Q2 2021 Nevro Corp Earnings Call

Good afternoon, My name is Ashley and I will be your country and operating today at this time I would like to welcome everyone to natural second quarter, Tony can you on financial results Conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

And you would like to ask a question. During this time simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question press. The pound key. Thank you I would now like to turn the call over to Julie to me for introductory remarks. Please go ahead.

Good afternoon, and welcome to net Bros. Second quarter 2021earnings conference call. We appreciate you joining us on Julie Dewey Narrows VP of IR and corporate Communications with me today are Keith Grossman, Chairman, and CEO, and President and Rob Mcleod Chief Financial Officer, the format of our call today will be and discussion of second quarter.

Business results from Keith followed by detailed financials and guidance from Rod and then we'll open up the call for questions. Please note. There are also slides available related to our second quarter performance on the narrow investor relations website on the events and presentations page.

Earlier today never released its financial results for the second quarter, ending June 30th 2021 a copy of our earnings release is available on our IR section of our website at narrow dot com. This call is being broadcast live over the internet to all interested parties on August 4th 'twenty, 'twenty, 1 and and archive copy of it.

This webcast will be available on our Investor Relations website before we begin I'd like to remind everyone that comments made on today's call may include forward looking statements within the meaning of federal securities laws and our results could differ materially from those expressed or implied as a result of certain risks and uncertainty.

Please refer to our SEC filings, including our form 10-Q to be filed later today for a detailed presentation and risks the forward looking statements and this call speak only as of today and we undertake no obligation to update or revise any of these statements. In addition, we will refer to adjusted EBITDA, which is a non-GAAP measure.

That is used to help investors understand nevertheless, ongoing business performance non-GAAP adjusted EBITDA excludes certain litigation expenses interest taxes, and noncash items, such as stock based compensation depreciation and amortization. Please refer to GAAP to non-GAAP reconciliation.

And within our earnings release, and now I'll turn the call over to Keith.

Okay. Thanks, Julie good afternoon, everyone and thanks for joining us in a moment, Rob will cover the specifics of our second quarter results and third quarter guidance I'm going to focus my comments today on the current state of our business, including the current state of the Covid recovery and on our PD on launch following July's FDA approval.

This is certainly a really interesting time and our business on 1 hand, our organization and our customers have never been more excited about our mid to long term prospects 3 new products already introduced this year, new and exciting data on non surgical back pain, and diabetic neuropathic pain patient populations with the latter resulting in our most significant FDA approvals since 2015.

Really exciting new products on the horizon and a whole lot more.

On the other hand, our team and our customers are dealing with a tough recovery environment from the Covid pandemic and the near term, which has proven quite challenging to forecast and at times to understand so let me start with this topic and after that I'll talk a bit about the PD unapproved and launch.

And the context of the current environment, we were actually pleased with our 81% global revenue growth in Q2 versus 'twenty, and 'twenty and 9% growth versus 2019.

Well I'd like to do is look a little bit and actual procedure activity compared to prior year Q2, total U S permanent implant procedures increased 60%.

All trial procedures increased 45 per cent.

Sequentially. We're pleased that we saw a bit of improvement over Q1 as the trials per day improved 4% and firms per day improved 11%.

And while the positive trend both of them grew at a slower rate than initially projected.

Now compared to Q2 of 2019 U S permanent implant procedures increased 5% and trial procedures decreased 8% and of course trials and drive future permanent implants and revenue so lower trial procedures or certainly a significant factor and our Q3 guidance.

It's obvious to all of US at this point and the various procedure volumes throughout health care are returning to pre COVID-19 levels at different rates and therefore, the same is true for the medical device markets that accompany those procedures and.

And clearly as the data rolls in the markets the market's rather for chronic pain treatment have proven to be among the more deferrable elective care areas by patients in this COVID-19 recovery to and extend that I think has probably surprised many observers are team is now done extensive rounds of market research with hundreds of implanting SCS physicians primary care physicians.

And the patients.

And even hospital and ASC administrators, and we've taken a deep dive into claims data as well.

Here are a few insights into the SCS market that we believe also sync up well with our own day to day observations and the field.

First any current delay and returning to pre COVID-19 volumes seems to be driven disproportionately by patient sentiment and patient behavior and as for now at least much less about doctor or facility capacity interest policies or procedures.

So let's start with patient visits.

Patient visits for the identified reason of chronic pain and continue to be slower to recover in both primary care and pain physician office settings, lower primary care visits for these patients are running at about 76% of pre COVID-19 levels and have resulted therefore and lower new referrals to pain physicians.

In turn pain doctors are seeing new patient visits that are running at about 83% of their pre COVID-19 new patient levels, whereas we know of course patient returned to some other specialties are proceeding at a quicker pace.

The primary reasons and patient said, they're reluctant to seek care, our financial issues and ongoing fear of Covid.

While the COVID-19 fears or rather obvious patients are concerned about employments and stability high out of pocket costs and either their loss or potential loss of health insurance.

Conversely, we inquired about payer policies and payer behavior and at present, there is no evidence of any change and payer behavior regarding pain therapies, it seems to be having a material impact.

Interestingly and despite their near term COVID-19 or economic concerns over 90% of pain patients indicate that their management of pain has not improved during COVID-19 and in fact half of the patients told us their paint has gotten worse not better throughout COVID-19. So we still do expect patients to return for treatment of prior levels at some point to address the burdens.

And their chronic pain.

And as for physicians, both pain physicians and primary care physicians indicate they anticipate patient volume returning and our pain doctors almost uniformly confirm the day remain very interested and SCS therapy, generally and and growing their SCS business going forward now.

And now on the topic of timing, we have what I'd say is around on equal split among our pain doctors, some who feel the recovery will accelerate and the next few months. Some later in the year and still others, who see a recovery pushed into 2020.2.

Now looking at claims data FCS trials and firms seem to have recovered as well or better than almost any other procedure. The pain physicians are doing so there doesn't seem to be any significant mix shift of procedures within our customers' practices.

Additionally, we've confirmed that opioid prescriptions do not seem to have risen during COVID-19 and addressing any speculation.

And the patients were being deferred with more aggressive medical management.

Now and maybe more anecdotally we have observed in July what seems to be a very strong desire on the part of both patients and our doctors to seek time off and take vacations after and what's been on obviously, a long year and I think reflecting their underlying expectation that both school and professional schedules may normalize and the fall we expect to see this dynamic in August.

And as well.

