day of running the day to day and and nurse education specialists, who are working specifically with the clinic and the patients.
That coupled with accelerating a clip clinical evidence generation through investigator initiated research.
And we've also worked to expand our publication strategy to help with the science and the discussions with patients and clinicians.
You know we were saying that typically there's about a six month lag as these teams develop their key account plans get up to speed and learn how to navigate the clinic and and they're making progress across the across the board all of the the existing policies have really shown above baseline performance and.
And we're really pleased with that we continue to see first from them.
The first N P I referral from our new epileptic Allergist, and Boston first and Tom was saying that from that clinic.
We had our first advisory Board meeting in March we had a number of clinicians from the key accounts.
Air, which is a new attendance and engagement with us and May.
And Midwest Hospital held its first neurosurgeon training, we've never been able to access that clinic and teach on VNS and.
And as a result of that to neurosurgeons completed their first implants.
So I think you know these behaviors are starting to read through positively on top of that as we see procedure volumes improve and patients willing to go back to the clinic and importantly in in person.
Visits stopped to increase we'll we'll see this continue to read through.
Okay and.
And clearly you're making progress on the BT.
B T D.
Trial front.
And it's encouraging to hear and you'll hit you think 250 455 four by year end.
And just.
To make sure I'm understanding Hurley.
How do we think about what's next beyond that year and milestone.
And what you know how we should think about God.
And I know, it's early to look ahead to 'twenty, two but next steps after that.
And it seems like you're encouraged at the pace of enrollment.
Yes, definitely with the way that people are consenting into the study and we saw the definitive acceleration through the quarter and and that's encouraging I think you know we've got more than 70% of our clinics are activated now which is great patience and returning to the clinic, which is great and.
As we can sent into the study and get them through the baseline one and two and into implant.
And we'll be able to us really see the progress there.
I think the next thing for US is to make sure. We hit these milestones towards the end of the year and then you know.
The key for US is making sure and we learned a lot from the <unk> study from anthem about making sure. The field clinical engineers are available for the titrations and we continue to drive the monthly follow US we'd go to school and these patients each month, so out our attention throughout the year is going to turn more to the mechanic.
And of operating the study and Rick It's Matt. So if you take unit polar as an example, you know 250 patients in.
Implanted and that's the next milestone for that that part of the study then we'd start following them we get to look every 25 patients after that what we're looking for statistical significance on time and response once we hit that we would then submit to CMS and then ultimately CMS within <unk>.
Move us to move the registry. So we still assume that will happen and late 'twenty two early 'twenty three.
That's very helpful. Congrats on on all the progress on the quarter. Thanks.
Thanks, Chris.
Your next question comes from Adam meter from Piper Sandler Your line is open.
Hey, good morning, guys, Hey, Damien I'm doing well thanks, how are you.
Excellent. Thank you.
Great well congratulations on the progress and start the year and thanks for taking the questions here I had a couple and I guess I just wanted to start with a big picture question.
And on the procedure environment or landscape.
I think you've talked about this a little bit you know March saw a significant improvement and you exited.
Heading into April with some good momentum, but wanted to just try and flesh that out a little bit for how the business trended.
You know over the course of Q1 and and throughout April and then I had a couple of follow ups. Thanks.
Yeah. So yeah, that's a as I said January and February started off slower, but the acceleration really really read through in and March, particularly in the U S and look like you and everyone else, we're watching the headlines and and tracking with our teams.
And the positive trends in our in the U S and a few other geographies I sort of balanced by the.
Issues that you see and in Latam, particularly Brazil, or India, and Asia Pac, Canada again, Germany.
I would say and I'm very encouraged by the momentum out of Q1, and we were pleased to see that and also the visibility and our funnel heading into Q2. We are we were very encouraged by that.
But when and when modeling the procedure volumes continue to improve sequentially throughout the year.
And you know Alex its Matt I would say in Europe, where we're assuming like a lot of other companies, probably a one quarter delay and then getting traction and and moving on to more of a back half for Europe, and Latam and you know and as we've said before Asia Pac is different different countries are having different levels of performance, but overall it looks pretty good.
Good.
