Q1 2021 AtriCure Inc Earnings Call
Good afternoon, and welcome to the Asia curious first quarter 2021 Inc. Conference call. My name is smell and that will be call. It didnt it looks likely to keep the call to me at this time all participants are in a listen only mode and there will be facilitating a question and answer session until like the end of today's call.
As a reminder, this call is being recorded for replay purposes, I would now like to turn the call over to Lynn Lewis from the Gilmartin group for a few introductory comments ma'am.
Thank you by now you should have received a copy of the earnings press release. If you have not received a copy. Please call 5137554136 to have one E. Mailed to you before we begin today, let me remind you that the Companys remarks include forward looking statements forward looking statements are subject to numerous risks and uncertainties many of which are beyond <unk> control.
Including risks and uncertainties described from time to time in <unk> SEC filings. These statements include but are not limited to financial guidance expectations regarding the timing of FDA reviews and expectations for product approvals expectations regarding the Fda's response, and whether it will approve converge the potential converge launch timing the potential.
Opportunity for converge on the adoption of the converge procedure Atrix yours results may differ materially from those projected <unk> undertakes no obligation to publicly update any forward looking statement. Additionally, we refer to non-GAAP financial measures, specifically revenue reported on a constant currency basis, adjusted EBITDA and adjusted loss per share of <unk>.
Reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures is included in our press release, which is available on our website with that I'd like to turn the call over to Mike Carrel, President and Chief Executive Officer, Mike.
Thanks Lynn good afternoon, everyone and thank you for joining US. We hope you are safe and doing well we are off to a strong start in 2021 with $59 million on total revenue for the first quarter.
This represents 3% sequential revenue growth over the fourth quarter of 2020, and largely reflects improving patient flow in the United States.
At the start of the quarter, we experienced headwinds from the decreased cardiac surgery procedures. Following the spike in COVID-19 cases, which resulted in extended quarantines and a reallocation of resources within hospitals.
However in March most areas United States began to stabilize and we saw steady growth across all of our franchises.
While we believe this recovery reflects some pent up demand. We also saw improvement in procedure volumes in March Encouragingly, we finished the quarter with momentum and this has continued in April.
Internationally on performance was not as strong, especially in parts of Western Europe due to COVID-19, resurgence is and slower vaccine rollouts.
Similar to the experience the United States began to improve in March however trends in our international markets has not been as consistent and we expect continued volatility in the coming months.
As we begin the second quarter, we expect the upward trend to continue in the United States.
The international markets will improve the outlook is less clear.
We believe that worldwide cardiac surgery volumes remained below pre pandemic levels.
Conditions are improving but this health care crisis is not fully behind us yes.
Therefore, we expect that we will experience some variability in the second quarter and further recovery as the year progresses.
Turning now to an update on our growth initiatives.
Beginning with converge, while we are closer to completing the PMA process, we cannot provide details of either a panel meeting or approval at this time.
However, we are confident that we remain on a pathway to eventual approval and look forward to providing an update on this milestone shortly.
Additionally, we continue to build a dedicated sales team and developed a robust infrastructure to support the commercial steps ahead.
Currently our U S sales and training team consists of more than 200 individuals on the field.
We're all critical to supporting our hybrid therapy gross.
This includes 35 dedicated reps and clinical specialists and our E. T focused hybrid sales team and over 30 professionals supporting nationwide training and educational programs.
The opportunity ahead of US is very clear and our goal is for the hybrid convergent therapy to become the standard of care for the millions of patients with long standing persistent afib.
We are also making significant strides on amaze, our other landmark clinical trial.
The Amaze study is a 600 patient randomized controlled trial designed to show superiority of endocardial catheter plus on lariat suture delivery device versus endocardial catheter ablation alone.
We successfully completed patient follow ups in early April and are now focused on analysis of the data.
We remain on track for PMA submission of the amaze trial during the fall of this year and expect to release trial data following the submission.
And our open franchise, we continue to make progress towards our five 10-K clearance of our new encompass plan. In addition to the open ablation platform, where we are a market leader in cardiac surgery procedures for the treatment of Afib.
