Q2 2022 Cardiovascular Systems Inc Earnings Call

Speaker 1: I'm going to say, Chairman, President, Chief Executive Officer, Ronda Robb, Chief Operating Officer, and Jeff Point's Chief Financial Officer.

Executive Officer, Rhonda Robb, Chief operating Officer, Jeff points, Chief Financial Officer earlier. This morning, we issued a press release announcing second quarter results you may find a copy of this release on our Investor Relations section of our corporate website. Here. You May also find an earnings supplement that includes additional details on our performance and outlook during.

Speaker 1: Earlier this morning, we issued a press release announcing second quarter results. You may find a copy of this release on our Investor Relations section of our corporate website. Here, you may also find an earning supplement that includes additional details on our performance and outlook. During today's call, we will make...

During today's call we will make forward looking statements. These forward looking statements are covered under the safe Harbor provisions of the private Securities Litigation Reform Act of 1095 and include statements regarding Csi's future financial and operating results or other statements that are not historical facts actual results could differ materially from those stated or implied by our forward look.

Speaker 1: These four-looking statements are covered under the Safe Harbor provisions of the Private Security's litigation reform act of 1995 and include statements regarding CSI's future financial and operating results or other statements that are not historical facts.

Speaker 1: Actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties, including those described in our most recent form 10K and subsequent quarterly reports on form 10Q.

Statements due to certain risks and uncertainties, including those described in our most recent Form 10-K and subsequent quarterly reports on Form 10-Q in particular, the COVID-19 pandemic has created risks and uncertainties for our business results of operations financial conditions and prospects, which we will discuss on this call.

Speaker 1: In particular, the COVID-19 pandemic has created risks and uncertainties for our business.

Speaker 1: results of operations, financial conditions, and prospects, which we will discuss on this call.

Speaker 1: CSI disclaims any duty to update or revise our forward-looking statements as a result of new information, future events, developments, or otherwise. We will also refer to non- GAAP measures because we believe they provide useful information for our investors. Today's press release contains a reconciliation to GAP results. I will now turn the call over to Scott Ward.

CSI disclaims any duty to update or revise our forward looking statements as a result of new information future events developments or otherwise we will also refer to non-GAAP measures because we believe they provide useful information for our investors. Today's press release contains a reconciliation to GAAP results I will now turn the call over to Scott Ward.

Thank you Jack good morning, everyone and welcome to the call.

Today, we reported Q2 worldwide revenue of $59 1 million, representing a one 3% sequential increase.

Speaker 2: but a decrease of 7.8% versus the prior year.

But a decrease of seven 8% versus the prior year.

Speaker 2: This revenue performance reflects another quarter where our business continued to be pressured primarily by lower procedure volumes related to hospital capacity issues and staffing shortages caused by COVID-19.

This revenue performance reflects another quarter, where our business continued to be pressured primarily by lower procedure volumes related to hospital capacity issues and staffing shortages caused by COVID-19.

Speaker 2: Our recovery from the Delta variant was suppressed by the arrival of Omicron in December .

Our recovery from the Delta Varian was suppressed by the arrival of Omicron in December .

Speaker 2: Consistent with past surges, the impact was more acute in the peripheral clotication segment of our business, which is deemed more deferrable and is more susceptible to the long-term havoc created by COVID.

Consistent with past surges the impact was more acute in the peripheral claudication segment of our business, which is deemed more deferrable and is more susceptible to the long term havoc created by Covid.

Speaker 2: We now know that staffing turnover and shortages, caused by COVID, have had a chronic dampening effect on the entire peripheral vessel preparation and assurrecting the market.

We now know that staffing turnover and shortages caused by Covid have had a chronic dampening effect on the entire peripheral vessel preparation and atherectomy market.

Speaker 2: The latest market data from independent sources indicates that the peripheral vessel preparation and anthorectomy procedure volumes are down 10 to 12% versus the prior year.

The latest market data from independent sources indicate that the peripheral vessel preparation in atherectomy procedure volumes are down 10% to 12% versus the prior year.

Speaker 2: The good news is that we continue to believe this is temporary and that many of these procedures will be regained as the Omicron Surge fades. The healthcare system recovers and patients return to hospitals and clinics for long overdue interventions.

The good news is that we continue to believe this is temporary and that many of these procedures will be regained as the omicron surge fades the health care system recovers and patients returned to hospitals and clinics for long overdue interventions.

Speaker 2: It is difficult to predict the exact timing, but we expect a backlog of cases to gradually flow through our accounts at some point after this latest wave repeats.

It is difficult to predict the exact timing, but we expect a backlog of cases to gradually flow through our accounts at some point. After this latest wave receipts.

We are also encouraged that the fundamentals in our business like new accounts, new customers trained and new contracts all improved sequentially in Q2.

Speaker 2: We are also encouraged that the fundamentals in our business, like new accounts, new customers trained and new contracts, all improved sequentially into two. And we continue to gain share and achieve strong growth in our international markets.

And we continued to gain share and achieve strong growth in our international markets.

In addition, we achieved sequential growth in our U S coronary business in Q2, and we believe that we are recovering some market share.

Speaker 2: In addition, we achieve sequential growth in our US coronary business in Q2. And we believe that we are recovering some market share.

Speaker 2: We expect this to continue as cath labs and physicians return to the consistent use of atherrectomy in their standard daily clinical practice.

We expect this to continue as Cath labs, and physicians return to the consistent use of atherectomy and their standard daily clinical practice.

We believe we have the preeminent sales force in the U S market.

Speaker 2: The work we do improves the quality of life, prevent amputations, and saves lives for thousands of patients every year. Our morale has remained strong, and our employees have diligently supported our customers and patients throughout this latest surge.

The work, we do improves the quality of life prevent amputations and saves lives for thousands of patients every year.

Our morale has remained strong and our employees have diligently supported our customers and patients throughout this latest surge.

So even though COVID-19 has caused us to adjust our near term outlook for this fiscal year. We are excited about our future and we expect to return to growth supported by improving market dynamics, our innovative product pipeline and expansion arch and fast growing markets.

Speaker 2: So even though COVID has caused us to adjust our near-term outlook for this fiscal year, we are excited about our future and we expect to return to growth supported by improving market dynamics, our innovative product pipeline, and expansion in large and fast growing markets.

Speaker 3: In a moment, Rhonda will provide additional information regarding our commercial progress. But first, Jeff will provide you with additional details regarding our second quarter financial results and our revised revenue guidance. Jeff. Thank you, Scott. Good morning, everyone.

In a moment Rhonda will provide additional information regarding our commercial progress, but first Jeff will provide you with additional details regarding our second quarter financial results and our revised revenue guidance.

Jeff.

Thank you Scott good morning, everyone.

Financial results for Q2, whereas follows.

Speaker 3: Worldwide coronary revenue increased over 4% sequentially to 20.2 million, while also increasing slightly from the fri-

Worldwide coronary revenue increased over 4% sequentially to $20 2 million.

While also increasing slightly from the prior year.

In the U S.

Speaker 3: Coronary revenue grew sequentially 3% from Q1 and decreased 7% to 16.7 million over the prior year period.

Coronary coronary revenue grew sequentially, 3% from Q1 and decreased 7% to $16 7 million over the prior year period.

Outside the U S coronary revenue increased 60% over the prior year period to $3 6 million as a result of continued strength in Japan combined with the launch of coronary OAS and euro.

Speaker 3: Outside the US, coronary revenue increased 60% over the prior year period at 3.6 million as a result of continued strength in Japan combined with the launch of coronary OAS in Europe .

Worldwide peripheral revenues were flat sequentially at $38 9 million.

Speaker 3: Worldwide peripheral revenues were flat sequentially at 38.9 million, while decreasing 11% to...

While decreasing 11% compared to the prior year.

Speaker 3: in the US, peripheral revenue was also flat sequentially, while decreasing 12% compared to last.

