Q4 2021 Inogen Inc Earnings Call
Welcome to <unk> 2021 fourth quarter financial results conference call.
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[music].
Thank you thank you ladies and gentlemen.
And with that I will now turn the call over to our host Jason Summer General Counsel. Please go ahead.
Just saying.
Hi, sorry.
Having a little bit of technical difficulties here. So we're on a cellphone.
Hopefully everyone can hear us.
We're going to try and reconnect at some point, but again for now we're just we're going to be on the cellphone.
Well with that.
Thank you for participating on today's call. Joining me are energen CEO in the shop shop, and our CFO Mike <unk>.
Earlier today Inogen released financial results for the fourth quarter of 2021.
<unk> earnings release, and <unk> corporate presentation are currently available in the Investor Relations section of the company's website.
As a reminder, the information presented today will include forward looking statements, including without limitation statements about our growth prospects and strategy for 2022 and beyond expectations related to our financial results for the first quarter and full year 2022.
Our expectations with respect to supply challenges.
And cost inflation related to semiconductor chips, using our batteries and concentrator.
Our expectations of European regulatory clearances and related impact on our international sales.
Our ability to create shareholder value by driving awareness of our products expectations regarding our international and domestic sales channels XP.
Expectations related to our rental channel.
Expectations related to our prescribers sales organization, including the expansion of our sales team and implementation of health care intelligence platforms and tools through our partnership with Ashfield healthcare LLC.
Hiring expectations expectations regarding reimbursement and regulatory changes our expectations regarding the market for our products and the impact of COVID-19, pandemic on our business and supply and demand for our products.
In both the short and long.
The forward looking statements in this call are based on information currently available to US as of today's date. These forward looking statements are only predictions and involve risks and uncertainties that are set forth in more detail in our most recent periodic report filed with the Securities and Exchange Commission.
Actual results may vary and we disclaim any obligation to update these forward looking statements, except as may be required by law.
We have posted historical financial statements.
On our investor and our Investor presentations in the Investor Relations section of the Companys website.
Please refer to these files for more detailed information.
Also during the call we will present certain financial information on a non-GAAP basis.
Management believes that non-GAAP financial measures taken in conjunction with U S. GAAP financial measures provide useful information for both management and investors.
Including certain noncash items and other expenses that are not indicative of <unk> core operating results.
Management uses non-GAAP measures internally to understand manage and evaluate our business and make operating decisions.
Reconciliations between U S GAAP and non-GAAP results are presented in tables within our earnings release.
With that I'll turn the call over to <unk>, President and CEO <unk> <unk>.
Ill.
Thanks, Jason Good afternoon, and thank you for joining our fourth quarter.
Fourth quarter 2021 conference call.
<unk> made steady progress on the execution of our strategy to expand and effectively increase our sales footprint, while driving the productivity of our commercial operations. We also continue to make progress in mitigating the supply chain challenges in order to meet the market demand and we are investing in R&D and clinical.
While strengthening other critical capabilities in support of short term growth, while setting us up for long term sustainable and durable growth and profitability.
A few months back we announced an important new partnership with Ashfield, a contract sales organization to effectively advance our prescriber growth strategy and we have made significant progress ahead of plan in terms of training and deploying the additional sales representatives and enhancing the operating margin.
In addition to enhancing our overall commercial excellence, we successfully executed the price increase in September 2021 debt, primarily offsets the cost of inflation associated with the Industrywide limited semiconductor chip available.
Turning to the fourth quarter results. We saw total revenue growth of three 3% from the fourth quarter of 2020, primarily driven by improved average selling prices sustained demand and the reduced impact of the COVID-19 pandemic related public health emergency or phe versus the comparative period in the prior year, which was partially offset by.
Supply chain constraints that primarily limited sales in our domestic business to business channels.
This was in line with the midpoint of our preliminary unaudited revenue estimates.