And short we've learned that patient reluctance to present to either their primary care, where pain physician for chronic back and leg pain is the most significant driver of slower recovery rates for reasons, having to do with both COVID-19 infection fears as well as the cost impact from factors such as job loss health care benefit loss or simply the fear of either or both.

While there is no reason to believe that FCS patients weigh these concerns and differently than other categories of patients. What is clear is that these patients while still suffering from unresolved chronic pain are nonetheless on nonetheless, more able and more willing to defer their treatment and patients and at least some other elective care categories.

Now importantly, we validated that other things that some have speculated about are not significant factors such as payer behavior.

Replacement of Ses with alternative treatments pace.

Patients managing their paying better during COVID-19.

And the loss of interest and SCS therapy, among pain doctors are referring doctors et cetera and these.

And who are encouraging findings to us.

And I'd also add that we are just over a month into the updated Medicare prior authorization requirements that went into effect for hospital outpatient fee for service patients on July 1.

While our customers are dealing with some extra administrative details and it doesn't seem to have changed treatment volumes and we've not seen any disruption and getting claims approved through our own H FX access team.

Finally, unimportant measure and diagnostic for US is how we're doing on a relative basis, while we believe our U S revenue growth rate for the first half of 'twenty, 1 exceeds that of the market. We also recognize and this COVID-19 environment that revenue comparables versus prior year and 2019 are all fraught with a lot of noise.

Between industry wide stocking and Destocking that occurred in 2018, and 2019, respectively as well as the as well as the timing of Covid impact and the disparate pace of recovery of canceled cases, it's challenging to determine accurate growth number comparisons.

However, based on third party claims data for actual procedures, here's what we do know.

U S permanent implant procedures for all market participants for the first half of 'twenty, 1 were down 6% compared to the first half of 2019 net.

Never on permanent implant procedures on the other hand, we're up 8% for the same 6 month period.

While revenue growth numbers can be impacted by the timing of shipments a procedural growth numbers more accurately indicate what products are implanted in patients and are a better indication of share trends.

We've seen that some competitors accelerated shipments and the first half of 'twenty, 1 and that at least 1 or 2 quite meaningfully and you.

You'll recall when I joined the company, we made a decision to discontinue quarterly stocking practices that exceed quarterly utilization and we've maintained that practice.

Based upon net real clearly outpacing market procedure growth by 1400 basis points and the first half of the year. We're confident that we do continue to win.

So let me close this portion of my remarks by concluding that first we believe the patient reluctance to reengage and willingness to differ. This is the primary issue behind slow SCS market recovery second we've uncovered nothing to day to indicate that there was any enduring or fundamental change to our problem with the SCS market beyond the pace of it.

Covid recovery.

And third never continues to perform well relative to the overall market by almost any measure.

In fact, we continue to believe we're very well positioned for longer term attractive growth on our lower back and leg business when the full impact of Covid on our market Subsides and in addition, we're excited and I'll provide the only SCS treatment option approved by the FDA for patients who are struggling with debilitating and painful diabetic neuropathy and who are unable to find relief with currently available pharmacologic off.

<unk>.

So let me cover a few things on our nascent but exciting launch of P D and before I turn the call over to Rod.

We were obviously thrilled to announce the FDA approval and the expanded indication of 10 kilohertz SCS for the treatment of PD on just a couple of weeks ago.

This approval demonstrates the strength of our clinical data and puts never at the forefront again, providing a proven and transformative non drug treatment option for PD and patients who are struggling with debilitating pain and who are unable to find relief.

Our high frequency therapy delivered by our <unk> system is now the only SCS system with an FDA approved indication for treating P. D and and is the latest addition to our comprehensive H FX platform, providing the unique efficacy of our 10-K therapy to an entirely new category of patients.

It's also now the only non drug product approved for this indication the approval itself was on time with the final language and the approval completely in line with the inclusion and exclusion criteria of our PD and randomized controlled trial let.

Let me be clear this is not a category approval. This approval is specific to our product only and in fact, the FDA approved labeling and specific to our proprietary 10 kilohertz high frequency therapy.

We were fortunate to have just gathered our entire U S. Commercial organization the week before approval for thorough training and preparation for the launch and following the FDA approval. We immediately initiated commercial launch activities and the U S. I'm pleased to report that while still extremely early the levels of interest among referring physicians and patients have exceeded our.

Patients and validated our market assumptions.

We immediately deployed our dedicated P D and field organization to begin calling on physicians treating PDP and patients our new website H FX for PD on Dot Com went live along with targeted and professional education programs and digital as well as various other outreach initiatives to PD and health care practitioners and patients.

And the 2 very short weeks since receiving approval or PD and field team has made over 2900 calls on referring physicians are H F X coaches have engaged directly with hundreds of patients and we've generated over 160 patient referrals to pain physicians through these combined initiatives now these are qualified referrals and patients who.

Fit the criteria for treatment and who have agreed to see a local pain physician regarding H F X for PD on therapy and.

And the coming months and quarters, we'll have more color for you on just how and at what rate. These patients go from qualified referrals to treatment.

Initial physician response has been really positive although the anecdotes are far too many dimension here and 1 primary care office 1 of our PD on sales reps was given 6 P D and patient referrals on their first call and.

And another office staff members actually approached our PD on sales team to talk to them about family members that are suffering from P. M.

We even had our first successful trials and the U S..1 patient was excited about the pain relief and her legs and pleasantly surprised at the burning sensation and her feet was also improved.

Another physician and actually performed to PD and trials after approval.

First patient reported 85 to 95 per cent relief and was able to walk without much pain. The second patient before trialing. The H FX system was suffering from multiple falls due to the numbness caused by his neuropathy.

During the trial the patient reported <unk> 95 per cent reduction in pain and states. She has regained feeling and his feet and hasnt fallen and to trial again and that patient is anxiously awaiting is permanent implant.

These are obviously anecdotes and there are a lot more behind these but they're the stories are so encouraging to hear we're really excited to share more of them and the future.

And we were of course delighted with a 12 month PD on and 6 months crossover results that were presented at this year's American Diabetes Association meeting in June.

We plan to submit these 12 month results for publication and very soon and this evidence as well as the German neurology publication of the 6 month results has created a lot of excitement and the pain and diabetes communities. These data will be used to support physician referral decisions as well as market access initiatives to expand payer coverage of this procedure and.

In addition, the health economic data will be submitted for publication later this year analyzing the long term outcomes with PD on patients treated with our therapy.