In the U S. Peripheral revenue was also flat sequentially, while decreasing 12% compared to last year.

Turning to expenses gross margin was 69, 4% for the quarter.

Speaker 3: Turning to expenses, Gross margin was 69.4% for the quarter.

Speaker 3: Excluding a one-time charge of 2.8 million, related to the voluntary recall of our wire on and ballad protection system, gross margin was 74.3%.

Excluding a onetime charge of $2 8 million related to the voluntary recall of our wire an embolic protection system gross margin was 74, 3%.

Speaker 3: Q2 gross margins also reflect lower OAS volumes and an increasing mix of ISD and international revenue.

Q2, gross margins also reflect lower OAS volumes, and an increasing mix of Isd and international revenues.

Operating expenses totaled $49 6 million, which was about flat with last year.

Speaker 3: Operating expenses totaled 49.6 million, which was about flat with last

Speaker 3: That loss was 9 million or 23 cents per share.

Net loss was <unk> 9 million or <unk> 23 per share.

Speaker 3: We ended the quarter with $176 million in cash and marketable securities and no long-term borrow.

We ended the quarter with $176 million in cash and marketable securities and no long term borrowings.

Turning to our outlook our sales have been have been constrained by Amit processes.

Speaker 3: Turning to our outlook, our sales have been constrained by Army Cross since the start to begin in December , and this trend has continued in the February . Based upon forecast from public health experts, we expect that hospital capacity constraints could begin to ease in late February , and our procedure volumes may gradually begin to improve in mid-bark.

Again in December and this trend has continued into February .

Based upon forecast from public health experts, we expect a hospital capacity constraints could begin to ease in late February and our procedure volumes may gradually begin to improve in mid March.

Speaker 3: As a result, we expect domestic revenue to decline sequentially in the third quarter and gradually improve in fourth quarter.

As a result, we expect domestic revenue to decline sequentially in the third quarter and gradually improve in the fourth quarter.

Speaker 3: Although the timing and magnitude of the recovery is difficult to predict, due to the dynamics introduced by labor shortages, we do expect sequential growth to resume in fourth quarter.

Although the timing and magnitude of the recovery is difficult to predict due to the dynamics introduced by labor shortages, we do expect sequential growth to resume in fourth quarter.

To accommodate the new constraints.

Speaker 3: Follows by Omicron and the Related to Staffing shortages. We are adjusting our guidance for the fiscal year and the June 30th, 2022 as follows.

<unk> and the related staffing shortages, we are adjusting our guidance for the fiscal year ending June 32022 as follows.

Speaker 3: Revenues of 235 to 245 million. Gross margins of approximately 73%. Forever 33%

Revenues of $235 to $245 million.

Gross margins of approximately 73%.

Net loss in the range of 15% to 18% of revenues.

Speaker 3: and adjusted EBITDA loss in a range of 4-7% of gravity.

And on an adjusted EBITDA loss in a range of 4% to 7% of revenues.

Speaker 3: To close, we are hopeful that Omicron will be followed by a period where COVID is less disruptive and we will get back to consistent sequential growth. I will now turn the call over to Ronda.

To close we are hopeful that <unk> will be followed by a period, where covenants less disruptive and we will get back to consistent sequential growth.

I'll now turn the call over to Rhonda, who will provide a commercial update.

Speaker 4: Today I will provide my thoughts regarding Q2 and share some of the key performance drivers for the back half of the SIL22.

Thank you Jack and good morning, everyone. Today I'll provide my thoughts regarding QQ and share some of the key performance drivers for the back half of fiscal 'twenty.

Speaker 4: In the US, personal revenue declined 12% and has got noted in opening comments in the entire market for rental preparation has declined 10 to 12% versus last year. We believe that the market decline is due to patient behavior, incidental COVID, and chronic stepping issue.

In the U S peripheral revenue declined 12% and as Scott noted in his opening comments the entire market for vessel preparation has declined 12% versus last year.

We believe that the market decline is due to patient behavior in San Jose and chronic staffing issue.

Speaker 4: As a result, many patients are being medically managed for longer periods.

As a result, many patients are being medically managed for longer period of time.

Speaker 4: As such, we believe in our market research corroborates that there is a vast lack of patience that needs to be treated. We do believe that some of these procedures will be recovered and we are working with our customers to prepare for a rebound. However, the pace of the recovery is difficult to predict.

As such we believe and our market research corroborate Eric.

There is a backlog of patients that need to be treated.

We do believe that some of the procedures will be recovered and we are working with our customers to prepare for a readout.

However, the pace of the recovery is difficult to predict the.

Speaker 4: The recovery is likely to progress more rapidly in our OBLs where the barriers to increasing procedure volumes are much lower.

The recovery is likely to progress more rapidly than our OBL, where the barriers to increasing procedure volumes are much lower.

Speaker 4: Throughout the pandemic, the OBL site of service has proven to be more resilient than the hospital site and the migration of peripheral patients to the OBL site of service continues in the quarter. OBL volumes increase 7% sequentially and now represent 51% of our peripheral procedures.

Throughout the pandemic that will be all client service has proven to be more resilient in the hospital setting.

And the migration of referral of patients to that will be outside of Quebec continued in the quarter.

<unk> volumes increased 7% sequentially and now represents 51% of our peripheral procedures.

Speaker 4: We are pleased that the market dynamics in the OBL setting have stabilized and our sales organization has recaptured market share since Q1.

We are pleased that the market dynamics in the OBL setting stabilize and our sales organization has recaptured market share since Q1.

Speaker 4: Although it's still early and OBL's are coping with COVID, we are not seeing much impact from the PFF changes implemented on January 1st.

Although it is still early and OBL coping with Covid, we are not seeing much impact from the PFS changes implemented on January one.

Speaker 4: Our OBL customers are not happy about these changes, but they are striving to drive a fish.

Our OBL customers are not happy about the changes that they are striving to drive efficiency and we're supporting that with a series of programs and initiatives that will build and support high volume will be on the comp there. Okay omnicare critical limb ischemia and other forms of complex <unk>.

Speaker 4: And we're supporting them with a series of programs and initiatives that will build and support high volume will be able to account that are focused on the care of critical academia and other forms of complex DAD.

Speaker 4: Our customized outpatient resources program will include procedural education, inventory management, volume-based pricing programs, clinical support, claims assistance, and other initiatives that will transcend future reimbursement changes and assure efficient and effective care for our patients in the OBL setting.

Our customers customized outpatient resources program will include procedural education inventory management volume based pricing program clinical support claims assistance and other initiatives that will transcend future reimbursement changes and a sore efficient and effective.

For our patients in the OBL setting.

Speaker 4: Customer education has always been a key core competency at CSI, and we are focused on training new physicians and adding new accounts. In Q2, we train 61 new physicians and 52 new peripheral accounts adding to our future pipeline of OAF users in the US.

Customer education has always been a key core competency at CSI and we are focused on training, new physicians and adding new accounts.

In Q2, we trained 61, new physicians and 52, new peripheral accounts, adding to our future pipeline of OEM Peter in the U S.

Speaker 4: Fails of our peripheral ISD's increased to 1.2 million in the quarter, following the successful launch and adoption of the Jade Balloon.

Sales of our peripheral imt's increased to $1 2 million in the quarter. Following the successful launch and adoption of the <unk>.

Speaker 4: We are launched into approximately 25% of our US PAD at home and expect this to ramp considerably. In the next two quarters, given the significant number of large contracts secured and effective January 1st.

We are launched into approximately 25% of our U S. <unk> accounts and expect this to ramp considerably in the next few quarters given the significant number of large contracts secured an effective January one.

Speaker 4: Jade Balloon represents a significant opportunity to increase our revenue per case to approximately $100 per OAS by the end of our fiscal year.

Jay balloons represent significant opportunity to increase our revenue per case to approximately $100 per OE.

