Q2 2021 Apollo Endosurgery Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to Apollo and or.
Second quarter 2021 results.
This time, all participants have been placed on a listen only mode on the floor will be open for your questions and comments following the presentation.
It's now my pleasure to your.
Host, Matt Kreps, Sir the floor is yours.
Thank you Catherine and thanks to everyone for participating on today's call to discuss the Apollo second quarter 2021 financial and operating results.
Joining me on the call of our child's Mcmullen, Chief Executive Officer, Stefanie Cavanaugh, our Chief Financial Officer. The also joining today's call is Jeff Black our incoming Chief Financial Officer, who will officially assume the duties upon the filing of our second quarter form 10-Q.
Before we begin I would like to caution listeners that comments made by management. During this conference call will include forward looking statements within the meaning of federal securities laws, including Apollo's financial outlook kind of pause plans and timing of product development and sales and.
In addition, there is uncertainty about the spread of the COVID-19 virus on the.
The impact it may have on our operations the demand for our products global supply chain and economic activity in general.
These forward looking statements involve material risks and uncertainties.
Actual results may differ materially.
For a discussion of risk factors on car.
Marriage, you to review of the company's annual report on form 10-K for the year ending December 31, 2020, if all of previously with the Securities and Exchange Commission and our most recent form 10-Q the.
This conference call contains time sensitive information that is.
Accurate only as of the date of the live broadcast August 3.2021.
Except as required by law, the Apollo undertakes no obligation to revise or update any statements reflect events or circumstances. After the day of this call.
And now with the I'd like to turn the call over to Charles.
Good afternoon, everyone and thank you for joining today's call are strong momentum continued into the second quarter driving of our fourth straight quarter of sales growth.
In the release, the just crossed the wire, we reported record sales of our endoscopy products of $16.6 million for the second quarter.
Leading us to increase our revenue guidance for the full year from 55% to $57 million to now 61% to $63 million.
You may remember that in my first call with you on May I laid out of the growth strategy with 3 phases to energize the business accelerate growth and lead from the front.
Our investor deck available on line includes the slide describing the 3 phases in more detail. The results were reported day clearly align with the first phase energize as we seek to deliver transformational growth at Apollo.
The energized saves is all about building momentum by driving near term performance and achieving strategic milestones that will lay the foundation for years of sustainable growth.
Customer demand for our products is increasing around the world and we're seeing that reflected our performance. Despite ongoing challenges presented by the pandemic and.
In addition to delivering record revenue for our endoscopic suturing and integrates the balloon businesses. We made substantial progress on many key initiatives. These include first transforming our senior leadership team with the recent appointments of pro jealous our VP of U S sales, Steve Baas rock.
The P of marketing of medical education, and Jeff Black our incoming CFO, who started this week and is with us on today's call.
The second strengthening and expanding our sales team in the U S. We have hired back for experienced sales reps all of whom are fully trained on our products and were previously top performers. In addition, we have recently opened 6 additional new U S sales positions and some key positions in our international team to further improve coverage and.
Allow our sales team to focus on driving growth and high priority geographies.
Third announcing that the net study investigators have reported that in the preliminary analysis. The trial has achieved its primary efficacy and safety endpoints and fourth continuing the successful launch of our novel ex Tac Helix tacking system with more than 120 active sites at the end of Q2.
Since starting at Apollo earlier, this year I've been engaging with customers continually as had many on our leadership team.
We consistently hear feedback of physicians love our products and now they also share our excitement for the revitalization of that is taking place on Apollo.
Turning now to updates on each of our product lines, starting with Overstitch, we continue to see strong overstitch demand from our core users. We are very pleased to see that of Q2 growth of overstitch was driven by an increase in both the total number of accounts ordering and the average revenue per account. This tells me that we are successfully growing the base.
The physicians who are trained in using overstitch, while also increasing adoption among our experienced users.
Our mobile learning lab is back on the road training physicians on our products and our training programs continue to evolve to best meet the needs of physicians, we worked closely with such as physician societies, such as the American Society for gastrointestinal Endoscopy, the Asce, who just last week hosted an excellent training program.
