Q2 2021 Inari Medical Inc Earnings Call

[music].

Good day, and thank you for standing by and welcome to the and already Medical Inc. Q2, 2021earnings call at the time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. Please be advised that today's.

Conference is being recorded.

To ask the question during the session you will need a price star 1 on your telephone if you require any further assistance. Please press star zero and I would now like the hand the conference over to the Caroline corner. Please go ahead.

Thank you operator, and welcome to minority second quarter 2021 earnings call. Joining me on today's call of Bill Hoffmann, President and Chief Executive Officer, and Mitchell 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 that do not relate to matters of historical facts should be considered forward looking statements, including statements regarding the markets and which and Harry operates trends and expectations for and <unk> products and technology trends and demand for and <unk> product and all of these expected financial performance expenses and position in the market and the impact of COVID-19 on an area of operations.

And and our customers' operations.

These statements are any of the promises or guarantees and involve known and unknown risks and uncertainties that could cause actual results performance or achievements to differ materially from any results performance or achievements expressed or implied by the forward looking statements.

Please review and all of these most recent filings with the SEC.

The risk factors described and and our U S..1 filing and and <unk> quarterly report on form 10-Q for the first quarter ended June 30 of 2021 for additional information.

Any forward looking statements provided during the call, including projections for future performance are based on management's expectations as of today and all the undertakes no obligation to update these statements except as required by applicable law.

And our press release, the second quarter 2021 result is available on and our web site Www Dot and army medical Dot com under the investors section and includes additional details about the financial results and our.

The website all sorts of late the SEC filings, which you are encouraged of regalia.

A recording of today's call will be available on the night website by 5 P. M Pacific time today.

I'd like to turn the call over to Bill for his comments and second quarter, 2020, 1 and business highlights.

Thank you Caroline and thank you everyone for joining us today, our second quarter was productive and successful in terms of financial performance and we again treated a record number of patients.

Our second quarter was also marked by important changes and our business significant investments and our future and important milestones and all of our growth drivers.

We are excited to share some additional detail about all of this but we would like to start first as usual with the patient story. We appreciate always the opportunity to remind you not only of the profound impact our people and products have on the lives of our patients, but also the sense of responsibility we share to solve some of the most challenging technical and clinical problems facing our positions.

And address some of the most important and devastating conditions and all of medicine.

Early in January 1 of our top position customers and interventional radiologist from Florida was asked by his colleague podiatrist and wound care specialists to see a patient with a large deep weaving ulcer on his leg. The also had failed to heal for 3 years, Despite best wound care practices and 3 arterial revascularization.

<unk> procedures.

This man and his early seventies lived with significant pain and was wheelchair bound due to the ulcer.

Our position recognized immediately that the patient's ulcer with Venus and nature, not arterial and not the cause was likely post thrombotic syndrome, where pts caused by an untreated deep vein thrombosis or DVT several years earlier.

He used cadre of or to remove a significant amount of post thrombotic scar tissue, establishing a large patent high flow venous channel and that's the patient 3 months follow up the ulcer was nearly 100% healed the patient was walking without assistance and he was pain free if.

If you've ever seen and venous ulcers or even an image of such of wound online. Perhaps you can imagine the impact on this patient and those who care about and not just physically and not just and practical ways, but and much bigger ways and ways that actually define their lives.

Especially with the suffering from advanced Pts it is caused by persistently high pressure and the legs as a result of deep being of scarring left untreated quite gradually transforms the scar tissue over time about 50% of all patients who of DVT as untreated will develop Pts it is a progressive disease with early.

Symptoms, ranging from swelling and pain and.

And progressing to pigment changes and scaly dry skin with scabs and finally, the venous ulcers that often necessitate amputation.

And there are about 1 million patients just in the United States suffer from venous ulcers right now many of the result of Pts.

And while cloud for river was not necessarily designed to treat this disease or to remove this sort of tissue. We are highly encouraged by the many patient success stories emerging in this difficult to treat patient population.

Beyond cost lever and we are investing aggressively and purpose built devices to remove post robotic scar tissue will have a lot more to say about this soon.

I'd like to turn now our attention to our Q2 financial performance of.

Our revenue in Q2 was $63.5 million up $38.1 million of 150%.

From the same quarter last year and up about $6.1 million of 10, 6% from Q1.

As in the past the vast majority of revenue and the quarter came from replenishment of inventory after procedures.

While the balance came from stocking orders, which has always include initial inventory purchased by new customers increases and inventory levels of existing customers as they grow and increasingly important from stocking orders for new product introductions revenue grew more quickly and procedures and Q2 due to the strong demand for and stocking of new products.

It's like $2.20 for flex and the 'twenty curves, which we've discussed in the past.

During Q2, our physician customers performed approximately 5900 procedures, including a modest number of cases from Europe.

This procedure count is up about 136%.

From the same quarter last year and up about 7.3% from Q1 procedure growth during Q2 moderated compared to Q1. We believe this was primarily due to the decline and the prevalence of Covid, which as many of you know can cause of ETE.

And this was an important source of patients treated with the in our devices and Q1 in January and February for example, at the peak of Covid hospitalizations about 15% of the patients we treated were associated with Covid.

The June that number had fallen to about 4% and short COVID-19 created a larger tailwind and perhaps we appreciate it and Q1 and the decline and Covid related DTE procedures tempered our procedure growth in Q2.

In addition, as we head into Q3, we're seeing a significant number of vacations by employees physicians and staff the.

And the commercial impact of this is uncertain.

We believe and note of caution through the remainder of Q3 is warranted.

Despite the short term uncertainties, we remain bullish on the intermediate and longer term prospects for robust procedure and revenue growth and a post pandemic environment. The gradual lifting of restrictions to access has begun to enable our field teams to once again communicate our story consistently to non interventional physicians, who make decisions about and rich.

For the patients for the treatment of ETE.

This is important is about 70% of all of <unk> patients are still treated with conservative medical management.

We have also been able to resume in person physician training VIP visits to our home office technology, Roadshows and executive field travel all of which we believe make an important impact on our goal to penetrate these markets and treat more patients.

Strategically our markets remain large and all 5 of our growth drivers, which we'll discuss now are intact.

While execution continues to be crisp.

Our first growth driver is the expansion of our sales organization of the target new hospitals and physicians given the size of our total addressable market as we just detailed.

Our performance in Q2 suggest we treated just over 5% of all of the patients. We believe can benefit from treatment with our devices.

We are very early and our effort to treat this patient population and we believe the effort will require a lot more sales professionals. As a reminder, we began Q2 with 150 territories and shared and our last earnings call that our intent is to finish the calendar year with 180 to 200 territories.

Consistent with our usual cadence, we recently completed another round of hiring the field sales professionals and we are comfortably on pace to land and the high end of this range by the end of the year.

The increasing density of our sales organization and the resulting smaller territories provide opportunity to more effectively address our second growth driver, which is building awareness and driving deeper adoption at existing hospital customers.

As we described earlier a high percentage of our target PE and DVT patient populations are currently treated with anti coagulation alone education and training of non interventional physicians such as emergency Department physicians Pulmonologist Intensivists Hospitalists, who offer responsible for treatment decisions for these patients is important we can be and both in person and zoom.

And based training of these physicians and groups and individually and in addition, our sales professionals routinely visit with these non interventional physicians in the current less restrictive environment, often inviting them to observe and already procedures smaller territories have been especially useful for these efforts.

We are also working with our hospital administrators to establish VT programs.

And which systematic processes, our install to identify and triage of our target patients to physicians, who are experts in these disease states the.

These efforts continue to show tangible progress.

All of our hospital customers for example, recently committed resources to higher dedicated DTE coordinators. We believe that this type of coordinator role has been vital to the growth and treatment of other disease states, such as such as stemming and stroke and.

And we will be similarly important through the development of ETE programs.

We look forward to sharing progress here over time.

Our third growth driver is to build upon our base of clinical evidence we have a lots of share on this topic for us.

And we presented early in June at the New cardiovascular Horizons meeting in New Orleans, and interim analysis of results of the first 250 patients enrolled into our prospective cloud DVT registry the.

Safety profile cadre of and remains pristine.

No patients with valve damage.

No patients with brain damage of patients with renal injury and the device related adverse event rate of just 0.4%.

Blood loss of just 50, Ccs, which is similar to a standard blood draw, making plot fever, thrombectomy virtually bloodless and.

Effect and this was equally compelling and independent core lab analysis showed near complete clot removal.

And more than 85% of the patients, which led to excellent clinical outcomes at 6 months every single patient reported of reduction in pain.

And 92% were free from moderate and severe post thrombotic syndrome.

All of these results are best in class by a pretty wide margin.

These results are even more compelling given that 2 thirds of the patients treated and cloud would not have qualified for truck for trials and which competitive devices have been used because of the age of the clot was older than 2 weeks.

As you know has cost age they become much more firm more wallet here and more resistant to thrombolytic drugs.

And impossible to remove the aspiration.

Shifting gears to pay and we continue to make excellent progress and our flame and flash registries. In addition, we have assembled a steering committee of key opinion leaders to design a series of randomized controlled trials or Rct's debt. We believe will establish flow trigger as standard of care for treatment of P/e.

Today, we are excited to announce the first of these trials.

This trial will compare flow tremor to catheter directed thrombolysis therapy, or CDT, which we believe still represents the majority of the p/e intervention today.

The composite primary endpoint will comprise Def intracranial hemorrhage major bleeding clinical deterioration and duration of Ice's day, we're targeting first patient enrollment by Q1 of 2022.

We plan to follow this with a separate RCT to compare flow tree of her to standard anticoagulation therapy, and we will have more to say about this trial and future calls we believe our devices change lives and the most extraordinary ways and we remain 100% committed to validating this with the highest level of evidence possible.

We believe also that each cut of registry data, each new and more clinically relevant endpoint, we measure each RCT, we initiate and successfully execute not only increases awareness helps drive adoption and moves us closer to establishing these devices of the standard of care, but also raises the bar by which new devices and.