By the end of our fiscal year.

Speaker 4: Turning to Cronary, are US Cronary revenue grew sequentially 3.1% to 16.7 million? This is an important step up following the launch of Cronary IBL's last February . Over the past years, a lot of CATHLAPs began trialling IBL to see where the device would fit in their treatment health algorithms.

Turning to our U S. Coronary revenue grew sequentially three 1% to $16 7 million.

As an important step up following the launch of coronary IV outlook last February .

For the past year, a lot of Cath labs began trialing Ibs C where the device in.

In their treatment algorithm.

Speaker 4: And out of that tri-ling, if an out-drawing to a close, we are driving a rebound in our cornery bit.

And that trial is now trying to cloud we are driving a rebound in our coronary business at Cath labs resumed the use of atherectomy for the treatment of lesion with intermodal nodular calcium having stenosis.

Speaker 4: have cast labs to resume the use of acorectomy for the treatment of lesion with intimal and nodular calcium, heavy stenosis.

Speaker 4: centric and a few fleets and multi-bubble disease.

Centric and a few Sweden and multi vessel disease.

Speaker 4: Of course, these are typically OAS cases and we are encouraged that our customers are returning to the cases that use the VAS Reckney in their standard daily clinical practice.

Of course these are typically OEM cases, and we are encouraged that our customers are returning to the consistent use of atherectomy in the standard daily clinical candidates.

Speaker 4: We continue to serve a high demand for customer training and coronary after-earn me. And to two, we begin training over 200 fellows.

We continue to serve a high demand for customer training and coronary atherectomy in Q2, we began training over 200 fellows.

Speaker 4: Certified 101 users and opened 11 new coronary accounts in the U.S. We look forward to working with these physicians to complete their certification in the month ahead and are excited by the study of the new we are seeing in the expanded utilization of our product. Our training pipeline remains strong and is an important indicator of future growth.

Certified 101, new users.

And opened 11, new coronary accounts in the U S.

We look forward to working with these physicians to complete their certification in the months ahead and are excited by the enthusiasm we're seeing in the expanded utilization of our products. Our training pipeline remains strong and is an important indicator of future growth.

During Q2, we sold $751 support for every coronary OAS itself. This was roughly flat Q1, but with over $200 higher than the prior year period, and total sales of coronary support products were $2 7 million in the quarter.

Speaker 4: During Q2, we sold $751 to support products for every coronary OAS sold. This was roughly $1, Q1, but was over $200 higher than the prior year period. In total, sales of coronary support products were $2.7 million in the quarter.

Speaker 4: We still have a large opportunity here since this product group is relatively new and we continue to make our customer base more aware of our product offering.

We still have a large opportunity here since this product group is relatively new and we continue to make our customer base more aware of our product offering.

Speaker 4: We are also expanding our coronary ISD Fortfolio and following the recent FDA PMA approval. We are in the process of launching the SourceLex NC Scoring Balloon in the United States.

We are also expanding our coronary IFC portfolio and following the recent FDA PMA PMA approval, we are in the process of launching the sport flex and the scoring balloon in the United States.

Speaker 4: This balloon creates a focal stress pattern to facilitate space and control slack modification.

This will increase the total stress pattern to facilitate safe and controlled plaque modification.

Speaker 4: Northwest NC has the highest rated burst pressure in the United States and is indicated for the dilatation of a Genobo astronaut, coronary lesion and instant rate sonoma.

Score Flex SCE has the highest rated burst pressure in the United States and is indicated for the allocation of a de novo benign coronary lesion and in stent restenosis.

Speaker 4: Drank balloons represent a growing $50 million market in the US and would lead to perfect, poor flex and C, backed by compelling clinical data. We'll continue to be well-resistant.

Frank loans represent a growing $50 million market in the U S and we believe our core.

It reflects emcee backed by compelling clinical data will continue to be well received.

Turning to international we are really pleased with our Q2 international results with revenue growing 62% to $3 7 million.

Speaker 4: Turning to international, we are really pleased with our Q2 international results with revenue growing 62% to $3.7 million.

Speaker 4: We continue to gain share and competitive as the Reckony and IBL accounts for strong progress in Japan and Europe .

We continue to gain share in competitive atherectomy and IBM accounts with strong progress in Japan and Europe .

Like the U S. We continue to have strong demand for physician training and certification and our international markets.

Speaker 4: Like the US, we continue to serve strong demand for position training and certification in our international markets.

Speaker 4: We certify over 70 coronary interventionalists outside the US and launched our coronary device in six countries during Q2. And we remain on track to the commercial in over 30 countries by 50 year end.

We certified over 70 coronary interventional is outside the us and launched our coronary device in six countries. During Q2, and we remain on track to be commercial in over 30 countries.

The year end.

Speaker 4: During the back half of fiscal 22, we expect to continue strong, revenue growth with quite COVID as we drive adoption and launch an OAS in several new-

During the back half of fiscal 'twenty. Two we expect continued strong revenue growth. Despite COVID-19 as we drive adoption and launch Oes in several new countries.

Speaker 4: We are on pace to deliver $15 to $16 million in revenue in FY20.

We're on pace to deliver $15 million to $16 million in revenue in FY 'twenty two.

Speaker 4: In closing for Q2, we strengthen the fundamentals of our business, strong progress in new customers' trained, new accounts, new contracts, and new product launches. And of course, we're also pleased with our shared-day recapture and strong growth in international work at that. I'll know if you're the call back over this guy.

In closing for Q2, we strengthened the fundamentals of our business with strong progress in new customers trained new accounts, new contracts and new product launches and of course, we're also pleased with our share gain recapture and strong growth in international markets I'll now turn the call back over to Scott.

Thank you Rhonda.

Speaker 2: We are obviously operating in a very dynamic environment, which is really so defined by COVID. But we are encouraged by our performance in Q2. As you just heard from Ronda with a lot of very favorable outcomes on many of our leading indicators.

We are obviously operating at a very dynamic environment, which is really so defined by COVID-19 , but we are encouraged by our performance in Q2 as you just heard from Rhonda with a lot of very favorable outcomes on many of our leading indicators.

Speaker 2: So despite all the chaos, we really do have some great opportunities and we're making strong progress in our efforts to transform CSI into a multi-product, multinational company capable of delivering consistent and profitable growth.

So despite all the chaos, we really do have some great opportunities and we're making strong progress in our efforts to transform CSI into a multi product multinational company capable of delivering consistent and profitable growth.

Speaker 2: Looking forward, we will continue to protect and grow our core orbital arthrectomy business while we expand globally and develop a robust portfolio of new products.

Looking forward, we will continue to protect and grow our core orbital atherectomy business, while we expand globally and develop a robust portfolio of new products.

Speaker 2: Over the next 18 months, we plan to introduce new products to serve our customer base, drive higher revenue per procedure, and expand the use of orbital atherics.

Over the next 18 months, we plan to introduce new products to serve our customer base drive higher revenue per procedure and expand the use of orbital atherectomy.

Speaker 2: In the near term, we will launch the score flex NC, which will be the first non-compliant coronary scoring balloon in the US.

In the near term, we will launch the score flex AMC, which will be the first noncompliant coronary scoring balloon in the U S.

Speaker 2: And next fiscal year, the 2.0 max, which is a large vessel crown that will expand our offering to treat soft and mixed plaque in the larger vessels above the knee. And we will also launch an innovative line of coronary micro catheters for accessing chronic total occlusion.

And next fiscal year, the 2.0, Max which is a large vessel crown that will expand our offering to treat soft and mixed plaque in the larger vessels above the knee.

And we will also launch an innovative line of coronary micro catheters for accessing chronic total occlusions.

Longer term our pipeline includes several products, representing some of the fastest growing segments in the market, including Everolimus drug coated balloons for coronary and peripheral applications.

