Q4 2021 Neuropace Inc Earnings Call
Good afternoon, and welcome to newer paces fourth quarter earnings Conference call. At this time, all participants are in a listen only mode.
We will be facilitating a question and answer session towards the end of today's call.
As a reminder, that's called is being recorded for replay purposes.
I'd now like to turn the call over to Matt back So from the Gilmartin group for a few introductory comments.
Thank you operator, good afternoon, and thank you for participating in today's call joining me from Neuro Pacer, Mike Babich, CEO and Rebecca <unk> CFO earlier today Neuro piece released financial results for the fourth quarter and full year ended December <unk>.
31, 2021, a copy of the press release is available on the company's website before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 any statements made during this call that relate to expectations or predictions of future.
Your events results or performance are forward looking statements all forward looking statements, including those around Europe cases, clinical trials and those relating to our operating trends and future financial performance FDA approvals the impact of COVID-19 on our business and prospects for recovery expense management expectations for hiring growth in our organization market opportunity revenue.
Guidance commercial expansion product performance and product pipeline development are based on based upon our current estimates and various assumptions.
Payments involve material risks and uncertainties that could cause actual results or events to materially differ from those implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements for more detailed description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our public filings with the Securities and Exchange Commission or SEC, including.
Our quarterly report on Form 10-Q filed with the SEC on November 10th 2021. The annual report on Form 10-K for the year ended December 31, 2021 to be filed with the SEC as well as any reports that need that we may file with the SEC in the future. This conference call contains time sensitive information, which we believe is accurate only as of the live brought.
Cash on March 10, 2022, neuro page disclaims any intention or obligation except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise and with that I will turn the call over to Mike.
Thanks, Matt Good afternoon, everyone and thank you for joining us for today's call I'll provide opening comments and a business update followed by Rebecca who will provide additional detail regarding our quarterly results and 2022 guidance before opening the call to Q&A.
Moving to our quarterly revenue results consistent with our pre announcement on January 11, total revenue for the fourth quarter of 2021 was $11 million.
Initial implant revenue in the fourth quarter of 2021 was $8 $5 million, representing 9% growth over the third quarter of 2021, and 10% growth over the fourth quarter of 2020.
For the full year 2021, we generated revenue of $45.2 million representing growth of 10% compared to full year 2020.
Despite the continued COVID-19 impact, we navigated quite well through the pandemic in 2021 and I am proud to report that initial system implants represented 75% of our revenue in 2021 and grew up 20% over 2020.
Before providing a business update I want to speak to trends, we experienced in the fourth quarter of 2021 that extended into the first quarter of 2022.
While pleased with our initial implant growth in the fourth quarter. It is important to point out that we did see business impact due to the delta variance at the beginning of the quarter.
And Omicron variant cases started to impact our business in late December .
As we entered the first quarter of 2022 headwinds associated with the surge in omicron bearing in cases, where severe in January , causing causing revenue to sequentially decline from December .
The decrease in January procedure volumes was.
It was driven by temporary limits on elective procedures staffing shortages inpatient COVID-19 infections.
As a result January was one of our most COVID-19 impacted months of the pandemic.
However, the operating environment has improved in the month of February we saw a marked improvement half of January levels with improving trends continuing into March.
Throughout the pandemic, we have seen the volume of patients going through the epilepsy monitoring unit or E M use reduced compared to pre pandemic levels.
As a result, we believe there is an increasing backlog of patients happy yet.
As we have discussed previously it takes about six months from initial IMU admission to rns system implant, we expect that IMU volumes will eventually return to pre pandemic levels and grow from there creating significant opportunity for our business.
The progress we have made and the investments we are making to increase the number of implanting centers and to increase utilization positions us well for when volumes increase.
Now let me provide you an update on our key initiatives as we look to extend our leadership position and drive long term growth starting with our commercial organization and our focus on increasing awareness and demand generation.