Got it that's helpful. And then my next question is just on on the guide you elected to leave the guidance unchanged. Despite the Q1 beat so maybe just talk through the guidance philosophy, a little bit more is it purely just.
Some conservatism given COVID-19, and and where you are and the year, which I think makes sense or are there. Some other items that are contemplated are factored in there just hoping to better on right on that.
Yeah, I think the way you characterize it first off is how we're viewing it you know, let's not get over S case, we like the momentum, we like the visibility and and the funnel what makes us cautious of the COVID-19 headlines and the vaccination rates I'd say as I said, we're modeling procedure and volume improvement and and that'll read through for the performance, but we're just being cautious.
As we as we looked at the pace of change around the world.
Okay understood that's very clear, thanks, and if I could just sneak one one more in.
I think last month. It was there was a report on the financial times about Premier having some interest and the business just wondering if you're able or willing to comment on that topic and thanks. So much guys for taking the questions and congrats on the nice start.
Yeah, Yeah, I would say you know it seems to be you know Q1 room, a time and.
You know the same thing the EBITDA before.
And we don't comment on any speculation related to that our focus is entirely on execution, let's get the company rocking and and help people deal with coming out of the COVID-19 crisis.
Your next question comes from Anthony Petrone from Jefferies. Your line is open.
Thanks, and good morning, everyone and good afternoon, congrats on shore and start to the year a couple I'll just rattle them off.
Damien one would be the first one on the.
Pushing comprehensive epilepsy centers.
<unk> talked about that a bit last quarter.
And it sounds like some of the sales hires will be focused on those centers. So maybe just an update on on where you sit and targeting and those two to 300 sites and and how we think that evolves throughout the year.
The second question would be on on the anthem study.
Just want to check there.
Well on track to hit the enrollment target for the first half of 'twenty one and.
And I'll have one quick follow up thanks.
Sure. So yeah with respect to the CEC as I said their debt.
Those teams now accounts for a north of 10% of our U S sales, there and about 50 plus clinics.
You know and entitled and there are you know roughly 250 level three level four centers.
And and were adding teams we've already added one and Q1 and will add another three in Q2.
Really quite a long way through the hiring process to fill out those teams. So I'm really encouraged by the progress there as I said, we see about a six months lag depending on the team as they get to up to speed, but I'm really encouraged by the progress there and some enrollment.
And that team has done a tremendous job and he said we have now over 300 patients and a randomized and enrolled.
The program here is that man, we fall out of those 300 for nine months.
And as we also get through the follow up we continue to enroll up to the 400 patient and when net debt 400 patient is randomized and we then can start reviewing the data and then based on net we anticipate being up and decide whether to submit to the FDA for approval and probably do that and the first half.
Off of 'twenty two.
That's helpful and quick follow up would just be on the operating margin and the quarter what was certainly well ahead of.
Where we modeled and and an improvement and certainly from <unk>.
And even from trends in the back half so maybe just kind of level set.
Are you sort of see operating margin progressing throughout the year here in 2021.
And as it's reflected in your earnings guidance. Thanks.
Yes, Thanks for your question Anthony.
And we.
And we were cautiously optimistic and the quarter.
And and you know as we saw things progressing throughout the quarter. We you know we started to continue to invest we we were holding back a bit in terms of our investments and in the quarter and you know what.
And hence the margin was a breath through better than expected.
But we feel good about our guidance and.
Our margin for us for the full year.
Okay. Thanks.
Sure. Thanks, Dan.
Your next question comes from Michael <unk> from Baird. Your line is open.
Good morning, Mike Good morning, good morning, and good afternoon.
Two on cardiopulmonary and the first is just the quarter.
Oxygen meters down mid teens, each L M revenue up mid single digits.
Encouraged by the H O N number of curious if you could unpack that pushes and pulls in the period and then the oxygenate or us.
Down mid teens is that simply just be the read through to two procedures.
And and if so might get comment on.
The trend and cardiac procedures.
Jan said March exiting March.
Sure Hey, Mike its Matt so for oxygenate or us.
You look at our SKU, you know were heavily skewed to what we call rest of world than Europe, and the U S and those are the regions, where we've just seen more pressure. If you look at some other companies that are reported and they see.