We anticipate clearance later this year followed by a concentrated commercial launch at certain key centers 2021 and a broad commercial launch thereafter.
As a reminder, the encompass clamp provides a simpler and faster approach to a bleeding heart in open procedures and we expect this device to appeal to high volume Cabot surgeons.
As a result, we expect this new plant to deepen our penetration of the cardiac surgery market starting in 2022 and beyond.
The collective opportunity in addressable markets for our open and minimally invasive ablation platforms is well into the billions of dollars representing hundreds of thousands of patients annually.
This opportunity is complemented by the continued rise in left atrial appendage management procedures.
We saw a record number of atria flipped Elliott exclusion devices sold in the first quarter.
And our left atrial appendage management franchise accounted for 40% of worldwide revenue.
Our track record of delivering innovative L. E M solutions over the past several years has contributed to revenue growth along with increasing interest in managing the left atrial appendage.
We are encouraged by the growing awareness at society meetings, where the management is the focal point of bulk sessions and discussions.
Switching gears to cryo sphere, our dedicated device for managing postoperative pain and thoracic patients.
The cryo ice classed year probe is gaining traction in the market with sequential quarterly sales growth since launch and continuous addition of new accounts.
Crowd nerve block, which is included in our open franchise revenue is one of the fastest growing parts of our business and accounted for approximately six percentage of total revenue in the first quarter.
Our unique technology uses a differentiator freezing method to block nerves from transmitting pain signals after cardio thoracic surgery, providing a long standing form of painterly for these patients.
We believe this therapy will drive accelerated revenue growth in the coming years.
Looking ahead, while the pandemic is still impacting our lives.
We are beginning to see some return to normality with the rollout of vaccines and the gradual lessening of social socially restricted measures.
The momentum with which we are moving forward. It gives us hope we're in a pathway toward recovery.
Our team continues to execute and make it cheapens towards our strategic initiatives and we remain confident in our future that we are strongly positioned with multiple catalysts, we have underway to accelerate our revenue growth.
In closing I would like to take a moment to thank Scott Drake and Mark landing for their dedicated service and leadership on our board of directors. During their tenure, aged care has experienced tremendous growth and advancement of our mission to reduce the global AIDS epidemic. We are grateful for their guidance over the years to our entire management team.
With that I'll now turn the call over to Andrew <unk>, Our Chief financial officer to discuss more detailed results of the quarter.
Thanks, Mike our first quarter 2021 worldwide revenue of $59 $3 million increased 11% on a GAAP basis, and 10% on a constant currency basis, when compared to the first quarter of 'twenty 'twenty.
On a sequential basis, we experienced growth of 3% and our worldwide revenue from the fourth to first quarter. The sequential increase results, primarily from our U S business and improving trends in elective and non elective procedures throughout March.
In the first quarter 2021 U S revenue was $53 million, a 16% increase from the first quarter of 2020.
We realized double digit revenue growth in each franchise in the U S from the improvement in underlying procedure volume.
U S sales of appendage management products were $26 million up 18% over the first quarter of 2020.
Open ablation product sales, which include our cryo nerve block business were $21 $1 million up 10% over 2020.
Minimally invasive ablation sales in the U S were $8 $4 million up 28% from 2020, reflecting increased elective procedures year over year on growth and that'd be sense revenue.
International revenue was $9 million down, 8% on a GAAP basis and down 13% on a constant currency basis as compared to the first quarter of 2020.
As Mike mentioned earlier, we experienced more pressure on our international markets largely related to conditions in Western Europe as a result of COVID-19.
Touching briefly on a few key metrics for the first quarter of 2021 gross margin was 75.1% up 200 basis points from the first quarter of 2020.
This improvement was driven by both geographic and product revenue mix.
U S activity accounted for 85% of our worldwide sales compared to a range of 80% to 82% historically.
Specific products contributing to a more favorable gross margin include heavier episodes and a chocolate flex V and pro V device sales.
