Q4 2021 Tactile Systems Technology Inc Earnings Call
Right.
Please standby good evening, ladies and gentlemen, and welcome to the fourth quarter and fiscal year 2021 earnings conference call for tactile medical at this time, all participants have been placed in a listen only mode. At the end of the company's prepared remarks, we will conduct a question and answer session. Please note that this conference call is being recorded and will be available on the Companys website for.
A replay shortly.
Before we begin I would like to remind everyone that our remarks and responses to your questions. Today may contain forward looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including those identified in the risk factors section of our annual report on Form 10-K to be fine.
With the Securities and Exchange Commission.
Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly public publicly update or revise our forward looking statements as a result of new information future events or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with.
Generally accepted accounting principles or GAAP, we generally refer to these as non-GAAP financial measures reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website.
I'd now like to turn the call over to Mr. Dan Rivers, Tactile Medical's, President and Chief Executive Officer. Please go ahead Sir.
Thanks, operator, and welcome everyone to our fourth quarter and fiscal year 2021 earnings call I'm joined on the line by Brent Moen, Our Chief Financial Officer.
I'll begin today's remarks with an overview of our fourth quarter sales performance along with a discussion of the drivers trends and operational highlights we saw during the quarter.
Brent will discuss our financial results for the fourth quarter and full year in greater detail and review, our 2022 financial guidance, which we introduced in our earnings release. This afternoon.
Then I'll share some additional thoughts on our outlook and key areas of focus heading into 2022 before we open the line for questions. So with that let's get started.
In the fourth quarter of 2021 we reported total revenue growth of 4% year over year to $61 $7 million.
Our total revenue growth was driven by sales of our recently acquired <unk> product line, which contributed approximately seven percentage points to our revenue in the fourth quarter.
This more than offset a 3% decrease in sales of rentals and rentals of our lymphedema products with our revenue from flexi touch an entre systems, decreasing 3% and 2% year over year, respectively.
Our fourth quarter sales performance enabled us to achieve total revenue growth of 11% for the full year of 2021 exceeding our latest revenue guidance range, which called for total revenue growth of 9% to 10% year over year.
The higher than anticipated results relative to our expectations was driven by slightly better sales of our flexi touch systems during the fourth quarter.
Broadly speaking our flexi touch an entre system sales performance continued to be moderated by two primary factors that we outlined on our last earnings call in November the headwinds related to the extended recovery from Covid and the sales force staffing gaps that emerged during the second half of 2021 .
Let me take a moment to cover each of those aspects and a bit more detail.
Beginning with the impact of Covid the spike in cases, driven by the Delta during the second half 2021 led to the re emergence of many of the headwinds that we've seen during similar periods in the pandemic.
Namely increased patient absenteeism.
Constraints on patient throughput and restrictions on rep access to both patients and clinicians at the health care facilities that we serve.
These headwinds ultimately limited our teams ability to engage with new clinicians and patient customers.
The persistence of these headwinds throughout the fourth quarter was largely consistent with our expectations.
With respect to the Salesforce staffing.
Our performance in the fourth quarter was impacted by the challenging labor market, which in combination with some reluctance around our vaccination policy among both existing representatives and potential new hires impacted recruiting and retention.
Keep in mind, our field teams regularly engage with patients directly both in the clinic and in their homes.
Thus our cautious stance.
In addition, with nearly 30% of our sales team unvaccinated as we entered the fourth quarter, we start to reconcile our vaccination testing requirements to balance retention with patient safety.
During the fourth quarter, we focused on enhancing our sales rep retention efforts bolstering, our internal recruiting resources and increasing our hiring incentives, especially for territories that have been more difficult to staff.
We also instituted a vaccine policy aimed at restoring access to clinicians and patients addressing our obligations as both a federal contractor as well as ensuring the safety of both our employees and the customers that we serve them.
I'm pleased to share that we navigated the implementation of this vaccine policy during the fourth quarter, while minimizing additional departures.
As of December 31st our field commercial team, which is focused on increasing clinician awareness of our lymphedema solutions consist of approximately 220 field sales representatives.
30 field managers and 94 field support specialists.
The <unk> device is sold through our Dms providers throughout the United States and is supported by a team of 11 tactile sales representatives.
To help mitigate the effects of COVID-19 related headwinds on our business. Our team has been focused in recent quarters on leveraging virtual solutions to interact with patients and customers and these efforts continued during the fourth quarter as well.