On the January 10, 2022 and results for each revenue channel reported were in line with those estimates as well.
With ongoing supply chain constraints, and while attempting to fulfill critical orders for our domestic business to business partners. We intentionally focused our available capacity on supplying our direct to consumer and rental channels and our international business to business sales channel and an effort to optimize revenue and margins.
Additionally, in anticipation of the temporary suspension of manufacturing operations effective January one 2022, we have reserved a portion of our supply produced in December 2021 to Porsche the need the demand primarily for our direct to consumer sales and rental customers. We expected in the first quarter of 2022 until the time we.
Have restarted production.
Before we go through the fourth quarter financial results in more detail I would like to provide an update on the two items. We reported in the January press release relating to preliminary revenue results for fourth quarter and full year 2021.
With respect to the impacts from supply chain disruptions associated with the semiconductor chips used on the printed circuit board and better is a portable oxygen concentrators. We are seeing continued pressure on supply with some early signs of improvement in the regular supply channel for these chips.
We are working closely with our regular semiconductor suppliers to firm up their overall commitments and smooth our delivery schedules for the orders. They had initially concerns for 2022.
Despite early promising signs the semiconductor shortages lingered and likely will continue to limit our ability to fully meet demand in 2022.
We reported in the fourth quarter of 2021.
Or at least the announcement that we will temporarily suspending manufacturing operations due to the semiconductor shortage related to the commitments from various brokers on the opening semiconductor market.
The late cancellation of committed but outstanding semiconductor orders resulted in a decision to temporarily suspend operations beginning January one 2022 as expected. The suspension was a brief one and we have now restarted production at our Texas, and California facilities and at Fox.
Direct manufacturer in the Czech Republic between February 790, <unk> 2022 ahead of the plan we laid out on January 10, 2022, and we are back at normal production levels.
We are continuing to work across the semiconductor suppliers of our OEM and leveraging to the extent possible. The open market channel the purchase the necessary semiconductor chips.
Additionally, our.
Completing the redesign some other boards on our imaging <unk> POC.
Realize alternative chipset currently have the highest level of availability, which we expect to begin using in production starting in the second quarter of 2022.
With another board redesign there will be no material impact on the functionality performance patient user interface or patient experience, but we expect greater optionality in sourcing semiconductors moving forward.
The cost for the chip sourced from the open market has trended higher in the fourth quarter of 2021 versus the third quarter of 2021 as a result of high demand and constrained supply.
This resulted in inflated costs related to the acquisition of semiconductor chips that negatively impacted our cost of goods sold in the fourth quarter of 2021.
We expect the increased cost of chips to have an increased impact on our material cost in 2022 based on purchases already made to secure supply.
We also expect such impact will increase the regular supply chain's ability to catch up to demand surge that regresses and ultimate shifts with the redesigned motherboard start to witness similar shortages due to the heightened demand.
The highest semiconductor costs incurred in the fourth quarter of clinics 91, as a result of sourcing on the open market have also increased our prepaid expenses and other current assets and inventory given the most of these components were not yet in finished goods that were sold during that period.
We still believe based on industry feedback and our evaluation that the supply shortages are likely to continue through the second half was split 22, despite some expected improvements.
As part of our strategy to minimize supply disruptions and meet the higher portion of the expected 2022 demand we decided to forward buy a portion of our semi conductor requirements for 2020 to opportunistically during the second half of 2021.
As a result, we expect the increased cost of goods sold per unit for our 2020 to be higher than the cost increase seen in the fourth quarter of 2021, especially given that we will continue to source part of our semiconductor requirements. During the first half of 2022 and possibly into the second half of 2022 from the open market channels.
While the supply chain situation remains fluid we are pleased with the motherboard redesign for our imaging <unk> POC and are aggressively continuing to pursue efforts to get firm commitments from the regular supply channels, while simultaneously canvassing the open market for additional quantities again, our execution around that.