We had an adjusted EBITDA loss of $4 $7 million compared to an adjusted EBITDA loss of $6 $1 million for the first quarter of 2021.
While operating expenses increased year over year, the improvement to the bottom line results show revenue growth outpacing our investment.
Our loss per share was <unk> 38 cents in the first quarter 'twenty, one 2021 compared to a 42 cent loss per share in the first quarter of 2020.
While the adjusted loss per share each period was 32 and 36 cents respectively.
Now moving to detail on operating expenses for the quarter for comparability I will exclude recurring effects of noncash adjustments to contingent consideration liability for my comments.
Total operating expenses increased $6 million or 12% from $51 $9 million in the first quarter of 2020 to $57 $9 million on the first quarter of 2021.
The change results, mainly from increased variable cash and stock based compensation offset partially by lower clinical trial expenses reduced travel and discretionary spend per trade shows and internal meetings.
Certain areas of spend where we are currently experiencing savings such as travel and meetings are influenced by the pandemic.
And we expect cost to be restored historical levels as our top line improves and travel training and events increase.
We ended the first quarter with $236 million in cash and investments as a reminder, our first quarter cash burn is typically higher than the remainder of the year based on cash tax payment due upon stock vesting and annual variable compensation payout.
We expect our quarterly cash burn to reduce significantly for the remainder of the year.
And lastly, we are pleased with our recent development and the department of Justice investigation, specifically their decision to decline intervention in the underlying case.
And finally, turning to our outlook for 2020. One we now expect to achieve approximately 252 million to $256 million in revenue for the year given.
Given the momentum we observed exiting the first quarter, we project a reduced impact from COVID-19 in the second quarter.
As Mike mentioned earlier, we continue to experience procedural volumes generally operating below normal with regional variability.
In addition to reiterate our view for the remainder of the year, we expect cardiac surgery procedure volumes to continue to improve steadily through the year, resulting in sequential quarterly revenue growth for the remainder of 2021.
While we are pleased to report 75% gross margin in the first quarter. This result was largely driven by very favorable geographic mix, which we believe was unique to the quarter.
As we scale our operations in the coming years, we do expect our business to reach and maintain 75% gross margin consistently.
And we continue to expect adjusted EBITDA to be a loss of approximately $10 million for the full year 2021.
With improvements to the top line throughout 2021, we should realize a corresponding improvement in quarterly adjusted EBITDA. We also continue to expect adjusted loss per share for 2021 to be approximately $1 15.
At this point I will turn the call back to Mike for closing comments.
Thank you Angie we want to end by thanking health care workers in the scientific community for helping the world overcome this pandemic.
As we move towards recovery, we are excited about the path forward for <unk>.
We're also pleased with the appointment of Chris Johnson as our Board chair.
Sense of experience in medical device and growth oriented companies will be invaluable as we deliver on many of our catalyst that we've talked about earlier today, our outlook remains bright and with accelerated and sustainable growth over the long term. Thank you again for joining us today and with that I will turn it over for questions.
Thank you ladies and gentlemen, if you have a question at this time. Please press the star and the number one on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press. The hash key you will limit your question to one question and one follow up question at a time, we'll pause for just a moment to compile the Q&A roster.
We have the first question comes from the line of Robbie Marcus from Jpmorgan. Your line is now open you may ask your question.
Hi, This is actually Lili on for Robbie Thanks for taking the question on <unk>.
So first of all on converge on it sounds like you guys already know what path, you'll be progressing them approval or approval without a panel. So what's helping you what's holding you guys back from moving forward here what have your conversations with the FDA have been like recently and is it still reasonable to assume some sort of update in the first.
Half of the year.
I have one quick follow up thanks.
I'll start with the end of it it's very reasonable to assume that we're going to an update on very shortly as I mentioned in my comments.
And you're right. We do we do know the answer to the question that you did ask relative to that what is holding up as just we just need paper on hand from the FDA. Once we have that we'll be able to announce whether or not it's going to panel or we've got the approval as I mentioned in my comments, though.
Obviously, you've seen all the data we feel very confident.
In our eventual chance of getting approval there so.