Speaker 2: Longer term, our pipeline includes several products representing some of the fastest growing segments in the market, including Everola, Ms. Drug Coded Balloons for coronary and peripheral applications.

Speaker 2: A P-VAD for high-risk PCI and IVL balloons for peripheral and coronary arteries.

<unk> for high risk PCI and.

And Ivy all balloons for peripheral and coronary artery disease.

Speaker 2: And I'm happy to report that we're making really great progress on each of these programs. Last quarter, we announced the first in-human experience for the coronary drug code of balloon. Our R&D team recently completed several important development and pre-clinical milestones for our P-Bad device.

And I am happy to report that we're making really great progress on each of these programs last quarter, we announced the first in human experience for the coronary drug coated balloon.

Our R&D team recently completed several important development and preclinical milestones for our <unk> device and.

Speaker 2: And we expect to conduct our first inhuman clinical experience with that device in an OUS trial later this fiscal year.

And we expect to conduct our first in human clinical experience with that device and an O U S trial later this fiscal year.

Speaker 2: And most recently we announced the development of IVL balloons for the treatment of peripheral and coronary artery disease.

And most recently, we announced the development of ICL balloons for the treatment of peripheral and coronary artery disease.

So I think you can see that we have assembled an impressive portfolio that diversifies our growth platforms and expands our total addressable market from about $1 8 billion today to over $12 billion in the future.

Speaker 2: So I think you can see that we've assembled an impressive portfolio that diversifies our growth platforms and expands our total addressable market from about $1.8 billion today to over $12 billion in the future.

Speaker 2: We have a great team, our greatest asset at CSI is our people.

We have a great team our greatest asset at CSI is our people.

Speaker 2: and we have made strong progress in the execution of our product pipeline. I'm confident that we will overcome our near-term challenges and restore growth to our business while we transform CSI to become a leading innovator in the care of patients with cardiovascular disease.

And we have made strong progress in the execution of our product pipeline I am confident that we will overcome our near term challenges and restore growth to our business, while we transform CSI to become a leading innovator in the care of patients with cardiovascular disease.

Speaker 2: I would like to thank our CSI employees for their continued resilience as we continue to deliver exceptional support to our customers and patients during this extraordinary time.

I would like to thank our CSI employees for their continued resilience as we continue to deliver exceptional support to our customers and patients during this extraordinary time.

Speaker 2: I would also like to thank all of you for your continued interest in CSI and we will now take your questions. So Candice, if you would please repeat the instructions, that would be great.

I would also like to thank all of you for your continued interest in CSI and we will now take your questions. So Candace if you would please repeat the instructions that would be great. Thank you.

Speaker 5: If you would like to ask a question, please press start followed by one on your telephone keypad.

Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad.

Speaker 5: If for any reason you would like to remove that question, please press start followed by two. Again, to ask your question, it is start followed by one. As a reminder, if you are using a speaker phone, please remember to pick up your handset before asking the question. We will pause here briefly, we'll questions are can.

If for any reason you would like to remove a question. Please press star followed by two.

Again to ask a question it is star followed by Bob.

As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking the question, we will pause briefly for questions. Okay.

Okay.

Speaker 5: Our first question is from Matthew Blackman from Stifle. Your line is now open. Please go ahead.

Our first question is from Matthew Blackman from Stifel.

Your line is now open please.

Go ahead.

Speaker 6: All right, good morning everybody. Thanks for taking my questions. I've got a few here. Maybe just to start, you mentioned a couple of times that you think you're regained, share in the quarter versus the first quarter. Can you maybe just talk a little about the competitive environment in the second fiscal quarter and how you thought about competitive headwinds in the new guidance range. And then I have a couple of follow ups.

Alright, good morning, everybody. Thanks for taking my questions I've got a few here.

Maybe just to start you mentioned a couple of times that you think you regain share in the quarter versus the first quarter can you maybe just talk a little about about the competitive competitive environment.

In the second fiscal quarter end.

And how you thought about competitive headwinds in the new guidance range and then I have a couple of follow ups.

Yes, Thank you, Matt and good morning.

Speaker 2: I think where we probably made the most important improvement is in our coronary business, where you noted that we grew sequentially a quarter over quarter. We are also seeing that the trialing now of IVL balloons really drawing to a close, and at least in many of our accounts. And I think in those accounts that trialed early in, let's say, the IVL line.

I think where we probably made the most important.

Important improvement is in our coronary business, where you noted that we.

Ah grew sequentially quarter over quarter.

We are also seeing.

That the Trialing now of IVF balloons is really drawing to a close and at least in many of our accounts and I think in those accounts that trials early.

In let's say the.

The IV launch we now are beginning to see.

Speaker 2: We now are beginning to see a recovery of our procedures in those accounts that is really coming back about to our normal pace.

A recovery of our procedures in those accounts that is really coming back about to our normal pace. So we're excited about that our organization is doing a great job in continuing to work closely with our customers.

Speaker 2: So, I work excited about that. Our organization is doing a great job and continuing to work closely with our customers, you know, educating them on the proper lesions in which to use orbital atheroscopy and we're also seeing the results of that as physicians are returning to adopting our device on a regular...

Educating them on the proper.

Lesions in which to use orbital atherectomy and we're also seeing.

As a result of that as physicians are returning to adopting our device on a on a regular basis. So good good news there I think as we as we look forward.

Speaker 2: So good news there. I think as we look forward, we do expect to see continued improvement in that coronary segment in the second half of this fiscal year.

We do expect.

To see continued improvement in the coronary segment in the second half of this fiscal year.

Speaker 2: We are, as we have talked about before, we continue to anticipate some potential competitive headwind as it relates to the launch of IVLs for the above the knee segment in peripheral. Although we now think that will be fairly muted as we've

We are as we have talked about before we continue to anticipate some potential competitive headwind as it relates to the launch of IV <unk> for the above the knee segment in peripheral although we now think that it'll be fairly muted as we've.

Speaker 2: got just a short amount of time, it's early days. But we haven't seen a large impact from IVL in the ATK segment. That may progress over the course of the second half. If it does, we don't think it'll be a large impact, but it is a change in the competitive dynamic.

Scott just a short amount of time its early days, but we haven't seen a large impact from IPL.

In the ATK segment.

That may progress over the course of the second half if it does we don't think it'll be a large impact but it is it is a change in the competitive dynamic.

Speaker 7: And I think that addresses your question, Matt. If I haven't fully addressed it, please ask a follow up.

And I think that addresses your question, Matt if I haven't fully addressed it. Please ask a follow up on that.

Speaker 8: yeah no i think i think you covered it's got appreciate it and then maybe one for japan and i'll squeeze in one for for ronda uh... and just some of the p&l guidance the the full year gross martin uh... margin guide

Yes, no I think I think you've covered it Scott I appreciate it and then maybe one for Jeff and then I'll squeeze in one for Rhonda.

Jeff just on the P&L guidance, the full year gross margin our margin guidance at 73% I don't think implies you'd get back to the let's call. It the mid seventy's that you're hitting in the first quarter. So is that all volume headwinds as we think about the back half gross margin are you seeing any upward pressure on costs supply chain things like that and then maybe sneak.

Speaker 9: at 73% I don't think implies you get back to the what's called the mid 70s that you hit in the first quarter so that all volume headwinds as we think about the back half gross margin or you see any upward pressure on cost supply chain uh... things like that and then maybe sneak this one in for on the on the the large kind of sounds like timing maybe flip the bid into next fiscal year i think you're a privilege saying previously saying later this fiscal year so that you're that right and as we think about commercialization communications for the commercialization of

This one in for Rhonda on the large kind of it sounds like timing, maybe slipped a bit into next fiscal year. I think you were previously saying previously saying later this fiscal year. So did I hear that right and as we think about commercialization. So the commercialization of the large crown.

Speaker 10: Is that plug and play or where accounts gonna have to get recertified retrained just any help on that font would be a brief.

