Q1 2021 Zynex Inc Earnings Call
Good afternoon, and welcome to the <unk> 2021 first quarter earnings call.
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Certain statements in this release are forward looking and as such are subject to numerous risks and uncertainties.
Actual results may vary significantly from the results expressed or implied in such statements.
Risk factors that could cause actual results to materially differ from forward. Looking statements are described in our filings with the Securities and Exchange Commission, including the risk factors section of our annual report on form 10-K for the year ended December 31st 2020, as well as forms 10-Q, and 8-K press release.
And the company's website.
Please note this event is being recorded.
I would now like to turn the conference over to Thomas Vanguard, founder Chairman and Chief Executive Officer. Please go ahead.
Good afternoon. My name is from the Sun got President and CEO of <unk> welcome to all of 'twenty to 'twenty, one first quarter earnings call.
First of all I'm excited to announce a 140% year over year order growth. That's how the sales force continued to gain traction.
The first part of revenue of $24 1 billion with an increase of 58 per cent compared to the same quarter last year.
We continue to see good order flow of CA.
Economy returns to normal.
As I mentioned, it's the first total orders came in 140% higher than the first quarter of last year, and 15% sequentially compared compared to the fourth quarter of last year.
That's the comparison previous first quarters.
Had a sequential growth in the fall of two 8% range.
The as part of the seasonality the as you know of industry and when you talked to more of that.
And we were able to double that for.
That's an indication that things are really picking up.
The continued strength in order of speaks volumes to the relationships all of the sales force has for many prescribers and the need for them to prescribe non opioid non addictive prescription strength solutions for the patients in pain and sort.
Reminder of the majority of of cash and revenue related turn all of it comes in all of the year or two following the receipt of an order as the patient uses the device and the latest supplies, which should lead to expanding revenue and profitability in the second half of 2021 and beyond.
During the first part of the focused on the productivity of our sales reps and also trimmed our sales force slightly below our year end total of just over 500 up the sales reps.
We still expect to have 600 of sales reps by year end. Many of these hires for being the second half of 2021 of the.
The addition of net of the 100 sales reps compares true and net of 300, we added in the second half of 'twenty four 'twenty. The additional sales force growth is now happening at a much slower pace, which was the right to help all of Bottomline obviously.
I also want to mention that our operations continue without issues and all the supply chain of the names uninterrupted.
It is all the practice to keep several months of finished products on the shelf for.
For months of components on the handful of internal assembly in 12 to 18 months of orders being placed for the windows on top of the in house materials. During 2020 and here early this year, but we've taken a more conservative position in response to COVID-19.
And any possible supply of supply chain issues.
Which again resulted in increased inventory of approximately up towards $3 million in excess of all the normal levels, we should be back to normal inventory levels. During the second half of 'twenty or 'twenty one.
As announced earlier this month due to our growth we are moving into our new corporate headquarter.
The new building is just down the street from the existing get caught us and will expand the footprint from approximately 86000 square feet. In this building true starting Monday morning, being in the 110000 square feet, but the right for further expansion within the building the new building combined with our <unk>.
The facility.
It gives us an approximate of 161000 square feet under lease and the facilities are now conveniently just a few months apart.
The opioid epidemic continues to be a serious issue in this country and we are increasingly working to get patients off opioids and for physicians to use our prescription strength technology as the first line of of defense when treating pain.
Currently the devastating impact of reached 11 with tens of thousands of style yearly due to opioid abuse.
We continue to develop more tools to make physicians aware of all the technology. The literally has no side effects.
All of products for pain management of rehabilitation still stand out of some of the best products in the industry. The next wave for pain management of newer mode device for stroke rehabilitation and the envoy for incontinence treatment like Sanders of products that puts us in the very strong product position and the rehabilitation market.
We continue to see great potential in both of our product divisions.
<unk> revenue generating area for pain management as well as the huge unmet potential for blood volume monitor.
Earlier this month, we hired talent break as vice President of sales and operations for our monitoring solutions Division, where we have the non invasive blood volume on it the dawn will be leading all the sales marketing clinical research and engineering efforts with the.
John's background I'm confident we will soon have all of.
The technology become standard of care for early detection of internal bleeding in surgical.
The post recovery of situations as well as being used to detect blood loss during surgery.
While the <unk> hundred is already in full production.