As we have communicated throughout the pandemic.
Covid has presented a number of unique challenges, which have impacted our patients and our commercial efforts. Given this reality. We believe it is more critical than ever to make investments in the commercial channel.
We will continue to increase the number of implanting centers and increase the utilization rate of our rns system within the implanting centers. One area. We are increasingly focused on is targeting couple of FC specialists, who practice outside of level four centers.
Over the last few years, the number of epilepsy specialists has grown significantly and it.
It is our understanding that there are now more apple apologist practicing outside of level four comprehensive epilepsy centers, then within level poor cec's.
We plan to educate these epilepsy specialists about the rns system and to help them collaborate with <unk> to have their patients treated with the Rms system.
Through these relationships, we can make rns therapy available to a larger number of patients with ongoing device programming and patient management provided by epilepsy specialist practicing outside level for <unk> and.
Order to do this we are accelerating hiring within our field organization.
We ended 2020 with 42 field representatives and the size of our field organization did not materially change in 2021.
Given the investments we are making we expect to end 2022 with approximately 56 field representatives with most of those additions coming in the first half of the year.
This would get us to the sized field organization, we initially anticipated having at the end of 2023 a year earlier.
It takes time for a new hire to be fully productive and we want to ensure that our team is in place and productive as we anticipate the increase in patient volumes in coming quarters.
We are also driving demand generation by identifying and educating drug resistant epilepsy patients earlier in their treatment journey as they consider treatments beyond medication.
We intend to expand our multichannel marketing programs, including an increase in digital and social advertising lead generation efforts inpatient or patient ambassador connections.
As we connect with more rns candidates earlier in their care journey, our patient education team will provide information about neuro cases, rns system and guide appropriate patients through the process.
Moving to recent clinical updates and future indication expansion opportunities at.
As communicated on our last earnings call, we received IDE approval for that from the FDA for our Nautilus pivotal trial to support a PMA supplement to expand our indication to include primary generalized epilepsy.
We remain on track to enroll our first patient around the middle of 2022.
In addition to the large market opportunity for generalized epilepsy. There are important differences from our current focal epilepsy patient population that make this an excellent opportunity for our rns therapy.
First diagnosis of generalized epilepsy can often be established within outpatient EEG and does not require intracranial monitoring.
In contrast, seizure onset localization for patients with focal epilepsy requires a one to two week hospital stay and the EMU for noninvasive monitoring approximately 70% of our patients are admitted for a second one to two week stay in the EU with temporary electrodes implanted in the brain.
To identify the seizure onset location.
As a consequence on average it takes focal epilepsy patients approximately six months from the initial EMU admission until the implantation of the neuro based rns device for.
For generalized epilepsy, we expect the path from diagnosis to rns treatment to be shorter and simpler.
Other difference with generalized epilepsy is that there are no surgical alternatives to treat generalized epilepsy. Since there is no focus there can be resected or ablative.
Upon FDA approval, we expect a relatively fast commercial rollout because we anticipate selling to the same physicians who are already treating focal epilepsy patients using the same neuro pace device. We are excited to start enrollment in the Nautilus study and look forward to an indication expansion into this large and underserved.
<unk> population.
While progress on the response study for patients aged 12 to 17 with focal epilepsy has been slower than expected. The first patient enrolled in this study was recently implanted with the rns system. We expect to continue to support the response trial in 2022 and look forward to seeing the impact of our rns.
System on patients going through the study.
Next I would like to provide an update on the estimated battery life of the neuro stimulator, we have been selling since 2018.
I am pleased to announce that we received approval from the FDA to update our labeling to claim an estimated battery life of nearly 11 years under typical use conditions.
This represents more than a two year increase from our previously approved labeling.
We believe that a longer battery life removes an important barrier for initial implantee implant adoption and gives us a distinct competitive advantage over other neuromodulation devices for epilepsy, which have much shorter expected battery life.