And that's really what we can say about the conversion piece at this time.
Okay, great. Thank you and then just one quick follow up there.
Any color you could provide on the exit rate coming out of March and how that's continued into April and what sort of cadence over the rest of the year your guidance range assumes thanks so much.
Sure.
Yeah, when we exited strong I don't know that I understand exactly what exit rate per se means that we exited the month of March and March was very strong it really picked up at the end of February and continued into March that rate has continued into the month of April as well as I mentioned during my remarks.
We do anticipate that we'll have a I think if you think about the revenue we will be better in the second quarter than we had initially anticipated.
In the back half of the year will continue to be strong as we had anticipated we had already put into our numbers and our guidance originally really having a strong back half of the year. So most of that is going to probably come into the second quarter, which is where we can have had some of the softness in our original guidance that we've now updated and increased.
Yes.
Okay. Next question comes from the line of Rick Weiss from Stifel. Your line is now open you may ask a question.
Alright, good afternoon, Mike Hi.
Hi, Angie.
Maybe I'll focus on a couple of your major growth drivers and just.
Sort of I guess my question is on.
What's next.
Maybe just help us.
Given the amazing.
Okay.
Left atrial management performance.
Performance, what's next debt.
Separate from the recovery might help.
It helps sustain that.
But you know.
New product rollout.
If you could give us a little more granular expense.
Of your confidence in that.
That area specifically.
Yes.
I appreciate the question Rick we're at a great point and nature to your history on my mind, we've got some considerable catalysts coming down the pipeline over the next several years that are going to drive the gross you hit on some and Youre seeing some of it.
And our numbers to some degree first and foremost obviously converge.
That will drive our mis business you saw we had a really strong quarter.
Part of that is because of the impact of COVID-19, but part of that is also because the data has been out there since may of last year and people have seen that data at HRS in other places and lots of inbound inquiries and comments and people that are very interested in kind of adopting that we think that's going to be a significant driver to our growth you add left.
Appendage on top of that we're actually seeing an increase in the percent attachment of the H a clip to the converge procedure, specifically and so that's also driving some of the short term debt and we think that's going to continue so that as the.
The converge on hybrid therapies grow youre going to get the clip on top of that and eventually possibly even some Larry it's with the amaze data so getting to the second piece, which is on whats atrial appendage, we've got a rich pipeline of not just great products with the age of clip, but obviously with amaze, having fully enrolled and followed up on that trial now we're compiling the.
The data we are in a great position that within a couple of years to get an approval on that and then move that forward as.
As well as another standard of care, you combine that with converge and really we're the only ones that will be out there with that kind of robust ability to serve this huge market, which is the long standing persistent patient population on.
On top of that.
We do have other catalysts coming down the pipeline I mentioned encompassed getting clearance on that the penetration rate still is ridiculously low and cardiac surgery for treating the afib patients. We believe encompass will will help with that for sure.
And then on top of that you've got your pain management franchise, where we're really building up that team quite aggressively right now we plan on almost doubling it probably over the next 12 or so months 12 to 18 months every time, we add somebody new area.
There is great interest and it continues to drive growth as you've seen we've had sequential growth every single quarter since rolling out that product.
Thanks for all that.
Maybe.
One for Angie on on gross margin.
You were very clear that the first quarter I think that must be might be must.
Must be a record gross margin free check you're suddenly in my memory.
But how do we think about.
Two things really that I want to make sure I understand.
Was it the international was so weak or the price were so strong and that won't sustain because international is going to recover and so that'll be the drag I'm not sure I understand.
First I'd like the dynamics, there and again, how do we think about.
You know.
For the rest of the year or are you, suggesting we should be thinking about sort of 70% to 73% and then roughly that for the year is that the right way to think about it actually.
And Rick do you have a great memory, 75%. This quarter you know is one of our best and most recent history.
The unique mix that we saw with the U S contributing 85% of total revenue, we typically are 80% to 82% with the U S contribution and so what you'll see what we would expect for the rest of the year is international to rebound on it.