The next generation seem 1600, its well underway and we hope to apply for the FDA clearance for that market share.
Don brings a wealth of experience to the signage. He previously held leadership roles at Smiths medical.
Vice President and general manager of infusion systems, and at Medtronic Senior director of product marketing and business development of health Informatics and monitoring.
Don also successfully built the direct sales force launch and commercialize infusion products remote patient monitoring and clinical decision support software applications.
That's the result of innovating new products executing sales plans and creating strategic distribution and partnerships agreements. He grew each of these businesses, but double digits.
As most of you probably already know we might have to get the.
The fda's clearance and I see.
<unk> 1500 monitor about a year ago and also recently obtained three patents on the on the blood volume monotone.
The same 1500 ease of non invasive monitoring intended to monitor a patient's fluid balance in hospitals and surgical centers, we expect to initially target OS and surgeries of typically displays for potential blood loss as well as the recovery rooms, and I used to use internal bleeding is today, our common of difficult to detect.
Up until the point for serious complications occur.
We believe this product will lead to safe of surgeries fewer complications and the last of mortality one of the biggest unmet needs in the hospitals today.
I should also mention that our recently filed the patent application for early detection of sepsis and new technology, we will soon begin prototyping.
We continue to see solid preliminary results from the clinical study at wake Forest and are preparing to commence more studies in the device on the device shortly.
We're seeing interest in purchasing space from hospitals that have the devices from day mum and all the engineering team is well underway. The building prototypes of the next generation C. M. C. C 700.
That again will be even easier to use and soda from subjects.
I will now turn the call over to Dan Moorhead, our CFO.
Thanks Thomas.
First I'll review, our 2021 first quarter results.
Orders grew 140 per cent year over year, and net revenue grew 58 per cent to $24 $1 million from $15 2 million in 2020 the.
Device revenue increased to 85 per cent for $6 4 million compared to $3 4 million last year supplies revenue increased 51 per cent year over year, the $17 8 million from $11 8 million.
Gross margins were 76% in the first quarter of 2021.
As we mentioned previously we transitioned our production and warehouse to a new facility in Q1. This will greatly enhance our efficiency, but in the short term will put some pressure on gross margins.
Sales and marketing expenses increased 148% year over year as our sales force grew by 121 per cent year over year.
G&A expenses grew 45 per cent year over year much of the increase was related to increased headcount in our reimbursement and patient support functions related to our order book.
The first quarter had a net loss of $700000 or two cents per share adjusted EBITDA, which is the standard EBIT of calculation plus and the exclusion of non cash cash stock based compensation and severance and other income and expense and as reconciled in our press release was the loss of 400000 in the first.
Order of 2021.
On the balance sheet as of March 31, our.
Our cash balance of $33 4 million, which is down from year end, but much of this is related to the increased inventory, which will level out during the second half of 2021.
Our working capital was 51 in the $5 million at March 31.
With that I'll now turn the call back over to Thomas.
Thank you Dan.
I'm pleased with our full year of growth.
In all of this of 140 per cent and our revenue growth of 58 per cent.
The justifies the investment in all of the sales personnel at the sales management and inside support functions.
Our focus for 2021 is increasing sales rep productivity the selling of assumes to its normal course, continuing to leverage the investments we've made in sales.
As well as on the G&A side to improve profitability and most importantly, helping our patients in pain.
We will continue our sales force growth in 'twenty or 'twenty, one, but at the slow of place pace than in the 2020.
We've made the investments in growing out of sales force primarily in the second half of last year. This investment it's showing all of the right signs as Q4 of those group of 117% year over year in Q1 orders grew 140% year over year.
These orders will eventually convert into revenue over the next year and further out.
And therefore, we expect to return true much healthier a rash of malaise.
And chip between the top line revenue and sales expenses as we get into the third and fourth quarters of 2021.
As always with the beginning of the year insurance deductibles.
The seasonality means our first quarter of revenue is always much lower than how it progressed throughout the year.
We estimate our second quarter revenue to be between 31, and 32 and a half million with an adjusted EBITDA between three and $4 million.
The second quarter of revenue range is about 61% to 69% higher than the.
The second quarter of 2021 sorry of 2020.
And the full year 2021 revenue is estimated.
Between the Huntington 35 of 150 million.