<unk> will be evaluated.

Our fourth growth driver is to expand our product portfolio. We have some good news here is well flow favor was cleared by FDA on July 20, <unk> flow favor as many of you might recall is and intuitive disposable filtration system.

The enable physicians to reintroduce extracted blood back into the patient. This delivers 2 important advantages number 1 we believe that removing all of the cost of carry great clinical value to the patient and flow favour allows pursuit of this goal by enabling the physician to wash as many times as they deem necessary without concern for blood loss.

And number 2 by virtually eliminating blood loss and flow true EVAR procedures flow favor establishes bloodless thrombectomy and.

Across the entire spectrum of and already procedures again, setting the bar higher both for existing and future competitors.

Flow favor has been highly anticipated by our physicians and has already been received with great enthusiasm. Our 100 patient limited market release or LMR was completed and just 1 week and we have already begun full market release.

Beyond flow favor, our new product pipeline remains robust, we expect FDA clearance on several new products late this year and into the early part of next year and we look forward to sharing more at that time.

Our fifth and final growth driver is expansion into adjacent and international markets. We continue to make progress early and our European launch.

Despite what remains a very challenging operating environment. We have now completed cadre of early and flow through for cases across most major western European markets.

And <unk> and feedback from physicians remains highly positive and we are seeing steady increases and our monthly case volumes.

Most importantly, we are gaining clarity on our longer term commercial clinical and reimbursement strategies. There is much work ahead of us, but we remain optimistic about our European opportunity.

Finally, I appreciate always the opportunity to close by reminding you that and Ari has more than just business for US. We are committed to our mission we have committed to changing the lives of our patients and importantly, and beautiful waves and we increasingly responsibility and more than merely opportunity and tackling some of the most challenging unmet needs and all of medicine, We love.

Every second of the work and we remain thankful for your support of our effort and for believing along with us and extraordinary possibilities and we're just getting started we believe we can and will grow sustainably for many years to come with that I'd like to turn things over to Mitch.

Thank you Bill and good afternoon, everyone and <unk>.

The revenues for the second quarter of 2021 for $63.5 million compared to $57.4 million for the prior quarter and up $38 million or 150% from $25.4 million for the same period of prior year the.

The year on year increase was made possible through a bit more normalcy and the business environment versus the COVID-19 shutdown of last year compared to either Q2 of 2020 for Q1 of 2021, we have expanded our sales force open new accounts and achieved deeper penetration of our products into existing accounts.

Revenue was split between our 2 products as follows 33% of our revenue was derived from the sale of cloud fever products. During the second quarter of 2021, compared with 40% and the second quarter of 2020, and 67% was derived from the sale of poetry of or during the second quarter of 2021 compared to 60% and the same period.

And of the prior year.

Gross margin was 92, 4% for the second quarter of 2021, compared with 86, 3% and the second quarter of 2020 as.

As a reminder, gross margin in Q2 of 2020 was negatively impacted by a $1.1 million idle capacity charge due to COVID-19.

And the current quarter, we avoided any such impact and we also experienced positive contributions due to product mix and efficiencies and our manufacturing operations.

Operating expenses were $54.5 million and the second quarter of 2021, compared with $22.5 million and the same period of the prior year.

R&D expense was $11.6 million and in the second quarter compared with $3.6 million for the same period of 2020.

The $8 million increase and R&D expense was primarily driven by an increase and head count as well as product development and clinical evidence development costs SG.

SG&A expense was $42.9 million and in the second quarter of 2021, compared with $18.9 million for the same period of the prior year. The $24 million increase was primarily due to personnel related expenses as the result of increased head count across our organization and public company compliance costs.

Net income for the second quarter of 2021 was for $1 million compared with a net loss of $3.8 million and the same period of the prior year.

The basic and fully diluted net income per share for the second quarter of 2021, where <unk> and.

And <unk>, respectively, and the weighted average basic and diluted share counts were $49.7 million and $55.6 million, respectively, compared with a basic and fully diluted net loss per share of <unk> 16.

And the weighted average basic and diluted share count of $24.3 million for the same period of the prior year. The number of shares last year of significantly lower because of the conversion of the preferred stock and additional common shares issued as a result of the IPO.

I'd like to move on to a few balance sheet updates our cash of $91.3 million and short term investment balance of $84.7 million at the end of Q2.2021 total of $170.176 million compared to $164.2 million at the end of the fourth quarter of 2020.

We have not yet utilized our $30 million revolving credit facility. Although we ended the second quarter with borrowing capacity under the credit line of approximately $23 million.

Our cash flows from operating activities were $7.3 million and Q2 of 2021 compared to cash used in operating activities of $1.1 million and Q2 of 2020 as detailed by Bill we are continuing to invest aggressively and our growth drivers and an effort to help and increase its.

The to impact patient lives and the positive manner. We are working to build the business that can grow and an attractive rate and in a sustainable fashion. We are fortunate that thus far we have been able to fund our growth and investments internally, having said that we are not operating the business to deliver any particular quarterly cash flow of.

Tom.

I'll close my comments by addressing the noise financial guidance, while we continue to deal with the various uncertainties discussed during this call. We are comfortable increasing our full year revenue guidance to $250 million to $255 million up from our previous guidance of 240 to 250.

Yeah.

With that I would like to thank you for your attention and I will now turn the call back over to the operator for your questions for.

And the Q&A session Bill and I will be joined by drew hikes, Chief operating officer and by Dr. Tom to Chief Medical Officer.

Okay.

And thank you.

As a reminder to ask the question you'll need the press star 1 on your telephone to withdraw your question Brett for the balance sheet. Please standby, while we compile the Q&A roster.

And our first question comes from Bob Hopkins from Bank of America. The line is now open.

Thank you and good afternoon.

Bob.

Hey.

And I appreciate the chance to ask some questions here I guess 1 is the short term I was wondering if you could just.

Provide a little more color on your comments around Q3 and.

What youre seeing.

Patients and Covid and I'm, just wondering the degree to which this and stuff that youre already seeing and is and actually happening and manifesting in the last week or 2 or its just stuff that you're kind of pointing out is that.

It's something that we need to watch.

Wanted to get a little more clarity on what Youre seeing.

Yes, thanks, Bob So we saw kind of some significant momentum coming out of.

Q2, and we did see a little bit of and impact on vacation and the first.

The first couple of weeks in July.

So, it's just a little bit uncertain, and we certainly see and with our own employees and where we're seeing this I think.

Some of the some of our peer group, but the.

The fact is I think it is going to abate here at some point right. There is going back to school already gathering up for sports teams and that sort of thing. So I think it's in the short term sort of phenomenon.

The duration to which it persists is is the the cost for the uncertainty, but I think we really like our.

Execution, we like what we've seen in terms of.

Program building putting.

And that addressing the Tam the real <unk>.

I'm not the not the Covid type Tam the.

And the big the big part of our market development opportunity really seems to be picking up some momentum. So I like our chances here and I think we're going to get to some sort of normalcy and the operating environment in the next few weeks, that's how we're seeing and.

Okay, Alright, that's helpful and then.

The other things and just as the following that as you're providing any thoughts on kind of your how your full year guidance breaks down between Q3 and Q4, sorry, if I missed that and then just 1 other quick longer term comment I'd love to hear from you on.

And on some of the other.

Market opportunities and the United States for you.

Of like for example that arterial market. When do you think you will get more color on your plans to enter some of those.

Markets that clearly of technology could be well suited to address.

I wanted to start on the product stuff and then let Mitch address the.

The.

For the guidance.

So we've been a little bit.

So I think you see where were going here the city.

The the opportunity in markets immediately adjacent to <unk> and immediately adjacent to thrombectomy. Both of those are 2 different things.

We have invested heavily I think we're a little reticent to talk about specifics yet there's a lot of work to do in terms of quantification of the market.

The standing the.

And the uncertainty around.

Clearance, but I think youll see a stream of new.

The new product releases between let's call. It the end of this year and the first half of next year.

Right into Q3 actually so I think our product pipeline is very very robust. We're really excited about a number of different things not just within the DTE space not just within the thrombectomy space, but.

But a little bit beyond that again these adjacent markets I wish I could give a little bit more specific but I don't want to over promising.

And when we start talking about timelines the potential for over promise.

Exists, especially in a regulated environment like ours.

Bob Thanks for your question about the guidance when we look at the numbers year to date I think were of state of about $120.9 and.

And if we look at the midpoint of the guidance, which would be the typically 2.5 that would leave us about 131.6 for the second half of the year and I think when we would.

Kind of break that number down.

Versus the current consensus Thats out there, we'd probably see Q3 being a little lighter in terms of where that would land and Q4 of being a little heavier and I think thats largely due to this uncertainty sort of vacation seasonality and you heard about from bill.

Great. Thank you.

Yes.

And thank you and our next question comes from Cecilia furlong from Morgan Stanley. Your line is now open.

Great Good afternoon, and thanks for taking the questions and wanted to start off just.

Floating at various of the percentage of revenue and there is a little higher and the quarter than we've seen historically, but could you just tie that in with your commentary around Covid and elevating cases, and 1 Q and really how youre thinking about and the trends between treatments for the tree for going forward and you back out Covid impact.

I think yes, so thanks, Cecilia and thanks.

Thanks for the opportunity to answer.

<unk>.

So a couple of things we saw a lot of stability between the mix of.

Of P/e cases, and DVT cases and of course that led to some stability between the revenue mix as well, although we do see some flow to river usage in certain types of DVT procedures.

During COVID-19 kind of the height of the peak of Covid.

In Q1, we saw probably a little bit more of a trend toward p/e, just because those patients were deemed a bit more urgent.

That's who's being treated procedure and if I can use that word is of a term of the verb.

I think we're going to see and a normal environment of stabilization and similar to what we saw.

Through right up to.

Kind of the first quarter. So I don't think there is too much that we would read into this we are not seeing adoption of <unk> technology or <unk>.

Faster and more interest in 1.

Disease state versus the other we don't communicate or compensate our sales professionals to deliver 1 message.