Play a bigger percentage of the overall revenue and that's a headwind when we think about margins coming down from 75% you know our full year outlook, which I think will show some modest improvement off of where we've been historically.
Can you to target and progress towards 75% that that on a consistent basis is a more long term target in the coming years.
Thank you. Your next question comes from the line of Mike Matson from Needham. Your line is now open you may ask a question.
Yeah, Hi, Mike and Angie This is David Saxon on for Mike. Thanks, So much for taking the questions.
I guess first on.
The hybrid sales team if memory serves there weren't any new hires this quarter. So I guess are you guys happy with the size of that team going into a potential conversion approval or do you expect to make additional hires and then other than approval anything else that needs to be accomplished before you launch.
<unk>.
We're actually adding signet will be adding significantly to the.
Hybrid team over the coming years, we feel like we are ready for the launch we are in a great position with a number of reps, who would actually added kind of a management layer on.
We have converted some of the reps into area directors. So we've now got six areas around the country that team is fully staffed now and then we fully backfill them. So we actually have been hiring.
But it's more of a kind of back filling some of the people that have been promoted to take on larger management roles on that front and we will continue to hire in that area, but we're well positioned we've got the country covered we feel like what I'm really really good place on that front on top of that I mentioned about the education and training team in order to really roll. This out effectively we've got to have a robust.
Team there and we will continue to add to the number of people. We've got on the education and training team as well and so yes, we will continue to add head count.
Over the course of the year.
Okay, Great and then I guess, just one on guidance.
You're raising revenue, but maintaining EBITDA, so I mean, I guess other than the.
New hires.
Any other investments that debt you want to call out debt I guess is resulting in maintaining debt EBITDA loss guidance. Thanks, so much.
Sure.
Go on Angi, you got it.
Okay.
We typically see a heavier lost in the first quarter and some of the project spend has.
Shifted out I mean, what you called it out we are leaning into our catalyst for the future and are adding to the team and adding training and education programs, you know anticipating pretty sizable launches the rest of this year, but that's that's the kind of the thought behind the $10 million and managing to that that bottom line number.
Thank you. Your next question comes from the line of day unhealthy from SBB Leerink. Your line is now open you may ask your question.
Thanks, so much everyone. Thanks for taking the question on.
Mike I just wanted to follow up on a prior question as it relates to the revenue guidance and you know maybe this is just the street sort of mismatch in Q1, but you mentioned.
Now, we're seeing potentially better momentum than previously expected heading into Q2.
You beat the consensus number by a couple of million dollars, but you're only taking it up by about the beat it looks like at the midpoint of the range. So just curious about you know if you could help US help bridge US. There is this just sort of normal conservatism I know you guys tend to be on the more conservative side, and then I have one follow up.
Sure I mean I look at it is we do anticipate that we'll have a strength in the second quarter. We're just making sure that this continues it has continued and strength in April obviously, we just with some uncertainty as we kind of come out of the pandemic here just making sure that Q2 is on a solid place from that standpoint overall and on the back half shouldn't change much from what we had previously.
Got it too.
Okay. That's fair and then I guess on my follow up question.
On converge and it sort of you mentioned you know fully prepared to launch, but I guess just from a strategic perspective.
How should we be thinking about the early days of the launch and how quickly that can ramp and how much upside there could potentially be a two year guidance depending upon when when.
When we get news on converge and when this actually comes to market.
Yes, the upside this year is going to be.
Obviously, there's always the potential for upside on on converge, but it's mostly really due to COVID-19 as COVID-19 comes back and I think that's what we saw.
In March and has continued into the April timeframe is that just as hospital beds open up on their allowing these procedures to occur.
That's what's going to drive the upside force in 2021, both on both sides of our business inclusive of our pain management side, and obviously on the ablation side of our business as well so.
That's really what's going drive the upside in 2021 converged will clearly be a driver for significant growth in 2022.
That's really where we see converge and then the clip on top of that because of the attachment rate that we anticipate getting with it that's where you'll start to see kind of some acceleration from those two in 2022.
