Q4 2021 Venus Concept Inc Earnings Call
Please standby.
Good day, ladies and gentlemen, and welcome to the fourth quarter of 2021 earnings conference call for Venus concept.
At this time, all participants have been placed in listen only mode.
Please note. This conference call is being recorded and that the recording will be available on the company's website for replay.
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 most recent 10-Q and our annual report on form 10.
K to be filed with the Securities and Exchange Commission such.
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 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 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 on our earnings press release issued today on the Investor Relations portion of our website.
I would now like to turn the call over to Mr. Dom Serafino, Chief Executive Officer of Venus concept. Please go ahead Sir.
Thank you operator, and welcome everyone to Venus Concept's fourth quarter of 2021 earnings Conference call I'm pleased to be joined today by our Chief Financial Officer, Domenic della Penna, and our president of global sales Rasp Arturo.
Let me start with a brief agenda of what we'd be covering today during our prepared remarks, I will start with an overview of our revenue results in the fourth quarter.
I'll then provide a summary of our operating progress in key areas in recent months.
Then Dominic will provide you with a more in depth review of our quarterly financial results, our balance sheet and our guidance for the full year 2022, which we introduced in today's press release.
Then Ross will provide an update of our commercial priorities.
And global sales and distribution team update.
And then we will open the call for questions.
With that overview in mind, let's get started with a review of our fourth quarter revenue performance and our overall business trends.
We reported GAAP revenue of $32 6 million up 26% year over year. The increase in total revenue year over year was driven by 42% growth in sales in the U S customers and 14% growth in sales to international customers for the period.
We are very encouraged by our overall demand trends, we experienced during the fourth quarter total systems and subscription revenue increased 32% year over year in Q4, and our procedure related disposable revenue increased 14% year over year, excluding the impact of the suspension of our bureau graft or service during that period.
Importantly, our systems and subscription revenue growth was driven by key products, we prioritize as part of our commercial strategy. We discussed in recent Investor calls, we experienced strong adoption of the Venus Bliss in our body franchise and a record quarter for the adoption in our hair restoration franchise.
Fourth quarter systems and subscription growth also benefited from strong sales of other aesthetic products, including our Venus legacy versa velocity and ethically products. Our team did a great job working through approximately $1 3 million of backlog during the fourth quarter and we have fulfilled nearly all of the remaining backlog to date in Q1.
With respect to procedure trends in the fourth quarter.
Our real time, Iot data gives us strong visibility into the active device trends for a large portion of our medical aesthetic installed base. This average usage per system data reflects consumer activity consistent with what most companies have reported to date, specifically in the U S. The nice recovery in usage trends in September that we discussed in our last.
Call continued in October and November before moderating slightly in December as the Omnicom variants.
Variance impacted practices across the U S outside of the U S. We continue to see very in usage trends, depending on the region of the world and the respective pace of recovery from the pandemic.
Procedure trends for our hair restoration customers in the fourth quarter reflected a quarter over quarter improvement is expected as discussed in our Q3 call. We saw a larger impact from seasonality in Q3 than we'd expected and unexpected procedure trends to improve in Q4, which ultimately came to fruition.
Procedures of our artist systems in North America increased mid single digits year over year and increased mid teens sequentially.
Outside North America procedures on our artist systems were down year over year for the quarter, but increased.
High teens sequentially, driven primarily by improving procedure trends in EMEA.
Now turning to a brief update on operating highlights in the fourth quarter in recent months.
Overall, we've made considerable progress in the areas of new product development clearances and commercialization. We received a five 10-K clearance for the Venus Freedom in October which expands our portfolio of technologies that can treat a broad range of common women's health conditions.
Our limited launch of the venous Fiori in Canada, and the European Union began in Q4, and we are preparing for a limited launch of Venus freedom in the U S. During the first half of 2022.
Note that we continue to believe that the fiori and freedom will be a solid contributor contributors to our multi year growth profile. Beginning in 2023, we've continued to execute a measured and thoughtful strategy for this differentiated technology Venus concept devoted nearly six years to develop this technology in order to create a comprehensive suite.