And to favor 1 technology or a disease state over the other so I don't know I think we'll see some.

The ability over time, maybe 1 or 2 percentage points on occasion, and some of Thats just random noise I think rather than some significant trend.

Okay, that's helpful and I guess.

Second question for me, but just curious what youre seeing from that.

The procedures, you're performing the the percentage that are really tam expansion versus share capture from the legacy.

The <unk> really how that shifted over the past few quarters and then just any updates you can provide to you about adoption and cotton, Kansas and thank you.

Drew you want to take that 1 sure.

So relative to the question around Tam expansion and where the growth is coming from I think we continue to see evidence that our cases are coming from both taking share from the existing minority of patients who are already being treated interventions and increasingly we're seeing evidence that flow through of our clock.

River are succeeding and putting new patients on the table on patients that would have heretofore been treated with conservative medical management, but because of our purpose built solutions are being treated intervention Lee with mechanical thrombectomy as the first line therapy hard to put numbers to those trends.

But I think the base case number that we provided in the past of about a third of our patients to date coming from Tam expansion I think that number is still feels like it's in the ballpark to us.

And I think month after month quarter after quarter, those trends are and the direction of Tam expansion, which gives us some confidence that the work we're doing to drive deeper penetration and the work. We're doing on program development is all beginning to bear fruit.

Relative to your second question on cloud and transit.

We have now like we announced on the previous call a specific indication for cotton transit our T 20 curve.

Launch has proven to be a really effective tool for that patient population. We continue to see cases being done I can't tell you. It's a major contributor to the overall <unk>.

Case mix, but it's a very effective product those patients are in dire need of a solution with a very morbid and mortal disease and.

So we are seeing.

Some number of those cases being done and is growing month after month, but probably not at a material level to the overall commercial franchise.

Okay got it thank you for taking the questions.

And thank you and our next question comes from Larry <unk> from Wells Fargo. Your line is now open.

Good afternoon, guys. Thanks for taking the question and Tom Congratulations on those Rtp's I'll definitely have some questions on those.

And the future, but I wanted to focus on a couple of other topics.

And Tonight.

Just starting with the new products Bill.

Flow saver, it sounds like a pretty exciting product.

I wanted to ask about what impact the pricing strategy there.

What impact you think that could help us understand the impact that could have.

To your business and any update on flow stasis.

And how youre thinking about that would be helpful and I had 1 follow up.

Sure Thanks, Larry and good to talk with you.

So flow favor flow favor us.

And is being received extremely well.

We completed the limited market release of the hit in the prepared remarks in less than a week and we're and flow of full full market release as of well as of the first and tomorrow.

So that's the fantastic I.

And the in the prepared remarks also there's 2 really important.

Of components to this and the reason that people are excited about it is because.

And I think theres and increasing awareness and interest to remove all of the cloud or as much of the commodity possibly can this is not just about making and acute impact on the hemodynamics and the patient that's critically important it's always been important but we're swinging for the fences and now we have the device that's safe and there isn't any reason to leave caught behind and we just eliminated probably.

The last.

All of the reasons that someone might lead plot behind and that was blood loss right and so we're seeing people wash more often the statistics over the first the over the LMR here suggests we are seeing more passes suggesting.

Suggesting that people of being a bit more aggressive it and tracking down more plot because they can and of course, the whole concept of bloodless thrombectomy really really resonates.

We.

We have seen the enthusiasm is as strong as U S.

100 patient LMR and 1 week might suggest that we could not be more thrilled with the performance of the device nor with the reception that we've seen from from our field team and from our customers.

And the flow stasis.

Any update there.

Flow stasis look so.

It's a relatively minor product I mean, the you can imagine the average selling price here is is is quite low. So we want to make sure that we are not.

Distracting our sales team of any 1 minutes spent on AR devices for route relatively low average selling price of the minute that we're not communicating our story about growing the the VT market more broadly. So we have a few specialists. We continue to collect information about where this product might fit theres any number of procedures not just our existing.

<unk> been the thrombectomy procedures any number of procedures that require access venous access and so I think we knew we're still in the.

The data accumulation phase, but it's gone really well, especially and we target the right positions for the right applications so beyond that.

I don't think Larry you should expect.

The material impact on our on a revenue stream from flow spaces, and certainly not between now and the end of the year and we'll see how how we think about this as we continue to to accumulate information and data during the kind of this early phase and.

Hey, Larry I'll frame the follow.

Follow up on 1 more part of your flow stay of her question, which I think was relative to the pricing strategy just to be clear of that product will be part of our purpose stage of price.

The strategy on flow true, we're so it will not.

<unk> generated incremental revenue, we certainly are confident it's going to generate additional cases and patients being treated so.

Generate revenue from that regard, we will have an opportunity to get some upfront stock and revenue from that product like we do with all of our new product introductions, but to be clear it will be part of our per procedure price under flow Traver.

That's helpful and Bill it sounds like things are going well and Europe.

So I'd love to just get it just understand kind of of the revenue ramp there if anything has changed and I think of the past you've talked about maybe of $1 million or so this year.

Could you do better and I think when we've looked at competitors.

And maybe 10 to 15 percentage of sales in this area outside the U S. How quickly can you get there do you feel like you can get there.

Well, maybe just how quickly can you get there thanks for taking the questions.

I'll turn that 1 over to Joe as well.

So we continue of like what we see on the ground and Europe, it's still really difficult operating environment with Covid, but we're seeing increases month on month and our case volumes. We're seeing cases now haven't been completed and most of the major of western Western European markets.

And the docs are very enthusiastic certainly the unmet need is as prevalent in Europe as it is here. So we like what were seeing despite a pretty challenging environment and looking ahead to this fall when we have the summer holiday behind us and hopefully a more stable operating environment post pandemic those trends will accelerate were also good.

And any more clarity on the reimbursement work, we're going to need to do and Europe. The clinical work, we're going to need to do and Europe. The commercial strategies that will deploy and Europe I think all of that will inform how quickly and we're going to be able to get to.

And all.

Level that is indeed, a material contributor to the overall business certainly the opportunity is there, but I think those efforts are going to be measured in quarters, if not years as we put the pieces in place over time and <unk>.

And building in that direction. So we like what we're seeing but I think.

And that kind of additives reviews before that its measurable, but not material yet I think that's still a fair way to think about the European franchise tier of probably for the rest of this year and candidly into next year as well.

Thanks drew.

Thank you Larry Thanks for thank you.

And our next question comes from Bill told the net from Canaccord. Your line is now open.

Great. Thanks for taking my questions.

Just first on the the ask.

And of the guidance question 1 more time is just on the slowdown in July is there a particular segment of the business it's impacting.

More than others is more on the DVT or the <unk> side and then <unk>.

Mitch if you could just help us understand and I think bill is in your opening comments just regarding the the stocking and the.

And the replenishment and the stocking component.

Big was stocking in the quarter.

And then are there any metrics around the kind of same store sales that you'd be willing to share with us at this point.

I'm trying to of my ADT, the I'm trying to make sure I've got them all out of Australia out here, So let's start with.

So let's start with.

Q2, so I don't think we have seen any material difference and.

In mix that I think that was a phenomenon and that was related specifically.

2 COVID-19 only because there is an urgency and of all the hospital beds are full and.

People are running around hair on fire sort of trying to take care of COVID-19 patients and patients with quote unquote, just the swollen leg and may be sent home from the ER and may not be procedures. So I don't think we're seeing any any.

1.1.

Disease state being favored here and the early part of July I wanted to go back just a half step also and talk a little bit about what we saw in Q2.

We saw what we felt was very very crisp adoption of.

And crisp execution on program development. This whole concept of same store sales. If you think of kind of a bucket that was leaking COVID-19 patients right that was kind of of sugar high and there was.

Of these these COVID-19 patients were 15% and down 2.4% and down even a little bit further in July.

Just not many of those patients left to leak out of the bucket and we continue to fill that bucket from the top not only replacing the.

Kind of the Covid patients that went away, but also the.

And the real opportunity here is the.

And kind of the real Tam and that's where we're putting patients on the table and we continue for patient on the table at a pretty nice clip. So I think when there is no very few COVID-19 patients left to leak and we have some reasonable operating environment not hindered by.

By the craziness of Covid and lack of access not challenged by some of the.

Some of the vacations that we've seen and again thats, what we kind of saw coming out of.

And late Q2, we really really like our and the execution. We're seeing in terms of same store sales. So again, there's a little bit about theres. Some puts and takes here, but if you think about the COVID-19 patients as being kind of of temporary high and and a temporary.

The governor on growth the real opportunity here, where we can and where we've.

Executed our plan to build these programs has been very very effective.

And Bill and your stocking revenue question of ticket quick glance at the stocking revenue over the past few quarters.

Thank you are familiar with this typically are stocking revenues kind of and the low double digits in terms of as a percentage of total revenue and this quarter of a bit higher than that and I think thats largely due to the new product introductions drew made mention of this a minute ago and he was talking about the flow of flavor. We also have and Q2.

The 'twenty curves $2.20 for some products like that and so when the first go out into the field with our active customer accounts.

Stocking revenue related to that and I think that is something that varies quarter to quarter, depending on the cadence of our new product introductions.

And I was wondering.

And the image. If you can just help us out and level set of so if you started the quarter at about 15% of Covid and did it for showed about 10% for the quarter has been contributed the COVID-19. Just so we can kind of level set on what's the base you're growing off of going forward with that kind of pulled out of the mix.

If we if we fall a little bit about this bill and if you think about.

Covid going forward.

I don't know I don't know what it looks like right.

We're down to 4% of patients that we're treating theres a little bit of noise in there, but it looks like about 4% of the patient retreating.

Coming out of Q2, our Covid related should we expect.

Some percentage to remain Covid I don't know how many more patients I don't know how long COVID-19 can range on and it seems at some point here were just run out of patients 2 to 2.

To infect but right now that looks stable ish.