Given the relatively young age of our patients at a replacement rate of over 90%. This change brings significant benefit by reducing the number of required replacement procedure over a patient's lifetime.
We believe that providing an estimated service life of nearly 11 years with no recharging burden will enhance the patient experience, especially as we continue our pivotal trial to support expanding our indication to adolescent patients.
While the longer battery life.
Is of significant benefit to our patients they will reduce replacement implant revenue in the coming years as was communicated previously.
To provide increased transparency as of the end of 2021, there were 282 patients being actively treated with first generation devices.
We expect approximately two thirds of those devices to reach the end of their battery life in 2022.
As I look back on 2021, I can proudly say.
We have been able to make significant progress on key company milestones on the clinical side, we enrolled our first patient in the adolescent study and received breakthrough device designation and <unk> approval for the primary generalized epilepsy indication study.
Important steps to expand our indication and market opportunity on the commercial side, we were able to make significant progress by expanding into 150 implanting centers driving increased utilization and expanding the number of physicians prescribing and programming our rns system.
Lastly, we completed a successful IPO in April raising net proceeds of $105 $5 million and growth capital to facilitate investments to make rns therapy, the future standard of care for Appellee Uppal FC patients globally.
With that I will turn the call over to Rebecca Neuro cases, Chief Financial Officer.
Thanks, Mike.
Neuro cases, rather than air for the fourth quarter of 2020 wide bodies at $11 million compared to $10 8 million for the fourth quarter of 2020, an increase of 2%.
The increase was primarily driven by an increase in unit sales.
Our next fiscal two comprehensive epilepsy centers.
I shall implant procedures.
In the fourth quarter revenue from the initial implants like $8 5 million, an increase of 10% over the fourth quarter of 2020.
Fourth quarter 2021 initial implant revenue driven primarily by an increase in the number of implanting accounts compared to the prior year period.
As Mike mentioned previously we ended 2021 with 150 active implanting accounts up from 132 in 2020.
Growth in the quarter was impacted by headwinds from the Delta there yet at the beginning of the quarter and by almost crime in the back half of December .
Revenue from replacement and branch was $2 5 million, a decrease of 19% compared to the fourth quarter of 2020.
We continue to expect replacement implant revenue generally to decrease for the next several years due to the transition to the current model of eye device, which has a longer lasting battery.
Gross margin for the fourth quarter of 2021, and was 73% compared to 76% in the fourth quarter at 2020.
The decline in gross margin relative to the prior year period was primarily due to an increase in certain costs as our.
<unk> operation is returning to normal levels. Following COVID-19 related disruptions in 2020.
Total operating expenses in the fourth quarter of 2021.
$17 $1 million compared with $11 2 million.
In the same period of the prior year.
R&D expense in the fourth quarter of 2021 five.
$5 3 million.
Compared with $3 9 million in the.
The same period of 2020.
The increase in R&D expense was primarily driven by an increase in product development and clinical study expenses.
SG&A expense in the fourth quarter of 2021 was $11 7 million compared.
Compared with $7 3 million in the prior year period.
The increase in SG&A was primarily driven by increased costs associated with operating as a public company and increased sales and marketing expenses.
Loss from operations was $9 million in the fourth quarter of 2021.
$3 million in the prior year period.
We recorded $1 $9 million in interest expense in the fourth quarter, which was flat compared to the prior year period.
Net loss was $10 7 million for the fourth quarter of 2021, compared with $4 $6 million in the fourth quarter of 2020.
Our cash and short term investments balance as of December 31, 2021 license $115 $6 million.
While our long term borrowings totaled $49 8 million.
Now turning to our outlook for 2022.
Given the impact the AMA Cornbury had had on procedure volumes in January .
We remain cautious given near term uncertainty surrounding the severity and duration of COVID-19, and the potential impact on hospital physician and patient behavior.
Our 2022 outlook is highly sensitive to assumptions around steady global recovery.
