Q1 2021 Acutus Medical Inc Earnings Call
Good day, and thank you for standing by well Tien Tsin and Kiss first Guarani Tien Tsin Huang on earnings call. At this time, all participants are in a listen only mode.
Third the speaker's presentation, there will be a question and answer session.
Ask a question during this session you will need to press star one on your telephone.
Any further assistance. Please press star Zero I would now like to hand, the conference over to Caroline corner Investor Relations. Please go ahead.
Thank you operator welcome to our Q. This is first quarter 2021 earnings call. Joining me on today's call I've been Super just put them to Chief Executive Officer, and David Rowland Chief Financial Officer. This call will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, all statements made on this call on.
And did not relate to matters of historical facts should be considered forward looking statements factors that may cause results to differ from these forward looking statements are discussed under the forward looking statements section and the press release attached doesn't like that but to accuse us form 8-K filed with the SEC today and are also discussed in more detail on to the risk factors section and if you just as much.
Recent filings with the SEC, including the risk factors described and the ketosis form 10-K.
Finally during this call, including projections for future performance are based on management's expectations as of today I can't just undertakes no obligation to update these statements except as required by applicable law.
And it keeps us press release with the first quarter 'twenty 'twenty. One results is also available on the accused website www dot and curious medical dot com under the investors section and includes additional details about Acacia is financial results.
And this website also has that gives us a SEC filings, which you're encouraged to review.
A recording of today's call will be available on the acuteness website by five P. M Pacific time.
And now I would like to turn the call over to Vince for his comments and first quarter of 2021 and business highlights.
Thank you Carolyn and good afternoon to everyone joining us today.
During today's call I will provide an update on our key strategic priorities that I outlined in March.
Also comment on our first quarter results, which highlight improved performance and our business and commercial execution and.
It's ongoing turbulence and our end markets, David will follow up with details on our financial and operational results as well as our outlook for the second quarter and full year.
Our team remains steadfast in our mission to transform patient care and physician experience. There is nothing more important to us and improving clinical outcomes and changing the treatment paradigm for the patients and customers that we serve.
As discussed during our last call technology, and innovation leadership as top among our three areas to achieve our vision and drive shareholder value.
Veterans of the Med Tech space recognize that disruption is not linear and innovation is extraordinarily difficult and that companies who consistently deliver here ultimately rise to the top of their segments over the last quarter.
And in recent months, we continue to excel in this regard.
With recent approvals product advances anecdotal case outcomes as well as registry investigator sponsored and company sponsored prospective clinical trial data that we are seeing.
And I'm confident that we now have the most innovative suite of products and each of the three key areas of electrophysiology.
Access diagnosis and therapy.
Before going deeper here I would like to take a moment to share a recent case from Europe that highlights the acute and submission and our core value proposition.
This case involves the 76 year old male suffering from complex atrial tachycardia and heart failure.
Due to significant comorbidities, including liver dysfunction, the patient was not eligible for anti arrhythmic drug treatment. So cardiac ablation was viewed as the best option for this individual.
And the procedure the physician took a step wise approach to treat the arrhythmia, which included and utilizing our mapping catheter and ultrasound transducers and electrodes to quickly and efficiently create and anatomical map the patients' red atrium create.
Create a precise electrical wave propagation map of the whole right atrial chamber to quickly identify the area, where the average electrical activations first occurred and deliver RF energy to restore the patients' normal heart rhythm after using the acumen and system to identify a crystal.
Clear ablation target.
Following the ablation. Despite several attempts to induce the patient back into tachycardia through rapid pacing the patient was non inducible confirming successful treatment.
These steps, resulting and complete termination of atrial tachycardia took about five minutes.
And the total procedure time to 90 minutes by contrast, physicians report that using traditional systems with contact mapping and such complex atrial tachycardia ablation procedures can take three to five hours if not longer.
Moving now to our operational progress.
During our last earnings call I set forth three strategic priorities that will drive our business and guide our focus these include technology and innovation leadership commercial execution and operational excellence.
I'd like to provide and update on each of these pillars.
I'll start with technology, and innovation leadership and for simplicity stepped through our update and order a procedural flow, which is not necessarily weighted by revenue potential.
At the start of any catheter procedure is access and we are building a comprehensive and differentiated portfolio here is.
As previously announced we received five 10-K clearance for our Accu Cross so low family of Universal trend simple crossing devices.
This is the first and only transcept the poacher system, specifically engineered to pair and mate seamlessly with acute his own suite of sheets and with sheet sold by other manufacturers and the United States. There are over 300000, electrophysiology and structural heart procedures per year.
<unk> involving the use of trans septal crossing devices.
We began U S commercial launch of the new family of Trans Septal products and late April and the early interest reinforces the value of the technology and what it brings to physician users.
As further announced today, we received CE Mark approval for a complete line of Trans septal crossing device products. In addition to and expanded array of other sheath and access products.
These approvals help help complete our offering and CE mark countries to cover the entire procedural continue.