For the next quarter or 2 and your guess is as good as mine as to whether that might increase or decrease here as we get into Q4. So I think what we're seeing right now is the fairly low level of COVID-19 patients being treated and hopefully it remains that way.

Thank you.

Thank you. Thank you.

And our next question comes from Danielle analysis from ex the Leerink sort of Orion is now open.

Hey, good afternoon, everyone. Thanks, so much for for taking the question and congrats on a on a day quarter. Despite all of the.

And uncertainty.

I'm sorry about this but 1 of more guidance question, if I take out the <unk> from the procedures, the COVID-19 sort of impact it looked like procedure volume.

And from Q2, I'm, sorry from Q1, and Q2 grew over 20% with love to sanity check that if that sounds right you ex.

Covid.

And I guess as far as confidence and your guidance.

Procedures, 20% and second half versus first half I can get to the high end of the range is that sort of the right way to think about it.

Kind of.

And I guess bill to what you were just saying kind of like more of the more of the same.

And that's kind of a wildcard.

Okay.

Yes, let me start with that.

The simple math of Youre doing there.

I can't argue with it we haven't thought about it exactly like that but certainly with a lot of patients that went away based on COVID-19. So again, we not only replace those patients, but we managed to grow.

7% on patients. So it was a solid execution and it really.

And again in terms of our second growth driver, just driving deeper adoption, putting patients into the Q and on the table so to speak of.

As far as going into.

Into back half of the year and guidance I think we are continuing.

Continuing to communicate here and various different ways of where he is probably flattish in Q3, and we feel pretty good about Q4, we never want to put ourselves in a position to over promise, but we feel very confident in the the guidance that we've just delivered and you can impute are kind of back into what Q4 looks like.

And for suggesting right now the Q3s is flattish so again, we like our chances.

In Q4 as hopefully there is some sort of normalcy associated with with Covid and.

Hopefully some normalcy in terms of.

Vacations and kind of normal Q4.

The activity.

And then bought it.

Yeah. Thank you. Thank you for that and then I guess my next question Mitch is going to be a P&L question for you and that gross margin.

It seems like some uplift from ISP and new product introduction and curious how sustainable this level of gross margin.

Because it feels like all of.

It should be coming down every quarter, but every quarter you keep going up so just curious how to think about that.

Yes. So we are obviously pleased with the gross margin performance of the company part of that relates to as you pointed out Danielle to the.

The somewhat greater percentage of revenue of the screen driven by the <unk> business in Q2.

And the flow of treater carries a higher margin and the cloud <unk>, so thats contributing to that and part I think we are.

And we're still seeing of pretty stable gross margin outlook for the business the.

And sort of the gross pricing of the 2 products.

And with our hospital customers is stable and we are doing more business as time goes on with the larger hospital systems, and IV and and so that carry some.

Some admin fees and the rebates and things like that some gpo's.

That could.

Potentially have an impact longer term as well as Jim mentioned, a few minutes ago. The internationalization of the business is something that could impact our gross margin as time goes on and we don't necessarily see that having the shorter.

<unk>, that's something that will kind of fold and over the next few years.

So all in all.

We're seeing a pretty good.

<unk>.

For a pretty good outlook for margin I think as we continue to add products the flow save of price per procedure, sorry for the flow tree for price per procedure, such as we did this quarter.

And recently with the flow saver of that's something as well that could drag down the margin on the poetry for sort of kit. If you want to think about it that way.

Got it okay. Thanks for that.

Thanks, Danielle thank you.

And our next question comes from Marie for bulk from BP and <unk>.

Your line is now open.

Hi, good evening, Thank you for taking the questions.

Really appreciate all of the color here on the curve of tailwind and.

Some of the growth drivers that are behind the.

The increase in sales here.

I would love to hear a little bit more about how your new newer sales reps are progressing and maybe true if I could ask you for some.

Metrics on how many new accounts for added in the quarter and what percent of your.

The total accounts are using both of clot traver and for Trevor just the metrics that we like the track here.

Sure so and the first.

Area relative to the new hires we did as you heard Bill mentioned bring onboard kind of our next class our usual cadence of quarterly hires.

We feel good about being on track to that 180.200 and in fact, probably on the higher end of that range that we provided for how large.

Our group will have as we exit this year.

So no big changes there.

We continue to.

Like the depth and the quality of the candidate pools that were attracting for those open positions. We were able to train this last class and person which was a nice.

Change relative to the series of classes before that and the height of the pandemic. When we were doing zoom based classes. So this class is off to a good start.

The vast majority of them are stepping into some type of split territories. So they've got a group of accounts, where they're going to be trying to drive deeper and deeper penetration. So no big changes from that standpoint relative to your second group of questions on new account adds last quarter on our call. We shared we were kind of clothing.

And on the 1000.

And Mark during.

During Q2, we increased debt and now we are closing in on call. It 1100 accounts.

So we had kind of a similar level of new account adds during the quarter I can't tell you. That's the specific focus for us necessarily.

The vast majority of our focus commercially is on driving penetration, but we did add about 100 new accounts.

And still today about 60% of those accounts are using both technologies and the remaining 40% of those active accounts are only using flow traver or <unk>.

So and okay. That's all for overtime, yes, okay. Thanks.

Thanks for the Okay, yes, exactly what that and looking for thank you for that I guess I'll ask my follow up here, maybe just trying to think to and very short ones.

The discussion of new Adjacencies and understand that we need to be patient and wait for more details there, but is that something where you'll be able to use the same sales force the target those.

Clinicians whoever they are and those.

The Adjacencies and secondly on VT, VT coordinators and give us a sense of just how meaningful that could be to adoption and awareness of mechanical thrombectomy and HD and <unk>.

Thanks, so much for the questions.

You'll take the first 1 drew I'll sure if I can.

So I think the short answer is in terms of the go to market strategy for some of these new products entering what will be new Tam I think we're still assessing the options there and we're looking at.

Everything on a spectrum from.

A single sales organization that would have all of those products.

The other spectrum of course would be multiple sales organizations with the tighter focus and a more specialized approach and there are pros and cons of all of those I'm not sure we're quite far enough along yet and are planning to really.

Have determined our approach and it may well look different across the multiple projects debt.

We'll be bringing to market. So stay tuned on all of that and I think as we get closer to actually commercializing those products, we will be making some decisions about the optimal.

Channel strategy for each of them.

And the second question.

Maria I think we'll let Tom and so he kind of grew up and cardiology as the stemming market was undergoing a transformation that we think is a reasonable model for the way, we're thinking about DTE, so and Tom can handle the VT coordinator of discussion great. Thanks for the question Murray.

And you look at some of the major cardiovascular diseases.

Such as heart attack and stroke, you can see that they are complex diseases required requiring really of programmatic approach for the identification systematic and kind of triage of these patients treatment and follow up other disease states like aortic stenosis with tavern, all have really benefited from.

Our coordinator who is oftentimes described is the glue that really keeps the program together they are involved and the <unk>.

Systematic review to identify patients to get follow up to be the bridge between the.

The various types of physicians who have.

Challenges working together of communicating and so we think this is 1 of the critical elements required to get us from where we are now to really a state of.

Centers of excellence for ETE care.

Great color. Thank you so much.

Thank you and.

Yes.

Ladies and gentlemen that is star 1 if you have a question and we have a follow up question from Bill <unk> from Canaccord. Your line is now open.

Great. Thanks run through a couple of model questions of the Kansas.

I think youre going to the new facility coming online soon.

What should we expect in terms of an impact and the gross margin on the and then I think through the end of the Q I said the.

And maybe it's in the past, but is there a 1 time charge for some stock comp that's coming in and Q3 kind of a change in accounting and then lastly.

Of those really big jump and the R&D spend.

I mean, well above what we're looking for and just trying to find.

Got the.

The personnel and all of the different things, but is there any 1 thing that's really driving the that we should be thinking about thanks.

Let me, let me take the the R&D spend first and the Michigan handle the on the other.

Detailed financial questions. So 2 of our 3 growth of our 2 of our 5 growth drivers Bill are R&D related.

Development of clinical evidence and of course development of products and yes, we are aggressively as aggressive as we can possibly be.

<unk>.

We are working on those on those growth drivers and again, we've hinted that theres a number of products. We love the pipeline that we have coming down the pike here.

And I think you've seen already.

Most every conference call almost every earnings call, we have of new cut of data from.

2 different registry now 3 different registries. If you include the flame high.

High risk sub massive high risk and and massive patient population, we expanded the flash.

Registry to include anti coagulation only patients and and.

And other armed for Wearables. So we can track these patients activity level of pulse oximetry and our.

<unk> SaaS and heart rate so for 6 minute walk test over time all of these things.

And really do contribute to not only.

The growth and our and our revenue numbers, but and understanding of the disease States and I think is really really important to us for mission and more broadly. So yes, we are very very aggressively.

Investing in those to.

For those 2 growth drivers.

Hey, Bill with respect to the question about facility.

We are going live with the new and R&D facility here. During Q3. So the key folks are occupied actually at the new facility today and the balance of the company will probably be moving over during the September timeframe.

Expect for the clean room and things, we're working on and certification of the state of California for that and so we expect either in the late Q3 timeframe or early Q4 timeframe that will be fully operational over there the margin impact of the new facility I think is going to be less noticeable frankly, it's noticeable at all.

And Q3 as opposed to some impact in Q4, even so I think youll see a fairly small impact so it might not be something that will be very noticeable although we're happy to try to call that out for you when we do the the.

Date in November.

And the other question you asked was about the and.

Noncash stock based comp charge, which will be reported as a subsequent event and the Q and the MLP.

Hit the income statement for the company and Q3.

Actually 1 of our earliest employees who retired.

As of August 1 and so we recognize some RSC of acceleration that related to his retirement and Thats just the basically the impact of that that you will see flow through the income statement during the third quarter.

So we see that and the SG&A line, the R&D of the Cogs line.

SG&A line.

Okay, great. Thanks, so much.

Problem.

Thank you Anne and thank you for your question I am showing no. Further question. This concludes today's conference call. Thank you for participating you may now disconnect.