Anticipates, Keith scheduling and elective procedure levels normalizing throughout the year.
For 2022, we expect annual revenue to range between 45 million to $48 million.
This guidance assumes initial implant revenue to be in the range of $39 million with $42 million.
Consistent with the last several quarters and given uncertainty around clinical trial, rather now.
Our initial implant guidance assumes minimal revenue from clinical trials in 2022.
Lastly, given the replacement revenue dynamics, Mike mentioned previously.
We anticipate replacement revenue to be approximately $6 million.
Following one of the lowest initial implant revenue months under the pandemic in January February bounced back strong.
As of today March booking trends suggest a sequential initial implant revenue increase compared to February .
Given this positive momentum we expect first quarter 2022 total revenue to be in the range of 10 million to $11 million.
This includes an initial implant revenue range of 8 million to $8 $5 million.
Andrew replacement implant revenue range of $2 million to $2 $5 million.
Moving down the income statement, we expect gross margin to be in the mid 70%.
Operating expenses should be in the range of 74 million to $76 million.
Which approximately 8 million to $9 million.
Noncash stock based compensation expense.
This concludes our prepared remarks, I would like to turn the call back over to the operator, who will open the call for questions.
Thank you.
As a reminder to ask a question you would need to press star one on your telephone to withdraw your question. Please press the pound key.
Please stand by while we compile the Q&A roster.
I show. Our first question comes from the line of Robbie Marcus from JP Morgan. Please go ahead.
Great. Thanks for taking the questions.
Maybe to start it's great to hear that trends are improving throughout first quarter.
Maybe just to start there do you think the streets in a good place.
Where we sit now.
First quarter end.
Does guidance assume that COVID-19 trends materially improve from here or does it assume they they vary modestly get better.
Thanks for the question Robbie So for Q1, we provided guidance of revenue in the range of $10 million to $11 million, which is really based on what we've seen in the quarter, So far and where that's where we see trends going in the quarter to be able to close out here. The last few weeks of the quarter. So.
So I think what we've provided in guidance is our is really our best our best thoughts about where things stand overall for Q1.
How should we think about the rest of the year the guidance for the rest of the year.
We continue to believe that the initial implant revenue portion of our business is a growth in the low to mid twenty's percent over year over year growing it's growing at that pace and a normalized COVID-19 environment.
And primarily that's driven by assumptions about the number of patients coming through the <unk> on being somewhat similarly impacted to the way that they were in 2021.
Our guidance specifically the lower end of the guidance range that we provided for 2022 revenue incorporates the slow start to the year with omicron, having a higher degree of disruption early in the quarter than we saw in other recent recent waves of Covid and so.
Taking that into account and being thoughtful about the guidance, we incorporated that into the first into the lower end of the guidance range that we're providing for initial implant revenue.
The replacement revenue really being driven by the number of those devices of the old generation that are remaining and provided numbers for where that's specifically where that's coming from and we're encouraged by the progress that we've been continuing to make in Q1 of this year. We finished Q4 as you know better than better than where we thought that we would when we were in November . So we're very pleased with.
We were able to finish the year.
Things have been continuing to trend in a positive direction. After the significant impact of January I've been really incorporating that as we go forward just as a reminder, we did increase our business in 2021 by about 20% year over year for the initial implant revenue portion of our business that was really driven by the combination of new <unk>.
Or as additional centers prescribing the device as well as <unk>.
More utilization in each of those centers, we expect to be able to continue to do that and the foundation that we built for the business. In 2021 is the strong one that will be able to build off of.
And over the longer run when we do anticipate the number of IMU visits going back up to pre pandemic levels and growing from there puts us in a strong position to be able to grow from that but really anticipating that that will be a longer and longer term impact.
Not so much of an impact in 2022, but really impact beyond 2022.
I apologize shame on me for not here in the first quarter guidance.
Maybe just as a quick follow up here.
It sounds like Youre building out the sales force faster than expected.