Thank you. Your next question comes from the line from Matthew O'brien from Piper Sandler. Your line is now open you may ask a question.
Afternoon. Thanks for taking my questions, Mike just to push a little bit on converge I think coming out of the Q4 call a lot of us were kind of expecting.
Is gonna be soon in terms of a decision one way or the other so I think for investors that might be helpful. Just to talk a little bit more about.
I think you had said you had a sense for it back then that you felt pretty good about it back then and now fast forward a couple of months and it's much of the same is there something that's a little.
More tangible that we can bite down on that helps us understand what what the delay from how we see it might be in terms of getting that paperwork is they didn't administration changes that a reviewer.
The slowdown at the agency is there something specific that debt.
More tangible that we can look to a little bit all of the above I would say when you. When you look at it's all administrative at this point in time, I mean, I feel really good about kind of I wish I could say that I have the approval on hand, or I had something to kind of announce to you on a date.
But I don't and I cant and I.
It's an administrative thing more than anything else. If you think back to the quarter. There were they did do a panel meeting that definitely just that it was the same team that has been on top of ours.
That was a part of the panel meeting that occurred this quarter that definitely obviously was on the level of I think review in time that they had to spend on that was probably more than they had expected, which obviously causes some aspect of delay on our side.
The interim branch Chief did leave but the person that came in has done a wonderful job again, we had a really good collaborative pieces, but it's been mostly on the administrative side to your point in.
In terms of.
Any kind of delay from your perspective, again, I wish I could say something today, obviously I can't I understand why you're asking that question, but I'd say, it's much more of an administrative thing than anything else theres not theres nothing fundamentally wrong in any way shape or form other than that.
Okay. That's very helpful. I appreciate that and then on.
On the on the U S.
MS business I know, there's some catch up although it sounds like January for pretty much everybody was pretty soft. So sure. There was some slowdown there, but some catch up maybe in March but if you look at things on a two year stack you have not put up that level of growth in the mis business over the last two and a half years.
So there's clearly something is going on outside of just maybe some catch up in procedural volumes is there anything to point to in terms of essentially new clinicians or going deeper in existing accounts or anything along those lines on a case taken a while for people to look at the data process. They get their programs up and running and now theyre starting to starting to do more cases anything along those lines.
Yes, you're definitely seeing a combination of two things I mean, one is that.
The first thing that got impacted by COVID-19 was for sure Emas side. So you've got a really weak ended March in 2020, but your point's valid is that we do have.
The data has been out there now it's been presented its been presented at HRS in May of last year HRS did a special session on it in November and then the long term data came out in January I'd say, just the totality of evidence that continues to come out get put out and published.
Around this procedure continues to show that it is an incredibly durable procedure that works very well in these sick patients and so you're starting to see more and more programs for sure get up and running and those that were doing it begin to come back and say wait a second I really need to take a second look at that and begin to go down that path and so I think that you're definitely starting to see it a bit.
Beginning of that happening for sure.
Thank you. Your next question comes from the line of Bill <unk> from Canaccord. Your line is now open you may ask your question.
Great. Thanks so.
On converge just clarify node three questions have been asked but theres no final data or any.
Animal or any type of data you need to provide its truly admin you're just waiting on at this point.
And then my follow up question is just relative to your R&D spend and Andrew spoke about the investments a bit but I was wondering if you could provide a little more granularity on kind of what you're really working on there. Thanks.
Thanks.
Sure, Yes, just to clarify it is admin and theres not theres no additional work to be done on data for animals or anything else relative to this it is a purely at this point in time and administrative piece I'll turn it over to Angie maybe to give some more details on on.
The R&D spend.
Sure Bill a couple of the key areas of spend are the continued work on the amaze trial patient follow up during the quarter. We also have the continued access protocol with amazed that includes that new patient enrollment in that particular study.
Clinical trials ongoing ice afib and deep.
And then from a product development perspective, you're seeing pretty heavy spend with encompass.
That's the new open clamp and then a few other projects that are in the pipeline that you'll hear about from us in the coming years.
Okay.