[music].

And.

And.

And then.

[music].

And.

And.

[music].

Okay.

[music].

[music].

[music].

Good day, and thank you for standing by and welcome to the I'm Sorry of Medical Inc. Q2, 2021earnings call at the time, all participants are in a listen only mode.

The the speaker's presentation there'll be a question and answer session. Please be advised that today's conference is being recorded.

And to ask the question during the session you will need a price star 1 on your telephone if you require any further assistance. Please press star zero and.

And I like to hand, the conference over to the Caroline corner. Please go ahead.

Thank you operator, and welcome to minority of second quarter of 2021 earnings call. Joining me on today's call of Bill Hoffmann, President and Chief Executive Officer, and Michele 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 that do not relate to matters as historical facts should be considered forward looking statements, including statements regarding the markets, so much and already operate trends and expectations for and all of these products and technology trends and demand for and all of these products and all of these expected financial performance expenses and position in the market and the impact of COVID-19 on and all of these operations.

And and our customers' operations.

These statements are any of the promises or guarantees and involve known and unknown risks and uncertainties that could cause actual results performance or achievements to differ materially from any results performance or achievements expressed or implied by the forward looking statements.

Please review and all of these most recent filings with the SEC.

Take care, ladies and the risk factors described and in our U S..1 filing and <unk> quarterly report on form 10-Q for the first quarter ended June 30 of 2021 for additional information and.

Forward looking statements for either during the call, including projections for the future performance are based on management's expectations as of today and already undertakes no obligation to update these statements except as required by applicable law.

And all of this press release, the second quarter 2021 results become available and in our website www Dot and the army medical Dot com under the investors section and includes additional details about and all of these financial results and our.

The website all towards the way the stuffy filings, which you are encouraged to revenue.

A recording of today's call will be available on the night website and 5.5 P. M Pacific time today.

I'd like to turn the call over to Bill for his comments and second quarter, 2021 and business highlights.

Thank you Caroline and thank you everyone for joining us today, our second quarter was productive and successful in terms of financial performance and we again treated a record number of patients.

Our second quarter was also marked by important changes and our business significant investments and our future and important milestones and all of our growth drivers.

We were excited to share some additional detail about all of this but we would like to start first as usual with the patient story. We appreciate always the opportunity to remind you not only of the profound impact our people and products have on the lives of our patients, but also the sense of responsibility we share to solve some of the most challenging technical and clinical problem facing our positions.

And you've got some of the most important and devastating conditions and all of medicine.

Early in January 1 of our top position customers and interventional radiologist from Florida was asked by his colleague of podiatrist and wound care specialists.

And the patient with a large deep we being also on his leg the ultra and failed to heal for 3 years, Despite best wound care practices and 3 arterial revascularization procedures.

This man and his early seventies lived with significant pain and was the wheelchair bound due to the ulcer.

Our position recognized immediately that the patient's ulcer with Venus and nature non arterial and not the cause was likely post thrombotic syndrome, or pts caused by and untreated deep vein thrombosis or DVT several years earlier.

He's quad tree for it to remove a significant amount of post thrombotic scar tissue, establishing a large patent high flow venous channel and that's the patient 3 months follow up. The also was nearly 100% healed the patient was walking without assistance and he was pain free.

If you've ever seen and venous ulcers or even an image of such of wound online. Perhaps you can imagine the impact on this patient on those who care about and not just physically and not just and practical ways, but and much bigger ways and ways that actually define their lives.

This patient was suffering from advanced Pts it is caused by persistently high pressure and the legs as a result of deep being of scarring left untreated clock gradually transforms the scar tissue overtime and about 50% of all patients who of DVT and untreated.

And we'll develop Pts it is a progressive disease with early symptoms ranging from the swelling and pain and progressing the pigment changes and scaly dry skin with scams and finally, the venous ulcers that often necessitate amputation.

There are about 1 million patients just in the United States suffering from venous ulcers right now many of the result of Pts while.

And while cloud Trevor was not necessarily designed to treat this disease or to remove the sort of tissue. We are highly encouraged by the many patients' success stories emerging and it's difficult to treat patient population beyond.

Beyond cadre of or we are investing aggressively and purpose built devices to remove poster and biotic scar tissue will have a lot more to say about this soon.

I'd like to turn now our attention to our Q2 financial performance.

Our revenue in Q2 was $63.5 million up $38.1 million of 150%.

From the same quarter last year and up about $6.1 million of 10, 6% from Q1 and.

And the past the vast majority of revenue in the quarter came from replenishment of inventory after procedures.

While the balance came from stocking orders, which has always include initial inventory purchased by new customers increases and inventory levels at existing customers as they grow and increasingly important from stocking orders for new product introductions revenue grew more quickly than procedures and Q2.

Due to the strong demand for and stocking of new products like <unk> 'twenty for flex and the 220 curve, which we've discussed in the past.

During Q2, our physician customers performed approximately 5900 procedures, including a modest number of cases from Europe.

And this procedure count is up about 136%.

From the same quarter last year and up about 7.3% from Q1 procedure growth during Q2 moderated compared to Q1. We believe this was primarily due to the decline and the prevalence of Covid, which as many of you know can cause ETE.

This was an important source of patients treated with the NRI devices and Q1 in January and February for example, at the peak of Covid hospitalizations about 15% of the patients we treated were associated with Covid.

June and that number had fallen to about 4% in short Covid created a larger tailwind and perhaps we appreciated and Q1 and the decline and Covid related <unk> procedures tempered our procedure growth in Q2.

In addition, as we head into Q3, we're seeing a significant number of vacations by employees and physicians and staff the.

And the commercial impact of this is uncertain.

We believe and note of caution and through the remainder of Q3 is warranty.

Despite the short term uncertainties, we remain bullish on.

On the intermediate and longer term prospects for robust procedure and revenue growth and a post pandemic environment. The gradual lifting of restrictions to access has begun to enable our field teams for once again communicate our story consistently to non interventional physicians, who make decisions about and repurpose the patients for the treatment of ETE.

This is important and that's about 70% of all of <unk> patients are still treated with conservative medical management.

We have also been able to resume in person and physician training VIP visits to our home office technology, Roadshows and executive field travel all of which we believe make an important impact on our goal to penetrate these markets and treat more patients.

Strategically our markets remain large and all 5 of our growth drivers, which we'll discuss now are intact.

While execution continues to be crisp.

Our first growth driver is the expansion of our sales organization to target new hospitals and physicians given the size of our total addressable market as we just detailed.

Our performance in Q2 suggest we treat of just over 5% of all the patients who we believe can benefit from treatment with our devices.

We are very early and our effort to treat this patient population and we believe the effort will require a lot more sales professionals. As a reminder, we began Q2 with 150 territories and shared and our last earnings call that our intent is the finished the calendar year with 180 to 200 territories.

Consistent with our usual cadence, we recently completed another round of hiring field sales professionals and we are comfortably on pace to land and the high end of this range by the end of the year.

The increase and density of our sales organization and the resulting smaller territories provide opportunity to more effectively address our second growth driver, which is building awareness and driving deeper adoption at existing hospital customers.

As we described earlier a high percentage of our target PE and DVT patient populations are currently treated with anti coagulation alone education and training of non interventional physicians, such as emergency Department physicians, Pulmonologist, Intensivists Hospitalists, who off responsible for treatment decisions for these patients is important we can be and both in person and zoom.

And based training of these physicians and groups and individually and in addition, our sales professionals and routinely visit with the non interventional physicians in the current less restrictive environment, often inviting them to observe and already procedures smaller territories have been especially useful for these efforts.

We're also working with our hospital administrators to establish the T programs.

And which systematic processes are installed to identify and triage of our target patients to physicians, who are experts in these disease states the.

These efforts continue to show tangible progress.

Several of our hospital customers for example, recently committed resources to higher dedicated DTE coordinators. We believe that this type of coordinator role has been vital to the growth and treatment of other disease states, such as such as stemming and stroke and.

And we will be similarly important to the development of ETE programs.

We look forward to sharing progress here over time, our third growth driver is to build upon our base of clinical evidence we have a lots of share on this topic for.

First we presented early in June at the New cardiovascular Horizons meeting in New Orleans, and interim analysis of results of the first 250 patients enrolled into our prospective cloud DVT registry.

The safety profile of cloud chamber and remains pristine.

No patients with valve damage.

No patients with brain damage of patients with renal injury and of device related adverse event rate of just 0.4% blood.

Blood loss of just 50, Ccs, which is similar to a standard blood draw, making cloud schrieber thrombectomy virtually bloodless and.

And this was the equally compelling and independent core lab analysis showed near complete clot removal.

And more than 85% of the patients, which led to excellent clinical outcomes at 6 months.

Every single patient reported of reduction in pain and.

And 92% were free from moderate and severe post thrombotic syndrome.

All of these results are best in class by a pretty wide margin.

These results are even more compelling given that 2 thirds of the patients treated and cloud would not have qualified for truck for trials and which competitive devices have been used because of the age of the clot was older than 2 weeks.

As you know has caused the age they become much more firm more wallet here and more resistant to thrombolytic drugs.

And impossible to remove the aspiration.

Shifting gears to pay and we continue to make excellent progress and our flame and flash registries. In addition, we have assembled a steering committee of key opinion leaders to design a series of randomized controlled trials or Rct's debt. We believe will establish flow trigger as standard of care for treatment of P/e.

Today, we are excited to announce the first of these trials.

This trial will compare flow Trevor to catheter directed thrombolysis therapy, or CVT, which we believe still represents the majority of the p/e intervention today.

The composite primary endpoint will comprise deaths intracranial hemorrhage major bleeding clinical deterioration and duration of Ice's day, we're targeting first patient enrollment by Q1 of 2022.

And we plan to follow this with a separate RCT the compare flow traver to standard anticoagulation therapy, and we will have more to say about this trial and future calls we believe our devices change lives and the most extraordinary ways and we remain 100% committed for validating this with the highest level of evidence possible.