Most notably we continued to educate the medical community through our clinician clinician education events.
We hosted a total of 65 education programs during the quarter, which saw participation from approximately 1600 clinician attendees.
In total more than 5500 clinician attendees participated in our educational programming throughout the course of 2021.
This was more than double pre COVID-19 attendance given.
Given this enhanced engagement with the medical community. We've continued to see expansion in the awareness and effective treatment of lymphedema as evidenced by our growing base of clinician prescribers.
And lastly, we continued to make steady progress with the integration of our Aflow Vas product during the fourth quarter.
From a sales perspective, we were pleased to see solid engagement among our channel partners. We're seeing affirmation that our <unk> partners are finding well qualified patients among their oxygen nebulizer noninvasive ventilation customers.
As a reminder, we believe that this partnership with <unk> Representatives focused on respiratory products in the home care setting is an advantageous sales and distribution strategy.
These reps are well positioned to offer a complementary portfolio of respiratory solutions and benefit from the evolving needs of their existing customers.
From a margin perspective, Aflow best helped contribute to our strong overall gross margin performance during the quarter, resulting in nearly 73% for the fourth quarter.
Stepping back while the second half of 2021 proved to be more challenging than we'd anticipated. When the year began we made solid operational progress that was consistent with our expectations during the fourth quarter.
By continuing to successfully navigate these issues we remain on track for a recovery and subsequent inflection as we work our way through 2022.
Now, let me turn it over to Brent who will share a more detailed discussion of our quarterly financial results along with our guidance for 2022.
Thanks, Dan.
Total revenue in the fourth quarter increased 4% year over year to $61 7 million compared.
Compared to $59 2 million in the fourth quarter of 2020.
Byproduct category sale.
<unk> of our recently acquired <unk> system contributed $4 $3 million for the quarter.
Sales and rentals of our flexi touch systems decreased 3% year over year to $49 $7 million in the quarter.
And sales and rentals of our entre systems decreased 2% year over year to $7 $8 million.
Total revenue by channel was 68% commercial 16% Medicare.
9%, VA and 7% durable medical equipment distributors the ladder as a new channel comprised of revenue from our recent acquisition of <unk>, which closed on September eight 2021.
These figures compare to our total revenue channel and.
In the fourth quarter of 2020 in which the commercial Medicare and VA channels represented 71%, 18% and 11% of total revenue revenue respectively.
Continuing down the P&L.
Unless noted all references to fourth quarter results are on a year over year basis.
Gross margin was 72, 6% of sales compared to 76% last year, an increase of 200 basis points year over year.
non-GAAP gross margin was 73, 3% of sales compared to 77% in the prior year.
non-GAAP gross margin excludes noncash intangible amortization in both periods and noncash purchase price adjustments related to our acquisition of Aflow vest in the current year period.
The increase in gross margin resulted from sales and rental mix by payer.
As a reminder, we have provided reconciliations of certain GAAP to non-GAAP measures in our earnings press release.
Fourth quarter operating expenses were $41 million, an increase of $6 2 million or 18%.
The increase in operating expenses was driven primarily by a $5 million or 26% increase in sales and marketing expenses largely due to increases in personnel related compensation expense, including the addition of the <unk> sales team.
And travel related expenses as we returned to hosting in person regional sales meetings.
The increase in operating expenses was also driven by a $340000 increase in reimbursement general and administrative expenses.
A $400000 increase in research and development expenses, and a $400000 increase in cash or noncash intangible amortization and noncash earn out expense.
The increase in intangible amortization and non cash earn out expense was primarily attributable to the increase in intangible assets associated with the <unk> acquisition offset by a $200000 decrease in the estimated fair value of our earn out liability related to the acquisition of <unk>.
<unk>, which represented a reduction in our GAAP operating expenses in the fourth quarter of 2021.
Operating income was $3 $8 million compared to $7 million last year.
non-GAAP operating income was $6 4 million compared to $7 $8 million last year.
Income tax expense was $10 $9 million compared to income tax benefit of $3 $9 million last year.
The current year tax expense was driven by the recording of a full valuation allowance against our deferred tax assets.
Net loss was $7 5 million or <unk> 38 per diluted share compared to net income of $12 $1 million or <unk> 61 per diluted share last year.
non-GAAP net loss was $5 $5 million compared to non-GAAP net income of $11 $8 million last year.