And if I could throw a follow up in there just you know I think one of the questions. We get is you know as we talk about the amaze trial and Larry coming is.
How is that going to fit into the portfolio. If you think about.
Having the <unk> clip out there you got the converge procedure and then youre going to have the.
The area as well.
Yes.
Number one is that it's our first product that's actually going to be used by the interventional <unk>, whether it's the electrophysiologist or.
And the interventional cardiologist, primarily EPS at this point in time, but it really kind of gets us into that realm has a product for them to put into their hands.
To serve in the same way that the H O club does I mean, it's got the obviously very similar characteristics in that its epicardium on the outside it's less invasive.
And so there's obviously tradeoffs both ways. Our strategy is that we believe that in combination with other ablation techniques can really improve the afib.
Outcomes can take the opinions out completely does not leave anything inside and is a superior technology overall and so we feel like we're gonna be on a really good position to be able to offer that that youre going to be able to reduce the afib.
And we've already shown net with a clip from electrical standpoint, we're obviously shooting to prove that out with the amaze trial.
And that's going to position us well to have really kind of a holistic robust solution and give them the choice to make.
Thank you. Your next question comes from the line of Suraj Kalia from Oppenheimer <unk> Company. Your line is now open you may ask your question.
Good afternoon, Mike Angie can you hear me all right.
Yes, Sir.
Sure.
Perfect.
So congrats on the quarter my two questions from my side.
Piggybacking on bills question.
So Mike.
It's a foregone conclusion amaze will show positive outcomes in stroke prophylaxis on E F. Gordon production with the use of Fleury, yet so I guess when youre looking at the complete portfolio right I'm more interested in.
Vs Larry yet.
Like you said the end users.
Is different.
The reimbursement pathway for the physician is different.
Just understand that.
Should we expect on.
Net bifurcation within the public management itself.
Moving forward, how should we think about.
Will there be a pull through for the interest or is it going to be lost to Larry yet.
Larry is going to be the one thing.
The tangible data I would say within the framework of the amaze trial.
Yes, I think it's going to be a little bit of both it's a very good question and I actually think it's one of our Differentiators net we're going to actually offer for the physician to provide to their patients choices and what's going to work best for that particular facility in terms of how they best want to treat their patients. Some physicians are going to be very comfortable on are not going to go down.
The lariat pathway, and we'll be able to support them.
Some really like what they get out of the clip and we'll be able to support them that right now the clip is what we have in the market.
And so that's what's becoming in getting attached Larry It really is not out there yes. Once we get the amaze data we get the amaze approved that will obviously change several years down the line and then they'll they'll probably have some questions asked which way do they want to go the day of the skill sets and do they wanted the Dow malaria either way youre talking about managing the appendage and we're providing them.
With both options and bolt on a really good options for them and we're not going to dictate to them, which way. They go we just want them to manage the appendage because we think it's in the best interest of the patient and so.
We're going to leave that up to them and its interesting depending on the EP that you talked to some really want you to put on.
The clip and they don't ever see themselves going into the Lariat World. Many others are like they can't wait to see the low rate come down and then they'll move down that pathway and again, we're going to be indifferent. We're gonna do what's in their best interest and how they want on the program out.
Got it.
On converge.
Yeah.
If I listen to your comments.
You get a logic dictates approval is imminent and we are going to bypass a panel.
US understand the low hanging fruit.
Say for the next three to four quarters and the reason I ask is.
In the past you guys have reported about.
Memory tells me 3000, or so procedures in converge have been done correct me if I'm wrong, there, but should we expect a step change in converged demand post approval or should we expect.
Gradual uptake because it is being used technically off label. Thank you for taking my questions.
Yeah, well, it's actually not being used off label. So I wanted to just make sure I always want to address that I mean, we do have a very strong label today for cardiac tissue ablation.
And so that is how the.
Our products are being used today. It is absolutely an on label use of the product today.
Even before the approval does happen so now that being said in terms of the question you asked relative to what does this mean for an uptick and you put it out to three or four quarters. We really view this as you'll start to see some accelerated growth in 2022 2021 whenever the time is that we actually get there again, whether by panel or buy.