We expect to launch these products during the second quarter.
Overall, our portfolio of Trans septal and other access devices provides a natural entry point into any account and the U S or CE mark countries and complements our core mapping and guided ablation portfolio.
Next and the procedure is diagnosis and therapy guidance. This is the area where acute is most significantly differentiated versus our competition with our acumen <unk> mapping system.
We haven't had a we have had good success educating our broader physician user base on the results from the core to boundary paper published out of Oxford and the Royal Brompton Hospital in February of this year.
This ablation strategy and technique, which is uniquely enabled by our acumen and technology demonstrated strong clinical outcomes and challenging to treat persistent AF patients.
In real World settings, specifically 87, 5% of patients and this independence independent study were free from a F and the absence of antiarrhythmic drugs at 24 months.
And also we have now completed enrollment and 12 month follow up of our recover study and look forward to sharing those results. Soon once the final data are analyzed to remind you recover is a prospective multi center study conducted in the EU and Canada that uses the acumen.
System and patients who have failed and initial or as many as two prior ablation procedures.
We hope that these data will reinforce the results from both our own landmark uncover AF study and the independent core to boundary study.
Finally, we moved to therapy.
As you May recall, we launched our accu blade for sensing ablation catheter and system in the U K and Europe earlier this year.
This product line is approved for use and all chambers of the heart and CE governed markets and was very well received during our limited market release, we are now in full market release, and so so far sites are reporting that the accu blade ablation system performs extremely well when paired with our acumen.
Therapy guidance system.
And early April we initiated our U S. IDE trial for <unk> sensing ablation catheter and system for the treatment of right atrial flutter.
As a reminder, right atrial flutter ablation procedures account for approximately 30% of U S. Cardiac ablation and are projected to reach 200000 procedures annually by 2025 based on third party industry research.
The trial is up and running at sites and the U S and Europe and we continue to project completing enrollment by the end of this year with approval towards the end of 2022.
With our expanding product portfolio, we are positioned to become the partner of choice for Electrophysiologist and the management and treatment of complex patients such as redo oblations complex treatment of complex tachycardia, and atypical flutter and of course atrial fibrillation.
To that and our atrial fibrillation U S. I E application, where we plan to study the <unk> catheter and system and paroxysmal and persistent AF patients is currently under review by the FDA. We are on track to commence this study and the second half of this year as previously communicated.
Turning now to our second key priority commercial execution.
In Europe, and the U K, our direct and bio tronic distribution teams continued to drive solid case volumes and capital sales and placements. These operating segments led our first quarter results and we continue to see solid performance from these groups. Despite an ongoing COVID-19 headwinds and major European.
And markets.
As for the U S. We are seeing improved momentum in this business.
And our new Chief commercial Officer, Duane Wilder, who joined US in March is providing great leadership direction and a disciplined go to market strategy.
We are executing on our plan for more rigorous accounts segmentation, ensuring the right physician training and engagement and driving growth and utilization.
Lastly, we continue to grow and scale the business as well as launch and impressive array of new products.
Operational excellence will become increasingly important as a driver for the company.
We are better aligning our production volumes and inventory with end market demand as well as driving improved yields for key product lines day.
David will discuss these dynamics in more detail later in the call, but I want to underscore the importance of our operations and manufacturing efforts to the long term strength of the business.
As for our results during the first quarter, we generated sales of $3 $6 million compared to $1 $6 million and Q1 of 2020 and compared to $2 6 million and Q4 of 2020.
Both the year over year sequential sales growth was driven by higher procedure volumes globally and increased capital equipment sales.
We increased the worldwide installed base of second generation Accu map consoles to 57 at the end of Q1 up from 51 at the end of Q4, bringing the total installed base of <unk> consoles to 62 as of March 31, 2021 versus <unk> 58 at the end of last quarter.
We exited the quarter with a good backlog and have seen placements pick up with four net new installations already completed as of April 30th equaling, our net additions and all of Q1.
Importantly, many of the new system placements, so far and 2021 or at a major academic and high volume community institutions, consistent with our strategy to be more targeted with capital placements.
Turning to procedure volumes and utilization, we continue to see a wide standard deviation across accounts and geographies.
And the United States, we saw progressive improvement and utilization per system per month with March utilization rates about 50% above those we saw in January with the COVID-19 impact on procedure volumes moderating.
We do see some lingering COVID-19 impact as it relates lab access for medical device vendors, thus limiting some of our ability to train both physicians as well as our own members.
In addition to some limitations on access the capital equipment.
The environment remains somewhat constrained and contract processes are still longer than we would expect and a normal operating environment on.
That said, we continue to believe that more of the burden is on us to execute and the U S versus the impact of the external environment.
Recent trends are encouraging the team is showing stronger execution and we are optimistic that this will continue.
And the U K and Europe. The dynamic is quite different as COVID-19 remains a significant issue for much of the region. During the first quarter only half of our consoles were consistently active due to hospital and government restrictions on elective procedures.