On the endoscopic suturing with overstitch.
Outside the U S. We are seeing the strong results despite periodic COVID-19 flare ups in the various markets around the world might got our edge on our international team have done a remarkable job navigating these complex market dynamics in the first half of the year on conditions continuing to improve in most of our markets. We do anticipate that the disruptions from Covid Wilkes.
You knew the pop up but we are seeing broad basis of improvements in both our direct and distributor markets that we expect will continue to build in the second half of the year.
Perhaps 1 of the most significant overstitch milestones to date came in June at the surgical disruptive technology Summit, where the Merit study investigators announced that based on our preliminary analysis. The study of achieved its primary endpoints for both efficacy and safety.
I am pleased to now report that the mirror study results have been accepted for presentation at the by the International Federation for the surgery of obesity and metabolic disorders, otherwise known as if so at the annual meeting in Miami on October.
Based on the positive announcement that the merit of about the Merit trial endpoints, we anticipate filing of de Novo submission with the FDA for a new indication for weight loss, most likely in the third quarter.
In addition, we are initiating preparation for a comprehensive launch of the ESG procedure at the time of the new indication.
We are very excited about this milestone because we believe ESG has the potential to be transformative not just for our business, but also to the millions of patients worldwide looking for weight loss solution that better fits their needs. As a reminder, there are more than 100 million adults in the U S alone with the BMI greater than 30, and there is a vast unmet clinical.
Need for new treatment options.
Our sense of optimism for ESG stems directly from what we hear from our customers who are expressing rising enthusiasm on 2 dimensions first that the ESG value proposition resonate very well with patients and second that they have been experienced success of the offering both provider driven cash pay solutions as well as some positive case by case of reimbursement.
Decisions by private payers.
Turning to ex Tac the customer response continues to be very promising on our may call. We announced that we had added over 50 accounts in the first quarter and I'm pleased to say that we are now more than 120 accounts in the U S. We are.
We also have initiated our O U S launch in select countries, including Hong Kong, Chile in Israel and are making plans for additional markets.
Our <unk> ex Tac launch will be targeted to select markets. Initially while we work through the new procedures to gain CE Mark in Europe, which we believe will be of 2022 event.
Our U S. Ex Tac rollout initially targeted experience overstitch users, which made good sense and generated initial interest in the product.
Awareness about ex debt continues to build on the GI community and the end of the second quarter. We have a pipeline of approximately 80 additional perspective accounts was approximately $650000 of initial orders to be delivered upon completion.
That said under the direction of Kirk Ellis and Steve <unk>, our new commercial leadership team in the U S is increasingly focusing sales activities on driving additional utilization within the key targeted institutions rather than simply opening up a large number of new accounts. We believe this approach can generate more sustainable success by having multiple users at each hospital.
<unk>, including many who are not existing overstitch users and create highly experienced advocates who see ex Tac because of vital tool that they rely on frankly for the closure needs.
We are also supporting multiple clinical evaluations of <unk> check with several papers and development based on initial cases that have already been completed.
We look forward to the first clinical publications in the months ahead.
We anticipate the these studies will further document ex Tac unique benefits and ease of use and the closure of applications for which it was specifically designed in short we are very pleased with the initial clinical performance of this highly differentiated and effective product and we look forward to building on its initial success going forward.
Recognizing the beazer simply the anecdotes allow me to share some additional comments. So we've just recently received about ex Tac <unk>.
Physician within a large VA hospital share of quote ex <unk> is going to be the new normal and endoscopic repairs.
From the user at a major medical center.
Ex decades has good applications and tend to replace the need for a lot of Endo Chris.
And finally, a message from another kols position after their first case I absolutely love the ex Tac device I use the last week for the first time on a very challenging case, the ex tax system works beautifully on 100% obsessed.
This enthusiasm from our customers driven by delivering better patient care and real clinical success is very rewarding to our entire team, but especially the R&D engineers, who develop this outstanding product.