Like awareness is still major limiting factor here.
How do you think the increased feet on the street can help grow sales and where are they really going to be spending their time is it driving interest within existing accounts or trying to bring on new accounts. Thanks.
Thanks Robby.
Focus of the field organization primarily is on.
Driving increased utilization or pushing increased utilization within the epilepsy centers.
And bringing on new centers. So we grew our business last year from a combination of those two we expect to continue to do that.
As we have communicated previously with more implanting centers theres more feet on the street to be able to support those as well as to bring on more centers beyond that the one additional reason that were accelerating the timing of hiring in the field organization is to allow our team to call on.
Couple of Hep C specialist uplift colleges that are practicing outside of level four centers and establishing relationships for those patients being managed by these up OFC specialists to be.
Implanted with the neuro based device at a level four center and then go back to the to the community settings with these epilepsy specialists for ongoing care. So we want to be able to have that combination of bringing on new implanting centers, increasing utilization, but also recognizing that a large portion approximately 80% of patients with drug resist.
<unk> are not currently being seen in a level four center.
And the recent trends, where theres more and more epilepsy specialists. So not my general neurologists, but epilepsy specialists that are establishing practice outside of those centers with businesses practices that are focused on treating patients with epilepsy really creating a great opportunity for us to be able to identify those patients additional.
Patient opportunity tie those in with the level four center screen implantation.
They have to over time accelerate the growth of the business.
Great. Thanks, a lot.
Thank you I show. Our next question comes from the line of Larry <unk> from Wells Fargo. Please go ahead.
Yeah.
Hey, good afternoon. This is Nick in for Larry. Thanks, So much for taking the questions maybe a couple from us you.
You mentioned, the fact that patient volumes and not yet back to pre COVID-19 levels.
Help us understand when do you expect the EMU patient volumes to return to 2019 levels.
That's the first question and then the second question I had was perhaps on your margin guidance help us understand how we should think about the cadence for 2022. Thanks so much.
Thanks.
So specifically on assumptions built into our forecast for IMU volumes and maybe just as a reminder for everybody to start off.
The patients that are candidates or become candidates for the neuro based system go through a diagnostic processing and these centers through an epilepsy monitoring unit stay more than 70% of cases to stays in the epilepsy monitoring unit.
Those number of patients the number of patients coming through those epilepsy monitoring units for the last couple of years has been decrease has been reduced relative to pre pandemic levels because of a variety of reasons hospital limitation staffing challenges.
And then the other comment that I'll make on top of that is from the time a patient comes into the epilepsy monitoring unit. It takes about six months.
For that patient to ultimately get a neuro based device implanted.
And our guidance for 2022 or assuming that the.
The impact of increasing IMU visits doesn't have a significant impact on our revenue in 2022. So in other words, we're assuming that those EMU volumes come back to pre pandemic levels later in the year this year.
Not not in a time, where that six month delta between when they initially getting point get admitted to the <unk> and when they get implanted with the neuro based device would have a significant impact on our business in 2022.
And then Rebecca do you want to talk about the margin.
Sure absolutely.
Our guidance is that our gross margin will be in the mid Seventy's range.
We don't anticipate significant differences throughout the year of course, the gross margin will fluctuate with volume.
But.
In general throughout the year, we expect that it will stay within a fairly narrow range within that general guidance.
And over time, we expect that it will improve throughout the year generally within that range of good candidates.
Thank you.
Thank you I show. Our next question comes from the line of Danielle <unk> from SVP Leerink. Please go ahead.
Hi, guys. This is Peter on for Danielle.
That's on a solid quarter, despite all of the Covid challenges.
I guess the first one for me here is I. Appreciate that you guys expect an increase in number of implanting centers, but when we look at utilization per center what are some of the barriers to adoption aside from COVID-19 that you've seen in the past few quarters.
And now that you've got an expanded salesforce salesforce, how does the team anticipating to combat these barriers as you Andrew.