Again, with adjusted EBITDA of between 15 and $25 million.
The full year revenue estimate is approximately 68% to 87% above 2000, twenty's revenue of $80 1 million.
My long term going forward like the therapy and rehab division is to continue to grow our share of the huge market for prescription pain management and to take advantage of the huge void in the market. After the disappearance of a couple of main competitors.
This includes growing our domestic sales force as well as potential acquisitions of complementary technologies.
Our long term goal is still to fill all 800 territories in the U S and get sales reps fully productive.
We see that it typically takes on the average up to two years to make a sense for fully productive.
In summary.
We announced strong growth in orders, which will drive the drive revenue and profit in the second quarter in the second half of 'twenty or 'twenty one.
And we will now take a question.
Questions from all the listeners.
We will now begin the question and answer session to ask the question you May Press Star then one on you touched on the phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.
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At this time, we will pause momentarily to assemble our roster.
Okay.
The first question comes from Matt O'brien with Piper Sandler. Please go ahead.
Hi, guys. Good afternoon. This is drew on for Matt. Thanks for taking the question.
I just wanted to start off on the the rep common carrier of the kind of a multipart question here.
You know, one, particularly where you're seeing as far as that group of reps debt, how you're uncomfortable with that kind of led you to the trim. Your sales force to what measures are you putting in place to make sure that you don't run into the same issues that you've tried to bring a lot of reps on board here.
And then three are you seeing anything abnormal from a voluntary attrition perspective.
If at all.
Take the last question first because that's probably the shoulder sensor.
We don't see any attrition.
Attrition in terms of leaving the company more than than would be normal relative to having about 500 of sales reps.
So that's but that's obviously a good sign we are we'd be I can see quite of bit of loyalty are in in the sales force when it comes to the parameters. If you look at we put a lot of emphasis on the first 90 days Oh the sales Rep. We were probably the minimal lenient and gave me.
The one of two months more as part of the process of adding so many sales reps in the second half of last year. So it was it was literally in January.
Out of Westwood one.
Of all of the rest would put under the scrutiny, we put a lot of emphasis on those first few months on how the orders develop so it is very much a.
It simply keep keeping up to the benchmark and we haven't and coming up to for a minimum amount of all of us within 90 days.
Sure.
And.
The the up to something that the the that won't survive and.
So we we trimmed our sales force of literally at the same time, we will then hiring new sales reps at a slower rate than in the second half. So we started that in in January and up in terms of day. We've we've had sales dropped out of at a rate that was about a third of what we would.
We did so that the barely just kept up with the attrition or debt.
We've seen hit during the first quarter.
So the net result of that is obviously later in the year end and in the years to come the dose particular territories that we now have filled per day. They will be we know there'll be high producing.
That is something that is very deliberately we take a break now and until we get into the third quarter of of this year. So that when we start growing the <unk>.
Sales force all the true 600, then up towards the 800 of sales reps that we don't have a whole lot of loose ends we'll need to tie up in the it and perhaps not so great performing territories.
So it'll be easier for all of 15 regional sales managers to manage the the addition of.
All of those reps those territories as we move forward.
It's something that obviously is rough for for the financials that we just have that many new sales reps.
At the same time as when we have that seasonality of the relatively low revenue quarter because of the insurance deductibles, but you'll see that as we already indicated was what we think about the second quarter. We you can see we are back to profitability and then we'll start growing the sales force again.
Later in the year I hope that answers your question.
Yeah, Yeah that makes sense.
Maybe you could share I mean as of the end of April here are you above or below 500 at this point.
The last number I saw the right below 500.
Okay.
Okay that makes sense and then I just want a bunch of little bit on the guidance you know it looks like the the Q2 guide is pretty much in line with the street.
And now you, obviously expect the hire reps out of little bit of a slower pace until the second half of them. So.
So that implies you need the you know a fairly big step up the you know in the second half of it from a productivity perspective from some of the seasoned reps.
I see them much much higher order growth in the second quarter than we saw here in the first quarter of part of that is obviously because of COVID-19, primarily hit us last year of them on the orders in.
In April and May of last year, but you'll probably see something like a 300% order growth in April of two under 300 per cent and in May and maybe 200% auto closing in June of that day.
The numbers, we're looking at right now again.
Debt that sets the stage for that we are pretty confident of beginning to be pretty content on the Bob some significant revenue in 2022.