And completing the product updates or bearer of contingent demonstrate very compelling performance on a global basis, achieving the best revenue quarter. Since the very early days of the launch of the U S. I continue to believe that this is a potentially underappreciated asset.
Seeing growing market adoption of IGD is of less invasive but effective weight loss solution for those needing something more effective the diet and exercise of alone of areas, the leading IGD market as the market leader globally.
With an unmatched body of clinical evidence excellent weight loss results.
An excellent value for the patient.
A recent publication of new clinical practice guidelines by the American Gastroenterology Association had been very well received and there were many positive sessions about the role of balloon therapy of the 2021 digestive disease week meeting in May.
Looking ahead, we believe the recent positive announcement of new category, 1 CPT codes by the RGB procedures.
And the FDA breakthrough designation for the treatment of Nash further bolster the potential value of the franchise.
We are now seeing rapidly rising interest among physicians and building dedicated endo bariatric practices another development in favor of or bear on the.
The ALJ has created the specialty group called the association of very metric endoscopy that is focused on developing this emerging field.
In addition, there were multiple sessions of the DD other you meeting.
Developing successful Endo bariatric practices, which include the placement of integral the balloon such as are the era is 1 of the cornerstone of procedures offered the patients.
Overtime, we believe that endoscopic suturing, including both primary ESG procedures and endoscopic revisions of prior biometric surgeries could become the second cornerstone Apollo product lines are uniquely positioned to support this emerging field.
And briefly an update on our better for Nash recall, the non alcoholic Seattle hepatitis or Nash is a debilitating condition that impacts the millions of patients and is 1 of the leading conditions that caused the need for a liver transplant in February of received a breakthrough designation for <unk> for this new indication of Nash, we continue to work on potential designs for.
Our of Nash pivotal trial, and we will continue to make additional updates on this as it becomes and the better focus.
FDA breakthrough designation was a seminal event for us and an affirmation of RGB is full potential as the therapeutic solution.
With this update I hope to have 10 day of the tremendous sense of excitement and momentum that permeates Apollo right now in my first 2 quarters of CEO I've had the pleasure of hearing directly from our customers.
How positively they view of Apollo's products and in addition, our team here at Apollo has a passion for improving patient care and of dedication to advancing the field of therapeutic endoscopy, we are well positioned to deliver continued growth with large opportunities across all 3 of our product lines. We continue to build our capabilities, including the addition to our sales and marketing team.
And we work to scale supply and expand our volumes across all 3 platforms and move towards the accelerate phase of our growth strategy with that I'll turn the call over to Stephanie to cover the second quarter financial results.
Thank you Chad and good afternoon, everyone. The second quarter of 2021 demonstrated strong growth leading to record of endoscopy revenue.
This is indicative of our strong momentum as well as the recovery from the COVID-19 pandemic, even with some U S States and our U S countries continuing to experience periodic Covid Chargers, which is continuing to limit access and certain health care systems.
Total revenue was $16.6 million up 20% sequentially from the first quarter and 194% over the second quarter of 2020.
Yes, that's revenue increase of 196% and RGB revenue increased 220% versus the prior year.
The product lines demonstrated large increases in both of the U S and O U S markets as demand for our products has continued to increase exiting the pandemic.
As a reminder, ex Tac sales are included in our <unk> results, which we don't intend to disclose separately at this time.
We did cross the $1 billion market net and ex Tac sales since the launch in Q1.
Yeah.
Oh, you ex markets performed well in the quarter as activity continues to increase as more of on markets recover from the effects of the pandemic.
In particular, we are very pleased with performance of our direct markets in Europe. Despite.
Despite COVID-19 related shutdowns and a number of countries in Q2, our European direct markets delivered of 190% growth compared to the prior year quarter and 24% sequential growth.
As both overstitch and or bear on demand improved.
The strong Q2 performance gives us confidence in the growing market opportunities for both product lines and key markets around the world.
Gross.
<unk> also continued to improve increasing the 55%.