Weighted and weighted average shares used to compute GAAP diluted net income and loss per share were $19 8 million shares for the fourth quarters of both 2021 and 2020.
Adjusted EBITDA was $9 $5 million compared to $10 $8 million last year.
Turning to a brief review of our results for the full year of 2021 total revenue increased $29 million or 11% to $208 $1 million. The increase in total revenue was driven by an increase of $12 3 million or eight person.
<unk> and sales of flexi touch.
$5 $1 million in sales related to the Aflow vest.
And an increase of $3 $5 million or 15% and sales of entre.
2021 revenue by payer was 68% commercial 17%, Medicare, 12%, VA and 3% <unk> compared to <unk> 70 116.
13, and zero percent, respectively last year.
GAAP net loss for 2021 was $11 $8 million or <unk> 60 per diluted share compared to a loss of $620000 or <unk> <unk> per diluted share for the full year 2020.
non-GAAP net loss for 2021 was $6 $5 million compared to non-GAAP net income of $3 3 million for the full year of 2020.
Adjusted EBITDA for 2021 was $17 7 million or 9% of sales compared to $16 million or 9% of sales for the full year 2020.
As of December 31, 2021, we had $228 $2 million of cash and cash equivalents and $55 million of outstanding borrowings compared to $47 9 million in cash and cash equivalents and no outstanding borrowings as of.
Of December 31, 2020. This also compares to $22 4 million in cash and cash equivalents at the end of the third quarter of 2021.
Turning to a review of our 2022 outlook, which we introduced in our earnings press release. This afternoon. We expect full year 2022 total revenue in the range of $235 million to $240 million representing growth of approximately 13.
<unk> to 15% year over year.
Our 2022 total revenue guidance range assumes sales of our products that serve patients suffering from lymphedema and CV CBI, specifically, our flexi touch an entre systems increased approximately 6% to 8% year over year.
And sales of products that serve patients suffering from bronchiectasis and chronic respiratory conditions, specifically, our Apple vest product line in the range of $19 5 million to $25 million for the full year 2022. This compares to the $5 $1 million of App.
<unk> sales following our acquisition on September eight 2021.
On a pro forma basis, assuming the asset had been acquired on January one 2021 sales of our <unk> are expected to increase in the range of approximately 18% to 24% year over year for the 12 months ending December 31 2022.
For modeling purposes for the full year of 2022, and we expect our GAAP gross margin to be in the low 70% range.
Our GAAP operating expenses to increase 18% to 20% year over year.
With roughly one fifth of the expected year over year increase coming from non cash intangible amortization and noncash changes in contingent consideration.
The remaining increase in our GAAP operating expenses is driven primarily by incremental expenses from the acquisition of <unk> for the 12 month period in fiscal 2022 as compared to the partial period for fiscal 2021, and our continued investment in research and development include.
<unk> new product introductions, we expect to introduce in 2022, which is expected to increase by $4 million.
Interest expense of approximately $2 million.
Tax rate of 25%.
And fully diluted weighted average share count of approximately $19 8 million shares.
We also expect to generate adjusted EBITDA of approximately 14 million to $16 million in 2022, our adjusted EBITDA expectation assumes approximately $2 million of legal legal expenses and certain noncash items, including stock compensation.
<unk> expense of approximately $12 million.
Intangible amortization and changes in contingent consideration of approximately $8 $5 million and.
<unk> expense of approximately $2 $4 million.
Lastly, given the continued COVID-19 related headwinds we are seeing in the first quarter of 2022, we expect our total revenue for the first quarter to increase in the mid single digits year over year.
This will be driven by a decline in sales of our lymphedema products in the low single digits year over year offset by contributions from sales of Aflow best which by way of reminder, did not impact our sales results in the first quarter of 2021.
With that I'll turn the call back to Dan for some closing remarks.
Dan.
Thanks, Brent let me share a bit more color on some of the primary assumptions underpinning our 2022 revenue guidance.
First our guidance assumes that the primary COVID-19 headwinds related to the omicron variant will persist throughout the first quarter and then begin to subside thereafter.
These headwinds have been similar to those experienced during recent periods of high Covid case volumes with reduced patient throughput at the facilities, we serve limitations on rep access and higher rates of absenteeism at the patient provider and sales force levels and.
And second with respect to sales force hiring we made progress in the fourth quarter and remain committed to the goal expressed on our third quarter earnings call of achieving our target for field sales representatives by the end of the first quarter of 2022.