Okay. I was just wondering if you could you could speak to kind of what you're seeing from some of the seasoned reps that kind of give you confidence of debt you know of.
The larger revenue ramp in the third and fourth quarter of the year.
Oh right actually we see if you take all of the top 10 top 25 sales reps.
We actually have a pretty good mix of.
Few of of all brand new reps getting up in that category already.
Already as well as the system, perhaps that I just he was running at the normal cadence or well just inching up a little bit of all the time.
So it's not just the very seasoned reps out there actually a few few of these the newer ones that are developed it pretty quickly again I think we have here over the past couple of years gotten better at the recruiting.
The better training and now with 15 regional sales managers.
Holding holding the.
The hands in the for several months when the.
But when they get deployed to true to make sure. They do eventually become a highly productive reps.
Okay. Thank you very much.
Yes, that's true.
Our next question comes from Jeffrey Cohen with Ladenburg Thalmann. Please go ahead.
Oh, Hi, Thomas from Dan how are you.
You're doing great. How are you doing this.
Just fine. So first paranoid took we always like to ask this one but any read into the mix in particular.
True.
All of this isn't the supplies it looks like supplies.
Higher than what we expected is that just a function of utilization.
Yes, it's pretty close to normal where you're running 25 75 and it was 74% in Q1, we talked about Q4, sometimes of having a little bit of of a variance, but generally we should be inside of that $25 75 range.
Okay got it and can you talk a little bit about what.
Where you're seeing traction I know that Q.
Q1 is a little wonky with the with the providers out there, but you're seeing more traction between the more doctors day of your sales force is getting into that of new storage for you've seen more traction with the existing.
The existence of physicians that are now higher prescribing the near term.
Yeah, I think things are.
Normalized meaning debt.
The Knicks doctors.
Found a way.
In terms of dealing with patients as well as dealing with.
Representatives of that that debt changed from the the second quarter.
And into the second half of last year.
So what we saw from the the end of last year and into the first corner here was was about the same.
So it it's entirely of the.
The reflection of that.
A lot of all of our new sales reps are now beginning to stop sending in some.
Some of you at all of those that's that's really what you've seen here.
We probably need another three of four months before.
You'll see significant changes in interest.
How easy it will be for the sales force to come in of doing surfaces and.
You know show up without masks and just the move around more more freely tried to grab doctors in the hallway, sometimes that's what opens up in the new accounts et cetera.
So.
It.
At its entirety of reflection of the of the service reputation we have made right now and especially the the percentage growth are we going to see in the second quarter is a reflection of the second quarter last year was a little rough on us in terms of all of the thing and we still keep increasing all of this.
Pretty dramatically.
Okay got it.
Lastly from me any commentary on the the blood volume all of them as far as the <unk>.
1500 unit.
Is there a particular number that youre planning on producing during 2021 and then what sort of looks like for the <unk> hundred is that something planned for 2020 true.
I'm thinking of.
Yes.
The the the engineering of Hudson and manufacturing as the two two separate of animals in terms of the C and fixing the undergrad. We made are enough. So we can we can finish up about 130 of <unk>.
Those from the most in these days the it goes out.
Nickel studies in and just to be placed in hospitals for them.
To get used to it and maybe eventually keep it.
With an invoice being being sent to them.
And how long.
How many of those we need to make when literally depend on how of the next generations of how fast we can get them done that I have a feeling of as I look at it now we are already looking at of C. 1700 debt. The see them 1600 could well be more of a stepping stone to get quickly to the C 1700.
But again in terms of.
Now how many we'll sell meaning how many of them will need to make of the 1500 to some degree it depends on how fast we can be ready for the 16 under the 17 of them.
Okay.
That's the obsolete debt that first model pretty pretty easily.
Because of the wireless and the easier user interface and all of that debt the things of that that would be obvious.
For us to make the other one of obsolete but.
Okay, all right I missed the fault.
Hundreds.
Got it and the.
The stepped down in the inventory that you spoke about we will see that.
Throughout the balance of the 2021 it will be more pronounced in the second quarter.
Yeah. It's.
That's the slow moving thing it it's simply a matter of.
Making sure that the shipments we have underway and for those orders were placed out well over a year on items, we keep buying that they're split up so we indirectly as a result of that.