Due to higher sales and the accretive contribution from ex Tac, which was designed from the beginning to the accretive to our historical consolidated gross margin.
In addition, we continue to make progress on our internal program of gross margin improvement projects.
Operating expenses increased as we expanded investment in growth initiatives, including.
Strategic hiring in our marketing and sales organization as well as higher stock based compensation expenses as compared to the cost of Charles we implemented during the pandemic and the prior year.
Operating loss of also increased to $5.2 million, primarily as a result of the noncash stock compensation expense I just mentioned.
We recorded a $2.9 million benefit on the forgiveness of the PPP loans this quarter, resulting in the net loss of $3 million or <unk> 11 per share.
Excluding the noncash stock compensation and loan forgiveness, our net loss improved 42% compared to the second quarter of 2020.
And 14% on a sequential basis this year.
Turning to the balance sheet, our cash position remains strong at $31.2 million compared with $32.6 million at the end of the first quarter of decline of just over $1 million as the 2 million used for operations. This quarter was offset by $1 million of stock option proceeds.
As Chad mentioned at the beginning we are pleased to have delivered a solid first half and increased our full year revenue target from the 55% to $57 million estimated on our last call to the 61% to $63 million today.
Representing a $6 million increase and annual revenue growth of 45% to 6%.
A number of continued uncertainties are reflected in that range. We continue to anticipate ongoing uncertainty around the impact of COVID-19 variance in certain markets, particularly our U S. In the second half of 2021.
We also anticipate of typical seasonal summer slowdown and procedure volumes in the third quarter.
And finally, we are still in the early days of our ex Tac product lines and continue to learn about the likely growth of new accounts and ex Tac the utilization over time.
Thanks, Stephanie and before we move to Q&A I would like to officially welcome and introduce jet-black through joins the Apollo as CFO of this week, Jeff brings 30 years of experience to Apollo Endo surgery. Most recently served as Chief Financial Officer at Alphatec Holdings of medical Technology company, providing spinal fusion solutions.
Jeff played a key role in the successful turnaround of the company securing nearly $500 million in financing to support accelerated growth transformed the balance sheet and execute strategic acquisitions under his leadership Alphatec grew from a market capitalization of $20 million to more than 1 of $5 billion.
I would also like to thank Stephanie for invaluable contribution to follow over the past 6 years and I'm very pleased with debt will be continuing on with us as we position the company for the next phase of growth Stephanie. Thank you and Jeff welcome to Apollo. Thank.
Thank you Jasmine and good afternoon, everybody I could not be happy to be joining Chad and the team during a very exciting time for the company. There is a tremendous opportunity ahead of us to improve patient lives to transform and even expand a very large and growing market with truly differentiated technology.
And all with the the <unk>.
Hi towards continuing to build shareholder value.
The steps built a very strong finance foundation here at Apollo I look forward to partnering her with her as we prudently scale the organization to support our plans for accelerated growth.
Many of you on this call I know and looking forward to getting reconnected reacquainted, others, I don't and looking forward to getting to know you in the coming days and weeks.
With that concludes our prepared remarks on I'll turn it back over to the operator for questions.
Ladies and gentlemen, the floor is now open for questions.
If you have any questions or comments. Please press star 1 on your phone now we ask that while posing your question. Please pickup your handset sales.
Your phone to provide opt on some quality.
Your first question is coming from Matt Hewitt with Craig Hallum Your.
Your line of lives.
Good afternoon, congratulations on the the very strong quarter and welcome Jeff.
Thank you.
GAAP.
The first up.
Obviously, a big bounce back from where we were a year ago relatively easy comp given what happened a year ago, but we're still seeing pockets that you were able to put up some really strong numbers how much of that do you think was some pent up demand versus just the growth that youre seeing in new sites offering ex Tac.
Overstitch are bare coming back is there a way to kind of parse through it and see where that growth is coming from.
Yeah.
Yes, Matt we actually think this is this is real growth right.
As you recall, we had a little bit of a bounce back in Q3 of the last year.