Price increase we took back in September 2021 has allowed us to cover most of the cost inflation due to the chip shortages.
As mentioned in our pre announcement on January 10, 2022 current engine products are commercialized in the European Union under the medical device directive certificates and ours is expected to expire on May 18 2022.
We are preparing the filing for the MTR submissions for certification under the EU medical device regulations.
And part of 2022 for both existing and new and improved system and expect the MBR certificate to be issued during the third quarter of 2022.
We have verified our ability to meet most of the demand in terms of existing orders through our shipments up to May 18, 2022, Mbd certificate expires.
Additionally, we are in the process of applying for select EU country level delegations or exemptions as an additional mitigation measures.
We are also working towards securing the necessary certification for Great Britain in Switzerland.
Not directly applicable, allowing for continued operations in those two territories independent of the Timeframes for certification under the EU MBR.
I would like to reiterate that the anticipated gap in EU marketing is unrelated to product safety or performance and will not impact U S commercialization.
Based on our latest discussions with the notified bodies, we expect the EU <unk> for our improved products to be reviewed and potentially cleared in time for long term operations in the EU.
With that I will now provide details for our fourth quarter 2021 revenue by channel.
For the fourth quarter of 2021, we generated total revenue of 7% to $6 $4 million compared to $74 million in the fourth quarter of 2020, which represents an increase of three 3% over the comparative period.
Domestic business to business sales in the fourth quarter of 2021 decreased 57, 6% to $10 3 million compared to $24 $2 million in the fourth quarter explained 20, primarily due to supply chain constraints that limited product availability in this channel.
International business to business sales in the fourth quarter of 2021 increased by 47, 6% or 50% on a constant currency basis to $20 1 million compared to $15 6 million in the fourth quarter of 2020 they.
The increase was primarily driven by increased ambulation for patients in Europe , and improving operational capacity of certain European respiratory assistance centers closer to normal levels as improved and COVID-19 is explanation rates has enabled patients to return to normal normalized activity.
Levels and seek treatments, partially offset by supply chain constraints that limited product availability in this channel.
Domestic direct to consumer sales increased 23, 3% to $33 million in the fourth quarter of 2021 from $26 8 million in the fourth quarter of 2020, primarily driven by increased average selling prices.
Inside sales representative productivity increased in the quarter. Despite lower average inside sales representative head count, which was down approximately 3% from the comparative period in the prior year.
We are continuing to optimize our inside sales representative represented <unk> by increasing our focus on enhanced sales management disciplines and utilizing data driven insights led sales techniques aimed at improving the productivity of our inside sales force.
We are pleased with the performance of our inside sales team in the fourth quarter as we saw improved direct to consumer sales productivity per representative and increased average revenue per order versus the fourth quarter of 2020, including the price increase effective September one 2021.
Rental revenue in the fourth quarter of 2021 increased 39, 4% to $13 billion from $9 4 million in the same period in 2020, primarily due to increased patient foodservice higher Medicare reimbursement rates and higher billable patients as a percent of total patients on service as of.
At December 31, 2021, we had approximately 42900 patients on service, which was up six 2% sequentially compared to September 32021, and up 33, 2% compared to December 31 2020.
The increase in patients on service was primarily driven by greater utilization of patient leads for rental opportunity and physician facing initiatives to increase prescribed but I wasn't as part of our sales force as well as the relaxed Medicare criteria for oxygen therapy reimbursement due to the COVID-19 phe.
Despite the supply chain challenges being worked through we remain cautiously optimistic about the direct to consumer sales and rental channels. While we continue to assess the potential impact, including changing COPD diagnosis rates and other variables as a result of the COVID-19 in the U S.
In other major markets, where we operate.
Moving to the strategic initiatives focused on increasing our prescriber sale organization. Our total physician sales of the presentation Representatives head count was 35 as of December 31, 2021, compared to 24 as of December 31, 2020, an increase of approximately 46%. However.