We will end up with the lower inventory values.
We also benefit from having been able to negotiate better prices.
Many of the components as well as the.
The assembly cost, we'd been able to negotiate better prices. So all of cost prices in general.
The decrease in as well so that'll help on that too, but again before it really hits in the kicks in on the financial is a it's a it'll be later in the year, but you can see that.
Okay perfect. That's it for me thanks for taking the questions.
Thanks, Jeff.
Our next question from comes from E. Chen with H C. Wainwright. Please go ahead.
Thank you for taking my questions.
My first question just to follow up on the Inc.
So would you say the normal level of inventories.
Some of the between three and $5 million.
Well no between the.
Between six and 8 million debt that would be an appropriate level for the best way of running at right now.
Okay. Okay.
I mean, the called the.
COVID-19 pandemic is.
Some of those subsidized subsidy in the U S. But if there is another way of hitting the country inventory level will go up again.
Yeah, well one of the things we have improved since the.
For the COVID-19 pandemic started is also we have more second sources that are actively up and running and rather than just having sent us a prototype of samples of the products.
So we would potentially be able to two to be a little more lean.
Even during the.
Disaster period like that simply because we have more suppliers up and running all of that effectively allows us to take a little more risk on debt.
We'll see those products eventually hit hit the dog here so.
Not necessarily but let's see what day.
Okay.
And for those of sales.
The sales personnel, who train Oh.
All coming from.
The group of personnel from the hydro in the second half of 2020 of them all out there.
Are there any members that are wisdom for them at the beginning of 2012.
I'm, sorry, I'm not.
I didn't really understand your question Oh I'm asking those sales personnel you have trained all of your sales team.
The old relatively new reps right.
They are yes, most of them high up in the second half of last year.
Okay, but they are the RFP with the has been with the firm for quite a long time also.
Yes, that's the reps out of spend with us for for over 10 years.
Okay.
So last question is.
You said that do you expect the a loved one of the monitor 1600 should be approved.
Near term is that going to occur this year sometime later this year.
That's a good question, Oh, I need to see it be a little more comfortable with how the.
The the prototyping debt that we are looking at right now how that plays out.
That would obviously be the basis for the the data if we send it to two of the FTA, but.
Going forward, it'll obviously be a lot easier than the first generation because we can use the same 1500 as the predicate device and.
And then just keep keep improving on it and expand indications of etc.
So if it if it does get approved the later this year or would it make more sense that you would just commercialized for the 600 model instead of a search for 100 model the future.
Yes, we have some bit of a decision to make the it would be fairly easy jump over to the C 1700 wood.
Wood pulp, which will physically look more like your more traditional monitor.
But else and in terms of the data collection et cetera, and the ease of use when will be the same as the 1600, we might skip right over to that one for commercial reasons, but in terms of the F. D. A.
Cleveland.
This process we might.
We obviously take them one at a time I want to make sure we stay on the safe side for that instead of trying to.
But yeah I.
I think that'd be helpful. Yeah, yeah.
Let me just to clarify there was 1500 six 117 countries.
That's right, Yeah and of course in the future.
Probably continue like that.
We need to continue that the bring system or will come up with sometimes the names like all the companies to find for the product.
Thus each new does each new model require a separate FDA approval.
They probably wouldnt, but like book.
I'd like to place the teachers, so that as we try to add more indications for us that we use are.
The next generation of product to tag, along but we could probably get away with that but there's no need.
To do it we.
We will we will try to add more indications for use of bye.
By following simply but when we have a new generation product wise.
So.
It's the it's it's it's it's it's part of our strategy to do it to do it that way.
Okay. Thank you.
Okay.
Our next question comes from Mark Weisenberger with B Riley Securities. Please go ahead.
Thanks, Good afternoon.
Can you talk about the payer mix in the first quarter and how that's evolved year over year and sequentially as well.
Oh it is.
Pretty much the same and it all of it always has been.
The the mix of payers of it.
Still fairly constant.
Who is the most difficult of insurance company today all of this month that is a definitely a moving target sometimes things loosen up in one area.
And then you see another insurance company be more difficult.
In terms of how the how they can slow down payments to us.
Really with a lot of medical terminology test at the excuse of sets that that's really the only it's about how can the slow down payments to us.
That's the industry when Oh all of it it's pretty much the same.