Is that plug and play or or accounts going to have to get recertified retrained gist gist.

Any help on that front would be appreciated. Thanks.

Yes, Matt Thanks for the question on gross margin as we look to the back half of the year that is really if we compare to the original guidance. We provided that difference is really all volumes at this point, if we get back to normal volumes, we would be kind of in that mid 70 range and it'll be a little bit lower here in the back half and Thats just because of the lower.

Speaker 11: Yeah, Matt, thanks for the question on Gross Margin. As we looked at the back half of the year, that is really, if we compare to kind of the original guidance we provided, that difference is really all volumes at this point. If we get back to normal volumes, we would be kind of in that mid-70 range, and it'll be a little bit lower here in the back half, and that's just because of the lower volume.

Volumes.

Speaker 12: And Matt, thanks for the question. So we're timing on to large vessel. Now we're calling it the 20 Mac.

And Matt Thanks for the question separate timing on the large vessel now we're calling it the <unk> Max.

Speaker 13: We expect we're working very closely with the FDA and that's going really well. We expect to have actually approval.

We expect we're working very closely with the FDA and that's going really well, we expect to have actually approval later in the quarter. So realistically kind of a timing for launch will be kind of that early FY 'twenty three time frame. So that's the status update there and when you say plug and play I mean, I think yes to a degree it.

Speaker 14: Later in the quarter, so realistically, kind of a timing for launch will be kind of that early FY23 timeframe. So that's the status update there. And when you say plug-and-play, I mean, I think yes, to a degree, you know, it will work with our existing handles.

It will work with our existing handles.

Speaker 15: We will of course train and educate as we always do with that device, but I think it's going to be a really straightforward launch into a huge market that will give us access to ATK procedures, which are about 60% of the ASRAC-ME procedures out there.

We will of course train and educate as we always do with that device, but I think it's going to be a really straightforward.

Launch into a huge market that will give us access to ATK procedures, which are about 60% of the <unk>.

<unk> threatening procedures out there.

Alright, thank you so much.

Thank you.

Speaker 16: Our next question comes from Michael Matson from Needham Anko. Michael, you're lying.

Our next question comes from Mike Matson from Needham on Chi.

Michael Your line is now open. Please go ahead.

Okay.

Okay.

Okay.

Okay.

Speaker 17: Unfortunately, your question, there is no audio on your question. Can I ask you to re-register please Matthew?

Unfortunately.

There is that we will deal with your question can I ask you to where you participate please murphy.

Okay.

Speaker 18: Our next question is from Chris Pascal from Google and Hine Securities. Your line is...

Our next question.

Is from Chris <unk> from Guggenheim Securities.

Your line is now open. Please go ahead.

Speaker 19: Ron, to talk about the issues, you guys have underway to help your OBL customers cope with reduced economics in that setting. With OBLs now counting for the majority of USPAD mix, what impact do you expect that to have on your own business? Should we assume some incremental pricing pressure over time as they take advantage of volume discounts and the like, or do you expect to be able to maintain stable trends even as you help them become more efficient?

Thank you.

Brian just talked about the initiatives you guys have underway to help your OBL customers cope with reduced economics in that setting with OBL is now accounting for the majority of your U S mix.

Mix what impact do you expect that to have on your own business should we assume.

Some incremental pricing pressure over time as they take advantage of volume discounts and the like or do you expect to be able to maintain stable trends, even as you help them.

Become more efficient.

Speaker 20: Yeah, thanks, Chris, and good morning. I think that we expect now our OBLs to stay fairly consistent and actually to return to the good strong growth rate that you've seen in the past. I would note that our OBL segment has always

Yes, Thanks, Chris and good morning.

I think that we expect now our obl's to stay fairly consistent then.

Actually two returned to the good strong growth rate.

You've seen in the past.

I would note that our OBL segment has always.

Speaker 21: been, you know, Pat had more difficult pricing pressures. And that most likely will continue. We've seen pricing erosion there in the mid-single digits typically. And I would anticipate that will continue to see that going forward.

Ben.

It had more difficult pricing pressures and that most likely will continue.

We've seen pricing erosion there in the mid single digits typically.

And I would anticipate that we will continue to see that going forward.

Speaker 22: Okay, and then keeps update on the wire on filter after the recent recall, but what's the past to getting that product back to the market? How should we think about timing there?

Okay, and then keeps update on the wire on builds or after the recent recall, but what's the path to getting that product back to the market how should we think about timing there.

Yes, so the timing on that is still a bit to be determined we have now just completed the recall or we're just about complete with it.

Speaker 23: Yeah, so the timing on that is still a bit to be determined. We have now just completed the recall, or we're just about complete with it in terms of bringing back the devices. We will be making improvements in that device. We'll be improving the retrieval catheter and some of our use procedures. And as we assess that, we'll then be in a better place to give you a better sense of timing. We'll probably be able to do that next.

In terms of bringing back the devices.

We will be making improvements in that device will be improving the retrieval catheter in some of our used procedures and as we assess that will then be in a better place to give you a better sense of timing and we'll probably be able to do that next quarter.

Thanks.

Thank you.

Speaker 24: Thank you. Our next question comes from Danielle.

Thank you. Our next question comes from Danielle.

No.

Speaker 25: and to be from FUB Learlink.

<unk> from Seb.

Inc.

Good morning, everyone. Thanks.

Speaker 26: Hey, good morning, everyone. Thank you so much for taking the question. Rhonda, I have a question for you, and then Scott, a question for you on the max.

Hey, good morning, everyone. Thank you so much for taking the question.

Brandon.

Question for you and then Scott a question for you on that on the map product.

Speaker 27: products. You know, ATK, I appreciate it's a large market opportunity, but also more competitive. And I guess just would love a little bit more color on the rationale behind investing in this product is it more about the breadth of the portfolio strength into your competitive positioning. Do you think this is a higher growth market? You know, then maybe I had been assuming. So just a little more color there.

Okay. I appreciate it's a large market opportunity, but also more competitive and I guess, just would love a little bit more color on the rationale behind investing in this product is it more about the breadth of the portfolio strengthened your competitive positioning do you think this is a higher growth market.

Then maybe I had been.

Assuming so just a little more color there.

Would be great.

Speaker 28: Sure, yeah, thanks, Daniel, for the question. Much appreciated. I mean, it is a large market. And as I mentioned in my earlier comments, it constitutes about 60% of as-directime procedures.

Yes, Thanks, Danielle for the question much appreciated.

It is it is a large market and as I mentioned in my earlier comments that constitutes about 60% of atherectomy procedures. We currently do perform procedures and ATK today, but with this device will have better access to a new plaque morphology that we typically don't treat with OAS today, and thats soft and mixed plaque.

Speaker 29: We currently do perform procedures in ATK today, but with this device, we'll have better access to a new plaque morphology that we typically don't treat with OAAS today, and that's soft and mixed plaque. So we're looking forward to it. It's going to be a new market. It leverages our existing platform. So it's actually really pretty efficient for us to develop this and get it launched, because it does work with our existing handles.

So we're looking forward to it it's going to be a new market. It leverages, our existing platforms with actually really pretty efficient for us to develop this and get it launched because it does work with our existing handle and so from that standpoint, it's really a cost effective way for us to access a really big market.

Speaker 30: And so from that standpoint, it's really a cost effective way for us to access a really big market.

Got it okay. Thanks for that and then Scott a question for you around and maybe this is for you too on the coronary side of things great to hear that Youre regaining share I guess, what are the things that we've been hearing in our due diligence here on vessel prep in general is that the market has been expanding and now that the trial.

Speaker 31: Got it. Okay, thanks for that. And then Scott, question for you, or a round of maybe this is for you too, on the coronary side of things. Greta here that you're regaining share. I guess one of the things that we've been hearing in our due diligence here on Bestful Press in general is that the market has been expanding. And now that the trialing seems to be coming to a close at your account, at least, what are you seeing from IBLS?

