Q1 2021 AxoGen Inc Earnings Call
Good afternoon, ladies and gentlemen, and thank you for standing by welcome to the accident incorporated first quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation should you require operator assistance during the conference. Please press star.
<unk> zero to signal an operator. Please note. This conference is being recorded I will now turn the conference over to your host Peter Mariani Executive Vice President and Chief Financial Officer of Fracs for Jan. Thank you you may begin.
Thank you and good afternoon, everyone. Joining me on today's call is Karen Saturday accidents, Chairman, Chief Executive Officer, and President Karen will begin today's call with an overview of our first quarter performance update on our operational highlights.
Review, our rig initiated financial guidance.
I will then provide an analysis of our financial performance followed by a quote by closing remarks from Karen and the question and answer session.
Today's call is being broadcast live.
<unk> via webcast, which is available on the investors section of <unk> website within an hour. Following the end of the live call a replay will be available in the investors section of the company's website at Www Dot accident, Inc. Dot com before we get started I'd like to remind you that during this call.
This call the company will make projections and forward looking statements regarding future events.
We encourage you to review the Companys past and future filings with the U S. E C Inc.
Clothing without limitation, the company's forms 10-K, and 10-Q, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward looking statements. These factors may include without limitation statements related to the expected impact of COVID-19.
19 on our business statements regarding our growth our 2021 financial guidance statements regarding product acquisition, <unk> development product potential regulatory environment sales and marketing strategies capital resources or operating performance and with that I'd like to turn the.
Call over to Karen.
Karen.
Thank you Pete and good afternoon, everyone.
Our total revenue for the first quarter was $31 million representing growth of 28 per cent compared to the prior year.
I'm pleased with our Q1 results, which continued to demonstrate our team's ability to execute our strategy. Despite ongoing COVID-19 challenges.
The incidence of trauma and surgical procedures continued to be negatively impacted by new COVID-19 resurgence since they began in late 2020 and continued into the first quarter.
Additionally, the severe winter storms across the country in mid February further impacted the incidents of procedures.
However procedure volumes quickly recovered through March resulting in increasing demand for our products.
Our revenue volume and growth in the quarter contango being driven by the repair of traumatic nerve injuries and better use of advanced nerve graft across their nerve repair applications.
With more than 50000 advanced implants since launch and 136 peer reviewed clinical publications featuring a van.
Surgeon adoption of our flagship product continues to lead our growth as surgeons adopt the accident algorithm using our portfolio of nerve repair products.
In the first quarter, our commercial team remains focused on our strategy of driving deeper penetration of existing accounts and surgeons and hospitals continue to place a high priority on nerve repair procedures with oxygen products.
Throughout the pandemic and despite access restrictions and limited surgical schedule.
We've been able to effectively support our customers and remain close to surgeons as they continue their path of adoption.
We believe that these efforts have positioned the business for improving growth as the incidence of trauma returns to normal level, which we expect to occur over the course of the year with the continued rollout of vaccines and a gradual return to more normal activity levels across the country.
We're pleased with the continued growth of our applications for the surgical treatment of pain.
Despite the reluctance for some patients suffering with chronic nerve pain to undergo a surgical procedure during the pandemic and increasing number of our current surgeon customers are using accident products with greater frequency to treat symptomatic neuroma as compared to a year ago.
Yeah.
Our breast organization business slowed late last year and ended the first quarter of 2021 due to the increasing number of COVID-19 cases, which led many programs to suspend or limit breast reconstruction procedures.
As the quarter progressed several programs restarted these procedures and express business improved.
Although we anticipate the cancer diagnosis and reconstruction procedures may remain lower than normal in the near term as a result of pandemic related delays in patients seeking care.
We remain confident in the long term growth potential of our breast nor does it hurt the station business.
Throughout the pandemic, our oral maxillofacial nerve repair business has lagged the recovery seen in our other applications.
As mandibular reception procedures have remained below normal levels.
Well enough for repair is a highly invasive procedure involving the head and neck area.
Essentially increasing concerns associated with COVID-19.
We're encouraged that our all of that business showed signs of improvement in the first quarter and we expect continued recovery throughout the year.
Turning now to commercial execution and our sales team.
We ended the quarter with 106 direct sales representatives in the U S cash.
Mm 111, a year at year end and 109, one year ago.