Our guidance, therefore assumes increasing contributions from our new and recently promoted associates in the second half of 2022 after they're on boarded trained and ramp productivity during the first half of the year.
Third our adjusted EBITDA guidance reflects our proactive investments to support our future growth, including a step up in R&D spend in 2022 fueled by a few important areas I'll share more color on in just a moment.
In summary, we expect relatively flat results in our lymphedema business for the first half.
Giving way to more normalized conditions and a return to double digit growth in the back half of the year.
Our primary objective is to position tactile medical to return to double digit revenue growth on an organic basis during the second half of 2022.
With the contributions from Aflow vest enhancing our total revenue growth in the second half to mid to high teens.
Longer term, we expect to return to delivering strong sustained organic revenue growth and expanding adjusted EBITDA margins in 2023 and beyond.
With this objective in mind, we're focused on driving operational progress in the following four key areas.
First enhancing our sales force hiring retention and training to fill key sales roles and improve their overall productivity.
Next expanding and leveraging the new base of clinician prescribers in our lymphedema business by increasing the penetration of these new accounts through ongoing professional education training of their clinical teams and providing efficient support for their referrals.
Third introducing new and improved solutions for our customers beginning this summer with new flexi touch compatible garments that improve the patient experience.
We also intend to introduce a mobile app designed to engage with patients earlier in their diagnosis and treatment journey.
Leading to better qualified patients seeking care meeting more of the eligibility requirements at their console.
It will also give us an opportunity to educate update and train patients more effectively.
We expect to introduce fresh evidence as well, including more active podium presence at key society meetings.
And finally, supporting our Aflow Vest channel partners recognizing most of these patients are complex and thus integrating airway clearance as a more focused complement to the menu of solutions patients and prescribers already depend on them for such as oxygen <unk> in noninvasive ventilation.
And expanded and productive field team strong network of referring customers, increasing evidence to support education, and payer policy and an enhanced product and service offering will position us for a strong recovery as the near term headwinds subside.
Longer term, we continue to see significant runway ahead of us.
We shipped approximately 65000 flexi touch plus an entre systems during the course of 2021.
Which represented less than 5% of the $1 4 million diagnosed lymphedema patients seeking care. During this period. According to our latest analysis of U S medical claims data.
While this is a compelling statistic, we believe that a far greater portion of our patient population remains undiagnosed and untreated.
And expect this opportunity to come into view as the awareness of lymphedema and its treatment continues to grow.
And lastly, we remain excited about the addition of Aflow vest to our portfolio <unk>.
<unk> further expands our runway with an incremental $5 billion annual market opportunity, while enabling us to remain true to our core focus as an organization.
Providing clinically proven at home treatments to patients with underserved chronic conditions.
Before we open the call for your questions I wanted to comment on the press release, we issued on Friday.
<unk> announced the qui Tam lawsuit filed by a competitor had been dropped and dismissed by a federal judge in Texas.
On February 13th 2019, tactile was named in the lawsuit filed by a competitor in Texas.
The suit challenged our business practices, which are consistent with other industry leaders now three full years later the case was dismissed with prejudice by a federal judge with the plaintiff agreed to waive the right to appeal pursuant to a settlement agreement.
Tactile will not pay any damages attorney's fees or any settlement to the plaintiff.
We believe that the case was without merit from the beginning.
And I'm proud of how steadfastly, we held our ground choosing to defend our people our partners and our practices.
The dismissal closes the matter entirely and removes any uncertainty regarding the outcome of this case.
With dismissal by the plaintiff tactile has decided to voluntarily dismiss its countersuit against the plaintiff to bring the entire matter to conclusion and continue to focus on our business.
We look forward to continuing our long standing medical education practice partnering with health care professionals selecting the most effective training methods and serving patients with dignity and care.
I'd like to conclude today's remarks by thanking our employees for their dedication despite challenging circumstances. This past year, which enabled us to bring an identity to those seeking care, providing relief to over 65000 patients with lymphedema bronchiectasis and other chronic conditions.
I'd also like to thank our investors and those on today's call for their interest and support and tactile medical and our mission.
Operator, we will now open the call for questions.
Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if youre using a speakerphone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. We do ask that you limit yourself to one question and one follow up if you'd like to ask additional questions. We invite you to add yourself into the queue again by pressing star one.
And our first question will come from Adam meter with Piper Sandler. Please proceed with your question.