<unk> seem to be coming to add to it.

Close your accounts at least what are you seeing from <unk>.

<unk> is the market from a market expansion perspective, and just getting more.

Speaker 32: the market from a market expansion perspective and just getting more patients to undergo vessel prep than prior to IVL. Anything to note there, I know COVID complicate things, but just curious even anecdotally what you're saying.

More patients to undergo basketball crap than prior to IV anything.

Of note there I know COVID-19 complicated thing, but just curious even anecdotally what you are saying thanks so much.

Yeah, thanks Danielle. We are most definitely seeing IVLs expand the market. I think they are broadening to a completely different customer group that...

Thanks, Danielle we are most definitely seeing Ivy LLS expand the market I think they are broadening to a completely different customer group that.

uh, historically maybe has not treated calcium in the past. I think that is actually having a beneficial impact on the market as, as those efforts are raising the awareness of calcium and also, uh, making it evident that, uh,

Historically, maybe is not treating calcium in the past I think that is actually having a beneficial impact on the market is as those efforts are raising the awareness of calcium and also.

Making it evident that.

Severely calcified and even moderately calcified lesions should be treated before stents are placed.

And you know, that hasn't always been the case. So definitely improved awareness, strong market expansion out beyond the tertiary care centers now into more community hospitals and other areas. And also expanding the use of interventional procedures.

That hasn't always been the case, so definitely improved awareness.

Strong market expansion out beyond the tertiary care centers now into more community hospitals and other areas.

And also expanding the use of interventional procedures for treating calcium let's say to less severe.

for treating calcium, let's say, to less severe lesion.

Lesions, which all of which has really been very beneficial and I think as an indication of things to come as we do expect that that market expansion will continue and that <unk> in the in particular in the treatment of coronary.

which all of which has really been very beneficial and I think is an indication of things to come as we do expect that that market expansion will continue and that IVLs in particular in the treatment of coronary lesions will continue to be adopted and done well. Having said that, I think we also are seeing that physicians recognize and understand their own practice.

<unk> will continue to be adopted and have done well, having said that I think we also are seeing that physicians recognize and understand in their own practice that when they come across.

that when they come across severely calcified lesions where they have a high degree of stenosis or a nodular lesions where there's a lot of intimal calcium, that these are cases where they really do need to use that, correct?

Really calcified lesions, where they have a high degree of stenosis.

Or.

Nodular lesions, where theres a lot of integral calcium that these are cases, where they really do need to use atherectomy.

And we're seeing them come back to that in their more standard daily clinical practice, which is what we expected. This is happening as the trialing is kind of drawing to a close and we see individual physicians and cath labs kind of returning to their more standard practice. So good news for us and we expect to see that trend continue now as we head into the second half of our fiscal year here.

<unk>.

And we're seeing them come back to that and Theyre more standard daily clinical practice, which is what we expected.

This is happening.

As the Trialing is kind of drawing to a close and we see individual physicians and cath labs kind of returning to there there are more standard practice. So good news for us and we expect to see that trend continuing now as we head into the <unk>.

Second half of our fiscal year here.

Thank you.

Our next question comes from Mike Mattson from Neetham, Manko. Your line is open, please go ahead.

Our next question comes from Mike Matson from Needham <unk> Co. Your line is now open. Please go ahead.

Okay can you guys hear me now.

Yes.

Yes, we can, Mike. Thank you. Good morning. Sorry. Good morning. So I wanted to follow up on a Roddus comments on the OBL reimbursement changes.

Yes, we can Mike Thank you and good morning, Alright.

Good morning.

So I wanted to follow up on <unk> comment on the OBL reimbursement changes.

You know, I guess one concern that I had around that was that it could lead to more, you know, some increase in center for the customers, maybe move some of the lower cost, you know, products out there. You did mention value-based pricing, which I think you have talked about in the past with the OBL setting, but you know, can you just provide some more detail there? You know, is this something that's, you know, putting some additional price pressure on you?

I guess, one concern that I had around that because it could lead to more some increase incentive for the customers maybe move some of the lower cost.

Alex out there.

You did mentioned value based pricing, which I think you have talked about in the past with the OBL setting but.

Can you just provide some more detail there.

Is it something thats, putting some additional price pressure on you.

No, I don't think it's putting additional price pressure on our business mic. I think we would expect to see that continue and just recall and you noted this that about three years ago, we changed our approach to office-based labs and began developing deep partnerships with select labs where we do provide a wide range of support, including procedure support and inventory management and we do volume-based pricing programs. We were able to do a wide range of support and we were able to do a wide range of support and we were able to do a wide range of support.

No I don't think it is putting additional price pressure on our business. Mike I think we would expect to see that continue and just recall and you'd noted this that about three years ago, we changed our approach to office based labs and began developing deep partnerships with select labs.

Where we do provide a wide range of support including procedure support in inventory management, and we do volume based pricing programs. So those initiatives have been in place that kind of built into our base and I think that you can expect to see that continue going forward. So I don't really.

So those initiatives have been in place. They're kind of built into our base. And I think that you can expect to see that continue going forward. So I don't really envision that the reimbursement changes in office space labs will, you know, fundamentally change the business model that we have deployed to that site of service.

Envision that the reimbursement changes and office based labs will fundamentally change the business model that we have deployed to that site of service.

say that probably one of the things that has been fairly encouraging to us over the course of the past month is that You know our OBL customers are not on salary. They're not on

Good.

Say that probably one of the things that has been fairly encouraging to us over the course of the past month as that.

Our OBL customers are not on salary.

Not on a hospital salary so their procedure volumes is what determines how they do month to month and we do expect to see the <unk> return to a stronger performance.

So, you know, their procedure volumes is what determines how they do month to month. And we do expect to see the OBL's return to a stronger performance as Omicron recedes. And at least thus far, our customers are driving towards achieving higher volumes. And they're in their...

As omicron receipts.

And at least thus far.

Our customers are driving towards achieving higher volumes and they're in there.

Practices and that is how they are responding to these.

And that is how they're responding to these pricing challenges. As Rhonda said, I don't think any of the customers are happy about it, but they're really striving to improve efficiencies in their practices. And we're in there working right alongside them and working with them to help them make that happen, and to really increase their volumes. to put them in.

Pricing challenges as Rhonda said I don't think any of the customers are happy about it but there are really striving to improve efficiencies in their practices.

We are in there working right alongside them and working with them to help them make that happen and to.

Really increase their volumes.

Uh, they deal with Omicron coming back as well as, as this pricing challenge at the same time, but early on, at least here in January , the indications, um,

Yes.

They deal with <unk> coming back as well as as this pricing challenge at the same time, but early on at least here in January the indications.

are relatively positive that the office-based labs we work with will overcome these challenges.

A relatively positive.

Office based labs, where we work with will overcome these challenges.

Okay got it and then I just had a couple on the IV. All news that you are developing a product there. So so I guess my understanding is they took shockwave about two years from their first in human to getting the product commercialized. So.

Okay, got it. And then I just had a couple on the news that you're developing a product there. So, so, I guess, you know, my understanding is it took Shockwave about 2 years from their first in human to getting the product commercialized. So, can you maybe comment on, you know, does that imply sort of like a fiscal 25, you know, law?

Can you maybe comment on does that imply sort of like a fiscal 'twenty five launch and is there any way to accelerate that and then can you just talk about coronary versus peripheral or are you going to go after both are going after one before the other.

And is there any way to accelerate that? And then you know, can you just talk about coronary versus peripheral? Are you gonna go after both or you know, going after one before the other?

Yeah.

Thanks, Mike we will be pursuing both coronary and peripheral IV all balloons.