<unk> and effective system that addresses important medical needs and is supported with significant clinical data. We are now focused on investing.
The requisite time to develop relationships with kols and educating potential customers in the obgyn community on our unique utilization focused business model, which we believe will make the return on investment of this system very attractive for both obgyn practices and Venus concept.
Our efforts to expand the Venus Bliss portfolio of systems and products continues to make progress as well we received a five 10-K clearance for the Venus Bliss snacks in January and are preparing for our commercial launch in Q2, Venus Bliss snacks is a new device that not only includes fat reduction in body contouring capabilities, but also.
Russell stimulation technology. This device addresses three of the most in demand body contouring procedures all in one workstation.
We expect this new device will have a list price of approximately 229900 and contributing gross profit margins are above company averages.
We intend on adding a modest but important utilization fee of approximately $1 per treatment to this device importantly, we estimate that the time a return of investment of just 33 weeks, which we expect will be extremely compelling to our clinician customers.
Finally, we are proud of material progress we've made in recent months to advance our development regulatory and clinical strategy for Amy or non surgical robotic technology platform for medical aesthetics applications.
As indicated in our earnings press, because we are targeting an FDA submission for a general indication for tissue excision and skin resurfacing by March 31, 2022. This is significantly ahead of our time lines. We discussed with the street and is a direct result of our team's strong execution and collaboration engagement with the FDA we.
Intend to issue a press release to formally notify the investment community of this important submission for regulatory clearances.
Where are we are not in control of the review and approval process to secure an FDA clearance.
Our internal timing expectations are based on historical review timelines in Med Tech, which we believe gives us the potential for a limited release of Amy in the fourth quarter of 2022.
The prospects for non surgical robotic technology platform, Amy are very compelling and we look forward to introducing this disruptive technology. Beginning later this year. It is important to remember that the Ami platform is just that a platform and it has been designed to support numerous different clinical applications via our unique.
<unk> upgrade path for the clinician, making it extremely cost effective and differentiated from any products currently available to the aesthetic device market today.
In parallel to this process, we are preparing to submit an additional clearance for general indication of tissue excision resurfacing. We've also made progress towards our strategy to secure specific clinical indications for Ami treatments of the face as.
As discussed on prior calls we are pursuing an IDE clinical study evaluating the safety and efficacy of using Amy for the treatment of moderate to severe facial wrinkles. This study will support our FDA five 10-K submission for a specific clinical indication for the treatment of wrinkles on the cheek, which will further extend our annual addressable market.
<unk> opportunity and enhance our long term growth profile.
We have finalized the protocol train four clinical investigator sites and are happy to announce that we've begun enrollment.
We expect to have the first patient treatments in the coming weeks and we intend to identify sorry to notify the investment community via press release, when we achieve this important clinical milestone.
With that let me turn the call over to Domenic della Penna, who will provide you a detailed review of our fourth quarter financial results and discuss our balance sheet financial condition, and our 2022 guidance Dominic thank.
Thank you Don Givens arms detailed review of our revenue results I will begin with a review of our financial performance across the rest of the P&L for the avoidance of doubt unless otherwise noted my prepared remarks will focus on the company's reported results for the fourth quarter of 2021 on a GAAP basis.
And all growth related items are on a year over year basis gross profit increased $6 1 million or 37% to $22 8 million gross margin was 70% compared to 64, 7% of revenue in the fourth quarter of 2020.
The increase in gross margin was primarily driven by higher sales of Venus consumables and improved revenue mix of system sales sold under our subscription program.
Primarily tracing to Venus Bliss.
Total operating expenses were $26 9 million essentially flat versus the prior year period.
The change in total operating expenses was driven by an increase of $3 3 million or 45% and sales and marketing expenses and an increase of 0.5 million or 32% and R&D expenses, partially offset by a decrease of $3 9 million or 22% and general general and.