It had.
Historically, the terms of very strong Q3, especially when you factor in seasonality. Since then we've been growing quarter on quarter. Since then and so the underlying demand across all 3 products is really driving that growth, yes of course ex tax incremental and we're happy about that but we're also seeing really strong.
On performances with both overstitch and with the balloon franchise.
That's great and then I guess, the pointing the ex Tac, obviously, a fantastic quarter of.
Additions to the sites and I'm curious have you is there a.
Learning curve on getting through some of these hospital committees that you've kind of figured out now it shouldn't enable you to get through the next 80 quicker or is it just every site is different and you kind of got to go through of different process with each of them.
It's a little bit of both Matt, Yes, we certainly can months of best practices as we've been through it now but you are right every hospital has their own processes.
Some of them that we are.
The thought would go quickly you have taken longer and others of move really rapidly.
It's hard to predict.
This is an area of that it helps as we continue to build the team just to have more folks.
Available of the sort of shepherd that and manage the process.
But I would also reiterate we also are very much focusing the team on we're happy to continue to take on additional customers and work through the process, but we're really focusing our sales team, especially with the new commercial leadership on depth of the utilization we want to make sure of not only to get the product on the shelf, but to make sure that we're targeting multiple users in each account.
And have it become part of the practice and that takes some work right. That's the.
It's changing behavior of medicine.
And getting them used to using the product and incorporating their day to day practice, but we're seeing positive examples of that and that's going to be really our primary focus.
Okay. That's great maybe 1 last 1 then I'll hop back in the queue.
Regarding.
The the new salespeople. So you added 4 domestic here in the quarter. It sounds like you've got a few more openings that youre going to be home.
Hopefully filling could you give us an update on what is your current head count for both the domestic sales team and then the international direct markets. Thank you.
For the domestic sales team, we have with the 4 additions we have 20 sales reps and then our total team of about 25 people when.
When you account managers in another role.
The.
Are you at the similar yes, let me give a sort of similar size. We can give you the exact number but it's very similar in scale.
That's great. Thank you very much and congratulations.
Thanks, Matt.
Your next question is coming from Adam <unk> with Piper Sandler.
Your line of bi.
Hey, guys. Thanks for taking the questions and congrats on the great quarter and Echo.
Echo Matts comments, Jeff welcome aboard and congrats on the new role on staff Kudos to you on a job well done.
Maybe just to start with 1 on the guidance I was hoping you could.
Kind of rehash that a little bit for us just walk through the different components of their assumptions for the different segments of the business I think Stephanie you talked a little bit about seasonality in Q3.
Some conservatism around the delta very enter of Covid. So is it reasonable to assume that there's something baked in there for those items and then just broad strokes you know thinking about.
The cadence in the back half of the year Q3 versus Q4 would be curious on getting.
Some color there as well and I had a follow up on too.
Sure. Thanks, Adam.
The.
The as we look to the back half of the year, we don't break out the individual products.
As you can see from our results, we're seeing growth across all 3 product lines. So we're excited about that.
We as we as I said on the comments, we absolutely are expecting receptive.
A seasonal effect.
Last year's obviously, a little bit of the outlier, but if you go back to 2019 and even before that.
We have historically shown of seasonal impacts.
And if anything it may be more pronounced this year I think about just vacations in the.
The schedules, we have a big international business as you know in cell European holidays on August all indications are.
It used to take 2 weeks they might take 3 years right.
Just so the seasonal impact is real and we're certainly planning for some of that.
I think the Covid piece.
As I mentioned in my comments I've been very impressed with how the team has managed through it but we certainly see examples.
<unk>.
I think we used to talk about coming out of Covid I'm not sure what the new norm will be in terms of the COVID-19 going forward, but we're certainly watching that carefully.
Primarily outside the U S. But you know the occasional pockets here, so far and on a major impact in the U S, but Louisiana, Florida are markets that all of us are watching for obvious reasons.
And then just the learning curve of ex Tac it hadn't been in humans before 6 months ago. So we're still learning the the uptake in both new accounts on utilization. So all of those are factored into the range.