Thanks.
Thanks.
The growth that we see within the business. As you mentioned is a combination of additional implanting centers and utilization with Implanting center within implanting centers.
The work that we're doing in the barriers that we're overcoming within the comprehensive epilepsy centers that have started using to grow utilization is a combination of more of the doctors within those centers prescribing the neuropace device for their patients. These centers are larger institutions typically multiple epileptic <unk>.
Apple FC specialist practicing.
And we're moving from one or two epilepsy specialists, which is usually where we start adoption within our center to a larger number of those epilepsy specialist prescribing the neuropace device for their patients and so for that there are.
<unk>.
Incorporating I guess identification of patients and then incorporating the neuromodulation, specifically neuropace neuromodulation into the practice of those additional those additional physicians the things that we're doing they're providing education to those physicians about the clinical benefit the outstanding clinical results of our product.
Ease of use improvements that we've been able to make to be able to make this really easy to be able to fit into practice and the overall benefit that it can provide for the practice in terms of treatment options for these patients that otherwise don't have good options.
The growth of the field team and just to specify we have not yet increased the size of the field team. So theres going to be expansion largely in the first half of this year, but what we expect that that larger field organization to support for us over time is one getting into more centers. So those people on the new the new representatives will be able to support.
Getting into more centers.
Also be able to call on more of those physicians within the centers to be able to increase the number of prescribing physicians.
And then the important other aspect, it's really a new area for US is to call on couple of FC specialists that are outside of the level four centers that can refer their patients into a level four center for implantation and then have those patients come back to the epilepsy specialists outside of the level of course.
Center for ongoing management and care.
Haven't done much of that as an organization up to this point, but the trends in the industry. The medical industry are such that there is more and more epilepsy specialists that are coming into practice and many of them are going into practice outside of the level four centers and so we wanted to have a team that can call on those epilepsy specialists to be able to help the patients that they're managing.
That access to the neuro based device and then on and then provide the ongoing care.
Super helpful. Thanks, and if I could squeeze one more and I was wondering if you could speak to some of the early feedback you've received on the remote capabilities of the rns system, especially in an operating environment, where staffing shortages have played a large role and how do you think this could benefit in Europe and China.
Thanks for the question guys.
One of the interesting and I think really unique aspects of the neuro based devices that we do have a system that records information that's happening inside of the patient's brain records information, including the electrical signals that are associated with abnormal.
Abnormal events that our device to tax we also provide trending information about how often those events are being detected when they're being detected and all of that information is uploaded into a database that can be viewed by the physician anywhere without with or without the patient president that's been really helpful through the pandemic as there has been.
Fewer patient 10% visit so it enables physicians to get information objective information about what's happening with their patient without requiring the patient to physically come into the hospital to be able to to be able to get that information.
The diagnostic review of those E Cogs or intracranial EEG signals is also reimbursed and so it is a mechanism in a remote setting for the epilepsy specialist to get reimbursed for that work that theyre doing reviewing the diagnostic information stored by the device as.
As we go forward and we're doing more focus on patients to be implanted and level four centers, but potentially manage by Apple FC specialists outside of those local four centers. We also expected that unique data component and visibility of the diagnostic information becomes even more important as multiple physician some within level.
Our centers and somewhere in the community will all be able to access that that data for those patients to be able to really optimize the treatment for the patients.
With reimbursement established for those physicians when they do that diagnostic review.
Super helpful. Thanks, Dan.
Thank you I show. Our next question comes from the line of drew Ranieri from Morgan Stanley . Please go ahead.
Hi, Thanks for taking the questions.
Just on the utilization for.
Prior utilization question for a moment.
I understand that you're trying to add more centers get more prescribers, but can you maybe talk about underlying trends that youre seeing in the <unk>.
Business.
To help us get a better sense that.
Like how many clients are actually prescribing rns at this point, maybe compared to 2019 levels. Just so we can get a get a better sense there.