The decline in sales reps is due largely to the timing of ordinary attrition and internal promotions.
And subsequent to the end of the quarter, we increased by two reps for a current total of 108.
We anticipate ending the year with 115 to 120 sales representatives as we plan to strategically expand our sales team in the second half of the year.
Meanwhile, our sales rep productivity continues to improve and will be the primary driver of our revenue growth in 2021.
Our direct sales channel continues to be supplemented by independent sales agencies that generally cover more remote geographies.
Our independent agencies represented 11% of our total revenue in the first quarter compared to 12% in the prior quarter.
Driving deeper penetration within our existing surgeon customers and accounts continues to be at the core of our strategy to increase revenue through improved sales productivity.
In the first quarter, we had 919 active accounts out of the estimated 5100 health care facilities. They may treat nerve injuries and the U S.
This represents an 11% increase compared to 825 in the first quarter of 2020.
As a reminder, and active accounts is one that is purchased at least six times in the past 12 months.
Active accounts have typically gone through the committee approval process and have at least one surgeon who has converted a portion of his or her nerve repair algorithm to oxygen products.
During the past few years active accounts have consistently represented approximately 85 per cent of our total revenue with the top 10 per cent of our active accounts, representing approximately 35 per cent of our revenue each quarter.
Yeah.
And so this is continues to grow we're adding a new account metric that we believe demonstrates the strength of adoption and the potential revenue growth in accounts that have.
That have developed a more consistent use of accident products and their nerve repair algorithm.
We refer to these as core accounts defined as accounts that have purchased at least $100000 in the last 12 months.
Our core accounts typically have at least one surgeon who has adopted the oxygen nerve repair algorithm for the majority of his or her nerve injury patients.
And have other surgeons, who are in earlier stages of accident product adoption.
In the first quarter, we had 270 for core accounts, an increase of 13% from 243, one year ago.
These core accounts represented approximately 60% of our revenue for the quarter we.
We see significant opportunity to drive increased revenue as more accounts reached this level of adoption and as surgeons within these accounts increase their adoption across our nerve repair applications, including extremity trauma breast, Oh, I laugh and pain.
Turning now for our continued focus on building market awareness as mentioned on our previous earnings call early in the quarter. We participated in the virtual combined meeting of the American Association for hand surgery American Society for peripheral nerve and American Society of Reconstructive Microsurgery.
<unk> nerve repair portfolio was featured in several clinical and scientific presentations during these meetings, including data from the oxygen sponsored Ranger registry.
In the first quarter, we continued to utilize our digital marketing capabilities to supplement the efforts of our sales team to deliver important and timely net nerve repair news and content to targeted surgeons.
We were pleased with the continued high level of surgeon engagement with our email campaigns during the quarter and Additionally, our surgeon customers continue to participate in our nerve matters on line surgeon community discussing their use of peripheral nerve injury solutions.
In the first quarter alone over 2300 surgeons engaged with that nerve matters platform.
During the last year these platform for them, particularly helpful for surgeons, given access limitations for sales and clinical support.
We continue to drive awareness of nerve repair with patient audiences through our direct to patient marketing campaigns.
Our awareness efforts are spearheaded by targeted digital and media strategies focused on driving awareness of the recent station surgical technique and nerve repair as a potential solution for chronic nerve pain.
On Www recent station Dot Com, we saw like for 100% increase in organic traffic in Q1 versus one year ago.
Don't Kid Education, and advocate development remains a high priority for our team as we continue to operate in a virtual environment.
We have continued to provide virtual surgeon education events led by surgeon experts in nerve repair targeting multiple constituencies, including fellows.
Early career surgeons and all nerve repair surgeons.
Building on the very positive response to our 2020 invitation only masterminded nerve program for early career upper extremity surgeons, we kicked off our second mastermind series in April providing education for emerging leaders in nerve repair.
We also remain committed to providing education and training for each class of fellows. Despite the COVID-19 restrictions.
As in prior years, we're training more than three quarters of the hand, and microsurgery Fellows and the class of 2021 through a combination of local in person hands on lab as well as virtual programs.
We believe programs like these play an important role in providing future young in 10 days with the skills and knowledge to confidently incorporate nerve surgery early on in their practice.
A majority of the new hand surgery attending from the 20th 20 class.