Hi, Hi, everyone. This is Ryan on for Adam. Thank you for taking the question.
I guess I wanted to start with guidance, so 15% to 20% growth for 2020, Kale and obviously, it's a very fluid environment right now, but any additional color that you can provide on what you're seeing in the prestige our landscape thus far into Q1.
And is there anything meaningful outside of Covid that has been contemplated in the guide.
And then I guess to round it out when can we expect growth to return to that normalized 20% base and the core.
Lymphedema business.
Yes, so good questions, let me take a shot at a couple of those and then Brent may have some things he wants to weigh in on as well, let me start a little bit with the first quarter and kind of how we're seeing things unfolding.
First of all we were really delighted that our progress in December was slightly better than we'd expected, we saw a little bit of.
Covid subsiding frankly in early December which allowed us to over.
Perform against our latest guidance, but as we got into January we certainly saw a much more severe spike from the omicron variant and that was particularly strong in January and into early February .
We saw much higher absenteeism from our clinics the health care practitioners, along with patients and frankly, our own team. We had over 50 salespeople tested positive in the month of January for Covid due.
Due to the omicron variance so that's what kind of.
Underscored some of the way that our guidance unfolded for the full year, starting off a little slower start but the.
The backdrop of expectations is that.
The omicron variant wallet ramped quickly.
We're still expecting it to continue to ramp back down rather rapidly as well and more normalized conditions starting to set in we expect that as we get into the back half of the year that conditions start to look much more normalized.
That we've grown much healthier as it relates to staffing our targeted sales head count in the field throughout Q1.
Q2 is going to be a function of continuing to make sure that we get folks, especially the newest members trained and productive and then as we get to the back half. The expectation is we will not only have improving productivity within the sales force some improving backdrop of general market conditions as it relates to <unk>.
<unk> and also the introduction of some new products that I think can both reinvigorated both our sales force as well as our customer base. So those are kind of the some of the macro assumptions that.
That went into this and then as far as.
The ongoing growth, yes, we still believe that the growth profile for this business is really unchanged as you contemplate the size of this market.
And the opportunity that's in front of US 2022 is clearly going to be a year, where we demonstrate recovery.
Somewhat back certainly back half weighted but I think we have an opportunity to.
To exit the year looking a lot more like ourselves.
Hi, I'm Ryan it's Brent let me just provide a little bit of context about.
The year as well so the way I look at it it's really the tale of two halves. So I think if you if you heard my commentary.
We're looking for first quarter.
Two to be a little bit softer than what we historically have seen.
With all of the things that Dan just mentioned and I'll kind of lay it out in terms of what we what we expect but.
A total revenue increase in the mid single digits year over year.
And then but our lymphedema business is probably going to be down in the low single digits for the first quarter offset by contributions from <unk>. So.
Youll see outflow best because it doesn't have a comparable to the prior year.
Drive increase in Q1, but.
What we've experienced and what Dan was talking about will be will be a challenge in Q1, and then as we progress through the year expecting continual improvement throughout the quarter Q2 being a.
Our productivity.
Focus and then Q3 and Q4 getting back to our double digit revenue growth on an organic basis.
Got it perfect. Thank you that was very helpful.
Follow up on the sales force update how quickly do you think we'll.
We'll get back to full strength sales organization and I.
I guess to put a finer point on it how long does it take these reps to get fully productive and is there an average run rate.
Revenue per rep that we should be looking out for it to be considered.
You know all productive right.
Amarin it's.
It's Brent again, I'll give you a little bit of perspective on Salesforce. So I think it's important to appreciate where we were at the end of the third quarter and then what we've disclosed in the transcript are headed out coming out of Q4, and what we expect as we look forward. So if you recall when we exited Q3, we were <unk>.
<unk> 'twenty selling heads.
Give or take and where we finished at the end of December we broke it into three broad categories.
One is our field sales reps and we had 220 field sales reps, we have 30 field managers.
And 94 field support specialists.
You recall, our fourth quarter goal was 225 field sales reps. So we made nice progress in the fourth quarter, but we didn't get all the way back to what our goal was.
As we exited Q4 as we look forward to Q1 of 2022.
Our objective is to on the field sales reps get closer to 230 coming out of Q1, and then progressing from that point.
With the with a focus at yearend of growing up to about 240 by the end of the third quarter.
From a productivity.
Yes from a productivity perspective.
The the history would tell us because we were always in a build mode versus a buy mode.