<unk> within active centers procedure volumes and console utilization utilization has doubled versus the prior year, reflecting solid commercial execution as well as the benefits of having our mapping and ablation product lines on the market over there.
And the U K, which is our largest market currently and Europe, we're seeing some stabilization as COVID-19 vaccination rates and economic recovery are more closely following and that of the U S. Elsewhere in Europe, we still see rolling COVID-19 shutdowns and slowdowns and our team is working hard to maximize.
The performance on active consoles.
As mentioned previously laid and the first quarter. We also transitioned our accu bleed force sensing ablation catheter and system into full commercial launch feedback from the clinical community remains strong which was further highlighted by case presentations at the European Heart Rhythm Association and virtual conference.
In April.
We expect <unk> utilization to ramp meaningfully throughout the year and for this product line to be a key driver of future performance.
Lastly, our partnership with <unk> continues to deliver strong results, while installations were delayed due to COVID-19 and there is concentration in markets like Germany.
Where elective procedures have largely been on hold we are starting to see improvements.
Biotech the biotech on a commercial team remains heavily engaged on training and implementation and we expect this collaboration to be a critical driver over the short medium and long term.
Overall I'm extremely proud of the progress our teams are making to execute our strategy and bring innovative solutions to physicians patients and health care systems around the world.
First quarter results exceeded our internal expectations and we are continuously sharpening our focus to drive enhanced performance.
Through the rest of 2021, we expect to have several clinical data regulatory and product milestones that will further illustrate our long term value proposition.
We look forward to providing these updates throughout the year with that I'll now turn it over to David for our financial results. David. Thank you Vince and good afternoon, everyone. During my remarks today I will provide details on first quarter 2021 operating results as well as our outlook for the second quarter and full year.
And today's press release, and 8-K filings, you'll notice updated disclosures on our P&L.
These changes include a full non-GAAP P&L, whereas previously we only provided adjustments at the net income and loss line and today's call I'll be referring to non-GAAP financial measures for all P&L line items.
A full reconciliation of GAAP to non-GAAP financial measures is presented in our press release for your reference.
And revenues for the first quarter of 2020 with $3 $6 million up from $1 6 million and Q1 of 2020. The Q1 year over year revenue increase was driven by procedural adoption for a broad range of EP products and trans septal access devices.
Direct capital sales of our acumen on console and the implementation of the <unk> distribution agreement.
Sales and our direct businesses of $2 4 million increased nearly 60% from $1 5 million and the first quarter of 2020.
Disposable utilization and service contract revenue advanced 77% versus the prior year and accounted for the majority of Q1 sales growth.
Revenue through distribution agreements of approximately $1 2 million compared with 36000 and the prior years first quarter, driven by both procedure volume growth and capital sales.
Non-GAAP gross margin was negative 89% for the first quarter of 2021, compared with negative 95% and the first quarter of 2020 as.
As referenced in our press release, there were several discrete items that were significant gross margin headwinds and the first quarter.
A meaningful and factor impacting gross margins with the write off of excess and obsolete inventory, resulting from the transition to a new product line and fully in house manufacturing for Transcept, all access product lines and.
We also took additional excess and obsolete reserves for short shelf life product.
And aggregate excess and obsolete inventory charges impacted non-GAAP gross margin by approximately $800000 or 23 points to the gross margin line. Excluding these.
These charges non-GAAP gross margin was approximately negative 66%.
We have not excluded charges from non-GAAP results, but wanted to highlight this number given its magnitude and our view that this is a one time adjustment.
As you May remember on our last call I discussed the importance of demand planning to support commercial and manufacturing operations, we are making excellent progress in this regard as well as executing several cost and yield improvement initiatives. In addition, several of our new product launches such as our next generation and came out and mapping catheter that is <unk>.
Now available on both the U S and CE Mark countries carry a better cogs position the.
The combination of better yields forecast alignment and new product uptake should all help drive improved gross margin starting in Q2.
Non-GAAP R&D expenses were approximately $9 million and the first quarter compared with $7 $8 million for the same period of 2020.
The increase in R&D expenses was primarily related to investments and the accurately force sensing ablation catheter, our pulsed field ablation program Trans septal access products software development and upgrades, our accu, Matt and mapping catheter.
Non-GAAP SG&A expenses were $13 $8 million and the first quarter of 2021, compared with $8 $7 million for the same period last year.
Increase was primarily due to the expansion of our commercial team in conjunction with our full global launch and an increase in G&A for public company related costs.
Excluding specified items, our non-GAAP net loss for the first quarter of 2021 was $27 $3 million or <unk> 97 per share compared to a non-GAAP net loss of $19 million or $1 11 per share after giving effect to the pro forma conversion of our convertible preferred stock.
Our total cash balance at the end of the first quarter of 2021 was $106 $9 million.
And looking to the remainder of 2021 I would like to provide some further detail regarding our full year and second quarter outlooks that were included in today's press release.