For for cases, with our nerve repair portfolio since completing their fellowship trainings.
We're encouraged by the early and positive adoption trends seen with this future generation of hand surgeons.
Going forward, our searching education plans include a safe return to in person programs in the back half of 2021 as we anticipate COVID-19 restrictions being lifted and more of our surgeon customers being willing and able to travel to these events.
We continue to expand the body of clinical evidence in support of our product portfolio and increasing surgeon adoption.
Our Ranger and match registry has continued to enroll with over 2400 nerve repairs now enrolled in Ranger.
In 2020 and analysis of the match registry data, which is a comparative population of conduit and autograph subjects for Ranger.
Demonstrated that advanced nerve graft outcomes were statistically better than conduit and were similar to those for Autograft day.
Data from these two clinical programs continues to play an important role in informing surgeons clinical decision making.
Our recon study remains on schedule after completing enrollment of 220 subjects in July of 2020.
As a reminder, recon is our phase III pivotal study supporting our biologics license application or BLA, which will transition our advanced nerve graft from a section 361 tissue product to a section 351 biological product.
Our protocol includes a 12 month follow up visit for all subjects and given the impact of COVID-19, our plans to allow for an additional three months for subjects to complete their final visit.
We anticipate the final follow up visits to occur in October of 2021 with a preliminary study data readout in the second quarter of 2022 and filing of our BLA in 2023.
Earlier in the quarter, we announced positive results on the 15 subject pilot phase of the recover study.
Value anyway use of Axa Gardner of cap in the management of painful neuroma.
From the pilot phase demonstrated that subjects experienced a clinically significant reduction in preoperative pain and experienced clinically meaningful improvements in secondary endpoints, including fatigue physical function sleep disturbance pain interference pain intensity and pain behavior as measured.
The validated promise questionnaires.
Pain medication utilization data also showed positive indicators for a reduction of pain medication burden, including opioids following the procedure.
There were no afterguard nerve cap safety issues reported and no observed recurrence of symptomatic neuroma.
Enrollment in the comparative phase of repo repos is well underway.
And assuming a limited impact from COVID-19, we expect enrollment to be completed in Q1 2022, and our study data readout in Q2 of 2023.
Additionally, we're pleased to report that our breast and paying for clinical registries sensation now and rethink pain have re initiated enrollment efforts. After a temporary COVID-19 related hold in 2020 day.
These programs both play an important role in our development of these clinical applications and we'll provide procedure specific data on the role of accidents portfolio and the care of these nerve injuries.
As we advance the science of nerve repair.
We remain committed to investing the time and resources necessary to provide meaningful and impactful clinical evidence on the utility of our nerve repair portfolio.
Nurse regenerates slowly, which often necessitates long follow up time to assess treatment effects and to gather the meaningful clinical data that surgeons payers and regulators have come to expect when making clinical care decisions.
Our recon and Ranger studies highlight the significant amount of time effort and expertise required to conduct clinical research and peripheral nerve.
The Recon study began enrolling approximately six years ago and the Ranger registry began enrollment more than 10 years ago.
And Ranger many of the nerve injuries have follow up assessment periods of up to 36 months to fully appreciate the impact of the repair.
We are fortunate to have an established body of clinical evidence supporting advanced nerve graft and we remain committed to obtaining the clinical evidence to demonstrate the safety performance and utility of our nerve repair solutions.
Yeah.
Before I turn the call over to Pete I'd like to spend a moment discussing our outlook for 2021, including a re initiation of financial guidance.
We're encouraged by the trajectory of our business as we exited the first quarter. We expect the incidence of trauma will increase as communities relax pandemic related restrictions.
Which we believe will lead to increasing procedure volumes as we move through the year.
As a result, we're re initiating financial guidance.
And expect our full year 2021 revenue will be in the range of $133 million to $136 million.
And we expect full year gross margin will remain above 80%.
We are confident that our commercial execution.
Line with our substantial investments in clinical data over the past decade, we will continue to support surgeon adoption.
Bolstering our confidence and our long term growth potential as we continue our mission to revolutionize the science of nerve repair.
Now I'll turn the call over to Pete for a review of financial highlights Pete.
Thank you Karen first quarter revenue increased 28 per cent to $31 million a revenue increase for the quarter was the result from the 22% increase in unit volume and a 6% net benefit from changes in pricing and product mix the growth.