So building up our sales reps from a.
And associated product specialists, all the way up through a product specialist.
We expected a aps to.
Ramp to maturity between six and 12 months and then a product specialist taking somewhere in that 12 month period.
Given some of the focus that we've put on our sales team over the course of the last four.
Four or five months, we feel that we can ramp that productivity faster such that our objective by being healthy at the end of the first quarter will translate into double.
Double digit organic growth in the second half of the year.
Got it thank you Beth.
Okay.
Our next question is from Ryan Zimmerman with <unk>. Please proceed with your question.
Hey, this is Phil on for Ryan can you guys hear me okay.
Coming through Phil.
Great great. Thanks for taking the question in terms of the lawsuit getting that behind you. What do you expect from a revenue perspective in the Texas region, where you were impacted.
Yeah, I think it's a little early to say, but we will certainly have fresh opportunity to go back and revisit those accounts that demonstrated pause just based on kind of the reputation of overhang that this created for us. So we're certainly looking forward to getting back and more engaged with the <unk>.
Number of those accounts, particularly within the VA system.
Don't know that we'd put a finer point on it beyond that but.
We think it's a it's a ready place for us to certainly go lean back into.
Sure sounds great. Thanks for answering that in terms of the VA. What you just mentioned I understand that your earlier comments about FY 'twenty two being a tale of two halves, but in terms of that recovery in the VA as it relates to lymphedema patients. How do you kind of see that playing out as we move through the year here or are there still are.
Regulate regulations that your sales force is kind of encountering or how do you see that going.
Yes, so one of the things about the VA as they they seem to be growing increasingly entrenched in their posture.
I think when COVID-19 surface it seemed a little uncertain about whether or not their pivot was temporary or if it was a pre cursor to something more permanent.
Recall that we used to find most of our patients at the VA centers of which there were about 170.
When COVID-19 surface most of those patients were redirected out to the community.
Based outpatient centers.
As it is as we've continued to monitor this one I think that the <unk> or the outpatient centers and even virtual patient encounters seem like it's here to stay so I think that theres a good chance that this is the new model that we've seen but I think we've also demonstrated that we've been able to pivot along with it.
The.
The outpatient centers have become a regular call point for us. So we're certainly engaging there and I think longer term.
Suggested that I expect that low double digits is a more likely.
Percentage is a function of mix for us on a projected basis with the VA if you'd look at just the size of the market relative to the overall market. So.
We think that the VA posture is probably going to be enduring at least for the foreseeable future and I think we've adapted to be able to.
To engage with patients in that model.
Awesome. Thanks, so much.
Thanks, Phil.
Our next question is from Margaret Kaczor with William Blair. Please proceed with your question.
Hey, guys. This is Maggie on for Margaret today I just wanted to ask within your 2022 guide what are you assuming in rep productivity growth from your existing rights and then the new reps that you plan on hiring throughout the year.
Yes, maybe I can give you a little perspective on that so.
Recall that.
Our general expectation for product specialists and this is on average it is a product specialist generates roughly about $1 billion of revenue in a given year.
And depending on the size of the territory and how much demand there is in the territory they might actually be.
Be granted and associated product specialists, and if that territory can support both the product specialists and associated product specialist you can think about that territory generating roughly about a million and half dollars with the add of that Aps.
Then of course, we've talked about.
The field support specialist if we can have a field support specialist in that territory.
We start to see nice productivity gains on a comparable basis, so fully staff territory with a product specialist Aps and in FSS.
About that FSS, adding roughly somewhere between 20 and 30% relative to that territory. So that just gives you an idea of how how.
The build works from a productivity perspective by the by the reps I.
I think one thing to add too is that.
We have Brent alluded to it earlier about build versus buy we've historically had one path to staffing product specialists and that was.
To hire in an associate develop.
Develop that person and typically the germination process takes a fair amount of time.
What we're also doing now in an attempt to make sure that we staff all of the field territories that we have in mind, but to also accelerate our productivity curve is.
Sure.
Introducing a blend some associate product specialists continuing to promote up when they're ready, but we're also competing now externally within the med tech marketplace, and we're adding a blend of both promoted from within as well as experienced med Tech salespeople externally and I think that as we.
We do that there may be an opportunity for us to condense.
Some of the productivity curve for incoming product specialists.
Okay, great. Thank you.
You guys talked about having a heavier podium presence. This year. So what type of data are you aiming for and then what if any benefit are included within the guide whether that be assistance with utilization or new accounts.