Our first quarter results showed better performance from where we exited 2020 and the U S. COVID-19 related headwinds are fading and we're starting to see a thorn procedure volume and major accounts.
At the same time, we continue to see shutdowns across key markets in Europe that is making performance somewhat uneven.
All that said we are keenly focused on the variables that we can control such as commercial execution product launches and manufacturing.
As a result, we expect to see continued sequential improvement and the second quarter and project sales to range between $3 eight and $5 million.
Based on current trends and planned internal initiatives, we continue to anticipate a more meaningful step up in Q3 and Q4 on.
On our last earnings call, we outlined five key factors to support this growth throughout the year I'd like to give you an update on each of these drivers. The first is the timing of capital sales and conversions.
We have several evaluations that are reaching completion and our teams are working to convert these into capital sales leases or catheter utilization deals.
Second is the pace of manufacturing ramp for <unk> and Transcept flow crossing devices.
And response to higher demand, we are adding resources to support the oculate commercial ramp and Europe.
This should drive improved yields and facilitate higher production volumes and correspondingly revenue.
As for transit from crossing devices, we have resolved all back orders as of the end of April and are seeing manufacturing ramp accordingly.
Third is new product launches, we expect to see increased contribution from new product launches over the course of the year, including Accu blade. The active cross family of Trans Central crossing devices are next generation, asking that and mapping catheter and the Accu guide sheath.
Fourth is and market conditions as discussed earlier, we continue to see improvements and the U S. While conditions and Europe remained variable by hospital by market and by month.
Regardless, our forecast do you assume that the global and market that we serve show signs of improvement to the back half of the year and nothing we see today gives us pause on this assumption.
Lastly, we continue to expect improved commercial execution and the U S to be a major driver we are strengthening and expanding our team investing in critical training resources and ensuring we have the right level of account coverage.
With the first quarter now complete and taking into account our second quarter guidance. We reiterate our view that 2021 revenue will be heavily weighted to the back half of the year, reflecting the aforementioned drivers and the well documented headwinds we experienced entering the year.
Putting this altogether, we continue to project full year revenue to be and a range of 22% to $30 million.
I will now turn the call back to Vince for closing remarks.
Thank you David as I reflect on the cadence of our performance and the first quarter and here early in the second quarter. The trajectory of our business is gaining momentum our commercial execution globally is strengthening and I'm confident we have the right team in place and in addition, we continue.
Two advanced several key products through our pipeline and expect 2021, and 2022 to be very active years from product approvals and registrations and lastly, we are intensifying our efforts to improve operational performance and these initiatives are starting to take hold.
We appreciate your continued interest and support and we'll now open the call to your questions.
Peter.
As a reminder to ask a question you will need to press star one on your telephone.
And with your question.
Your first question comes from the line of Robbie Marcus with Jpmorgan. Your line is now open.
Oh, great. Thank.
And for taking the question and good evening.
Hey.
And David welcome to your first earnings call.
Thanks Ravi.
Just wanted to start you know as we think about guidance for the rest of the year.
<unk>, probably came in just a hair and la where and where the street was thinking placements and first quarter were a bit lower.
It's still calling for a pretty meaningful acceleration and third quarter and fourth quarter. So I'd say you know.
And what gives you confidence that sales can accelerate like that and third and fourth quarter and and what kind of environment is that assuming and then b. How should we think about the balance of what you're assuming for new system placements and then utilization as system.
Placements to get to those those revenue numbers.
So in terms of the environment.
That's all kind of predicated on.
We are we're kind of assuming as we get into the back half of the year and the U S. We're looking at them either on the environment that approaches normalcy.
So you know.
Really the lingering thing we're seeing.
Primarily on the east coast and and.
Kind of northern Midwest is some continued.
Friction in terms of access to labs. So we can we can bring one person and vs. One person plus mapper trainee or something like that.
Other than that I mean, I think most of our accounts are kind of up and running pretty close to normal operations yeah.
Europe.
We've we're assuming that Europe will be a.
Relatively light in August as it normally is a from a procedural perspective, and then start to get back towards normalcy and September October and November which have been historically quite good for us over there and then.
And obviously the seasonality and.
And in December with the holiday and whatnot, we expect.
Some kind of a.
Normalized kind of a reduction there so.
I mean, that's kind of my sense and just the overall over the overall environment.
In terms of systems placements I mean, I think from.
On the models have it pretty well, but I've seen most recently have and have a pretty well right in terms of what we think we can do in terms of placements.
Placements Q1.
And the and the prior call when we talked about how we're thinking about Q1.
And I tried to get across that with the targeting that.
And that we were really focusing in on with and with adding Dwayne and really thinking about where we place our systems. The types of physicians, we want to be working with at this phase of our evolution.
And I kind of had the sense that we would probably move a few consoles around and and it might be a little bit lighter than the rest of the year in terms of placements and then as we came into Q2 things would would start to ramp up again and as I mentioned and my <unk>.
Repaired comments I think our net new adds and April alone and <unk>.