For the volume was primarily attributable to growth in our Athens and core accounts and also reflects the initial impact of the COVID-19, pandemic, which began to negatively impact procedure volumes and revenue in March of 2020.
Gross profit for the first quarter increased 33% to $25 $9 million compared to $19 $4 million in Q1 of 2020 gross margin was 83, 3% for the quarter compared to 81% for the prior year first quarter.
Prior year gross margin was negatively impacted by lower revenue and additional inventory reserves, resulting from the impact of COVID-19.
In the current year, we have continued to ramp our tissue processing capacity across the quarter and increased inventory by nearly $1 million compared to the end of the year.
Total operating expense from the first quarter increased 15% to $32 $1 million compared to $28 million in the prior year.
Total operating expenses in the first quarter included $2.6 million in noncash stock compensation compared to $600000 in the prior year per.
Year stock compensation included a credit of $1 $7 million, primarily reflecting lower estimates on performance stock awards. Additionally, the increase over prior year includes incremental investments in our R&D programs increased compensation cost associated with our new.
Tampa Office and lab and.
And litigation charges, partially offset by decreases in travel in person conferences and surgeon education programs due to COVID-19 related restrictions.
For a year.
Sales and marketing expense in the first quarter increased 1% to $18 million compared to $17 8 million in the prior year.
As a percentage of total revenue share.
Sales and marketing expense decreased to 58 per cent for the three months ended March 31.
Compared to 74% in the prior year.
Research and development spending in the first quarter increased 25% to $5.7 million compared to $4 6 million in the prior year research and development cost include product development, including the non clinical expenses in support of our BLA for advanced nerve graft and expenses for clinical research.
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Product development expenses represented approximately 66% of total R&D in the first quarter compared to 50% in the prior year, while clinical expenses represented the remaining 34% in Q1 compared to 50% in the prior year the increase from product development expenses.
For increased spending in specific programs, including the BLA for advanced nerve graft and a next generation advanced product.
Additionally, pandemic related restrictions lowered spending on certain clinical study programs beginning in March of 2020 in the first quarter of 'twenty. One we re initiated activities on our sensation now and rethink pain registry and we expect that these and other political activities will continue to increase.
Across the coming quarters.
As a percentage of total revenue research and development expenses were 18% in the first quarter compared to 19% in the prior year.
General and administrative expense in the first quarter increased 52% to $8 $4 million or 27 per cent of revenue compared to $5 5 million or 23% revenue in the prior year.
The prior year quarter included $1.8 million of lower noncash stock compensation, primarily related to lower estimates for performance stock units.
Additionally, current year general administrative expenses include litigation charges of approximately $800000.
Adjusting for both of these items G&A expense from the first quarter would have increased approximately 4% to seven $6 million and represented approximately 25 per cent of revenue.
Adjusted net loss and net loss per share in Q1 of 'twenty, one was $3 $1 million.08 per share compared to adjusted net loss and loss per share in the prior year of seven 6 million and 19 cents per share.
Adjusted EBITDA loss from the quarter was $1 $9 million compared to an adjusted EBITDA losses of $7 6 million in the prior year Rec.
A reconciliation of these non-GAAP financial measures to GAAP can be found in today's earnings release and on our website.
The balance of cash cash equivalents and investments on March 31 was $97 $2 million compared to a balance of $110 8 million on December 31 'twenty.
The $13 $6 million change in cash in the quarter included.
$2 $9 million of capital expenditures related to our new facilities in Dayton, and Tampa and approximately $9 2 million related to items, which typically occur in the first quarter of each year, including payment of the 20th 20, all employee performance bonus annual sales awards and related call.
And our annual sales meeting.
And as we noted on our last quarterly call. We resumed construction of our Dayton Biologics processing center in January of 'twenty. One we anticipate completion of construction later this year followed by a one year validation process and expect to convert production to the New center in late 'twenty two.
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We continue to anticipate total capital expenditures of approximately $26 million for this facility in 2021.
Additionally, we expect to continue ramping investment in the projects that were placed on hold for the majority of 2020, including certain clinical trials and product development programs and marketing and administrative initiatives all of which are key to driving our long term growth goals.
As a result, we anticipate that operating expenses will increase sequentially and that we will continue to see moderate operating cash burn throughout 2021.