The same thing in and obviously the the way we direct of sales forces is obviously the deal.
They also incentivized.
222 to hit the clinic set of give us a better.
A bit of paying all of it et cetera. So.
Fundamentally nothing has really changed obviously, the first quarter as all of US here Tobey by our insurance deductibles from B.
We tried to take that into.
Into account when we.
When when we reported revenue for well.
For the first quarter of it yet.
Got it understood you.
You have made big investments in the sales force to reach prescribers. However have you or do you plan to engage in any direct to patient marketing that could further drive order growth.
No.
Okay.
I'm I'm I'm, so won't know and Ive dealt with sales and marketing all of my life on different continents different industries et cetera.
It would make absolutely no different to pre spend a dollar of $10 million from $100 million.
The end use of advertising for this this is this only works through a total strategy.
Not approached strategy.
Got it okay, maybe just looking at some of the impacts on the quarter would you say that the.
The access to prescribers was maybe a larger factor or a maybe a reduction in some elective surgeries or the fact that people may be arent Gulf doing our normal activities and maybe injuries are less than they might be in the normal year and kind of what's baked into your your growth outlook.
In terms of kind of maybe of normalization of those different aspects.
Aspects.
I would say that our if we look at historically up until today, what we saw in April and May last year.
That was the that they've been all of this was definitely impacted by.
The uncertainty and therefore, the much more restrictive access true to prescribers.
Since then it has reached the more normal level not exactly what it used to be before COVID-19.
And that's probably going to take several more months before we see it.
A change the however, our numbers because of how many reps we've been hiring in the some of them are now becoming very productive some sort of somewhat productive and in some of.
Being being monitored for if if if they can stay on on both long term Oh order growth is.
At much more impacted by the addition of sales reps on anything there but.
It's as long as we would behave appropriately in clinics and in terms of how we come in and ask for the business and as part of that time.
The.
And it's it's it's not a real issue.
Today, it's not a inc.
Exactly the same as it was a year or two ago, but.
Again as long as you behave professionally and an appropriate then.
And respectful.
The dis these clinics still see patients.
Is oh, the a few pay people getting getting into it because there's less activity throughout the country, maybe a little bit.
But again, that's more of a slow.
Slow moving microeconomic thing that I I don't think it impacts on the numbers that much elective surgeries.
Some of that is in the orthopedic area.
Yeah, maybe this is still a little slower than it used to be but it's it's it's not something that the significant impact on the numbers at it it's really all internally.
Make sure we.
We make our our sales reps our sales force as it is as productive as possible and there's still a long way to go.
The average rep can can easily double or triple.
The Odyssey of producing right now.
And obviously, we need to higher long term 300, more sales reps to get up to the 800 of territories being filled.
Understood and then final one for me can you talk about the expectations for increases in spending throughout the year, maybe how much was removed last year as a result of of COVID-19 in and kind of how should we think about that bouncing back throughout the rest of don't think we've removed the whole lot of because we decided to.
The opposite direction, the most companies and double down, but you started hiring more aggressively so we have the infrastructure to keep up with the increase in orders and because of other companies for scaling back Oh dropping out entirely we actually during last year had access to a much better talent pool in more applications.
And the normal so we now have a workforce that out that are smaller and bigger than it normally would be and standard we were able to grow the G&A portion of all the expenses slower than the.
The the topline and Oh by the way it really you can say.
Hurt on the Bottomline, but sadly we aggressively at that many sales reps.
And so.
I don't know we used at the end do you have any areas you can point to where we have saved save so we paid down a couple of things of them are we.
Started doing training remotely for the big sales classes that were coming in and I think we've talked about saving now between the hundreds of $200000 of months related to that and those training.
Those were the biggest ones I think we did have some efficiencies.
I think every call company type of inefficiencies that came in because of the zoom and some other things and doing things a little different than we had in the past, but I would say the travel was probably the largest one.
Mhm.
Great. Thank you very much.
Yep. Thanks, Marc.
As a reminder, if you have a question. Please press star then one to be joined into the queue.
Our next question comes from James Terwilliger, Alright.
The land Securities. Please go ahead.
Yeah, Hey, Thomas can you hear me.
Yeah, Hey, James loud and clear.
Great. Thanks, most of my questions have been answered, but I and of course I've got a couple of so first of all of nice growth numbers are in this environment just looking at the release.