We believe also that each cut of registry data, each new and more clinically relevant endpoint we measure.

Each RCT, we initiate and successfully execute not only increases awareness helps drive adoption and moves us closer to establishing these devices and the standard of care, but also raises the bar by which new devices and competitors will be evaluated.

And our forest growth driver is to expand our product portfolio. We have some good news here is well flow favor was cleared by FDA on July 22nd flow favor as many of you might recall is and intuitive disposable filtration system and.

And enable physicians to reintroduce extracted blood back into the patient. This delivers 2 important advantages number 1 we believe that removing all of the clot carry great clinical value to the patient and flow favour allows pursuit of this goal by enabling the physician to wash as many times as they deem necessary without concern for blood loss.

And number 2 by virtually eliminating blood loss and flow traver procedures for.

Low favor establishes bloodless thrombectomy across the entire spectrum of and already procedures again, setting the bar higher both for existing and future competitors.

Flow favor has been highly anticipated by our physicians and has already been received with great enthusiasm. Our 100 patient limited market release or LMR was completed and just 1 week and we have already begun full market release.

And beyond flow favor, our new product pipeline remains robust, we expect FDA clearance on several new products late this year and into the early part of next year and we'll look forward to sharing more at that time.

Our fifth and final growth driver is expansion into adjacent and international markets. We continue to make progress early and our European launch.

Despite what remains a very challenging operating environment. We have now completed cadre of early and flow tree of the cases across most major western European markets and.

And <unk> and feedback from physicians remains highly positive and we are seeing steady increases and our monthly case volumes.

Importantly, we are gaining clarity on our longer term commercial clinical and reimbursement strategies. There is much work ahead of us, but we remain optimistic about our European opportunity.

Finally, I appreciate always the opportunity to close by reminding you that and Ari has more than just business for US. We are committed to of mission. We have committed to changing the lives of our patients and importantly, and beautiful wave and we increasingly sense responsibility and more than merely opportunity and tackling some of the most challenging unmet needs and all of medicine, We love.

Every second of the work and we remain thankful for your support of our effort and for believing along with us and extraordinary possibilities. We're just getting started we believe we can and will grow sustainably for many years to come with that I'd like to turn things over to Mitch.

Thank you Bill and good afternoon, everyone and <unk>.

The revenues for the second quarter of 2021 for $63.5 million compared to $57.4 million for the prior quarter and up $38 million or 150% for the $25.4 million for the same period of prior year the.

The year on year increase was made possible through a bit more normalcy and the business environment versus the COVID-19 shutdown of last year compared to either Q2.2020 for Q1 of 2021, we have expanded our sales force open new accounts and achieved deeper penetration of our products into existing accounts.

Revenue was split between our 2 products as follows 33% of our revenue was derived from the sale of cloud Schrieber products. During the second quarter of 2021, compared with 40% and the second quarter of 2020, and 67% was derived from the sale of flow through of or during the second quarter of 2021 compared to 60% and the same period.

And of the prior year.

Gross margin was 92, 4% for the second quarter of 2021, compared with 86, 3% and the second quarter of 2020.

As a reminder of gross margin in Q2 of 2020 was negatively impacted by a $1.1 million idled capacity charge due to COVID-19.

And the current quarter, we avoided any such impact and we also experienced positive contributions due to product mix and efficiencies and our manufacturing operations.

Operating expenses were $54.5 million and the second quarter of 2021, compared with $22.5 million and the same period of the prior year R&D expense was 11.6 million and the second quarter compared with $3.6 million for the same period of 2020.

And the $8 million increase and R&D expense was primarily driven by an increase and head count as well as product development and clinical evidence development costs.

SG&A expense was $42.9 million and the second quarter of 2021, compared with $18.9 million for the same period of the prior year. The $24 million increase was primarily due to personnel related expenses as the result of increased headcount across our organization.

And public company compliance costs.

Net income for the second quarter of 2021 was $4.1 million compared with a net loss of $3.8 million and the same period of the prior year.

The basic and fully diluted net income per share for the second quarter of 2021, where <unk> and.

<unk>, respectively, and the weighted average basic and diluted share counts were $49.7 million and $55.6 million, respectively, compared with the basic and fully diluted net loss per share of <unk> 16.

And the weighted average basic and diluted share count of $24.3 million for the same period of the prior year. The number of shares last year of significantly lower because of the conversion of the preferred stock and additional common shares issued as a result of the IPO.

I'd like to move on to a few balance sheet updates our cash of $91.3 million and short term investment balance of $84.7 million at the end of Q2.2021 total to $170.176 million compared to $164.2 million at the end of the fourth quarter of 2020.

We have not yet utilized our $30 million revolving credit facility. Although we ended the second quarter with borrowing capacity under the credit line of approximately $23 million.

Our cash flows from operating activities were $7.3 million in the in Q2 of 2021 compared to cash used in operating activities of $1.1 million and Q2 of 2020 as detailed by Bill we are continuing to invest aggressively and our growth drivers and an effort to help and <unk> increased its.

The impact patient lives and the positive manner, we are working to build the business that can grow and an attractive rate and in a sustainable fashion. We are fortunate that thus far we have been able to fund our growth and investments internally, having said that we are not operating the business to deliver any particular quarterly cash flow.

From.

I'll close my comments by addressing the noise financial guidance, while we continue to deal with the various uncertainties discussed during this call. We are comfortable increasing our full year revenue guidance to $250 million to $255 million up from our previous guidance of 240 to 250.

Yeah.

With that I would like to thank you for your attention and I will now turn the call back over to the operator for your questions for.

And the Q&A session Bill and I will be joined by drew hikes, Chief operating officer and by Dr. Tom to Chief Medical Officer.

And thank you.

Okay.

As a reminder to ask the question you will need the press star 1 on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.

And our first question comes from Bob Hopkins from Bank of America. The line is now open.

Oh, Thank you and good afternoon.

Hey.

And I appreciate the chance to ask the questions here I guess 1 is just short term I was wondering if you could just and it.

Provide a little more color on your comments around Q3 and what.

And Youre seeing is the vacations and Covid and I'm just wondering the degree to which this and stuff that you are already seeing and is and actually happening and manifesting in the last week or 2 or it is just stuff that you're kind.

Kind of pointing out is the that's.

As something of that we need to watch.

Wanted to get a little more clarity on what you are seeing.

Yeah. Thanks, Bob So we saw kind of some significant momentum coming out of.

Q2, and we did see a little bit of and impact on vacation and the first.

The first couple of weeks in July.

So, it's just a little bit uncertain, and we certainly see and with our own employees and where we're seeing this I think.

Some of the some of our peer group, but the.

The fact that and I think it is going to abate here at some point right. There is could be going back to school already gathering up for sports teams that sort of thing. So I think it's in the short term sort of phenomenon.

And the duration to which it persists is is the the cost for the uncertainty, but I think we really like our.

Execution, we like what we've seen in terms of.

Program building pudding.

Addressing the Tam the real.

Tam not the not the Covid type Tam.

The the big the big part of our market development opportunity really seems to be picking up some momentum. So I like our chances here and I think we're going to get to some sort of normalcy and the operating environment in the next few weeks Thats how were seeing and.

Okay, Alright, that's helpful and then.

2 other quick things and just as a follow on that as you're providing any thoughts on kind of your how your full year guidance breaks down between Q3 and Q4, sorry, if I missed that and then just 1 other quick longer term comment I'd love to hear from day 1.

And some of the other.

And market opportunities and the United States for you in terms of like for example that arterial market. When do you think we'll get more color on your plans to enter some of those.

Markets that clearly your technology could be well suited to address thank you.

And I start on the product stuff and then let Mitch address.

The net.

And the guidance so we've been a little bit.

And so I think you see where were going here the city.

And the opportunity in markets immediately adjacent to <unk> and immediately adjacent to thrombectomy. Both of those are 2 different things.

We have invested heavily I think we're a little reticent to talk about specifics yet there's a lot of work to do in terms of quantification of the market.

And understanding the.

Any uncertainty around.

<unk> clearance, but I think youll see a stream of new.

<unk> new product releases between let's call. It the end of this year and the first half of next year.

Right into Q3 actually so I think our product pipeline is very very robust. We're really excited about a number of different things not just within the ETE space not just within the thrombectomy space, but.

But a little bit beyond that again these adjacent markets I wish I could get a little bit more specific but I don't want the over promising.

And when we start talking about timelines the potential for over promise.

Exist, especially and that in a regulated environment like ours.

Bob Thanks for your question about the guidance when we look at the numbers year to day I think were of state of about 129.

And if we look at the midpoint of the guidance, which is a certificate to 5 that would leave us about 131.6 for the second half of the year and I think when we would.

Kind of break that number down.

Versus the current consensus Thats out there, we'd probably see Q3 being a little lighter in terms of where that would land and Q4 being the low heavier I think thats largely due to this uncertainty sort of vacation seasonality and you heard about from bill.

Great. Thank you.

Yes.

And thank you and our next question comes from Cecilia furlong from Morgan Stanley. Your line is now open.

Okay. Good afternoon, and thanks for taking the questions I wanted to start off just for.

Let's see if there is the percentage of revenue and there's a little higher and the quarter than we've seen historically, but could you just tie that in with your commentary around COVID-19 and elevating cases, and <unk> and really how youre thinking about and the trends between cheaper and low trigger going forward and you back out Covid impact.

I think yes, so thanks Cecilia and.

Thanks for the opportunity to answer.

<unk>.

So a couple of things we saw a lot of stability between the mix of.

Of P/e cases, and DVT cases and of course that led to some stability between the revenue mix as well, although we do see some flow through of or usage in certain types of DVT procedures.

During Covid and you know kind of at the height of the peak of Covid.

In Q1, we saw probably a little bit more of a trend toward p/e, just because those patients were deemed a bit more urgent.

That's who's being treated procedure and if I can use that word of the term of the verb.

I think we're going to see and a normal environment of stabilization and similar to what we saw.

Through right up to.