Before I turn the call back over to Karen I wanted to review the regulatory status of our barge soft tissue membrane. The F. D. A has previously issued guidance on the regulatory considerations for human cells tissues, and cellular and tissue based products with enforcement discretion through may 31 from 'twenty to 'twenty one.
For relevant brunch.
We are currently in discussions with the FDA to confirm the regulatory classification of our five soft tissue membrane has a tissue product. These discussions with Y O two alive, which represents approximately 5% of our revenue and have no impact on any other accident products, including advanced nerve graft.
Which has which was granted enforcement discretion by the FDA in 2010 received our map designation in 2018 and for which we plan to submit a biologics license application in 2023.
Additionally, we wanted to note that our existing shelf registration will be expiring on may 7th and we will be filing an updated shelf registration with the SEC along with the filing of our first quarter 10-Q. This is purely a matter of corporate housekeeping and we have no current plans to raise equity under this new <unk>.
Shelf.
We are encouraged by the trends, we see in the business and the broader health care Arena and we remain confident in our ability to drive sustained meaningful revenue growth as the environment continues to normalize across the second half for the year. We also remain extremely bullish about the long term growth prospects of our business.
Given the significant underpenetrated growth opportunity and our teams improved commercial execution and our continued investment in an expanded clinical portfolio.
And with that I'd like to hand, the call back over to Karen.
Thanks Pete.
I'm proud of the achievements of the entire accident team as we continue to meet the challenges we faced during this quarter.
We remain committed to delivering our innovative nerve repair solutions to patients surgeons and hospitals and I believe we're well positioned for success throughout the rest of 2020, one and beyond.
At this point I'd like to open up the line for questions David.
Thank you.
This time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. If at any time you wish to remove your question from the queue. Please press star two for participants using speaker equipment.
It may be necessary to pick up your handset before pressing the star keys, one moment, while we poll for questions.
Our first question is from Richard <unk> with SBB Leerink.
Hey, Karen M. P. It is Jamie on for rich.
Hi, Jamie Thanks, Jamie.
Thanks for taking my questions I guess to start off just on the guidance.
Thank you for reinstating that and kind of giving us a target to to look at them. How are you guys thinking about the timing of a return to more normalized levels across the different market segments, and then just relative to the guidance how should we be thinking about the different factors across each segment.
And and what's contemplated in in that range.
Yes. So if you look at and I know you know this but for everybody else from the line. Historically, if you look at our biggest segment, which is extremity trauma, we see a seasonal impact and a step up between Q1 and Q2.
Because of our I actually just increased activity as people summer activities, leading to an increase in traumatic injuries.
We think that as the vaccines expand as people have more confidence to engage in that activity, we'll see that ramp up it wont be a we believe that the step up that we've seen in the past that there still should be a nice ramp through the year are really based on our overall activity.
On the other segments are a little a little different obviously, they're less seasonal not related to the incidence of trauma.
And breast reconstruction.
That is going to really be dependent on again centers opening up surgical schedules, we still have a number of centers that have a reduced surgical schedule for <unk>.
Certain procedures, including breast reconstruction.
We see those as opening up and they're starting to open up now, but it it's going to be a gradual process certainly through the summer time period. We also know that there was decrease diagnosis that was done in the last year, where patients didn't go see I didn't have a mammogram so they weren't diagnosed with cancer. So.
There is a sort of air pocket in the flow of patients that we expect by the end of the year will be righted, but at this point, we still see some interruptions in patient flow so increasing through the year.
Definitely not back to normal yet.
In the surgical treatment of pain, that's that's actually growing nicely, we're actually pretty pleased that we're seeing our current surgeon customers.
I'm beginning to to expand and bring in these patients that they can help with the neurology.
Where they cut out for neuroma, and then they need to repair the nerve and advance has been a good tool that they've used in that repair and so we've seen some nice increases in that.
Again, it's a very small segment because we've just launched actually the beginning of last year.
But we're seeing some nice growth there and expect that to continue to expand through the year Oh about is the piece that's actually been the most challenging for us and we think that's going to remain dampens through much of this year, although getting better as we go along.
Okay. That's super helpful. And then I appreciate that you guys are now introducing this new metric of core accounts can you just talk a little bit about the growth trends that you saw in core accounts over 2020, and what strategies you're focused on in 'twenty, one to not only increase the number of core count but also drive.