On an official approval beforehand what.
What that's going to look like is getting sites up and running we've got them segmented every territory has picked out key sites, they're going to go into make sure that day or establish a beachhead in every area of the country, we're being very strategic about going after them building up those programs learning from that and then kind of building out an accelerating we think that we want to take the rest of this year.
Listen when we get that approval to really kind of build that out and we're starting to see some of that happen organically already even before the approval because we're getting approached by certain sites that being said.
2022, we do anticipate that's when you'll begin to see.
The ramp and maybe I don't know that I would call it low hanging fruit, but I would say that youll start to see the ramp in terms of having programs that are more established and able to kind of take advantage of the training and education with riding.
Thank you again in line to task a question you will need to press Star then number one on the telephone touched on next question comes from the line of Maurice evolved from D. T. I G. Your line is now open you may ask your question.
Hi, good afternoon. Thank you for taking the questions I'll ask both of mine here right upfront.
On to new products that we haven't really touched on too much today and the discussion. The first is on cryo nerve block I think you said in your prepared comments, 6% of total revenue interest certainly material and impressive.
I'm wondering what's in terms of the investments you mentioned, you're making what more you can be doing there too.
Expand use of cryo nerve block and sort.
Sort of where you see that.
Product to go in terms of you know him you know.
Helping the open market.
Grow faster and then secondly on encompass.
It sounded like this could be something that's material to revenue in 2022.
What are sort of your early plans to once that's approved get that into the hands of cardiac surgeons on and encourage use there.
The question.
Great well. Thank you Mary I appreciate the question on on pain management, or a crown or blocked youre.
Youre right its an exciting part of our business that we have invested and we've added significantly to the head count on.
That team, we've got around 20, or so people out in the field right now that continues to grow so the number one major investment is to get people to cover the United States, we need to get coverage in all major cities and areas because when we do do that now that we've learned the pattern for how to actually open up a city and get the right person and get them trained.
Training is less than what you would see on the.
<unk> side of it so we can kind of have an impact a little bit more quickly.
We do anticipate that that will continue to accelerate as this year goes on and into next year, it's going to continue to be.
A big part of our business on a growing part of our business for years to come the key there is again getting more.
More and more people out there to gain coverage, that's where the major investment is the second piece that we need to invest in is really continuing to get clinical data you've heard me talk about it on about all of our therapies, we really believe clinical data matters. It does change the way that people can treat and so as a result of that we will probably continue to invest in a very.
He is different trials not necessarily I D E trials, but we will invest in trials. So that we can get data to prove out the therapy, even further than what the data already suggests a joe's.
The third piece really is eventually getting it into Europe.
And we have applied for and are looking to try to get that into Europe over the coming years, and so that's going to be another one that we anticipate being some upside to us they're chomping at the bit over there to use it to hear about it at conferences from the U S and they definitely want access to the.
On the cryo sphere product.
As it relates to encompass it's a great question encompasses a great product and we're really excited about it as.
As I mentioned on the call earlier, what we see is we are we believe that's going to enable us to continue to grow into that kind of mid to high single digits in the open franchise for years to come that really kind of helps us build upon it so that cardiac surgery isn't necessarily growing area, but we believe through penetration and getting more people to use products. That's what it encompass.
Allows us you're not going to have a hockey stick kind of growth curve that youre going to see with the clip or the leary it or the cryo nerve block or the encompass encompass excuse me the <unk> and contact product that is now epicenter and so that is really where youre going to start to see those are going to be big inflection points encompass is going to be kind of steady as she.
He goes.
Thank you Mike.
Yes.
There are no further question at this time I would like to turn the call over to Mr. Mike Carrel for closing remarks.
Great again, thank you everybody for joining us today, we really appreciate.
You listening in and learning about all the great catalysts and the wonderful quarter, we have 2021 is going to be a banner year appreciate it and have a wonderful evening bye now.
Ladies and gentlemen that concludes today's conference call. Thank you all for participating you may now disconnect.
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Non-GAAP.
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