Now remember there are over 5 million patients and the U S diagnosed with P. D on and at least $2 million and these patients are refractory to or failing conventional medical management and in need of a new solution solution to treat their chronic pain.

As we begin to interact and commercially with these patients we're seeing firsthand what we already believed that these patients are truly desperate for answers and we think we can play a new and meaningful role and helping many of these patients.

To further validate the PD and market opportunity. We recently fielded a blinded online research survey with a thousand U S, referring physicians treating PD and patients today.

Referring physician groups included endocrinology internal medicine primary care podiatry and neurology.

To participate and this survey physicians had to treat more than 100 patients with diabetes annually have treated P. D and specifically have prescribed any convulsions for P. D M and had patients who failed and conventional pharmacologic medical management.

Our research found that the 1000 patients referring physicians that screened into the study each actually treated on average of 169 patients with P. D M and the last year.

They told us about 34% of these patients who are not responding to medical management.

68% of these physicians found the results of our sons of PD and publication either extremely are moderately compelling.

And overall these physicians indicated they would refer about 37% of their refractory PD and patients per 10 kilohertz therapy based on these data in the first full year.

And they expected to more than double their number of referrals over the following 3 years.

Now for those of you reaching for your calculator share quickly realize these and these results imply some pretty eye popping numbers.

I'll caution you these and no way represent a demand forecast for H FX for P. D. M. As we have a lot of work to do to educate the universe of referring doctors and patients initiate a referral stream and begin to get some experience with the conversion rate of referrals to implants et cetera. However, this research not only validates, but well exceeds our initial market.

<unk> regarding the level of interest and acceptance of referring physicians and it seems consistent with the least the very early reception, we have seen and the last 2 weeks since approval.

We're looking forward to educating more patients and physicians about H FX for PD and on the coming months.

As part of our commercial launch plan and hopefully by next quarter, we'll have some pretty pretty rich launch data to share with you.

We also know we have some work to do with the payer universe expand market access and drive adoption and that will take some time as well we have 2 key strategies to achieve this which are first developing H F X specific positive coverage policies for PD and with our Payors and second concurrently obtaining individual prior.

Prior authorizations on a case by case patient basis.

We have a team of specialists and house and our <unk> access group, who assist with securing insurance approval for patients reaching out to commercial payers requesting to meet and present, our RCT data and new FDA approval and we're hopeful that our 6 month published RCT results on our robust value and evidence dossier will be impactful enough to influence a policy change.

To cover PD and.

Keep in mind that each payer has its own SCS policy review timeline and effective date and may even collaborate with a third party administrator to manage their policies. Additionally, we believe many payers will want to see 12 months data published which we expect to have later this year.

With this in mind, we expect our payer coverage to increase gradually over time with an incremental increase through 'twenty, 1 and broader coverage with payers occurring throughout 'twenty, 2 and even beyond.

We continue to anticipate a mid single digit million revenue contribution from P. D. On in 'twenty, 1 and the majority of which is expected to be in the fourth quarter with broader penetration and a larger revenue contribution expected in 'twenty 2 and beyond the.

The revenue ramp is expected to build gradually during the initial months. Following the launch of course patients must still move through the referral to trial to permanent implant pathway, but also as awareness increases among physicians and patients with <unk> and access with insurance payers expands.

Our PD and approvals a latest example of how never and continues to lead and innovation the rollout of our recent on the upgrade known as <unk> connect has been well received and we're on track to upgrade the majority of our existing U S. Omnia patient base by the end of the year. Our new trial Stimulator is also now and full market release in the U S along with improvements in patient comfort and inquiry.

<unk> programming versatility, so patients can evaluate our proprietary 10 kilohertz therapy.

This new product extends the comprehensive valuation H F X and should improve success and patient experience with trial procedures.

We continue to develop the non surgical portion of our market using the MSR VP data as well and look forward to publishing our 6 month follow up data and the second half of this year and then presenting our 12 month data as early as Q1 of 'twenty 2.

And I'm also pleased to report that just this week the FDA accepted our PMA supplement submission for substantive review to add explicit labeling claims to include the treatment of MSR BP patients now unlike PD and this is not a gating approval as MSR BP is already broadly on label, but based on the strength of our data.

And I feel and more explicit FDA approved label claim will help us as we work with payers to expand specific coverage of MSR VP.

And similar to our PD on labeling if approved this would not be a category approval, but rather a claim only for our products and would be specific to our proprietary 10 kilohertz high frequency therapy.

In closing, while the slower Covid recovery environment remains on near term issue. We continue to believe we are very well positioned for longer term attractive growth when the full impact of COVID-19 on our markets subsides, our fundamentals remain intact and I believe we're really well set up for 'twenty 2 and beyond.

And lastly, as always I want to express my appreciation to the entire <unk> team for their efforts and the second quarter as they continue to move the SCS field and the company forward.

With that I'll pass the call over to Rod to provide further details on our second quarter results and financial guidance.

Thanks, Keith and good afternoon all.

I'll begin with our worldwide revenue for the second quarter of 2021, which was $102.3 million.

And 81% increase as reported and 80% constant currency compared to $56.4 million and the prior year period, and an increase of 9% compared to the second quarter of 2019.

On a sequential basis Q2, 2021 revenue increased 15% over the first quarter.

As a reminder, this quarter included the same number of selling days as Q2, 2020, and Q2.2019, and 1 more selling days in Q1.2021.

You'll also recall that we had a tougher comp in Q2.2020 relative to our competitors due to the differentiated speed of our canceled cases recovery. After the initial COVID-19 shutdowns and April 2020.

U S revenue and the second quarter of 2021 was $80.85 million and increase of 67%.

Compared to $51 million and the prior year period, and an increase of 9% compared to $78.1 million and the second quarter of 2019.

International revenue was $17.3 million and.

And increase of 222% as reported or 191% constant currency compared to $5.4 million and the prior year period.

And an increase of 12% as reported or 3% constant currency.

Compared to $15.5 million and the second quarter of 2019.

On a constant currency basis international revenues were back to pre COVID-19 levels, but Kenny but continued to be impacted by COVID-19 related issues, including both patient behavior and health care facility restrictions.

Gross profit for the second quarter of 2021 was $70 million and increase of 99% compared to $35.3 million and the prior year period.

And an increase of 9% compared to $63.9 million and the second quarter of 2019.

The increase in gross profit compared to the prior year quarter was driven primarily by increased revenue as well as an improvement and product cost as a result of increase in 2020.1 volumes.

Gross margin increased to 68, 4% and the second quarter compared to 62, 5% and the prior year period, and 68, 3% and the second quarter of 2019.