My first question is really.
The deductible issue is kind of behind US. There's nothing you can do about that that's from a seasonality perspective, but and everyone has it but did you see as you move from 'twenty to 'twenty to 2021 any significant change in the reimbursement rates from the insurance companies are always reimbursement pretty stable I thought that's what I heard but I just wanted to ask the question of.
A different way.
Yeah. The the two two of moving parts of not just the pricing or I should say allowable amount that insurance companies have established.
The move around a little bit Oh, all you can say that it's fairly stable some areas, we've been able to improve pricing a little bit and some of it's are they they just keep hammering on.
The other variable is the the the allowable quantities.
Oh suppliers, we send out the patient and you could also the C.
The.
The the success rate of the probability that.
The one of the devices are is.
Approved or not for for coverage of.
With the patients those those of moving targets as well so the quantity side of it what's allowed for insurance companies again.
Some of our improving somewhat going down a little bit and it changes all the time, but both on the pricing side on the volume in terms of what's what's allowed from insurance companies.
Oh, all the teams to be constant so no change yet not a whole lot of different from what it looked like 25 years ago.
[laughter] have you been answered the question for 25 years.
Thanks for that my second one here.
[laughter] after that one of the age you a day two of my second question is really on the on the sales rep. So so if I heard it correctly here at approximately 500 today and the target is to go to 600 by the end of 2021.
Correct and is that how should we think about that is that kind of evenly spread throughout 2021 because when I look at my model. It was really the second half of 2020 and in Q3 and Q4.
Is that the sales and marketing as a percentage of revenue really had had an increase so as you move into 2021 is the.
Maybe evenly spread or are you kind of catching your breath now and you're looking more at a higher digest, what you have and maybe hire more reps in the second half of the issue of how should I think of the.
The timing of of your hires for 2020 of them hopefully that exactly my question.
Right Yeah for a day.
From recent than last year, we are of high very slowly.
Basically to the same point of the.
The attrition rate the first half of this year.
And I would assume that July.
Still be a fairly quiet I think during August and September we'll start stepping it up too.
Not the same rate.
Last year, but at a rate that's about a third of what it was last year that'll still keep adding.
The 15 15, plus reps of months net true trauma sales force of maybe as much as 20 net.
And as we get into.
I would say late November early December would probably slow down again.
Simply because of the practicalities of training people et cetera of getting them deployed right around the end of the year.
But that should.
Leave US was approximately of net of 100, and so that would be of rate of.
That's sort of how we added sales reps in the second half of last year. So it would be a lot easier to manage but it'll start getting more.
Spencer however, the the order growth we are seeing right now.
It is directly correlated to for the year.
The amount of revenue, we're going to see in the third and fourth quarter of next year and into the following year.
So these the the base salaries that are hurting so much right now will be proportionately a lot less of when we get into the total pulse pool of.
Of the year.
Okay fantastic. Thanks for taking that one of my last question I think you guys touched upon it earlier, but how.
How should I think of this this this might be for the CFO I mean.
How should I think of of for modeling purposes. The you know you talked a little bit about maybe the patient support functions and kind of the reimbursement function of which I believe is from G&A.
Should I think of and the support this growth that you're putting up you've got a.
Invest in those patient support functions, how should I think about maybe the G&A expenses going forward in 2021, you've given like the revenue guidance, maybe as a percentage of revenue or or however, you're comfortable answering that but I'm just trying to make sure I'm I'm on target with maybe my G&A, Inc.
<unk> build to support your growth.
Yeah, James I would look at it Q1 was about 23% of revenue.
It'll start to kind of trickle down from there even though the expenses will increase from a dollar perspective I think you know if he took 23 and then kind.
Kind of layered it down to probably closer to 20% by the end of the year and he did that evenly based on you know the current revenue model we have out in the.
That's out there that should get you pretty close.
Well, thanks, guys and again nice job on the thanks for the clarity of nice job on the AR on the impressive growth numbers should take care of guys. Thank you.
Thanks James.
This concludes our question and answer session.
The conference back over to Thomas for any closing remarks.
Yeah.
Yeah. Thank you I hope today's earnings call, it's been informative for everyone and I appreciate the interest in <unk> and listening into this call. Thank you and a great day toll.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.