Terms of installed base equal to Q1, so I think I think we're on track now just Q1 was.
Just a little light.
Almost intentionally we really wanted to make sure everything we installed and the right place the expectations were set properly and we have the right docs identified.
Did I Miss any of it.
Rob Please.
Questions I think Ravi the only thing that I would add and you you commented on the second quarter, a couple of variables impact that which are obviously the pacing of capital sales.
And as you know each capital sales anywhere from two to $300000 for us so as those might move quarter to quarter. They can have an impact on our interim results I would also point out the COVID-19 dynamic in Europe was was what did have an impact on our business entering the quarter, but we have since.
Starting to see that moderate quite significantly and.
Are encouraged by the trends, we're seeing today in Europe and.
The guidance for the balance of the year assumes that what we're seeing today continues we also with our biotech partner had forecasted a few additional placements in Q1 that were pushed out due to continuing COVID-19.
Hum.
Issues, and Austria, Australia and Malaysia.
Got it and then.
David how do we think about expenses ramping through the year. Obviously, there is going to be more meaningful revenue and third and fourth quarter. How do we think about the scale up of SG&A and R&D throughout the year. Thanks.
Sure sure Ravi so.
While we are expecting youre correct revenue to ramp throughout the rest of the year, we would actually not expect a meaningful expense ramp to follow that and let me walk through some of the specific reasons there.
And with R&D, we have over the past couple of years really sprinted to pull together a wide and diverse portfolio of differentiated products and a lot of that investment and call. It the pure development a research phase is sunsetting.
So as we think about our R&D investments the breadth of our product portfolio that we've been able to create is largely reflected and trailing R&D expense and we would expect to be able to to REIT to prioritize that more judiciously going forward and if.
And I can just jump on that really quick before you move on.
Rob you from you.
And you've been focused on the R&D spend.
Throughout our getting to know you and you're getting to know us the thing I want to point out here is over the last 18 to 24 months we have Rev.
Basically our entire system on and when I say, we're out I mean.
Executed on.
Upgrades of the console the software as many as six times and each I think each individual disposable components that we manufacture and sell has been road from Gen. One Gen two and as of today, which we announced.
And are basically nearly our final CE mark approvals of those are now in production approved and available for launch in the U S and Europe and through our distribution partner and bio Charlie.
So I have to tell you it's been a.
All of these reps all of these changes are intended to address the early feedback we've received from our customers about things that are great about the products things that need additional tweaking and improvement and some cost reduction things. We're working on we've been working on.
I would say the majority of that heavy lift is now behind us and we feel great about the full array of second generation products, which we have cranked out of our R&D organization.
And on SG&A Ravi as I look at it I look at it sales marketing and G&A, we will continue to make investments and in the sales force and it.
And the opportunities to manage.
Tightly marketing expense as well as drive down G&A and we did have some I would say trends transition area expenses and the first quarter related to senior level management turnover that that will not recur going forward.
And then you didn't ask about gross margin you said you brought up operating expenses that I do want to point that out that.
Gross margin will also be a significant.
[noise] lever as we go forward and we are starting to see that materialize in real time, and when you say and real time, we're talking about in Q2 and in April.
Specifically, correct, correct and and when do we see that turn positive.
So from a gross margin to be positive we have to be at a run rate of about call it $9 million a quarter.
And same mix of 80 20.
Disposables and capital and that should occur.
Exiting the third quarter with a full quarter on gross margin positivity in Q4. There are some opportunities. We are working on right now specifically around and yield improvement that could pull that forward and to be clear.
Standard margins on our disposables are presently already positive.
It's the overheads and obviously we're on.
And we're getting hit on.
Great. Thanks, a lot.
Your next question comes from Mike and with Katherine with William Blair. Your line is now open.
Hey, guys. Thanks for taking my question and.
Maybe first one from me you guys brought Duane on board and you've talked about these commercialization changes and can.
Can you give us a good sense.
Four questions. So on can you give us a sense of utilization within accounts.
The March rates were encouraging but as we look at that is that coming from accounts reopening back up post COVID-19 or share taking within them and then as we think about utilization climbing from here and what's being assumed in and some of those guidance assumptions and the ranges.
And we're dealing with small numbers of hospitals and accounts relatively speaking.
And in Europe.
Over half of our consoles basically have been down and all of Q1.
Due to a 100% due to COVID-19.
So we and we're a couple of them some of them are still down or doing very like procedural volume and some are actually still going up and down.
And.
And Rotterdam, the Netherlands, Belgium, we're still seeing some slowdowns and and then returned to work.
We we are seeing generally though.
The centers and getting back online and the U K.
And <unk>.
And they brought these state of the art hospitals.
That were really stay on the RVP labs over the last six or nine months down and basically field hospitals to deal with COVID-19 and now they're bringing them back up into state of the art appeal hubs again, and if you talk to or our folks on the ground, it's taken a little bit longer than expected to get there, but they are getting there and we expect the U K probably to Lee.
The charge in terms of coming back up to more normal utilization levels.