Additionally, during the most recent quarter, we continued to invest and our Costa Rica manufacturing facility, which decreased margin by about 140 basis points. We are still targeting shipping product from Costa Rica, and the first half of 2022.

Operating expenses for the second quarter of 2021 were $85.7 million, a 21% increase compared to $76 million and the prior year period.

But down 9% from $95 million and the second quarter of 2019.

The year over year increase and operating expenses was primarily related to patent litigation related expenses, new PD and marketing and selling related activities personnel costs and travel and meeting expenses.

Partially offset by a decrease and clinical trial expenses related to the <unk> study as well as management's continued initiatives to drive leverage throughout the business.

Legal expenses associated with patent litigation were $6.6 million for the second quarter of 2021 compared to $2.3 million and the prior year period.

We continue our ongoing patent cases, and the district of Delaware and at the patent office related to spinal cord stimulation technologies.

And while the disputes with Boston scientific are unrelated to our core high frequency therapy IP protecting these innovations remain an important objective.

We are anticipating and October 2021 trial, where and we will be presenting our defenses with regards to Boston Scientific's retaliatory suit against Us the October.

<unk> trial is expected to be some combination of patents and trade secrets claims that Boston scientific raised which again are unrelated to high frequency SCS.

Net loss from operations for the second quarter of 2021 was $15.8 million.

If fee of 55% improvement compared to a loss of $35.4 million and the prior year period, and a 41% improvement compared to a loss of $26.6 million and the second quarter of 2019.

Non-GAAP adjusted EBITDA for the second quarter of 2021.

It was a positive $3 million.

Paired to negative $22.1 million in the prior year period, and negative $11.1 million and the second quarter of 2019.

We continue to focus on cash preservation, while balancing the need to reinvest and the recovery process.

And our new growth drivers and PD and MSR VP cash.

Cash cash equivalents and short term investments.

Totaled $397.5 million as of June 32021.

This represents a decrease during the second quarter.

$178.9 million, which was primarily due to the scheduled $172.5 million payoff of the June 2021 convertible notes.

Turning now to guidance.

It's important to note that we will be using non-GAAP financial measures to describe our outlook for the business. Please see the financial tables in our press release issued today for GAAP to non-GAAP reconciliations.

Due to the uncertainties related to Covid on our operations and financial results. We are no longer providing full year 2021 guidance and only providing third quarter revenue and non-GAAP adjusted EBIT EBITDA guidance at this time.

As a reminder, we may not continue to provide quarterly guidance once the impact from Covid subsides vaccination rates increase and patients began to again seek elective care at typical levels.

We expect third quarter of 2021 worldwide revenue of approximately 90% to $93 million. This guidance represents a 14% to 17% decrease over prior year and a 7% to 10% decrease compared to Q3.2019.

As Youll recall Q3 of 2020 benefited from the recovery of cancelled Perm procedures from the initial COVID-19 shutdown and the first half of 2020.

While it's challenging to determine exactly how much of an impact and recovered backlog had on Q3 of 2020, we believe it negatively impacts this year's Q3 growth number by more than 500 basis points.

As mentioned earlier, while we have seen directional sequential improvement that recovery is progressing slower than previously anticipated including trial activity.

In addition, with the rise of the Delta variant variant and increasing restrictive mandates.

Our ability and the near term for debt to predict and inflection point is difficult.

We expect third quarter of 2021, non-GAAP adjusted EBITDA to be approximately negative $10 million to negative $12 million.

As Keith mentioned earlier, we continue to expect a mid single digit million dollar revenue contribution from PD and in 2021, the majority of which is expected to be generated and the fourth quarter with broader penetration and a larger revenue contribution expected in 2022 and beyond.

Keep in mind that our third quarter guidance provided today is highly sensitive to the pace of COVID-19 recovery and patient willingness to seek elective care, which continues to be difficult to predict if these assumptions differ from the actual pace of COVID-19 recovery and its impact on the companys markets than the company mainly.

To change and withdraw this guidance and the future.

Although we are no longer providing full year 2021 guidance. We did want to provide you with some thoughts to keep in mind as you update your models for the remainder of 2021.

On the plus side it would be reasonable to expect some Q4 seasonality as well as the majority of anticipated revenue from our PD and launch we could also see a return of some of the patients that have continued to defer SCS treatment during COVID-19.

Offsetting this would be the negative impact from the slower than anticipated recovery of SCS procedure volumes and the lower trial procedures from Q2 and Q3.

Furthermore, the combination of increased impact from Covid, along with reductions in capacity and shutdown of elective procedures could adversely impact patient willingness to seek treatment.

In closing, we made good progress and the second quarter as evidenced by sequential growth and revenue.

Miles per day and terms per day.

And we remain on track to drive growth and scale profitably in our core business and years ahead.

And a great position strategic strategically with best in class SCS technologies remaining share gain opportunity future growth opportunities and PD and and then S. RVP.

Superior clinical data and a strong commercial organization.

We continue to advance our operating margin expansion efforts with many of the changes we are investing and this year such as our integration of manufacturing and Costa Rica.

<unk> of the PD and market and the Omnia upgrades that facilitate greater commercial productivity all expected to provide continued improvement and our financial leverage as we grow.

That concludes our prepared remarks, I'll turn the call back over to Julie to moderate the Q&A session.

And.

Thanks, Rod in order to get through the question queue efficiently Tonight, we ask that you. Please limit yourself to 1 question only you can then rejoin the queue and if time allows we will take follow up questions.

Operator, we're ready for the Q&A instructions.

At this time I would like to remind everyone in order to ask a question Ross sorry, Dan day number 1 on your telephone keypad.

Just a moment to compile the Q&A roster.

Your first question comes from the line of Peter Olsen with Wells Fargo. Your line is open.

Good afternoon, and thanks for taking the question keeps it would be helpful. If you could kind of bridge from Q2 Q2 to Q3 guidance.

Down 11% sequentially.

And it's still on and year over year basis, adjusting for that the pent up demand a year ago would be down call it 9% to 12%.

So it's hard to understand why.

Despite your comments it would you know we had COVID-19 last year, you know why it would be down so much year over year and you know.

Thinking ahead, when do you think PD and could offset the declines and the core STS implants and and.

Sales and when do you think you can start to to grow and again, thanks for taking the questions.

Hey, Larry This is rod Thats, a great question and I'll start off and then I'll, let Keith add a little a little bit of color.

As you know and our business.

Leads.