In light of the collaboration with a contract sales organization Ashfield as of January 2022.
Scriber facing sales organization was at 47 sales reps in place and 10 sales reps with accepted offers that will be in the field. Early March 2022, well ahead of the timing we have communicated when we announced this agreement.
To support the combined 57 physician facing sales reps, we have evolved our operating model by adding <unk> SV, a concierge service reps that will be assuming administrative responsibilities, which we believe will increase the selling time of the sales reps by about 60%. According to our internal early estimates, while improving the customer and patient experience.
Yes.
We expect the new strategy and action plan with significantly improved coverage of the highest decile prescribers with adequate call frequency, while driving sales productivity through proprietary prescriber insight and analytics for the first time with imaging.
The enhanced sales tools and techniques as well as the concierge service model will benefit the combined sales force, including imaging and estimate the representatives and we expect will increase our coverage of the portable oxygen patients that are diagnosed and prescribed and the prescriber channel from 40% approximately 65%.
Regarding reimbursement rates, we continue to see increases in Medicare rates for oxygen therapy, with Medicare reimbursement rates, increasing approximately 5% effective January one 2022 due to the annual inflation adjustment.
The 2% Medicare sequester benefit that has been in place since May 2020, due to the COVID-19, Phe was set to expire at December 31, 2021, but has now been extended until March 31 2022.
The sequester then resumes with a 1% reduction to rates from April one 2022 until June 32022, with the full 2% Medicare sequester resuming July one 2022 and continuing through September 32013.
As we look ahead, despite some near term challenges the underlying demand for our offerings is strong and we are committed to increasing the <unk> market penetration and improving patient access.
In the meantime, we are committed to working through the ongoing supply challenges and mitigating most of the material cost inflation, focusing on commercial excellence and driving our operational efficiency we.
We will continue to invest in our infrastructure and capability build clinical evidence innovation and new product development as well as commercial capabilities to strengthen and advance our market leadership position in portable oxygen therapy will.
We believe that these focus areas and the investments will contribute to our aspiration of long term sustainable and profitable growth and value creation.
I will now turn the call to our interim CFO , Mike So just get the mic.
Thank you Bill.
That's the meal noted total revenue for the fourth quarter of 2021 was $76 4 million representing.
An increase of three 3% over the comparative period in 2020.
Turning to gross margin for the fourth quarter of 2021 total gross margin was 55% compared to 46% in the fourth quarter of 2020.
Our sales revenue gross margin increased to 49, 2% in the fourth quarter of 2021 versus <unk> 44, 5% in the same period of 2020.
The increase was primarily due to higher average selling prices and decreased mix of domestic business to business sales, which have a lower gross margin than direct to consumer and international sales.
The increase was partially offset by higher cost of goods sold per unit in the quarter, primarily due to higher material labor and overhead costs.
The fourth quarter of 2021 included $2 $3 million of higher material costs associated with open market purchases of semiconductor chips used in our batteries in POC, which represents approximately 360 basis points of gross margin.
This cost is lower than our previous expectation of $4 1 million to $6 1 million.
A higher cost of goods sold in the fourth quarter of 2021 for open market purchases of semiconductor chips due to the timing of usage of chips purchase.
Rental revenues gross margin increased to 56, 8% in the fourth quarter of 2021 versus 56, 5% in the fourth quarter of 2020, primarily due to higher Medicare reimbursement rate.
Higher billable patients as a percent of total patients on service and lower service expense per patient on service, partially offset by higher depreciation expense per patient on service.
As for operating expense total operating expense increased $2 50 to $45 3 million in the fourth quarter of 2021 versus $39 $6 million in the fourth quarter of 2020, primarily due to increased personnel related expenses and consulting expense.
Really offset by a $2 $9 million non cash decrease in the change in fair value of the new era earn out liabilities versus the comparative period.