You hire to the us so we still believe that our oxygen and a number on a global basis, and especially and rest of world is indicative of the procedure volume. So we do think we've held share there.
And I think in terms of the quarter. There was an improvement and marshman was not the same as neuro Mod. It was a little more steady and Gen fab March for that business.
And then H L M up mid singles I mean that seems to be a good result, and anything to call out there.
It is I think it was a little better than we expected I think that you know and you've seen and some other of the capital equipment companies.
The hospitals I think are spending more on capital equipment, and and we realized and and also for us given our share.
People still still really Wanna, if they need a new H L and machine. The S. Five is still we consider best in class.
In terms of the markets you know I'd say overall it was pretty good I think the U S and particular with solid.
The follow up also on C. P. I have noticed in March and April one of your competitors here has had not one but two recalls pediatric oxygenate or us.
And our blood pump.
And then I think competes with your Ats solution. So I won't name the name, but I'm curious have you seen any change in <unk>.
Competitive dynamics and the and the very.
Recent past here as a result of some of these announcements.
So my take is not that much there.
They are both relatively small products pediatric ops meters and a small piece of the pie.
So nothing material to think about for share.
Okay. Thank you very much.
Thanks, Mike.
Your next question comes from Scott Bardo from <unk>.
Aaron Berg and your line is open.
Yeah, Thanks, very much for taking the questions.
Yes. The first question please.
Good start on.
Gross margins, which I'm guessing is a reflection of the mix and neuromodulation.
Alex I Wonder if you could help them by providing them.
Some feeling on the outlook as to what it is embedded in your guidance for gross margin for the full year on.
And also if you could help us.
And I understand some of the close ballpark and coffee evolution throughout the successive quarters that would be helpful. And now that is not easy given your heart valves disposal.
And second question. Please just relates to you.
On initiatives and sleep apnea.
On all going well.
Give us some sense of.
When you think you might be and the position that submit them to the regulator just some sense of timing and on the huddle with other required to achieve those milestones and I've got a quick follow up thanks.
And when are kept us gross margin cost yeah, and so on gross margins I think this quarter was indicative of.
And how we're progressing against.
You know against our targets for the year.
We're going to continue to see improvements and gross margin slight slight improvements in gross margins as our volumes continue to grow in epilepsy.
And.
And we had a we had a nice bump this quarter because of HL on which you know relative to the overall fleet carries a.
Stronger gross margin as well, so feeling pretty pretty good about our ability to continue.
Continue to grow gross margins over the course of the year.
In terms of SG&A.
Like I said.
We held back investments and the first quarter a bit to just.
Just as we were seeing some softer trends and so we.
We're going to see some level of investment.
Expand and in the second half of the year as our sales our revenue velocity picks up.
We're going to continue to see the SG&A as a percentage of sales to decrease and 21 versus China.
And we get the economy of scale as the sales rebound and we you know we're continuing with our cost discipline and you can see that rate through and some of the data that we've published the last few quarters. So I think that's an important change and the behavior here and it is reading through and in terms of OSA, Yeah, we submitted.
The <unk> at the end of the year.
Last year.
We are responding to questions. Our intention is still to kick off the study and in mid 'twenty one.
And again, depending on the response times from the FDA, but we're still bullish on the market, we're still bullish on the technology and.
And I like what the team is doing to be able to get this thing going again.
Okay fine.
But no indication on.
And when this product might come to market I mean, presumably.
And.
One might expect.
Bonding and a couple of years is that two other Neil.
And that might be a little it's Matt and might be a little early Scott we're thinking probably 2024, if we started and the middle of this year.
So you've got a year a year of enrollment a year of enrollment.
Six to 12 months of follow up depending on where we land with negotiations and then the approval program through the FDA. So that puts us in late 'twenty three early 'twenty four.
Got it thanks, I'm real quick just on on free cash flow.
On a little bit soft and the quarter, which as you recall and I Wonder if you could just help outline again some of the moving parts to improve and that towards your guidance on how that guidance will be affected on disposals on the heart valves.
Yeah, so and <unk>.
They'll feel.
And good about our guidance of $30 million to $30 million for the full year.
The first quarter was was softer and and that's typical and in terms of the way our phasing us from in terms of cash conversion.