The revenue mix versus the 60 per cent that you saw in the quarter.
Yeah. So I'll go back to why we introduced the core accounts.
We've always had this measure of active accounts for active accounts are really just a place we're beginning to sell.
And and the threshold was so low that it wasn't really representative of what we thought it to inform where we're seeing some some real growth and repeat usage and so the core accounts, that's a higher threshold and our strategy has been and continues to be to drive deeper penetration.
<unk> and existing accounts Ah first with existing surgeons, and then expanding to additional surgeons at those same accounts and so we see a nice opportunity to continue to build these core accounts into sizable accounts are our largest core accounts exceed a million dollars today and we want to continue to grow.
These core accounts that they go from that floor of 100000 up to something higher. So it is both about what's the dollar amount per corp core account as well as increasing the number of core accounts and that's what really drives all of the work. We're doing also on rep productivity because those two things are very tightly related.
Yeah.
Okay. Jamie are you there did we lose you.
Sorry, I was on mute thanks for.
For taking my questions that was helpful. I appreciate it.
Good day.
Our next question is from Brandon Folkes with Cantor Fitzgerald.
Alright, Thanks, taking my question and congratulation on.
Another good quarter.
Maybe just on gross margin, it's been very good for the last three quarters, the growing to the guidance I saw that but how do we think about sort of.
Gross margin, maybe one for the remainder of the year or just any sort of lumpiness or should we expect this to improve and then maybe just longer term.
And then just going back to its core accounts and following on from core accounts, we could park coming on from the prior question.
Any way you can conceptualize it turns up.
How many of your active accounts you believe you can get into this core accounts.
Kind of agree I mean, maybe just.
The focus is it going to be growing core accounts.
This is growing our revenue within core accounts, obviously, Peter because you mentioned some of your larger accounts.
So I had a million so just just anything to set the expectation.
From quarter to quarter should we be focusing a lot on percentage of revenue cash basically I can remember of accounts. Thank you.
Why don't I take the gross margin question first I mean first just as a reminder to everyone.
Hmm.
Been a while since we've given guidance and we have historically given guidance that says that our gross margins will continue to be above 80%, even though we've been running sort of normalized in the $83 84 per cent range.
That's just our way of looking at it we think.
Having gross margins above 80% is outstanding.
We believe they will continue to run above 80%.
And then specifically to this quarter I think you know in the 83 to 84 per cent range has been normal for us and I think as we have.
<unk> gotten our our processing center back up to full speed that we're getting we're getting back from that utilization level that allows us to run the gross margins at this level and so I wouldn't suggest it could be within the range a bit but I wouldn't expect cigna.
Significant increases from this and I, certainly wouldnt expect significant deep.
Decreases from that normalized range now that were at this level of production.
From the core accounts, yet so in terms of our strategic intent what we're looking at with both core and active accounts. It think of these as the priority order that our sales team is working is that their first working with our existing users to increase their penetration across their algorithm that's their first and Hyatt.
<unk> priority.
By definition debt and predominantly means theyre going to be focused on existing accounts and increasing the dollars per accounts, but we do know that surgeons make practice at multiple centers and and that same work that we're increasing that surgeons usage may.
Cause us to add more active accounts because that surgeon may also practice and down the road at another hospital, where we haven't historically been in place.
Second priority is to add and new surgeons or expand surgeons at those same centers and then the third priority is starting out from scratch in centers that we don't have a current users. So all of those are dimensions of growth, but there's a there's a very clear priority and the sales direction.
End of first and foremost grow our existing users.
Great. Thank you very much.
Our next question is from Dave <unk> with JMP Securities.
Yeah.
Great Good evening guys.
Maybe one for you.
You mentioned rep productivity.
And great to see guidance out there again and I'm just curious you know.
Given the length of time, you guys have been at it and some of the trends you've probably seen.
Do you feel like your visibility is greater today than it was say in prior years. It seems like the performance has been remarkably consistent and better so I suppose get any color you'd like to provide around sort of how.
How how how how that visibility is today, maybe it's maybe it's better than it was in the past any thoughts on that from.
Yeah I think.
The question and yes, I think we do have better visibility or or or improving visibility in the sales rep productivity ramp.
Remember last year was a point.