Research and development expense increased to $4 $7 million in the fourth quarter of 2021 compared to $3 $7 million in the fourth quarter of 2020, primarily associated with increased personnel related expense.
Sales and marketing expense increased to $29 $7 million in the fourth quarter of 2021 versus $25 $4 million in the comparative period of 2020, primarily due to increased personnel related expense consulting expense and credit card and financing fees.
Media and advertising costs were $9 $5 million in the fourth quarter of 2021 compared to $9 3 million in the fourth quarter of 2020.
General and administrative expense increased to $10 $9 million in the fourth quarter of 2021 versus $10 $5 million in the fourth quarter of 2020, primarily due to increased personnel related expense and increased consulting expense offset by the noncash change in fair value of the earn out.
Liability versus the comparative period.
In the fourth quarter of 2021, we reported an income tax expense of $16 million, which included a $17 4 million noncash income tax provision expense associated with the revaluation of our deferred tax asset.
The valuation allowance was recorded in the period due to uncertainty around the ability to utilize existing deferred tax assets to offset tax liabilities in future periods, primarily due to cumulative pre tax losses.
Strategic investments in future periods, and the impact of the COVID-19, pandemic, including related supply chain impacts on parts availability and cost inflation.
In the fourth quarter of 2021, we reported an operating loss of $6 $7 million adjusted EBITDA of negative $5 million net.
Net loss of $22 $9 million and loss per diluted common share of $1 1 billion.
Finally, we ended the fourth quarter of 2021 with cash cash equivalents and marketable securities of $245 $5 million with no debt outstanding.
As Bill mentioned, we paid significant additional costs in the fourth quarter of 2021 for the semiconductor chips purchased on the open market, but not yet sold in finished goods, which increased our prepaid expense and other current assets and inventory as of December 31, 2021 15.
<unk> $15 $4 million and $7 million respectively.
Now turning to our outlook.
We continue to make progress addressing the uncertainties caused by supply chain disruptions. We do not expect we do expect they will continue to impact 2022 results in terms of the increased costs.
We do believe material costs will be incrementally lower in the second half of 2022 versus the first half of 2022 once the motherboard redesign effort is complete and our regular supply chain further returns to normalcy.
We are also closely watching for any potential impact from the omicron or other potential variance of the COVID-19 pandemic and.
And its potential impact on COPD diagnosis rates.
As a result at this point, we will not be providing detailed guidance for full year 2022.
However, we can provide some general context or expectations for the first quarter and full year of 2022.
Due to the expected supply chain constraints impacting semiconductor chip supply, we expect total revenue in the first quarter of 2020 to be similar to the fourth quarter of 2021.
With the full year over year revenue growth is expected to be in the mid single digit range over 2021.
While we expensed $2 $3 million of higher material costs associated with open market purchases of our semiconductor chips using our batteries in POC in the fourth quarter of 2021, we expect this cost to increase significantly in the first quarter of 2022.
Cost inflation in materials and labor throughout the supply chain, primarily related to semiconductor chips, we forward bought in 2021.
We expect approximately $4 5 million to $5 $5 million of incrementally higher material costs associated with open market purchases of semiconductor chips chips used in our batteries in POC for the first quarter of 2022.
At the same time, we're still committed to making multi year investments in clinical research research and development and building the necessary infrastructure to support future durable revenue growth and margin expansion.
Such investment initiatives, we expect increased operating expense for full year 2022 compared to 2021.
With the expectation that these investments will begin to meaningfully benefit results in 2023 and beyond.
In summary, while we believe our pricing actions will cover most of the material cost inflation, we expect negative operating and net losses for the full year of 2022, reflecting the anticipated supply constrained revenue increased cost of goods sold per unit higher operating expense and incremental growth investments.
<unk> versus the prior year.
To reiterate what Bill said earlier, while in the short term our outlook is impacted by certain supply constraints. We are proud of the actions we have taken to make structural improvements in our business, including our investments in our prescriber sales and service organization productivity improvements in our direct to consumer channel.