Kind of the first quarter. So I don't think there is too much that we would read into this we are not seeing adoption of 1 technology or <unk>.

Faster net net.

More interest in 1.

The disease state versus the other we don't communicate or compensate our sales professionals to deliver 1 message.

And to favor 1 technology or disease state over the other so I don't know I think we'll see some.

The ability over time, maybe 1 or 2 percentage points on occasion, and some of Thats just random noise I think rather than some significant trend.

Okay, that's helpful and I guess.

The second question for me, but just curious what youre seeing from the.

And the procedures, you're confirming the the percentage that are really Tam expansion versus share capture from the legacy the faces using lytic really how that shifted over the past few quarters and then just any updates you can provide to about adoption and Clinton, Kansas and thank you.

Drew you want to take that 1 sure.

So relative to the question around Tam expansion and where the growth is coming from I think we continue to see evidence that our cases are coming from both taking share from the existing minority of patients who are already being treated intervention and increasingly we're seeing evidence that flow through of and clocks.

The river are succeeding and putting new patients on the table on patients that would appear to for been treated with conservative medical management, but because of our purpose built solutions are being treated intervention Lee with mechanical thrombectomy as of first line therapy hard to put numbers to those trends.

I think the base case number that we provided in the past of about a third of our patients to date coming from Tam expansion I think of that number still feels like it's in the ballpark to us.

And I think month after month quarter after quarter those trends are in the direction of Tam expansion, and which gives us some confidence that the work we're doing to drive deeper penetration and the work. We're doing on program development is all beginning to bear fruit.

And to your second question on clot and transit.

We have now like we announced on the previous call a specific indication for clot and transit are key 20 curve.

Launch has proven to be a really effective tool for that patient population. We continue to see cases being done I can't tell you. It's a major contributor to the overall <unk>.

<unk> mixed but it's a very effective product those patients are in dire need of a solution or the very morbid and mortal disease and so.

So we are seeing.

And some number of those cases being done and its growing month after month, but probably not at a material level to the overall commercial franchise.

Okay got it thank you for taking the questions.

Thanks for today and thank you and our next question comes from Larry <unk> from Wells Fargo. Your line is now open.

Good afternoon, guys. Thanks for taking the question and Tom Congratulations on those Rtp's I'll definitely have some questions on those and.

And in the future, but I wanted to focus on a couple of other topics.

Right.

Just starting with the new products Bill.

Flow saver, it sounds like a pretty exciting product.

I wanted to ask about what impact the pricing strategy there.

What impact you think that could help us understand the impact that could have.

To your business and any update on flow stasis and.

And how youre thinking about that would be helpful and I had 1 follow up.

Sure Thanks, Larry and good to talk with you.

And so.

So flow favor flow favor us.

He is being received extremely well we completed the limited market release as I said in the prepared remarks and less than a week and we're in flow of full full market release as of well as of the first and tomorrow. So that's fantastic.

And the in the prepared remarks also there's 2 really important.

<unk> for this and the reason that people are excited about it is because.

There's an increasing awareness and interest to remove all of the clot or as much of the cloud and possibly can and this is not just about making and acute impact on the hemodynamics and the patient that's critically important it's always been important but we're swinging for the fences now we have a device that space and there isn't any reason to leave caught behind and we just eliminated probably the.

And last.

Of the reasons that someone might leave plot behind and that was blood loss right and so we're seeing people whoosh more often the statistics over the first the over the LMR here suggests we are seeing more passes.

Suggesting that people are being a bit more aggressive it and tracking down more plot because they can and of course, the whole concept of bloodless thrombectomy and really really resonates.

So we.

We have seen the enthusiasm is as strong as U S.

And as a 100 patient LMR and 1 week might suggest that we could not be more thrilled with the performance of the device nor with the reception that we've seen from from our field team and from our customers.

Okay.

And then a flow of stages.

Any update there.

Flow stasis look so.

It's a relatively minor product and even the you can imagine the average selling price here is you.

Is is quite low so we want to make sure that we are not.

Distracting our sales team of any 1 minutes spent on AR devices for route relatively low average selling prices of minute that we're not communicating our story about growing the the VT market more broadly. So we have a few specialists. We continue to collect information about where this product might fit theres any number of procedures not just our existing.

<unk> being the thrombectomy procedures and any number of procedures that require access venous access and so I think we were still and me.

The data accumulation phase, but it's gone really well, especially and we target the right positions for the right applications. So beyond that and I don't think Larry you should expect.

No material impact on our on a revenue stream from flow spaces, and certainly not between now and the end of the year and we'll see how how we think about this as we continue to accumulate information and data during the kind of this early phase and.

Hey, Larry I'll frame it up for a follow up on 1 more part of your flow of state of our question, which I think was relative to the pricing strategy just to be clear of that product will be part of our per procedure price.

The strategy on flow through of our so it will not.

Generate incremental revenue, we certainly are confident it's going to generate additional cases and patients being treated so we'll generate revenue from that regard we will have an opportunity to get some upfront stock and revenue from that product like we do with all of our new product introductions, but to be clear it will be part of our per procedure price.

Under flow Traver.

That's helpful. Bill It sounds like things are going well and Europe.

So I'd love to just get just understand kind of of the revenue ramp there if anything has changed and I think of the past you've talked about maybe of $1 million or so this year.

Could you do better and I think when we've looked at competitors.

And maybe 10 to 15 percentage of sales in this area outside the U S. How quickly can you get there do you feel like you can get there.

Well, maybe just how quickly can you get there thanks for taking the questions.

I'll turn that 1 over to Joe as well.

So we continue of like what we see on the ground and Europe, it's still really difficult operating environment with Covid, but we are seeing increases month on month and our case volumes. We're seeing cases now haven't been completed and most of the major western Western European markets.

And the docs are very enthusiastic certainly the unmet need is as prevalent and.

Europe as it is here so we like what were seeing despite a pretty challenging environment and looking ahead to this fall when we had the summer holiday behind us and hopefully a more stable operating environment post pandemic those trends will accelerate we're also getting more clarity on the reimbursement work, we're going to need to do and Europe the clinical work.

And the need to do and Europe, the commercial strategies that will deploy and Europe I think all of that will inform how quickly we're going to be able to get to.

And.

A level that is indeed, a material contributor to the overall business certainly the opportunity is there but.

But I think those efforts are going to be measured in quarters, if not years as we put the pieces in place over time and start building in that direction. So we like what we're seeing but I think.

And that kind of additives reviews before that its measurable, but not material yet I think that's still a fair way to think about the European franchise here probably for the rest of this year and candidly into next year as well.

Thanks drew.

Thank you Larry Thanks for thank you.

And our next question comes from Bill told the net from Canaccord. Your line is now open.

Great. Thanks for taking my questions.

Just first on the debt.

And as kind of the guidance question, 1 more time and it's just on the slowdown in July is there a particular segment of the business it's impacting.

More than others is more on the DVT or the PE side and then <unk>.

And if you could just help us understand and I think bill is in your opening comments just regarding the the stocking.

And the replenishment and the stocking component like how big was stocking in the quarter.

And then are there any metrics on the kind of same store sales that you'd be willing to share with us at this point.

I'm trying to of my ADT, the I'm trying to make sure I've got them all out of straight down here, So let's start with.

So let's start with.

Q2, so I don't think we have seen any material difference and.

In mix that I think that was a phenomenon and that was related specifically.

<unk> Covid only because there is an urgency of all of the hospital beds are full and.

People are running around the hair on fire sort of trying to take care of COVID-19 patients and patients with quote unquote justice swollen leg and Megan sent home from the ER may not be procedures. So I don't think were seeing any any.

The.

<unk>.

Disease state being favored here and the early part of July I want to go back just a half step also and talk a little bit about what we saw in Q2.

We saw what we felt was very very crisp adoption of.

Crisp execution on program development. This whole concept of same store sales. If you think of kind of a bucket and it was leaking COVID-19 patients right that was kind of of sugar high and there was.

These these COVID-19 patients were 15% and down 2.4% and down even a little bit further in July.

Just not many of those patients left to leak out of the bucket and we continue to fill that bucket from the top not only replacing the.

Kind of the Covid patients that went away, but also the.

And the real opportunity here is the.

And kind of the real Tam and that we were putting patients on the table and we continue for patient on the table and a pretty nice clip. So I think when Theres no very few COVID-19 patients left to lease and we have some reasonable operating environment not hindered by.

By the craziness of Covid and lack of access not challenged by some of the.

Some of the vacations that we've seen and again thats, what we kind of saw coming out of.

The late Q2, we really really like our the execution. We're seeing in terms of same store sales. So again, there's a little bit about theres. Some puts and takes here, but if you think about the COVID-19 patients as being kind of of temporary high and and a temporary.

Governor on growth the real opportunity here, where we can where we've.

Executed our plan to build these programs has been very very effective.

And bill on your stocking revenue question the tick a quick glance at the stocking revenue over the past few quarters.

I think youre familiar with this typically are stocking revenues kind of in the low double digits in terms of as a percentage of total revenue and this quarter of a bit higher than net and I think thats largely due to the new product introductions drew made mention of this a minute ago and he was talking about the flow of Sabre. We also have and Q2.

The T 20 curve $2.20 for some products like that and so when those first go out into the field with our active customer accounts. There is some stocking revenue related to that and I think thats something that varies quarter to quarter, depending on the cadence of our new product introductions.

And I was wondering.

The image if you could just help us out and level set of so if you started the quarter at about 15% of Covid and did it for sure about 10% for the quarter event contributed the Covid. Just so we can kind of level set and what's the base you're growing off of going forward with that kind of pulled out of the mix.

Yeah.

If we if we saw a little bit about this bill and if you think about.

Covid going forward.

I don't know I don't know what it looks like right.

We're down to 4% of patients that were treating and theres a little bit of noise in there, but it looks like about 4% of the patient retreating.

Coming out of Q2, our Covid related should we expect.

Some percentage to remain Covid I don't know how many more patients I don't know how long COVID-19 can range on and it seems at some point here were just run out of patients 2 to 2.