Lead to trials trials lead to permit and as we were going through Q2 and into Q3.

The basic number of trial volumes, it's kind of a math equation and it leads us to the revenue number that we're that we're guiding to and in Q3 here.

And so while we did see sequential improvement from Q1 to Q2 and trials. It didn't it didn't improve at the rate that we were originally expecting at the beginning of the year and going into the beginning part of Q2.

And the way that the trials and Q2, and so far and Q3 with with the vacations and July and August It just can be a little bit of a softer third quarter and then what we anticipated.

Yeah, I guess I guess, Larry the only thing I would add would be that.

Probably a little bit of a conservatism applied here just because of the pretty profound lack of visibility we feel we have into the business right now and I think probably.

It feels to us like at least for our patients and and and maybe even our doctors that the summer vacation impact could feel a little bit more dramatic this summer than it did last and of course as Rod pointed out we don't have the recaptured canceled cases that have an impact this year either.

So I think all of that with the you know the trial model that we have now that we're a month into the third quarter.

Gets us to third quarter revenue guidance that we're reasonably comfortable with.

In terms of P. D and I mean look we don't feel like we have to have PD and to drive growth and this franchise and the long term.

I think I was pretty exhaustive and my remarks and in our conclusion that our.

Debt there is growth in these markets beyond Covid, we certainly can't predict when that happens when it gets back to and then begins to exceed again pre COVID-19 levels and the core lower back and leg pain market, but we don't view <unk> as being the necessary growth driver on a long term basis.

Having said that while I can't give PD and guidance beyond what we've said about this year, which is pretty minimal.

But it's a very very large market and given the size of our business. It doesn't take much to drive our.

Overall growth rates.

It doesn't you don't need your calculator to figure out debt.

Something in the neighborhood of 440.

And $40 million of a PD on sales next year would drive a <unk>.

10% growth rate or something close to that and the whole business.

So given the size of this market.

And I think we feel really encouraged with the idea of PD and as a growth driver, but not as a needed driver to give us positive growth at least on the long term.

Thanks, guys.

Your next question comes from the line of Bob Hopkins with Bank of America. Your line is open.

Oh, Thanks, and good afternoon, and can you hear me, Okay, Yes, Bob.

Great. So I'd love you to comment on on 2 things.

Given our biggest surprise this is to the way the street was thinking about your numbers for Q3 and the rest of the year.

First is this guidance for Q3 assumed that things get worse from what you saw on July <unk>.

On the same gets better would just love some perspective on that and then the other thing keeps on I'd Love you to comment on as it is.

It's so far below what we were thinking and we're not really hearing this from others. This kind of magnitude about the market. It seems to me that this kind of has to be market share or.

Or else I feel like I'm really missing something about the market and what's going on out and the field and I was wondering if you could address that issue of market share and then again the comment on what you assume for the rest of the quarter relative to what you saw on July. Thank you.

Yeah, I think in terms of a trend look where we're giving you the facts and we've done on a lot of work to try and figure out what is going on and the pain treatment market and what's happening in claims data on what's happening with patients.

I think the reason our remarks went almost 40 minutes Tonight was because we were trying to download as much information and Bob as possible.

That support what we believe is happening and the market in terms of our Q3 assumption no.

I think I pretty much assumes that August looks a lot like July and that we begin to see a little bit, but not dramatic recovery and in September so.

Well the numbers Youre seeing certainly required no heroics don't really assume it gets better or at least in the near term.

And it gets that it gets worse.

In terms of share I think you are looking on it the wrong way and we've tried to we've tried to provide a lot of data on this call to help you with that.

The the claims data is painfully clear on what's happening with actual procedures.

What's also clear to us is that they're in and this kind of environment. We're in a competitive environment, where there is frankly, a lot of moving parts and every quarter and.

And.

1 of our competitors introduced a new product and the second quarter and we saw a lot of product going on their customer shelves and the last month and another competitor and in the first quarter.

You did probably probably the most.

Forward inventory.

Stocking and we've seen that competitor due at least and my time and.

And this segment. So yes, you can you can look at revenue our competitors don't have to talk about these details they barely talk about neuro moderate pain market and say they don't say much about SCS. They don't ever talk about procedures. They only talk about revenue and.

And so we're trying to give you as much visibility as we possibly can to what's going on we do not feel as though this is a share issue. We're certain of that internally, we do not feel we're losing share.

We're the only company we believe to have gained share in both 2019 and 2020 and.

Repeat that were the only participant and FCS we believe gained share in both of 2019 and 2020.

And in 'twenty, 1 and the best data point, we have is the 1 we just gave you on on procedure claims codes.

Which was a fortune 500 basis point difference between the market and our permanent implants.

There's nothing that we're seeing outside of.

Outside of the movement in the quarter to quarter reported revenues numbers that can be pretty confusing to indicate otherwise.

Sorry, maybe just 1 quick follow up on I apologize or like what's the rationale for why this market would be so much more.

It is a from a recovery perspective relative to the other things that we're seeing what why is.

Paying something you can put off so much more than other procedures and do you ever thought there and then I'll get back in queue and I'm, sorry, what I mean, yeah I address I thought in my remarks, I mean, the I try and we tried to give as much fundamental data as we could that we've gathered and we recognize that a lot of segments are behaving differently.

We've tried to rule out the things that we needed to rollout to make sure there wasn't something fundamental going on about which we should be concerned or conclusion is simply that we've got patients who can defer these procedures and despite the fact that they're in debt theyre in pretty severe pain and this.

This was paying they're willing to differ there and they're able to defer it's clear and we can talk about why that is I'm not sure. We can go much deeper than that and frankly, we haven't gotten a lot more insight and that from our customers our doctors, but but the conclusion is pretty obvious the patients are still out there theyre not getting alternative therapy.

They're not seeing increases and opioid prescriptions their pain is not getting better and they're not going to other procedures. They still say, they're going to seek care.

But they're deferring.

And.

And they've told us what they are waiting for in terms of their fears about COVID-19 economics, but.

You know I don't have and I don't have a crystal ball on that and it's been as I said in my remarks.

Net of a surprise to a lot of observers the extent to which these patients are able and willing to defer even the ones, who say they plan to seek care.

Thank you.

Your next question comes from Robbie Marcus with Jpmorgan. Your line is open.

Oh, great and thanks for taking the question.

On.

Keith you mentioned that youre, not seeing or hearing of any.

On reimbursement pushback on.

And maybe.