And increases in our average selling price.
Over the long term our strategy to optimize the commercial infrastructure and drive productivity, while investing in clinical research and research and development around commercial opportunities will help us work toward our plan to return to sustainable revenue growth and profitability.
With that we'll be happy to take your questions Diego do we have any questions in the queue.
Thank you Sir and at this time to the audience if you'd like to ask a question. Please press star one on your telephone keypad.
<unk> in the case that your line is in the question queue. You May press the Star key followed by the number two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Once again to ask a question press star one on your telephone keypad. Our first question comes from Robbie.
Marcus with Jpmorgan. Please go ahead.
Oh great.
Congrats on the quarter.
Wanted to ask if there is a lot of moving pieces in 2022 and I do really appreciate the mid single digit sales growth over 2021.
But maybe you could walk us through the different moving pieces and how to think about the components of each of the businesses.
Just given.
There is.
With euro and the <unk> there is a lot of ups.
Ill turn downs through the year, so I think that would be a great place to start.
Yes. Thank you Robbie it's going to be and so thanks for the question. So as I, maybe let me take a step back and say that the good thing is the underlying demand that we see as very sustainable and deleveraging, which is a good thing.
As you can tell from the prepared comments that there is a supply situation that's still lingering over outperformance with that said, we feel comfortable that with the channel.
Channel mix that we have planned for and execute around that we'll get to that mid single digit growth.
As expected of course, we are going to be focused on prioritizing what do we get the highest revenue on margin not too dissimilar from 'twenty to 'twenty, one, but we hope with the improved supply situation, we'll be able to also serve the needs of the b to B domestic channel and is it better than what we've done in 2021.
Sure.
Got it and how do you think the.
The current <unk>.
Jamie.
Hi.
The health of the HMA Saar in the U S. Do you think once you get supply back online that there'll be a willingness to go out and buy Inogen POC.
Do you foresee more of DTC and rental is the biggest driver is gone forward.
Yes.
Let me, let me make a comment first on the <unk> I think there is an understanding that we're trying to do as a company in terms of the privatization of the channel is on the expected everybody would behave the same way if they were running their own business. So despite the fact that there is some.
Maybe uncertainty around us supplying the H M E business that has some understanding to the fact of why we're doing it now with that said we continue to see.
Or does the car in the system that not being canceled we get also additional orders and then indication that also that supply is constrained all around it. So it's not only us and we believe that most of that will remain in place.
The lights come back online.
Got.
Enrolment part of the uncertainty that we're all living through but we believe that most of it will stay in place.
Great if I could just slip one more question in.
The first quarter guide below consensus how do you get confidence in mid single digit growth for the full year, if theres still going to be some supply issues.
Different points during the year and Thats. It for me. Thanks, Yes. Thank you Robert so.
Think despite the fact that the first quarter was a little bit lower we believe that from the visibility we have in terms of supply chain as well as our ability to ramp up production. The second half of course of the year are going to be stronger than the first half of the year, giving us the confidence that put us.
At least at the high level indicate where we believe the growth rates are going to land.
Great. Thanks, a lot.
Okay.
Our next question comes from Matt Michelle with Keybanc. Please state your question.
Hey, Matt.
Hey, guys. This is actually Brad on for Matt.
Thanks for that question.
Okay.
Just a couple of questions from us today I just wanted to start with gross margin.
30% number seemed pretty positive and point of view and with the understanding.
Some of the supply chain cost seem to be increasing.
They're moving pieces, just how would you be thinking about gross margins directionally in <unk> versus <unk> and then also just touching on the cadence for the rest of 2022.
To that.
Yes.
Mike.
As you think about gross margin because we talked about what we expect in Q1 in terms of topline.
And we also.
A number out there in terms of what we expect the supply chain premiums that were going to be absorbing in Q1, and so if you think in terms of we have a pretty good gross margins in Q4.