The centers, but just kind of what are what's the total clinicians that are using our prescribing rns at this point and maybe what do you expect for that to look like for 2022.
We haven't provided specific numbers at this point of prescribing physicians. So the level of detail. We provided as you know is at the account level.
What I can tell you is that the growth that we're seeing in utilization. So the number of patients being treated per center per year is driven in significant part by more physicians within those centers prescribing for their patients and so we are seeing trends similar to what we're seeing for more spend.
<unk> and planting for more physicians prescribing within those centers and then over time also pushing to have more utilization per physician, so without getting into specific numbers to answer your question to your question drew.
The utilization increases that we're seeing come in large part are being driven by more physicians within those centers prescribing for their patients.
Got it helpful. Thank you and with the clinical trial revenue I heard the word minimal.
But can you just help us think through that.
It only takes a few a few implants relate to drive a percentage point of growth for the business, but should we be thinking 10, 20 implants is kind of what youre thinking in terms of clinical trial based on plans for.
For the year.
So.
Couple of things that I wanted to just to clarify around clinical studies and then get into the specific answers to answer to your question. So we have the two clinical studies that we're pursuing in 2022 continuing to pursue in 2022. The primary focus for our organization is on the Nautilus study for expansion into.
Two generalized epilepsy.
Have a significant opportunity there in the prepared remarks I made a number of comments about why we think that opportunity is especially interesting for our business and what that means for us over time and so we're very much focused in particular on execution of that study timing wise, we're expecting to start enrolling in that trial around the middle of this year.
There is a there is a delay that's required because the baseline information collection between when a patient is enrolled and when a patient is implanted.
So theres an element of this which is based on timing of when the when the bulk of the patients for these studies are going to be implanted on the other comment that I'll make is that while we are seeking reimbursement for the patients and the model that study.
We don't know how effective we will be getting insurance companies to reimburse for the patients in that trial and so we've taken a much more conservative view around our ability to get reimbursed for the patients in the trial and as a result of the combination of the timing of when the study is going to be starting and.
Questions around or more conservative assumption, if you will around the reimbursement.
That results in the comments of guiding to minimal revenue for 2022, and really incorporating that within the guidance for initial implant revenue overall.
Got it and last from me Mike You mentioned you are building out the sales force going to 56 from.
From 42 in 2021, but you haven't.
It sounded like you Havent made any salesforce higher ads yet for the year. It looks like there is kind of a fight for talent across med Tech several companies have pointed to.
Increased.
Labor challenges for forgetting new talent, but how dependent is your 2022 revenue to adding these.
Adding these potential salespeople for the year. Thank you.
Thanks.
To clarify we have just started that process and so it's not the results of.
Of that are still largely ahead of us, but we've been at work. We're in the process of doing doing the hiring and expansion of the field organization.
Hiring coming into largely in the first half of the year. Following that there is a period of time before a new representative really becomes productive in the field. It takes about three months on average for a for a new representative to be qualified to be treating or to be in the hospital by themselves.
To be able to manage the implantation procedures or two to really support the clinicians and I would say really kind of 12 to 18 months to be fully productive and so given the assumptions that we talked about for most of these hires happening in the first half of the year in time to be productive theres really not significant impact.
That we're building into our guidance for 2022 for that expansion the expansion and the investments we're making in 2022 are really to put us in a position to benefit from increased number of patients coming through epilepsy monitoring unit as those come back in to be able to support the growth of the business over the longer run so not not significant we bill.
Into our numbers for 2022, but important investments for us to to be able to support the growth that we expect over the longer term.
Thank you.
I'm showing no further questions in the queue. This concludes the Q&A portion at this time I would like to turn the call back over to Mike <unk> CEO for closing remarks.
Thank you again for your time today, we look forward to meeting with many of you. Many of you at upcoming Investor conferences, as well as individual meetings and have a great evening.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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Yes.
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