We were on the on.
On the on our update call with the entire European team.
A couple of hours this morning, and getting an update on this this is just an outstanding team a highly mature very experienced and tenured group great handle on the business and we feel like.
The properly positioned with the right customers this product and the technology is generally being used.
In the more complex procedures and we are.
We see that we are becoming the technology the product of choice.
And reduce and more complicated persistent patients and complicated cargos. So that's how we drive utilization there.
Like to be at a place where we're at 25 to 30 plus percent of complex procedures and the accounts, where we are installed.
Great great target for us.
The U S. I would say the U S is a bit more of a mixed bag. We have accounts that are that are rolling nicely and generating pretty consistent.
Utilization.
We have a number of accounts that have had very low utilization in the last quarter, we had a group of.
Caliber of consoles that were in accounts.
That were part of a larger group, where we had some contracting issues that we had to get through which we actually just got through last week and we were excited to to restart, particularly one of those accounts four cases yesterday with us and a single day and a single room.
So it's really kind of a.
On a mixed bag of.
And those sorts of issues and the U S, but for US it's all about making sure that our mappers are well trained.
Have the right message.
And we're one of the things we're really leaning on heavily now.
His training our U S mappers to deliver over the course of boundary diagnostic and ablation strategy that came out of our European experience over the last couple of years, which was written up and kind of a cookbook step by step fashion and that quarter boundary paper and box.
<unk>.
And that having net recipe that playbook.
For our Mappers and our sales reps to deliver over to U S. Based EPS I think is going to serve us very well.
So those are some of the kind of the key drivers and David I don't know if you have anything you want to add based on.
Mark and I would add as we think about overall all utilization our guidance does contemplate that utilization rates continue to improve from what we saw in the first and the in the first quarter.
And that is if I look across the different parts of the world. We are comfortable and that assumption because we saw it pretty consistently January to February to March and sequential progression.
And utilization and especially as we bring in and bring back online and some critical high volume centers that also contributes to the overall.
Revenue performance.
Okay, and part of what I'm trying to get and what did April look like how does that set up for Q2, it sounds like maybe there's some from easier.
Low hanging fruit and said some of these centers still come back and so we should start to see that utilization rates across the installed base.
Without assuming you know huge share.
And so hopefully later in the back half of the year did I am I hearing that right.
That's correct I think Thats fair.
Okay, and then if we look at the net new installs and the four that you gave and April seem pretty good I couldn't quite tell based on what she told and Robbie how much of that maybe had moved from Q1 to Q2, how should we think about that as a good monthly rate going forward and what would you guys be happy to see.
I think that would be.
And okay, starting point as a monthly renewable I mean, Florida products Yatra Europe, Yeah, I think I think kind of the.
And that pace.
I would say at least at that pace.
And would be our expectation and and in terms of the.
And the shifting of timing, whether it's Q1 into Q2, we don't have a ton of control necessarily over when they went and systems get place. It is around contracting and hospital availability to do and install that the key thing that we wanted to make sure we communicate out of coming out of Q1.
As we think about being highly targeted with their accounts being targeted and it does not necessarily mean limiting the number of opportunities, we still see significant opportunity to grow our installed base and as we come out of that account segmentation and targeting initiatives and Q1, we started and you start to execute on that more with more.
Vigor and Q2 that and that helps us with that contributes to the U S. Placements and then there are clearly still has some COVID-19 overhang outside the U S that is resolving and should continue to resolve as we are.
As we move forward.
Okay perfect. Thanks, guys.
Your next question comes from Bill <unk> with Canaccord. Your line is now open.
Great. Thanks, good evening.
Thanks for taking my questions. So just clarification on Margaret's question.
For installs and April you said you'd be happy to see that is that for a month or four quarter globally just for clarification.
That would be a good monthly figure.
I think we'll have months, where we do more than that we have a multitude we'd be less but that's I think is a good pace for us.
Okay and then.
Just as.
As we get out here.
And definitely last year was a challenging year given the macro environment.
On bringing new technology to market I think you covered that in your opening remarks, but what is the first year learnings or the launch learnings.
How have you implemented that into the commercial strategy, both direct and the U S O U S and with your distributor partners.
Yeah.
And.
And in talking with our European team, we really spent a lot of time on that over the last couple of months.
Making sure we are crystallizing that and trying to think about how it translates into the U S. So Europe.
Feel great about not only where we are but where we're headed the utilization wise and where we're headed in terms of additional console installed and ablation.
We call them equipped our electronic stack and.
Installs.
Got a nice number of therapy electronic stacks already and I think we expect to double that installed base of electronic stacks and this quarter alone.
So we're trying to bring that over now to the U S.
And for me the number one and two things I guess number one.
We need to do a better job.
Of bringing over that European experience and our training.
Our commercial team here and the U S and we're really focused and on that and number two it's really about targeting and when I say targeting.
The place for US to go is centers, where there are one or more physicians.
Who arent satisfied with their current procedural technique for persistence for reviews for tachycardia.