Obviously, they were propped up a little bit by the price increase and a little lower material cost effect than we had planned in the quarter and so we came in higher harder than we thought we would.
And so I think as you as you look at Q1, you have to kind of factor in the fact that we're going to have about double the amount of PPV, that's going to be flowing through our financials on a similar revenue and I think that can get you pretty close to probably to do a number in terms of what to expect for Q1.
Now if you think about the full year, obviously, we're going to be wrapping up we think in the back half of the year.
And we expect things to improve in the back half of the year around supply chain as we see some.
More normalcy coming back to supply chain.
So we would hope that as we move through the year, we'll continue to see improvement in our gross margins from that from that low point in Q1.
Alright, thanks for that additional color and then.
Just a little bit of a bigger picture question here.
I appreciate this could be a little bit tough to answer but do you guys have a sense of what underlying demand might look like.
If not for the supply chain constraints and what upside to the initial mid single digit growth items could be in more of a normalized environment.
Yeah, So Brett I'm going to take that so if I look at underlying demand.
Characterize it.
<unk> one is we're continuing to see the demand in the cash channel and the cash sales as well as the orders that we received from B to B and the answer is we're seeing steady demand.
From both those channels.
<unk> in Europe , <unk> in the U S as well as our own DTC.
There is not a significant concern that might flag, so far that the undone by underlying.
Underlying demand is weakening the other side or the other.
Look at it's also we don't believe to our knowledge that there is any major reduction in prescriptions as off as a result of diagnosis and prescription rates nothing that we have been able to see or determined so far.
<unk> and Gov that said the underlying demand seems to be steady and healthy.
We're going to make a comment on saying, it's increasing but it's actually steady as we as we go through the early parts of 2022.
Alright totally fair and then last question from me today, just thinking about capital allocation for 2022.
What would you consider your biggest priorities at this stage and how would you characterize the current pipeline for potential acquisitions or maybe relative to a year ago. Thank you very much for taking the questions.
Yeah, So Brett.
Im going to say the primary thing is we have a growth strategy, we're going to make sure that we fund that growth strategy. We believe that's one of the best returns, we can get back to our share holders, but with that said as you know and you can see from our balance sheet that we have the ability to continue to look for an acceleration of our growth rates, if we happen to find the right.
Organic play through M&A, so that.
Would be part of it and of course as you can see in our funding some of the increases in our cost basis from the cash that we have we believe the balance between the three thing, meaning we're doing some investments like we said in multiple areas.
Actually overcoming some of the challenges on the cost increases as well as we are constantly engaged in dialogue around potentially finding.
The M&A acceleration that we would hope to get to.
In the future so three way but.
We're in a good place in terms of the cash on.
On hand to be able to do all of them at the same time.
Thank you.
And a reminder to ask a question at this time press star one on your telephone keypad.
Our next question comes from Margaret Kaczor with William Blair. Please state your question.
Hey, guys. This is Maggie on for Margaret today, I wanted to ask a question on <unk>.
Physician sales force.
Do you guys have added several new rack to the physician calix fourth in the first quarter of launch so how long does it take these reps to ramp and then when do you expect these to be fully productive and do you think we can see material impacts to the top line. This year from these reps.
Hey, Matt gates to be and how long youre doing so great question. So first I think what.
But the new not only the additional salespeople, but the insights behind them in terms of the same stores as well as the data driven insights we are providing as well as the operating model in terms of giving people the productive time back, but theyre not doing administrative work that focused on selling we definitely believe that we will see effects that are gone.
To productivity.
Im just before used to be 12 to 15 months more trending towards the end, but I'm not going to make a comment on how do we expect them to be but we expect it to be shorter than we've seen before with higher productivity based on the on the back end of it.
Okay, great. Thank you.