Thanks Mike. We will be pursuing both coronary and peripheral IVL balloons. We would anticipate our peripheral launch to occur probably late FY 23 or early FY 24. So that is out let's say 18 to 24 months from now. And

Would anticipate our peripheral launch to occur probably late FY 'twenty three are early FY 'twenty four so that is out let's say 18 to 24 months from now.

And.

You made a note of the timing from first in human of course, we have the benefit now of being second coming into this market and recall that the peripheral approval as a five 10-K approval. We are working with the FDA now on what requirements. They will see as being important for that launch and then.

You made a note of the timing from first in human. Of course, we have the benefit now of being second coming into this market and recall that the peripheral approval is a 510K approval. We are working with the FDA now on what requirements.

they will see as being important for that launch and then we'll be able to be more specific about the timing as we get greater clarity from the FDA. The coronary clinical trial requirements, that coronary approval is a PMA approval, as you know, and that will likely be FY25, FY26 before we see approval for that coronary.

We will be able to be more specific about the timing as we get greater.

Clarity from the FDA the coronary.

Clinical trial requirements at coronary approval is as a PMA approval as you know.

And that will likely be FY 'twenty five FY 'twenty six before we see approval for that coronary segment, we may launch outside the United States earlier than that but thats, what we would anticipate in the U S.

We may launch outside the United States earlier than that, but that's what we would anticipate in the US. And last year winner Bitcoin crunch was over.

Okay got it thank you.

Okay.

Thank you. Our next question is from Saraj.

Thank you our next.

Our next question is from Suraj.

Kalia from Oppenheimer, your line is now open, please go ahead.

Calia from Hyphen Hymer. Your line is now open. Please go ahead.

Good morning, everyone can you hear me all right.

Yes, we can suraj. Thank you.

Perfect.

So, it's got a couple of questions. The first one, either for you or for Jeff, so the updated guide is approximately 20% lower than your original guide.

Scott a couple of questions. The first one either for you or for Jeff. So the updated guide is approximately 20% lower than your original guide.

So, can you give us a breakdown of the relative impact of COVID versus IVL so that as we structure the remaining two quarters and the outlook over this calendar year, we can put the...

So.

Can you give us a breakdown of the relative impact of Covid versus IV L. So that as we.

Structure.

The remaining two quarters and the outlook for this calendar year.

Can put the different pieces together.

Yeah, sir. I thank you for that question. Um, the vast majority of the impact is Omicron and the related

Yes suraj.

Thank you for that question.

The vast majority of the impact is omicron and the related staffing shortages and labor shortages that are impacting the market broadly I think as we look at our performance in January and now into early February as you've heard from many companies reporting.

staffing shortages and labor shortages that are impacting the market broadly. I think as we look at our performance in January and now into early February , as you've heard from many companies reporting, we are seeing reduced procedure volumes largely due to the acute impact of Omicron. We do expect in our markets that we will see some restoration of normal commercial,

We are seeing reduced procedure volumes largely due to the acute impact of omicron.

We do expect in our markets that.

We will see some restoration of normal.

Commercial.

uh, activities, probably beginning in the mid March time frame. Um, and then we are anticipating that we will see a slow and gradual recovery after that. Uh, it will be slower than what we've seen in the past. If you recall last year, uh, when we had that

Activities, probably beginning in the mid March timeframe.

And then we are anticipating that we will see a slow and gradual recovery after that.

It will be slower than what we've seen in the past if you recall last year.

When we had that January outbreak.

The market actually recovered fairly fast and in March.

The market actually recovered fairly fast in in March and April .

in April , there was a backlog of patients that were rapidly treated. And what's different this year is that hospitals are dealing

There was a backlog of patients that we're rapidly treated and what's different. This year is that hospitals are dealing with these staffing shortages and we find that in many cases hospitals are triaging cases, there they are coming back and doing their most severe cases first in and frankly.

with these staffing shortages and we find that in in many cases hospitals are triaging cases they're they're coming back and doing their most severe cases first and and frankly um

you know, the treatment of patients with intermittent claudication are not arriving on the high end of that priority list. So we are expecting that that will result in a.

The treatment of patients with intermittent quantification or not arriving on the high end of that priority list. So we are expecting that that will result in a slow and gradual recovery in our peripheral.

slow and gradual recovery in our peripheral hospital segment. And that would largely be the patients that have intermittent claudication.

Hospital segment and that would largely be the patients that have intermittent quantification.

So that is some of the, basically the rationale for that guide. Naturally, if the Omicron

So that is some of the <unk>.

Basically the rationale for that guide naturally if the.

Omicron.

Waved, recedes more quickly, or if these staffing shortages are addressed more rapidly, we would anticipate that our guidance may improve.

Wave received more quickly.

Or if these staffing shortages are addressed more rapidly.

We would anticipate that that our that our guidance may improve.

I have to say though, Sorage, at this point, our conclusion is there's not strong evidence that this shorting of the staffing shortage and the labor shortage that is impacting hospitals in particular, we don't think that's going to resolve quickly. We think that this is going to take some time to recover.

I have to say, though suraj at this point or.

Our conclusions.

Not strong evidence that the shorting of the staffing shortage and the.

Labor shortage that is impacting hospitals in particular.

We don't think thats going to resolve quicker.

Quickly, we think that this is going to take some time to recover.

So I hope that helps in regards to your question.

So I hope that helps.

In regards to your question.

I've got my second question. I'll just put a position for you or Ronda, and it's a two-part question. First, what percent of your cases are being done independently on site? I.E. just to give us an idea in terms of...

Got it Scott that my second question I'll just.

Position it for you or Rhonda <unk>.

Two part question first.

<unk> cases are being done independently on site I E just to give us.

Idea in terms of leverage ability once omicron disappears and the second thing to the extent that you can.

leverageability once Omicron disappears, and the second thing, to the extent that you can, Rhonda, you or Scott can talk about this, on your IVL approach,

Rhonda you or Scott can talk about this or not.

On your IV approach.

What is the specific competitive attribute that you all are targeting? Is it emitters per catheter, number of pulses per catheter, deliverability, or size limitations? Because these are issues in the current platform.

The specific competitive attribute that you're targeting is it imagers for catheter number of pulses per catheter deliverability.

<unk> limitations because these are the issues in the current platform.

I'd love to get again any color you would share. Thank you for taking.

I'd love to get again any color you could share. Thank you for taking my questions.

Yeah, thanks. About about two thirds of our cases, we cover about two thirds of our cases. So about one third are conducted.

Yes, Thanks Suraj about.

About two thirds of our cases, we cover about two thirds of our cases. So about one third are are conducted independent now as we have been impacted by omicron and our reps have not add easy access to our accounts over the course of really the past couple of months.

independent now as we have been impacted by Omicron and our reps have not had easy access to our accounts over the course of really the past couple of months.

Uh, that number has reduced pretty significantly. Uh, so we're, we're not, we're not covering, you know, two thirds of our cases at this point. However, our.

That number has reduced pretty significantly so.

So we're not we're not covering.

Two thirds of our cases at this point however are.

sales teams have been collaborating very closely with our customers during this time, working to identify where the backlog.

Sales teams have been collaborating very closely with our customers. During this time working to identify where the backlogs exist.

getting prepared and really, you know, interacting with our customers to understand how can we help them best.

Getting prepared.

And really interacting with our customers to understand how can we help them best.

uh, if and when you know this volume comes back. There are many issues in these hospitals. For example, uh, the technicians that support cases in

If and when this volume comes back there are many issues in these hospitals for example.

Hi.

The technicians that support cases in.

Cath labs.

Uh, we, we have seen a fair amount of turnover in that particular, uh, part of the workforce, we've got to get back in train and educate.

We have seen a fair amount of turnover in that particular.

Part of the workforce, we've got to get back in train and educate those.

We've got to train and educate others in the support and care network there so that they know how to manage patients that have been treated, let's say, with orbital atherectomy or frankly that are just being treated for intermittent claudication or CLI or, you know, coronary lesions. So our

Cath lab techs, we've got to train and educate others in the <unk>.