And are ready willing and able to think about modifying their workflow modifying their technique.
To try and improve their acute and long term success.
And versus just taking a a cool new system that has a lot of whiz bang sort of optics to it but be unwilling to actually modify their technique.
That's just not a great place for us right now and.
And frankly it.
It never will be the only way, we can deploy our system to make to do things differently and if youre willing to to go.
Go away from just a standard PVA ablation approach or <unk> plus posteriorly wall.
And if that's just what Youre hell bent on doing and Electrophysiologist, the competing systems to very adequate job of.
<unk> and empiric anatomically based ablation approach.
We think and quota boundary and uncover really point to that we think that there's more that can be done you can be more patient focused more adaptive more individualized for each individual patient.
And and hope and expect to see better outcomes and we think only our system really has the potential to facilitate that because the current systems. It's just biologically and plausible to use conventional contact mapping system to.
Matt.
And individually a bleed.
<unk> who's in a non regular rhythm so someone that has an irregular rhythm not incentives for them. It's just not really possible to map those patients.
We think with our system, we bring that to the party and that can that can help.
Take the physician and the procedure to the next level.
And that's actually really helpful. And then and then Vince how does that translate.
Into the.
Funnel of potential accounts as you said the targeting.
Does that take the funnel of what you originally expected and cut it down by 10%, 50%, 90% how should we think about that in terms of kind of this initial ramp and then as you think of the accounts that have come on board and I. Thank you.
You gave us some clarity on that the U S accounts are doing the more difficult cases, and it's really that's what they're using and for have you seen it kind of move into that.
Two small case, yet and that those are my questions. Thanks, so much for taking them.
Yes.
As you look at our initial models that we've worked with our analysts to put together a less and less spring.
And the and the rollout of consoles and the pace of those consoles and then just the sheer number of consoles set against the total number of.
EP rooms, and the U S and around the around the country.
And we mapped out.
Pretty modest share of rooms.
When you.
Go around the World and you talk to doctors about how they feel about the tools they have.
And how confident they are and their success rates and treating persistent cases and reduce and quickly treating tachycardia that are complex.
The vast majority of the physicians we talk to.
Feel like there's plenty of room to improve now not all of them want to go through the.
Sometimes.
Arduous process of changing workflow to do that and you know those folks probably arent for for now for us.
A lot of these positions however.
Give all signs of being ready willing and able to roll through sleeves, and do that work and work with us and I would say there are plenty.
EPS out there that feel that way and certainly a sufficient number to hit that three and five year kind of rollout trajectory that.
We spelled out a year ago.
C.
I see no no major change and how we think about the funnel based on what we've learned and experienced.
Great. Thank you.
Yeah.
Your next question comes from Marie Thibault with BTG and your line is now open.
Hi, Good evening, Vince and David. Thank you for taking the question I wanted to ask one here on accu blade and the full market release that you're headed into.
And Europe I know you mentioned, you're adding some resources there and given some of the COVID-19 constraints would love to hear how you're thinking of the cadence of that rollout is that mostly kind of a second half event as we think about our models and.
What's the latest on feedback from Accu book late users, what's it going to their utilization.
And sort of any qualitative anecdotes you can give there.
Okay.
Yes.
And then med tech for a long time and.
And usually and emerging companies and emerging technologies you go over there first and then you focus primarily on the U S because of reimbursement and other issues.
They make Europe hard to do well and.
We're doing really well and Europe and I think it's a great proof point for us in terms of the value proposition that we bring with our mapping system.
And as we have now put our mapping system together with the accu blade and and I want to this is an important distinction here. This is not just a catheter and this is the accu blade catheter paired together with the force monitor and unit that we have that as our unit together with a concurrently designed on.
RF generator and pump that was designed by our partner by the chronic.
As one unit basically it works just seamlessly together I think it is the best electronic stack and the therapy business presently in the market anywhere in the world and when you pair that up with the catheter, which I think can go toe to toe with any catheter.
It's just a great great unit. We are also finding that when we take our mapping system and haven't used along with E. On.
Abbott catheter comp generator force sensing unit.
These weren't designed to work flawlessly together from the get go and it just imposes some work flow issues, you have a higher likelihood of having to do troubleshooting and things like that you may not have as clean a signals consistently room to room to room.
And we really like about all of this being designed from the ground up to work together every single element to work together.
We're just getting better results and then the nurses and the techs that work and these rooms really appreciate the way the consoles and electronics were designed they're very very small there literally very light.
They're very simple and easy to set up and use.
And the alarms and everything I have a very sensible.
And they work very well with the catheter and.
And.
We think that we're going to be able to make some hay with that.
And the thing we love is just.
When we have that controlled set of systems.
All the different individual elements.
We know where the noise as we know how the connectors are supposed to be set up we do it the same way every time when we set it up along with our mapping system and we're just getting better more consistent results and happier customers. So we're we're kind of pedal to the metal over there in terms of that accu blade catheter.