Growing market access thank you.
Yeah, Great question. So I think we are we had certainly shared last year that we had started.
Sponsoring random clinic randomized clinical trial on head and neck cancer survivors and that one will continue to proceed. So that's one of the places that we're certainly investing in ongoing evidence we're convinced that while that's a multiyear study that it will have the kind of girth.
And.
And level of evidence that will actually influence payer policy. So that's an important one.
Bear fruit in 2022, but I think a really good example of some of the evidence we're doing.
Coming up later on this week as the American Venous Foundation Congress down in Orlando, and we will have a couple of opportunities.
With <unk> of various speakers and presenters presenting.
Some updated information as it relates to identifying patients.
And I think further.
Exposing the market opportunity and how to.
Identify suitable candidates for for treatment.
There is also in June the society for interventional vascular radiology, we expect to be represented on the podium. There I think there's going to be a really nice opportunity for us within with another new constituent to further.
The opportunity to talk about the scope of lymphedema and how to better identify suitable candidates and then we've got some earlier stage work starting as it relates to Aflow vest that we'll be able to demonstrate we believe.
Some of the efficacy that the therapy that we've got can produce so evidence continues to be a really important part of our journey about revealing more of these underserved and under recognized patients and helping clinicians identify the right markers. So they can.
Both diagnosed and ultimately prescribed the right therapies to bring relief to these patients.
Great. Thank you.
Okay.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad, we ask that you limit to one question and one follow up.
Our next question is from Suraj Kalia with Oppenheimer. Please proceed with your question.
Hey, Dan Brent I hope, everyone is safe and healthy.
So Dan.
Yeah.
A two part question.
In Q4, what percent of your organic revs were contributed by the 30% on vaccinated reps.
And the second part to that question is in Q1, the 50 reps that contracted COVID-19 .
On average how long will the decommission and how recoverable is this business.
So suraj I just wanted to make sure I answer the first one there were a couple of percentages mixed in there. So your question was related to.
The 30% that were unvaccinated I, just want to make sure the nature of the part of that.
Yeah, just trying to understand what percent of the organic business is contributed by these 30% of the unvaccinated reps.
Yeah, I don't know that we have the detail on that and just to remind you. We said we had about 30% of our sales force remained on vaccinated going into the fourth quarter over the course of the quarter number of them either.
Either got vaccinated or we had our policy was going into effect basically the first of the year and anyone that remained on vaccinated would've gotten a waiver and agreement that they were going to be tested a couple of times a week. So.
The entire sales force is either vaccinated by the end of the quarter or meeting that that testing requirement. So we wanted to make sure that we could.
Be bringing people into patients' homes, and interfacing with them in clinics in a safe environment. So.
That 30% certainly continued to go down as far as how many were unvaccinated, but ultimately all of them.
Followed our policy as it related to two vaccination.
And then I think the second question.
Hum.
So yes, how many days.
It's probably a reasonable assumption to say not less than five if you test positive most protocols would certainly suggest that you're out for a week and in some of them could have been more so.
I think it was.
Kind of a pretty typical rule of thumb.
But is this business recoverable Dan.
When you say is that recoverable.
I mean, the sales rep wouldn't have been available to engage with patients.
In clinic.
It's more about the ability to support new prescriptions. If we had prescribers that were prescribing for patients we were still of course able to support them.
We're able to have trainers meet with them.
So I think that that business continued but you can imagine if you've got absenteeism. It's the same as having an open territory. So if you if you pull a handful of salespeople out that are not productive in a clinic either growing the business or continuing to support their customer, there's certainly an impact and that's what.
Let us to kind of some of the guidance general direction that we were.
<unk> as far as Q1.
Got it and final question, Dan what was the percent use of virtual training in the quarter. Thank you for taking my questions.
Yeah.
I don't have the percentage at my fingertips, Suraj, but it was relatively modest.
It's a place where I think we can continue to grow, particularly as we introduce this mobile app in the back half of the year I think engaging with patients with a digital footprint increased.
Training.
Content via video in the palm of their hand on their phone certainly will continue to help us move in that direction, but.
At this point I think it was relatively modest in Q4.
Thank you.
Hmm.
We are currently seeing no remaining questions at this time that does conclude our conference for today. Thank you for your participation.
Thanks, Scott Thanks, Scott.
Welcome.
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Okay.
Yes.
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