Looking forward a little bit I noticed that the AMA CPT panel for September has SCS codes on the agenda to better reflect current day usage do you have any idea what we should be anticipating are there possible price cuts or reimbursement cuts ahead for Ses.

Okay.

2 things on the on the reimbursement pushback, let me, let me be really clear Theres always reimbursement pushback and I would say if you. If you look back or if you look forward on a multiyear trend.

It's all going 1 direction and I think that's true of our procedure I think that's true of most frankly, so I don't mean to imply and I hope I didn't that Theres no reimbursement pushback and my comment was that there is no significant change in reimbursement and the reimbursement environment that we think is having any material effect on what we're seeing and the market.

Today that it's it's not a factor and in terms of patient demand today.

And any change over 2 years ago et cetera that doesn't mean, there's not reimbursement pushback. There always is on net on the review of the codes.

And just popped up within the last couple of days, where and the process of trying to get a little bit more insight into that our sense is that may have been something done at the request of a of a smaller non SCS potentially peripheral nerve stimulation entrants into the field, we're not certain of that.

There's nothing about it right now that seems suppose any particular threat or risk or that signals a concern for that matter.

But where we're looking into that and see if we can get a little more information.

Great appreciate it thank you.

Your next question comes from Joanne Wuensch with Citi. Your line is open.

Thank you.

2 questions.

Non political refractory back pain PMA supplement that's new information.

It's been filed and so when are you anticipating getting that approved and how do you anticipate that changing.

Hoping our trajectory on sales.

We submitted a just a couple of weeks ago and generally the FDA has I think around 45 days to accept the submission for processing and they did that and about 2 weeks that.

That means the 6 month PMA supplement clock starts ticking.

I think essentially from yesterday.

And what that means to us is I.

I think the ability to add and explicit claim for these patients for high frequency.

And to our label will come and we hope if we get approval about the same time, our 12 month data is being reported and I think the combination of those 2 will give us a much stronger case with payers and remember the main reason we ran this trial to begin with was to help our customers get a more complete and more consistent coverage of these pay.

<unk> from from the payers, so I think having a label claim is.

Is going to be a good thing if we can get there.

And my second question has to do with it sounds like Youre getting a lot of interest on PD and is your sense that physicians are starting a waitlist.

And of some type.

I don't know that I I don't know that I know of a wait list I think what's happening is we are interacting with a lot of the referring doctors educating them on and on the data on the approval on a referral pattern and theyre beginning to refer patients to pain doctors.

It's really early Joanne I mean, we're a couple of weeks and we're not we're not talking yet about thousands or tens of thousands of patients. So I don't think weightless have begun but I think.

I think we're probably going to see and the not too distant future that there is a fairly large volume of patients being referred to these pain doctors and at that point they'll probably begin.

Doing something to make sure they process and the right way.

And I'm going to squeeze them on my question My apology, Joanne Beth and Don.

Yep. Thanks.

Yeah.

Your next question comes from Matt Taylor with UBS. Your line is open.

Hi, Thanks for taking the question.

So I guess I just wanted to touch on the competitive dynamic and I know, there's always this and try and that starts at the beginning when when others launch I mean can you just talk about your confidence and your ability to gain share and the core market with omnia through these competitive product launches and what would you point to to give us and understanding of where that's coming.

From.

Yes, I mean, I think we've we've continued to gain share.

I mean, we essentially started at zero and we continue to gain share really through 2017, and then began taking share again in 2019, we feel like we've taken share since.

Probably more aggressively in 2019, and the first half of 'twenty than in the last half of 'twenty.

And that oftentimes ebbs and flows depending on competitive reaction and new product introductions and we've had we've had some of both.

But I think over time, we feel like we can continue to gain share and we still have the fundamental differential edge of high frequency therapy.

I think we are.

We are very clear with our customer base and letting them and know that.

We are investing in the therapy and investing in new patient populations to bring to them for the therapy, and making investments that nobody else is making and I think that gives us some.

Some presence with our customer base and addition to the outcomes advantage and we've also continued to introduce a lot of new products. The H FX connect.

And the ability and have Hff's coaches walk them through big data driven per.

Programs of 70 different programs I mean, theres, a theres a lot of things that have continued to come out at a pretty steady stream.

That I think will allow us to continue capture share having said all that we don't I'm not going to give some prediction for share we're not going to guide to share for this quarter and next quarter and next year.

The share as defined by revenue is really noisy we track it through a few different solutions sources.

And then it jumps around and it jumps around a lot.

Our quarter really better yet 2 quarters is.

Our balance of at least resolution that where you can really get a good picture we track it month to month, but I'll tell you the rate of variability the way it jumps around makes it a less than.

Reliable indicator based on reported.

Reported revenue.

Got it okay. Thanks, a lot for us on.

Your next question comes from Cecilia furlong with Morgan Stanley. Your line is open.

Great. Good afternoon, and thank you for taking the question Keith I wanted to ask just what you've seen and the U S versus international your international business and <unk> from a recovery and so all those patient willingness standpoint, and then as you think about <unk> and just what you're factoring in.

And across those 2 geographies.

And willingness vacations anything else that you would call out or any trends that are unique when you look at those 2 geographies and comparison. Thank you.

Yeah, I would say a couple of things going on there from a from a patient willingness I mean that not only varies by country and it varies by ZIP code I mean really this is a patient and psychology issue that.

Is.

And is almost invisible and some states, where it seems like it's not a problem and and other states.

It's a it's a major factor and certainly that is true as you get from country to country.

And there's a high sensitivity to news flow infection rates and that kind of thing I would say the biggest difference between the U S and.

Our O U S markets is it R O U S markets tend to be more centrally controlled.

They tend to win win.

Demand is suppressed it tends to be more top down more institutional and by that I mean local government decisions hospital decisions.

And to limit or eliminate elective procedures for some period of time to lower census of certain procedures on and inpatient or outpatient basis.

And so that's a little different from the U S, where we haven't really seen that since the spring of 2020.

Counterbalancing that I would say if you compare our commercial performance to last year and the year before.

You'll recall in 2019, we were very focused on our U S commercial organization and.

And I think that in 2020 and 2021, we've made.

Strides in our international organization on and frankly, just things that we're doing better and our overseas markets on a relative basis, because we're executing well.

I think the PD and data has been very well received and we're starting to get a lot of attention and our European and Australian markets.

And for that data as well in terms of assumptions look we're I think we're assuming for the rest of the quarter.

And you might imagine we're.

We're probably a little bit.

Little bit gun shy from from this particular environment and we've seen this recovery play out and in this market.