Support and care network, there so that they know how to manage patients that have been treated let's say with orbital atherectomy or frankly are just being treated for intermittent claudication or or CLI or coronary lesions. So are.

And the fact that we have a substantial organization actually positions us very well to provide outstanding support to our customers in conducting these cases, but also training and educating their new staff as they're dealing with the turnover that they're experiencing.

The field sales organization and the fact that we have a substantial organization actually positions us very well to provide outstanding support to our customers in conducting these cases, but also training and educating their new staff as they are dealing with the turnover that they're experiencing so I.

So I think we're, we're, we're well prepared to deal with this. We've done it before. And, uh, if, and when this wave comes back through, uh, we'll be in a good place to manage.

<unk>.

We're well prepared to deal with this we've done it before.

And if and when this wave comes back through will be in a good place to manage it.

In terms of the competitive attributes of the IVL, yeah, our IVL will address some of the limitations of the product that are currently in the market. We will be talking more about that as we get closer to commercial launch, but I think that you articulated quite well some of the key areas that need to be addressed and the areas that we will be addressing in our product.

In terms of the competitive attributes of the ABL.

Ivy Hill.

I'll address some of the limitations of the product that are currently in the market.

We will be talking more about that as we get closer to commercial launch, but I think that you articulated quite well some of the key areas of that that need to be addressed in the areas that we will be addressing in our product.

Operator, I think we're ready for the next question.

Thank you.

Our next question comes, our final question comes from Brandon Saz.

Our next question comes our final question comes from Brandon <unk>.

Bob Skus from William Blair. Your line is now open. Please go ahead.

Buzz Q's from William Blairs. Your line is now open, please go ahead.

Hi, everyone, thanks for taking the question. First, just want to follow up on kind of the backlog that we're talking about here. I appreciate the color around it. I know that staffing shortages.

Hi, everyone. Thanks for taking my question first I just wanted to follow up on kind of the backlog that we're talking about here.

I appreciate the color around it staffing shortages.

can impact the market's ability to treat this backlog, I would think maybe the OBLs could maybe be a source of alleviating that backlog. Is that a fair statement? And if so, it seems like you guys might be in a good position to kind of benefit from that backlog coming in. So kind of curious, is that a fair statement? And then is that kind of benefit potentially based on the guidance or not? Or could that be a little upside as we move through the year? Yeah, I think that the OBLs...

Impact.

Mark its ability to treat this backlog I would think maybe the obl's could maybe be a source of alleviating that backlog is that a fair statement and if so it seems like you guys might be in a good position to kind of benefit from that backlog coming in so kind of curious is that a fair statement and then is that kind of benefit potentially baked into guidance.

Or could that be a little upside as we move through the year.

Yes, I think that the OBL.

Usually do.

bounce back more quickly, largely because the barriers to patient care and their ability to increase their volumes quickly are there. The barriers are much lower.

Bounce back more quickly largely because the barriers to patient care and their ability to increase their volumes quickly.

Or are there.

The barriers are much lower so we may see that happen in the office based labs.

So we may see that happen in the office-based labs. We, in our current guidance.

Our current <unk>.

Guidance are anticipating that the omicron impact.

are anticipating that the Omicron impact will really impact nearly all sites of service through that March 15th time frame.

We will really impact nearly all sites of service through that March 15th timeframe.

Um, and then after that, we will see, uh, some recovery begin. Um,

And then after that we will see.

Im recovery begin.

I think, geographically, this will be asymmetric across the United States, so, you know, in the South, where office-based labs are more prevalent, we may see the office-based labs in, let's say, Florida, Texas, that those parts of the country rebound more quickly than other parts of the country.

I think geographically.

This will be a symmetric across the United States. So in the South where office based labs are more prevalent we may see the office based labs in let's say, Florida, Texas that those parts of the country rebound more quickly than in other parts of the country.

So that is most definitely an opportunity and we are prepared to address that there Brendan.

So that is most definitely an opportunity, and we're prepared to address that there, Brendan.

Did you have another follow up question on that.

No, that was good on that. I did have one follow-up separate to that, but appreciate the color there. It looks like international, you know, that international was a big market for you guys and obviously COVID delayed that for a while. It seems like this may be the first quarter where you're starting to dip your toe back into the international market.

No.

Good on that I did have one follow up separate to that but I appreciate the color there.

It looks like international.

International was a big market for you guys and obviously COVID-19 .

Delayed that for a while it seems like this may be the first quarter, where you're starting to dip your toe back into the international markets can you just talk a little bit about where youre kind of seeing some early momentum, there and where you're making investments in the international market that will drive growth in the next 12 to 18 months. Thanks.

Can you just talk a little bit about where you're kind of seeing some early momentum there and where are you making investments in the international markets that'll drive growth in the next 12 to 18 months? Thanks.

Yeah, thank you for that question. Our international markets actually have been growing nicely despite COVID-19 even over the course of the really the past four quarters. So we're really pleased with our launch of our business outside the United States where we are taking share from I. V. L. S. We're taking share from from other anthrax me devices as well, mainly in the coronary segment. So we focus

Yes. Thank you for that question, our international markets actually have been growing nicely. Despite COVID-19 , even over the course of the past four quarters.

So we're really pleased with our launch of our business outside the United States, where we are taking share from <unk>, we're taking share from from other atherectomy devices as well mainly in the coronary segment. So we focus principally in coronary outside the United States. We have gained really strong share in Japan and <unk>.

principally in coronary outside the United States. We have gained really strong share in Japan and our launch in Europe . Our coronary launch in Europe has also progressed very well. So

Our launch in Europe , our coronary launch in Europe has also progressed very well. So we now are launched in 22 countries and we expect by the end of this fiscal year, we will get to about 30 countries. So here is a circumstance, where we have a marketplace that.

You know, we now are launched in 22 countries, and we expect by the end of this fiscal year, we will get to about 30.

So here is a circumstance where we have a marketplace that has never had access to orbital arthroxia before, and we're able to now engage with our customers there, train and educate them on the use of this technology. They see the benefits of this technology and the care for their patients.

<unk> has never had access to orbital atherectomy before and we're able to now engage with our customers their train and educate them on the use of this technology. They see the benefits of this technology in the care for their patients they adopt it and incorporate it into their daily practice. So we're excited about that and we did.

they adopt it and incorporate it into their daily practice. So we're excited about that. And, you know, we did.

this quarter with very strong growth there about 62% year over year and about 3.7 million.

This quarter with very strong growth, there about 62% year over year and about $3 $7 million. We are expecting to continue on about that run rate and that would lead us to probably having $15 million to $16 million of revenue in our international segment of our business. This fiscal.

We are expecting to continue on about that run rate. And that would lead us to probably having 15 to $16 million of revenue in our, uh, international segment of our business this fiscal year, which would be obviously very strong growth and, and we're not done there. We expect that to continue going forward as we launch into these new, uh, markets and continue to grow our business there.

Full year, which would be obviously very strong growth and we're not done there. We expect that to continue going forward as we launch into these new markets and continue to grow our business there.

Great. Thank you.

Excellent. Thank you Brendan.

Thanks Keith.

There are no additional questions waiting at this time, so I'll pass the conference over to the management team for closing remarks.

There are no additional questions waiting at this time, so I'll pass the conference over to the management team for closing remarks.

Excellent. Thank you very much. And thanks, everybody, for your continued interest in CSI. We look forward to giving you another update next quarter. And with that, we'll conclude our call. Thank you.

Excellent. Thank you very much and thanks, everybody for your continued interest in CSI, we look forward to giving you another update next quarter and with that we'll conclude our call. Thank you.

That concludes today's conference call you may now disconnect your lines.

That concludes today's conference call. You may now disconnect your lines.

Okay.

Okay.