And certainly you would see a seasonal impact in Q3, and historically Q4 is the strong a strong quarter for us.
That's really helpful. Chad Thanks for all of the color there and then if I can sneak in 2 more and other a handful of of positive updates.
On the call today, so maybe just starting with <unk>.
Overstitch and the Merit study I guess the question here is really on.
How do you think about the potential impact from a reimbursement of up here perspective, when could that come to fruition is that of 2022 or 2023 events and then you gave the update on.
The de Novo submission for a weight loss indication I think you said, that's most likely of Q3 filing on assuming that means ESG specific label.
Do I have that right and of that potentially kind of on a mid 'twenty 2 items and then I'll sneak in 1 more if that's okay. After that.
Sure the.
The.
So ESG and the development of Youre right. The 2 major milestones in front of us will be the presentation of the mayor of data itself and then using that towards the indication.
And as I mentioned on the call we are working feverishly.
We would hope to have that the submission for the novo potentially this quarter.
That's a 6 to 12 month process, depending on the level of questions and.
So in our in our Investor deck, we have the kind of wide range of first half of next year.
And we will update on as we learn more on that.
And I focus on the indication because I think it's an important part of the answer to your question about reimbursement.
As I mentioned in my comments, we're already seeing examples of our customers and then we're not promoting it right. This is our customers independently.
Following 2 models both of the cash pay model as well as a case by case reimbursement model prior authorizations using existing on most of codes and duty of quite successfully and I would say, especially for revisions of very hatrick surgeries.
And so we're well on the learning stage right now the seeing what they are what they are doing and where they are having success and then what actions. We can then would be able to appropriately take if and when we have the indication.
And those 2 models both cash pay on the case by case reimbursement with an indication we think can be very successful in driving a lot of growth. While we will then work on I think the base of your question the broader coding coverage and payment.
That will need to also take place and so we have plans in place to pursue the procedural codes are things like new APC codes.
And.
And as well as in patient, but it is primarily an outpatient procedure of so the new codes there those can happen pretty quickly.
In terms of the filing after the indications, but then often take a fair amount of time to again put into place so probably more of the 2023 kind of event.
And then the CPT coding the societies drive that and Theyre working through it but that also will take some time as you know the balloon codes. We just got approval for they don't go into place until 2023, and so if anything ESG will probably be at least a year later than that.
Just because of the need the data needed to work through the processes.
But again.
So summarizing I'd say, we've got a lot of opportunities in the here and now even using the existing practices that our customers are already pursuing.
That's a great update thanks for that and if I can sneak in just 1 more.
Maybe transitioning to <unk>.
And the Nash indication it sounds like the.
<unk>.
The path forward there in terms of the trial design is still a little bit.
In progress through development.
Can you give us any flavor at this point in time in terms of kind of what you think will be required from a clinical trial standpoint in terms of number of patients or follow up just trying to get some sort of rough sense for when this could be on label on the states. Thanks, again and congrats on the strong performance.
Yes, I think that on the.
Not much of an update honestly on the Nash.
Just because we're still working through I think I mentioned on the last call.
On the.
There are a lot of benefits to the breakthrough designation, but 1 of the elements of you've got is that we end up working with not 1 of the 2 agencies on the design of the trial on them because they both have a say in what it looks like and so we're we're working with them on the design and I'm optimistic that we'll get that worked through on.
On a reasonable of course, but it's hard to speculate on exactly what the trial will look like until we're a little further along in that process and so we're working on it.
And we'll provide an update once we have some intangible.
Sounds good thank you.
Your next question is coming from Frank Tackiness.
From Lake Street.
Hey, Thanks for taking my questions.
Echo previous comments about welcome Jeff and thanks for everything you've done on stuff, that's been a fantastic run and glad to see you're sticking on board for the remainder of the year at the minimum.
Couple of questions from me wanted to first start with ex Tac.
Comments about both.