And system launch as we speak.
Not really governing that back.
And we up to now have had some production capacity issues with the catheter and I believe we are getting through that we've invested significantly and our production capacity there from a catheter perspective, so so we're really pushing and pushing hard.
Two to really get a significant installed base and we'd like to be one to one with our mapping systems and also have some ablation stacks even in centers, where we don't have mapping systems as well because it works very well on a standalone basis so were.
<unk>.
We're not really holding back and Europe, we're really pressing over there and the team's just done a terrific job.
And we're super eager to have all of that and the U S. We've already we have I don't recall I think we have four or five stacks up and running and the U S supporting our IV trial.
Which is just great for us because our our U S team now gets to experience the benefits of a system that was designed to work together.
And and they're having a lot of from them.
And maybe just to clarify clarify so from a modeling perspective, or how and how this weaved into our guidance a couple of important things to point out here first is when we launched that accumulate earlier. This year, we did that through what we call a limited market release with the intention to understand how the product performance and a real world setting during that time, we don't we don't generate any revenue.
We moved into full market release very late in the first quarter.
There are some additional factors in the UK, where you have to get and NHS and.
NHS catalogue lifting to generate revenue.
We applied for that and February it's about a six month turnaround time in the interim we can sell accu blade on consignment and the U K, but have to defer that revenue and we expect to recognize all that deferred revenue in Q3, which is another one of the factors that impact that impacts the back half loading of our year.
But we would also expect production volumes to ramp materially throughout the year as.
As well and as we get this and we as volumes ramp and we get this and the hands of our reps across all of Europe as well as bio tronic, you should see an increased contribution quarter by quarter.
Okay helpful and sites from both thank you on that maybe I'll ask then on Ackee Cross.
Talk a little bit about how you're envisioning the launch here in the U S. And then pushing forwarding Europe as well with that product again, it's one I know you that you've called out <unk> as a promising part of the whole portfolio. So we'd love to hear how that adds to procedure asps over time here as well and thanks for taking the question Tonight.
Yeah, So the accu cross launch and the U S.
<unk>.
If <unk> been following this we this is a this is part of the.
Acquisition, we made a couple of years ago, a company called rhythms and science, we acquired the product line, we iterate it.
Launched that added to the market.
As a combination of the subtle crossing along with our own set of durable and fixed per sheets and saw really really good feedback and uptake and both EP ablation and in structural heart. So we were seeing great utilization and la.
Procedures, and watchman and procedures for that product line.
One of the limitations that we saw and.
And the EP space.
Was by forcing a user.
To use not only our simple crossing device also our sheet.
We saw some friction from.
EP doctors around moving away from their sheet of choice.
So what we did is we said look why do we want to fight that fight, let's meet them, where they are let's make this really novel effective safe fast simple crossing device compatible with the vast majority of the market leading sheets that are used and ablation.
And we identified that opportunity and executed on that very well and we are now compatible with the agilis from Abbott with the.
And first cross from or the visit go from <unk> with <unk> and with the cryo balloon sheets from Medtronic.
And we and of course with our own sheets.
Those catheters are linked to diameter.
On a matched and transition matched and they locked into the hub at the back.
So you can just.
Go right in.
Across the septum hop out and you've got your sheets of choice to guide your ablation without having to change your ticket.
Order of magnitude from a procedural revenue perspective.
I think we've.
We have talked publicly about our per procedure revenues from mapping based catheters and being a bit north of $5000 a case.
And I think you can see.
A pretty clear path towards increasing that by about 10% in cases, where they use.
Our accu cross products.
So very nice opportunities there and about half I should point out about half of the accounts that are using these products are they don't even have our mapping systems yet.
Theyre, just using them on a standalone basis, because they love them and one of them using them for their ablation.
Procedures and the structural heart procedures.
Those accounts, where we don't have it's really fertile territory, it's a great brand builder for us and and.
And door opener for us you've got a couple of accounts that I can think of right off the bat that once they get to know our reps once they get to know our product and how we think about this market and all of a sudden they started asking about our mapping system and it was a great door opener for us to get in there and start contracting process to get them mapping system installed and.
And then one of the specific examples that Vince is referencing actually I believe will be installed this week or next so we are seeing this as a nice door opener into new accounts.
So we expect to see the same in Europe as it relates to both completion and structural heart opportunities. There is a nuance in Europe that were.
And we're still trying to kind of wrap our heads around which is the vast majority of cases, they cross the septum under fluoro guidance or using pressure differential and.
And as opposed to ice image guided surgical crossing and so we're going to go over there.
Starting this month and work through the work flow issues, we're highly confident that it will be well liked over there. We just have some low some some workflow differences that we need to.
Better understand now that we have approval.
And really make sure we work with those structural heart and AP.
And there is to get this right coming out of the gate.
Makes sense. Thank you.
Yeah.
Okay.
And there are no further.
Any questions at this time.
This concludes today's conference call. Thank you for joining you may now disconnect.
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<unk>.
And then.
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