So we're not really assuming much and the way of improvement for the balance of Q3, and so we think about our guidance.

Thank you.

Your next question comes from Bill <unk> with Canaccord. Your line is open.

Hi, it's John on for Paul Tonight.

Have you seen and sales force churn all over in the past 3 to 6 months and how does it compared to historical trends.

I don't have a number and my head.

And certainly that I'm willing to put out there, but I will tell you just from a high level. The turnover has been for the last 2 years dramatically less and it was for the 2 years before that and to my knowledge. It has not increased during COVID-19.

We've got a we've got a really good really effective experienced team in the field and I think we've been kind of shoulder to shoulder with them in terms of how we've tried to manage our business throughout COVID-19 and frankly, how we manage our relationship with them.

And as a result, I just don't think we've had a lot of turnover and I would add to that there's a lot of excitement.

About PD and.

And if Europe. If you are a member of our commercial team and the field and you see this indication coming and you're getting the kind of feedback that you're getting.

And from referring doctors from your own customers Youre seeing the kind of outcomes and just indication gets on patients it's pretty fun. It's I mean, it's a it's an exciting and fun place to be as you think about the next couple of years. So.

I think for the most part there's always some turnover, but I think for the most part our field team is is very engaged right now.

Great. Thank you.

Your next question comes from Adam.

Your line is open.

Hey, guys. Good afternoon, and thanks for taking the questions Keith in your prepared remarks, I think he talked about.

Ongoing fear of Covid that patients have as well as some financing issues are high out of pocket costs associated with the deductible.

I know you don't have guidance for Q4, the full year, but just wondering if we should think about Q4 is maybe being not as seasonally strong and passengers given that perhaps as many patients 1 of achieved.

And their deductible and other several moving parts there, but just any thoughts as how.

And how we should think about that dynamic.

Yeah.

Rob gave you a little bit of color on how to at least think about and I know it was just that it was just a little bit of color, but how to think about Q4.

I'm not sure I can give you a whole lot more than that but.

I will say that in in Q4 of this year are our assumption has been that.

<unk> debt a lot of the kind of the time off mentality, we've seen in the summer is due.

Based in part on a on an assumption that things kind of get back to normal and the fall.

And I Express it is anecdotal on my comments and it is in fact, just that but as we talk to our customers.

Many of them, who have families that are raising and they are and that age group.

A lot of them are assuming I hope I hope rightly that kids are going to be back in school and the fall.

And they are ready and able to actually travel at this point. So my assumption is we're probably going to see a typical seasonal uptick in Q4.

But I don't feel comfortable enough and that to bake it into revised full year guidance, which is why.

Why in fact, we are we didn't do that.

That's helpful. Thank you.

Your next question comes from Chris Pasquale with Guggenheim. Your line is open.

Thanks can you just wanted to circle back on the question of market versus share.

Claims data you provided was very helpful. Appreciate the comments about the noise factor and the revenue numbers.

But you guys had a lot of momentum throughout 2019, and and early last year. As you said so that net claims comparison to the first half of 19 sort of pre dates those games can you say anything about how your underlying performance in the first half of this year compared to the back half of 2020, we should be a more.

And the recent comparison and the trends.

I don't think we have that and.

And we don't.

Sorry, I don't have that I don't have the claims data comparison for the back half of 2020.

For now and Thats not I guess, that's not the point, we were trying to make with the claims data, but maybe you can take your day at your question on more generally I do think debt.

And I think I said and fact that.

If you look on the market share gains we've had since early 2019, they were probably the steepest and 2019. They continued in 2020, although not as steeply and then and the back half of 2020, I would say there.

And there was probably more.

More aggressive and effective competitive activity and the second half of 2020 and I don't believe we lost share and the second half of 2020 and can be sure.

But I think our pace of gains probably slowed in the back half of 2020, we them just released a.

A series of new products and the last I don't know 60 days I guess some of them and the last few weeks and then and of course, the PD and claim which has just come and the last 2 weeks so.

Momentum tends to shift around and I don't think that's unusual but if youre looking at the last half of 'twenty as a less aggressive share capture time, I think that's probably right.

Okay. That's helpful. Thanks.

And then just sneak 1 and then.

On a different topic, you talked about a range of opinions from physicians about when things might recover and also this and a lack of consensus about what's really keeping the market down do you have a candidate for what's the most important trigger for a normalization is it progress on Covid is and economic factors and you're just getting out of vacation season is there 1 of them.

Do you feel like should be over weighted as we think about the recovery from here. Thanks.

I don't have a look I don't have a real scientific way of doing that for you I mean, I think that I think all 3 of those things are important I think probably it would be tempting to say that COVID-19 and the sense around COVID-19 is probably the biggest issue.

Though I think we.

We were maybe even a little bit surprised that the just the prevalence of commentary from patients on economic issues, whether it's debt reflects.

Unemployment or or loss of benefits or.

Or just simply wanting to spend their deductible on other procedures first that were less deferral other discretionary items like travel first it's really hard to know.

And if we can only get down so deep but.

I would say those 2 the summer vacation and that gives an important factor, but it's temporary I think what you are looking for is a more.

Reliable trigger to predict recovery and between the other 2 buckets of Covid and economics, it's probably hard to give you a real quantitative answer.

Thanks.

Your next question comes from Suraj Kalia with Oppenheimer. Your line is open.

Keith Thanks for taking my questions.

So Keith forgive me just juggling in between calls.

And maybe you already talked about this Keith.

What was it.

Hey, Suraj, we can just barely hear you is there any way you can speak up and get closer to the microphone or something.

Is this better keep a little bit okay, sorry, my phone is goofed up.

So keeps over the last 2 years can you give us a sense of the number of centers and the U S and that has added.

And incremental centers and the reason I ask is when I strip out Sps.

I'm, just trying to get a rough math on the.

The utilization metrics, you know, what's going on with utilization.

Well, there's a bunch there theres a theres new customers I assume youre talking about new store same store comparison, and Asps and utilization, we gave a little bit of color on on.

Utilization at least on on 'twenty, 1 over 19.

Comparison, we have not been.

Granular on new stores same store statistics.

Where we are at a big disadvantage when it comes to.

Disclosure from our 3 competitors and what we what we're public about what we need to be public about.

And we've not generally weighted into that topic, and and frankly I don't think we really feel like we need to or want to start I'm not sure. What the question is on on Asps.

Asps have been generally pretty steady and where we expected yeah, yeah, and they haven't been really a variable and in our performance that wasn't expected as you get.