We had a couple of items one was the divestiture related.
On legal and advisory fees debt.
We incurred and the first quarter and then some separation payments related to the organizational restructuring that we did.
And in Q.
Q4 Q1.
Okay. Thanks.
Thanks Chuck.
Your next question comes from Matt Taylor from UBS. Your line is open.
Good morning, Matt.
Good morning, Thanks for taking the question.
I was hoping you could talk to us a little bit more about expectations for.
And the faith and your cadence of revenue through the year what's inherent.
And your guidance for some of the visibility that you have now and in Q2.
And how closer are we going and get back to kind of normal seasonality based on some of the underlying trends youre seeing and.
Can you talk about any factors to think about in terms of mix of capital or some of those new neuroma and plants are coming back as big swing factors.
Yeah, So I think again thinking about modeling.
The way we've looked at it is that the procedures continue to improve throughout the year and.
And so sequentially quarter on quarter I think that's the first way to think of it.
In terms of you know one of the key drivers for us and you.
We're on modulation ware.
And I'm pretty convinced that there's been a backlog created in 2020.
And U S neuromodulation, particularly around the end of service. So we think that that will continue.
A thousand patients that we think were backlogged and deferred procedures. So we will recapture those over the next one to two years.
And new patients as they returned to clinics importantly, us as people are prepared to go back us can't give us with patients.
And we skew us pediatric so about a third of that population is pediatric as those patients go back into the clinic.
We view that as a positive pool and the in the back half of the year as well.
Cardiopulmonary and.
We expect to see and level of procedure acceleration from the backlog of patients that have deferred cardiac procedures.
We were across a number of procedures cabbage and aortic valve replacement and mitral valves fib congenital defects. So we expect cardiopulmonary again too.
Progressed throughout the year.
Okay. Thanks for that and then I was hoping you could just spend a minute and explain the importance of uncover I hadn't heard you talk about that before us that just kind of nice to have that extra dataset to ride along recover or is that going to be important in terms of the submission strategy or for some other key learnings.
I think.
Importantly for us in <unk>.
Intervention psychiatrist and having these biomarkers available and and systematically capture it is really case, there's not a lot of systematic a daughter about this and partnering with verily I think is important and we've coupled that with the recover study. So it's a sub study and inside the recover.
And so it doesn't impact what we're doing with recover on the timelines of our engagement with CMS, but we believe you know one of the key aspects of moving through the depression patient set is going to be able to have.
More and more data about these patients have I react what things and signals, we can use to try and indicate who's who's going to respond.
And so we're pleased that we got someone who's going to have a lot of AI capability to help us on cover that.
Okay.
Okay. Thank you.
Thanks, Matt.
Jacqueline.
Your next question.
From Mike Matson from Needham and company your line is open.
Hi, good morning, Thanks for taking my questions.
It gives them on to ask.
Hi, I just wanted to ask about the other pipeline projects, so starting with TTP and and heart failure.
When do you think are the earliest we could we could potentially see data made public from either of those trials and then what would the forum be where you would try to release that data on the heart failure data for example, I'd imagine you'd want to have that presented at some sort of cardiovascular conference or something.
Hey, Mike It's Matt So for D. T D. It's really going to come down to Cms's preference.
As far along and we're going to kind of defaults and what they prefer and terms of us submitting the data versus presenting it and we're not going to know that until we get to the point, where we believe we can submit it to them.
For heart failure, it's probably the ESC or the heart failure Society meeting.
In September of 2022, that's the next big meeting, we're probably a little tight for the ACC it could be close but I would assume.
<unk> heart failure with the possibility of ACC for that data.
Okay. Thanks, and then just a question on the adjusted free cash flow guidance that you've given us.
Does that include the proceeds from the heart valves sale I would assume not but I just wanted to ask about that.
No it does not and why.
Okay, great. Thank you.
Yeah.
Thank you and I have started.
Yes.
And there are no further questions at this time Damien Mcdonald I turn the call back over to you.
Well, thank you everyone and for kicking off early and we appreciate the questions and on behalf of the entire team. We appreciate your support and the interest and live and over and we look forward to seeing you next quarter. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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