And in fact, but right now that looks stable ish.

For the next quarter or 2 and your guests and as good as mine as to whether that might increase or.

The decrease here as we get into Q4, so I think what we're seeing right now is the fairly low level of COVID-19 patients being treated and hopefully it remains that way.

Thank you.

Thank you.

And our next question comes from Danielle analyses from ex the Leerink sort of outline it.

And is now open.

Hey, good afternoon, everyone. Thanks, so much for for taking the question and congrats on a good quarter. Despite all of the ongoing uncertainty and I guess, just I'm sorry about this but 1 of more guidance question, if I take out the <unk> from the procedures the.

Covid sort of impact it looks like procedure volume.

From Q2, I'm, sorry from Q1, and Q2 grew over 20% with love to like Sanity check that if that sounds right to you ex COVID-19.

And I guess as far as confidence and your guidance.

Growth procedures, 20% second half versus first half I can get to the high end of the range is that sort of the right way to think about it.

And of.

So to what you were just saying kind of like more of the more of the same.

And Covid is kind of a wildcard.

Yeah, let me start with that.

The simple math of Youre doing there and as I can.

<unk> argue with it we haven't thought about it exactly like that but certainly with a lot of patients that went away based on COVID-19. So again, we not only replace those patients, but we managed to grow.

1% on non patients. So it was a solid execution and it really.

And again in terms of our second growth driver, just driving deeper adoption of putting patients into the Q and on the table so to speak.

As far as going into.

Into back half of the year and guidance I think we are.

And to communicate here and various different ways that he is probably flattish in Q3.

And we feel pretty good about Q4, we never want to put ourselves in position to over promise, but we feel very confident in the and the guidance that we've just delivered and you can impute are kind of back into what Q4 looks like.

And of course, suggesting right now of the Q3s is flattish so again, we like our chances.

In Q4 as hopefully there is some sort of normalcy associated with with Covid and.

Hopefully some normalcy in terms of.

Vacations and kind of normal Q4.

Activity.

And then by day.

Yeah. Thank you. Thank you for that and then I guess my next question Mitch is going to be a P&L question for you and that gross margin.

Seems like some uplift from AFP and new product introduction and curious how sustainable this level of gross margin.

Because it feels like all of it.

It should be coming down every quarter, but every quarter you keep going up so just curious how to think about that.

The somewhat greater percentage of revenue of the screen driven by the flow Cheever business in Q2.

And the flow of treater carries a higher margin and the cloud <unk>, so that's contributing to that and part.

We're still seeing of pretty stable gross margin outlook for the business the.

Sort of the gross pricing of the 2 products.

With our hospital customers is stable and.

And we are doing more business as time goes on with the larger hospital systems, and idms and so that carries some.

Some admin fees and rebates and things like that and some gpo's.

That could.

Potentially have an impact longer term as well as Jim mentioned, a few minutes ago. The internationalization of the business is something that could impact our gross margin as time goes on we don't necessarily see that having the shorter.

<unk>, that's something that will kind of fold and over the next few years.

So all in all.

And we're seeing a pretty good.

A pretty good the outlook for margin I think as we continue to add products that flow through of a price per procedure, sorry for the flow Driever price per procedure, such as we did this quarter and very recently with the flow saver, and thats something as well that could drag down the margin on the flow fever sort of kit. If you want to think about it that way.

Got it okay. Thanks for that.

Thanks, Danielle thank you.

And our next question comes from the REIT the bulk from BP and your line is now open.

Hi, good evening, Thank you for taking the questions.

Really appreciate all of the color here on the curve of tailwind and.

Some of the growth drivers that are behind the.

The increase in sales here.

I would love to hear a little bit more about how your new newer sales reps are progressing and maybe true if I could ask you for some.

Metrics on how many new accounts for added in the quarter and what percent of <unk>.

The total accounts are using both of clot traver and for Trevor just the metrics that we like the track here.

Sure. So on the first area relative to the new hires we did as you heard Bill mentioned bring onboard kind of our next class our usual cadence of quarterly hires.

We feel good about being on track to that 180.200 and in fact, probably on the higher end of that range that we provided for how large.

Our group will have as we exit this year.

So no big changes there.

We continue to.

Like the depth and the quality of the candidate pools that were attracting for those open positions. We were able to train this last class and person which was a nice.

The change relative to the series of classes before that and the height of the pandemic. When we were doing zoom based classes. So this class is off to a good start.

And the vast majority of them are stepping into some type of split territories. So they've got a.

A group of accounts, where they're going to be trying to drive deeper and deeper penetration. So no big changes from that standpoint relative to your second group of questions on new account adds.

Last quarter on our call. We shared we were kind of closing in on the 1000 accounts Mark.

During Q2, we increased that.

And now we are closing in on call. It 1100 accounts.

So we had kind of a similar level of new account adds during the quarter I can't tell you. That's the specific focus for us necessarily.

The vast majority of our focus commercially is on driving penetration, but we did add about 100 new accounts.

And still today about 60% of those accounts are using both technologies and the remaining 40% of those active accounts are only using flow traver or <unk>.

So now, okay, and Thats overtime, yes, okay. Thanks.

Thanks for the Okay, yes, exactly what that and looking for thank you for that I guess I'll ask my follow up here, maybe just trying to think to and very short ones.

The discussion of new Adjacencies and understand that we need to the patient and wait for more detail there, but is that something where you'll be able to use the same sales force the target those.

Clinicians whoever they are and those adjacencies and secondly on VT VT coordinators give us a sense of just how meaningful that could be true adoption and awareness of mechanical thrombectomy.

And thanks, so much for the questions.

Sure.

You will take the first 1 drew I'll sure if I can and.

So I think the short answer is in terms of the go to market strategy for some of these new products entering what will be new Tam I think we're still assessing the options there and we're looking at.

Everything on a spectrum from.

A single sales organization that would have all of those products.

The other the spectrum of course would be multiple sales organizations with the tighter focus and a more specialized approach and there are pros and cons of all of those I'm not sure we're quite far enough along yet and are planning to really.

And have determined our approach and it may well look different across the multiple projects debt.

We will be bringing to market. So stay tuned on all of that and I think as we get closer to actually commercializing those products, we will be making some decisions about the optimal.

Channel strategy for each of them.

And the second question.

Maria I think will of Tom and so he kind of grew up in cardiology as the stemming market was undergoing a transformation that we think is a reasonable model for the way we're thinking about ETE. So maybe Tom can handle the VT coordinator discussion great. Thanks for the question Murray.

And you look at some of the major cardiovascular diseases.

Such as heart attack and stroke, you can see that they are complex diseases required requiring really of programmatic approach for the identification systematic kind of triage of these patients treatment and follow up other disease states like aortic stenosis with <unk> all have really benefited from.

Coordinator, who is oftentimes described is the glue that really keeps the program together they are involved and the.

And the systematic review to identify patients to get follow up to be the bridge between the <unk>.

<unk> types of physicians, who have.

Challenges working together and communicating and so we think this is 1 of the critical elements required to get us from where we are now to really a state of.

The centers of excellence for ETE care.

Sure.

Great color. Thank you so much.

Thank you and.

Ladies and gentlemen that is star 1 if you have a question and we have a follow up question from Bill Hello. The next from Canaccord. Your line is now open.

Great. Thanks.

And through a couple of model questions. If I can just I.

I think you guys have a new facility coming online soon.

What should we expect in terms of an impact and the gross margin on the and then I think through the end of Q I said the.

And maybe it's in the past, but is there a onetime charge for some stock comp that's coming in and Q3 kind of a change in accounting and then lastly.

Those really big jump and the R&D spend.

I mean, well above what we're looking for and just trying to find it.

Got the the personnel and all of the different things, but is there any 1 thing that's really driving net debt.

We should be thinking about thanks.

Let me, let me take the the R&D spend first and the Michigan handle the on the other detailed financial questions. So 2 of our 3 growth of our 2 of our 5 growth drivers Bill are R&D related on the development of clinical evidence and of course development of products and yes, we are aggressively as aggressive as we can possibly be.

We are working on those on those growth drivers and again, we've hinted that there is a number of products. We love the pipeline that we have coming down the pike here.

And I think you have seen already almost every conference call. Almost every earnings call. We have of new cut of data from <unk>.

2 different registries and now 3 different registries. If you include the flame.

And high risk sub massive high risk and and massive patient population, we expanded the flash.

Registry to include anti coagulation only patients and.

And other armed for Wearables. So we can track these patients activity level of pulse oximetry and.

Of our OTT, SaaS and heart rate and so forth 6 minute walk tests over times all of these things I think really do contribute to not only.

The growth in our and our revenue numbers, but and understanding of the disease State and I think is really really important to us of our mission and more broadly. So yes, we are very very aggressively.

Investing in those 2.

The growth drivers.

With respect to the question about facility.

We are going live with the new and R&D facility here. During Q3. So the key folks are occupied actually at the new facility today and the balance of the company will probably be moving over during sort of the September timeframe because.

As you would expect for the clean room and things we're working on certification of the state of California for that and so we expect either in the late Q3 timeframe or early Q4 timeframe that will be fully operational over there the margin impact of the new facility I think is going to be less noticeable frankly, it's noticeable at all.

During Q3 as opposed to some impact in Q4, even so I think youll see a fairly small impact so it might not be something that will be very noticeable although we're happy to try to call that out for you when we do the.

The update in November.

The other question you asked was about the.

And noncash stock based comp charge, which will be reported as a subsequent event and the Q and that will be.

Hit the income statement for the company and Q3, we had 1 actually 1 of our earliest employees who retired.

As of August 1 and so we recognized some RSC of acceleration that related to his retirement and Thats just the basically the impact of that that youll see flow through the income statement during the third quarter.

So we see that and the SG&A line, the R&D of the Cogs volume.

SG&A line.

Okay, great. Thanks, so much.

Problem.

Thank you Anne and thank you for your question and Joe.

And no further question. This concludes today's conference call. Thank you for participating and you may now disconnect.