Point in time, when we weren't expanding obviously, we weren't expanding reps very much reps were focused in their territories for long periods of time, and we were able to connect with these surgeons.
And remain with them as they continue on their journey of adoption and I think that's proven beneficial to us on a lot of levels and it helps us think through what is the appropriate pace at which we might expand reps and when we do think about splitting territories with expanded reps than we do so.
In a very.
Deliberate fashion that allows us to maintain the connectivity between rapid surgeon and continue to not only grow the top line revenue, but do so with.
Increasing overall productivity.
That's great to hear I mean like looking at the level, it's certainly above where the street's ex.
That's great.
Maybe as a follow up to 6% mix and price.
Just love to get any color there are price evenly spread out maybe maybe across the dance and Axa Guard and.
I was wondering the mix go ahead, yeah no I appreciate the question.
For percent of that 6% is price and and we are yeah. We've been successful this year last year over the last several years of taking moderate price increases across the product line and we've continued to do that this year's price increase.
Was effective April 1st.
But we've got this was the annualized impact of last year's increase coming through.
But the additional two per cent of mix is actually a reflection of increasing mix of advance in the overall revenue.
Results. We've traditionally said debt advance has been slightly more than 50% of revenue, which is true but this quarter. We have moved that up a few more percentage points from that came through.
And the mix calculation.
Got it and then thank you for that one one last one.
You mentioned the Nextgen advance product you may not want to talk about it but I'd certainly love to know when we might hear more about that or any details you could share. Thank you. So much yeah. We don't have any details at this point, Dave that we can share other than we're excited to continue to look for the future and see opportunities to continue to improve our flagship product.
Thank you.
Ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.
Our next question is from Anthony Petrone with Jefferies.
Yeah.
Oh, hi, Thank you just hopping between calls here thanks for fitting me in.
The first would be on on breast and organization apologies were.
Hopping amongst call so with any visa were asked I apologize on breast Nurit physician question there just on backlog.
How substantial can that be in terms of a turnaround once we sort of evolved.
Into the vaccine cycle. So the first question again would be breast normalization backlog and then on the new key account focus when we think about champion on the van side.
Sort of using most of debt using events across the majority of their procedures.
For being at least one surgeon in that site.
You think of an end of an existing kao well in that site there already how how easily scalable is that to additional surgeons within those sites. Thanks again.
Yeah. So on breast reconstruction organization, we don't see that there's a sizable backlog.
Net net net with the air pockets that I talked about that youre going to see a big bubble here, So I wouldn't model and a debt. There's a you know a nice.
And a nice reserving that we're heading into them, we think that most of the centers have been able to recover again about a third of our centers do still continue to have delays, but most have recovered and are back on a reasonable flow and with the air.
Pockets of patient flow, that's intermittently picking these centers in and impacting them, we think that the little bit of reserve that you have from the third that are shut down or they offset are going to offset that I'm missing.
That backlog.
In terms of how easy is it to get surgeons at these centers to continue to to adopt.
We've not seen a change in the adoption process in nerve repair the adoption process in nerve repair remains slow and a lot of it is gated by getting a certain seeing clinical results in each type of nerve repair they do from their own hands. So they want to see the data that we have and then they want to replicate it with their own hand.
In their own patients and so what we have seen is historically a surgeon will do a handful of cases, and then pause and wait to see results from those for subjects. So if they start with a digital nerve injury, a digital nerve injuries typically take six months before they're going to get results back. So they'll do you know.
Three to six cases, they'll wait you'll see those patients back in that six month time period, and say Hey. This works then they'll continue to adopt and add a maybe the next type of injury. So that that pattern remains the same and so well I think we have a good understanding of the pattern and a good method to be able to continue to add those.
Surgeons are adoption, it's not it's not typically quick.
Thanks, Greg.
Great.
Ladies and gentlemen, we have reached the end of the question and answer session I would like to turn the call back to Karen <unk> for closing remarks.
Thank you David.
I want to thank everyone for joining us on today's call. We look forward to speaking with many of you virtually at the Canaccord Genuity Musculoskeletal conference on May 20th.
The Jefferies Virtual Health care conference on June 2nd and the JMP Securities Life past conference on June 16th Thank you.
This concludes today's conference actually Jay Thanks for you for your participation you may disconnect your lines at this time.