You guys talked about the level of investments you've made in 2021 and plan to make in 2020 Q beginning to see impacts from 2023. So I know, it's still early but assuming that youll have an improving supply backdrop is it reasonable to assume that you guys can begin to see high single digit to double digit square. Thank you.
By when.
Youre asking by clean in 'twenty three.
Yes by 2023.
Yes, we believe that within the coming couple of years, we will be back to that level of double digit growth as well as returning to profitability.
Maggie.
Okay, great. Thank you.
Youre welcome. Thank you.
Our next question comes from Mathew Blackman with Stifel. Please go ahead.
Hi, good afternoon, everybody. Thanks for taking my questions just a couple maybe.
Maybe to start on guidance, if youre willing to share that single digit revenue growth youre expecting for 'twenty, two anyway to parse that between price and volume and then a couple of follow ups.
So at this point Hi, Matt This mobile at this point in time, we're not.
Two questions.
I think the <unk>.
Good news is we've got the ability to successfully execute on our price increase.
Because of the fact that supplement supply is the issue here without that answered that question now because the supply strengthen then that ratio will change significantly between when we're sourcing that revenue growth from.
Fair enough and then another one on the guidance I just want to clarify.
The way it read in the press release and I apologize if you expanded on it.
Prepared remarks, but it sounds like for the full year, you're expecting positive adjusted EBITDA am I reading that correctly.
While in the first quarter for the full year, it's supposed to be positive.
Yes.
What we were signaling in the press release.
Okay I appreciate that and then my final question would be just.
Just and I apologize again, Theres a lot a lot of moving parts, particularly in Europe , you're obviously doing a lot of things there.
But is it sort of takeaway messages.
Not expecting to see material disruption in the business is.
Is that sort of a takeaway, obviously theres a lot of different.
Initiatives, you've got in place, but is that sort of the bottom line.
Takeaway I would assume so because you wouldn't be able to grow mid single digits. If you will.
Lose substantial revenues in Europe , but just I just wanted to clarify that that should be the take rate.
Great question, Matt So let me maybe answer it in.
A two part answer one as we believe that the existing orders.
Because the backlog a little bit in Europe also like here, we can meet the existing or the ability to ask of the MVD legislation ship product before may 18, so that component I would say, yes, so I would think the likelihood at that.
Of course, we have also applied for the MTR certificate and the knowledge as Johan said in the prepared remarks, we feel that it would be cleared in time for a longer term operation, but I can't sit here and say they don't have a huge backlog or there will be some questions that might come back, but we feel.
If you ask me today I feel that we will get that back on track in terms of the MVD. Our certificate issued on time for us not to have major disruption, but im not going to take it off the table altogether.
Okay, but does that stabilize.
Please go.
Go ahead Larry.
Okay.
Yes.
Yes go ahead and Bill I apologize.
No no no no not material enough to go ahead.
I was just going to ask if that mid single digit which I assume is like 4%, 6% is there some cushion in there to give you a little bit of flex in case.
Things take a little bit longer I'm, just trying to get a sense of what's baked into that mid single digit guidance.
No, we're not going to add to that.
Thanks.
That doesn't mean I can't ask but.
Alright.
Of course.
Today, we'll see you later today.
Fair enough.
I appreciate it.
Okay. Thank you.
Thank you and there are no further questions at this time, so I'll turn the floor back to Mr. Sharp sharp for closing remarks. Thank you.
Okay. So while the short term outlook is impacted by certain supply constraints. We are proud of the actions we have taken to make structural improvements in our business, including a stronger commercial organization and more robust innovation pipeline and to support our market development efforts I remain confident.
And our ability to advance that agenda as global market leader.
This evidence based chronic less connected care solutions with long term sustainable revenue growth and profitability. Thank you for the time today and we look forward to engaging in conversations with all of you.
You.
Thank you and this concludes today's conference all parties may disconnect have a great day.
Welcome to <unk> 2021 fourth quarter financial results Conference call.
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