The new accounts as well as utilization was hoping 1 you could kind of help us frame the broader total account opportunity beyond the 220, plus 80, so far as well as some of the utilization trends you are seeing in the early days and how you believe utilization could trend over time and to what level of some of your.
Your your higher level users make it too.
Yeah the.
So first on the account universe, 1 of the exercises that we've done with the new T Symphony team has come on board as we purchased very detailed level data on procedures.
And you can get it by account and by physician of relevant procedures.
For example of mucosal resection procedures that are being done on the golar and from that we can glean a pretty good understanding of where the procedure volumes are.
Both within the hospital setting as well as within the ASC setting.
On the based off of those data.
We've got a pretty good indication that there could be as many as 500. The 2000 accounts in the U S. Now that all remains to be seen but thats based off of real data with.
And with a pretty high cutoff in terms of how many procedures they are doing.
Each year. So we're still on the early days of this.
And then more on part of it we're going to focus as I said on on the high end, even within that data I mentioned, the sort of broader universe at the top levels of that universe of again to get depth in the.
In those institutions.
The second question on the utilization and frankly, we're still learning.
On that on the our while we continue to hear is that ex Tac has on flexibility to a broader user base than overstitch, it's pretty common for overstitch to have say a couple of users within a even a pretty large account because of the learning curve involved with overstitch.
And but in some of our early accounts with ex Tac. We see examples of the 4 of 5 physicians or more who are already interested in others, who are learning about it so.
Out of the account level the utilization of potential will really be dependent on our ability to identify and train and engage multiple users to then incorporate into their practice and so as we get more data and more experience.
Then maybe on the decision to give you a sort of a firmer numbers on that but that's what we're focused on right now.
Got it that makes sense and on transitioning over to overstitch could you or yes. That's in general could you break out a little bit more.
Some of the puts and takes of driving the strength in the quarter and specifically could you maybe speak to ESG trends growth rates. If you have anything of that nature, you could share with us.
The well what I said in the opening comments broadly is low.
We've seen a growth in the number of accounts.
Using in the quarter.
As well as the average per account and so the number of accounts, which in the U. S is now at 400 accounts, who are actively using in Q3, sorry Q2.
And that's driven by both our core Gi.
So call it non bariatrics.
In fact, that's where a lot of people often start.
Overstitch, especially if the <unk>.
And I mentioned, we're doing a lot of training programs and continue to bring people on there.
And then we also are growing and the revenue per account and that can be both from the core Gi side as well as.
From the Reattribution <unk> I think we want to get a little bit more experience and certainly get into the the zone of having a new indication to really be able to talk through the sort of endo bariatric opportunity, but suffice it to say that we certainly have examples of a number of customers who have embraced that opportunity of being quite successful.
The using both of the payment models, what I mentioned before.
Got it and then last 1 from me sort of Opex was a little bit elevated that makes sense with the strong quarter I applaud spending to grow the business establish on standard of care was curious if we should look at Q2 ads in the run rate on a go forward basis or if there is anything specific.
And the operating expense, we should know about that may not recur on a go forward basis.
No I think youre right. It is indicative of the.
The future moving forward, what I would point out however is a fair amount of the increase from Q1, the Q2 if of noncash stock comp related items.
And when you when you get to our Q filing youll be able to see all of that broken out on the foot and our cash flow reports.
But essentially that went up quite a bit from Q on Q2 for all of the performance related options and <unk>.
And stock units given our good performance.
So we expect that trend to continue into the moving forward quarters.
Perfect. Thank you for taking all my questions.
Yeah.
Yeah.
We have no further questions from the lines at this time I would now like to turn the floor back to chose mccahon for closing remarks.
Thank you Catherine and thank you everyone for joining us today, it's been a busy and rewarding second quarter and we've got even more excitement for the second half of the year as we continue analyze the business in pursuit of attractive opportunities do you have any questions you'd like to arrange a call with US Please contact Matt Kreps from Darrow associates.
Thank you and have a great evening.
Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time on everyone Wonderful day. Thank you for your participation.
Okay.