And of product cycle.

Cycles get kind of along on the tooth you tend to see Asps.

ASP degradation and then you tend to pick them back up as you refresh and renew with new products.

I'd say, our ASP performance has actually been quite good and we still sell at a premium to.

Every 1 of our competitors.

No I get that that's why I was when I strip out the debt.

And the ESP Delta, that's what really I was trying to get up and we can take it offline and Keith. Thanks, Suraj, we need to move on and we're trying to if you'd like to ask another question you cannot get back in the queue.

Your next question comes from Danielle and Kelsey with SBB Leerink. Your line is open.

Yeah, Hey, good afternoon, guys. Thanks, so much for squeezing me and I guess I just really have 1 question at this point and it's really Keith I appreciate all debt.

On data that you gave us around the claims and things like that but I guess 1 of the areas of pushback that I get when I am talking to some folks that are more bearish as whether this market is really a growth market and I guess my question is what gives you the confidence that this slower patient returned to SCS therapy and in the.

Legacy indication is really key.

Covid related versus something broader and bigger and more endemic to the market itself. Thanks, so much.

Yeah.

Danielle it's a great question I, just can't imagine how I could give you anything more than I've given you on that I mean, we have Doug and Doug and we've dug pretty deeply on on these things.

Relayed a lot of that information to you today. There is no indication there is nothing to lead us to believe that somehow the market just stops where it is today I don't think any of our competitors believe that I don't think there's any data out there from customers or or from payers or from patients or from <unk>.

Referring doctors that indicate that that's the case, we know theres a lot more patient to go untreated and get treated.

We don't see and alternative.

<unk> therapy or treatment, either on the market or coming.

So I don't think there is I just don't think there's any reason to think that this is somehow magically because of the slow COVID-19 recovery going to be a no growth market.

And it's not just because we want that to be true we've done the work and that's that's our conclusion now I mean, we're open to new sources of information, but I don't think theres anyone on our and our customer world and our competitive World I think that's the case and we just haven't found anything to indicate that we should believe that either.

Okay, Thanks, and I'll keep it to that thank you.

Your next question comes from Margaret Kaczor with William Blair. Your line is open.

Hey, this is Maggie on for Margaret and I know, there's been a lot of focus here on the short term so love to ask something more on the net churn here.

And what are you guys kind of expecting for market growth for the core SCS market and 2022, obviously know there.

A lot of variables, there and while I know you aren't giving guidance for 2020 and can you give us some color generally on how youre thinking about both back and leg and PD and growth for the company.

[laughter].

Yeah, I mean, the short answer to that is no look I'd love to be able to do that.

We're not we've been kind of out of the projected market growth game for a while as you know and certainly if we're not comfortable giving our own guidance beyond Q3.

Little I can say about 'twenty 2 it's certainly I will tell you that certainly our hope that as we as we get into Q4.

And that we begin to see I think what other procedures have seen a full quarter before us.

And we begin to see kind of an uptick and the core and the return of patients for the core lower back and leg pain indications.

If thats the case and we continue to see this kind of enthusiasm about PD and.

And then I think the market and narrow our poised for what I said in my remarks, which is a really encouraging 22 I can't give you a number on that growth rate.

We certainly would like to think that if that's the case, it's fairly robust.

But.

That's about as much as I can give you I think.

Okay. Thanks, so much.

Your next question comes from Michael <unk> with Baird. Your line is open.

Hey, good evening. Thank you I want to bridge and just make sure I understand the <unk> trial performance and then the <unk> revenue guide. So I believe I heard that from <unk> to <unk>. This year sequentially trials improved 4% and.

And the revenue guidance and <unk> is sequentially down 11% from <unk>. So I just is that timing I've tended to think that trials lead firms by 1 to 3 months.

So can you just help put a little color on on what I'm missing there and that kind of simple frameworks.

Sure Mike Hey, this is rod I'll take this.

And on.

I would think that the way to think about it is the volume of trials that we saw in Q2 will lead largely to the revenue numbers and in Q3.

And just the fundamental volume in Q2.

It is not enough to get to a figure to that.

Probably you and we were thinking about earlier and the year and we were anticipating that sort of a recovery and and improvement in the <unk>.

In the recovery for Covid and while we while we did see some improvement and your numbers correct on the 4%.

It's just not fundamentally a large enough volume in Q2 to drive the sort of the sort of.

Figures and we had been talking about or thinking about for Q3.

You know.

I'll add on to that just quickly I think as we think about the conversion curve from trials to firms.

Given the scheduling that we're seeing.

Among patients and doctors over the summer months.

It's fair to assume that we probably model a little bit different curve and little bit different.

Behavior and converting trials to firms over the summer months, and we're certainly factoring some of that and as well.

Okay alright, thank you.

Again, if you would like to ask a question sorry, Dan day number 1 on your telephone keypad.

Your next question comes from Steve did you ask Scott Your line is open.

Hey, guys. Thanks for squeezing me in here, Keith you've talked about prior authorization for CMS payers coming into play this year. So I guess the first question here is I just want to confirm that that went into effect on July 1st and then as a second part to that question. We've heard some some players and med tech space kind of comment on how the process of documenting prior.

Nation, particularly it's been impacted by Covid. So I guess, so far and the month of July and you released and any impacts to the ability for patients to receive and and then ultimately document some form of failed therapy ahead of SCS implant and then just looking into the second half of the year I guess, how do you see that playing out with within the context and guidance. Thanks.

All I can tell you is what we've seen it's only been in place a months and and so I can tell you that what we're hearing from our customers that there hasnt been a loss of patients and loss of cases patients they couldnt get adjudicated.

And get to yes.

There has been a little bit of a delay and some of those cases and some added and administrative detail.

It doesn't drag out forever. If memory serves I think there is a statutory requirement on the on the prior offs to resolve them and 10 days.

So whatever that process is needs to get to and answer fairly quickly.

And then the more direct visibility. We have is are those cases that were involved into our own access team and they've been able to get through them.

Quite well and they haven't seen a.

A decline and the number of cases that are ultimately being able to move forward. So it's only a month of experience.

And so it doesn't it doesn't really play a role and our guidance going forward and frankly.

Yeah.

There are no further questions at this time I would now like to turn the conference back to Mr. Grossman for closing remarks, okay. Thanks, everyone for joining US. We appreciate your time I'm sure you are left with.

More questions, we'll be happy to answer them as best we can and we'll talk to you next quarter.

This concludes today's conference call you may now disconnect.

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