Ministration of expenses.
Operating loss decreased $6 1 million or 60% to $4 1 million net loss attributable to stockholders decreased $10 4 million or 70% to $4 3 million.
non-GAAP adjusted EBITDA loss increased by 0.2 million or 9% to $2 5 million. We have provided a full reconciliation of our GAAP net income to adjusted EBITDA in our press release.
Turning to the balance sheet.
As of December 31, 2021, the company had $30 9 million of cash and cash equivalents and total debt obligations of approximately $77 8 million compared to $34 3 million and $79 6 million respectively. As of December 31, 2020.
Our net change in cash for the fourth quarter of 2021 was $15 million.
Driven by $15 $7 million of cash from financing activities during the period offset partially by cash used in operating and investing activities in Q4.
On December 15th 2021, we entered into a securities purchase agreement pursuant to which we issued and sold certain investors an aggregate of nine 8 million shares of our common stock and $3 8 million shares of our convertible preferred stock the net proceeds from the security.
Sold in this non brokered private placement transaction was $16 7 million.
Our cash used in operations for the fourth quarter of 2021 was $400000, reflecting a continuation of the significantly improved cash performance, we have discussed throughout 2021.
Specifically for the 12 months ended December 31, 2021, our cash used in operations was $19 8 million down 31% year over year, driven by a reduction in our net loss and a 33% decline in cash used in working capital compared to the prior year period.
Turning to a review of our guidance.
As detailed in our press release, we introduced our revenue guidance for the full year 2022 period. The company expects total revenue for the 12 months ending December 31, 2022 in the range of 126 million to $130 million, representing an increase of approximately 20% to 23% year.
Year over year compared to total revenue of $105 6 million for the 12 months ended December 31 2021.
While we are not providing formal profitability guidance for the full year 2022, our outlook assumes we deliver another year of material profitability improvement, including a target of achieving cash flow positivity in the fourth quarter of 2022.
For modeling purposes, we would like to offer the following considerations to help investors understand the underlying assumptions driving our 2022 profitability targets.
First we expect our gross margins to be in the range of 68% to 71% as we see continued improvement in gross margins driven by mix, but also expect inflationary headwinds to pressure our cost of goods in 2022.
Second week, we expect continued expense management to drive notable operating leverage in 2022.
Specifically, we expect GAAP operating expenses in the range of 98 million to $101 million representing growth of 10% to 13% year over year compared to our total revenue growth range of 20% to 23% this year.
Third we expect our interest expense to be approximately $4 million and we expect non cash G&A of $4 5 million and noncash stock compensation of approximately $2 4 million.
Fourth we continue to expect our weighted average shares outstanding to be approximately 64 million.
And finally, while it is not our practice to provide quarterly guidance given that we are reporting in the last week of the fiscal quarter of the first fiscal quarter of 2022, we thought it would be helpful to share our range of expectations for total revenue as such our full year 2022 revenue guidance includes the assumption.
That first quarter total revenue will be in the range of $26 5 million to $27 5 million up 17% to 22% year over year.
And now I'll turn the call back to them.
Thanks Dominic.
Before we open up the call for questions I'd like to have Ross share an update on our commercial priorities and our global sales and distribution team.
Ross.
Yeah, thank them.
Before I address our Q4 execution of commercial strategy priorities I'd like to touch on our current aesthetic product portfolio that is attracting proven aesthetic leaders to Venus concept.
With our current product portfolio and competitive advantages our long term growth will be supported by our two growth franchises. Our hair restoration franchise, which consists of artist EMEA graph and our body franchise, which consists of bliss and Bliss Macs.
The number one growth market in aesthetics as men and the number one issue they face is hair loss.
This robot has been providing superior clinical efficacy as well as a more static pleasing natural hair restoration versus the past message.
With our recent blip match clearance Venus concept is the only company with three targeted modality solutions for fat muscle and skin tightening in one system can.
Combined these two key growth franchises with legacy versa velocity I believe and you have an unmatched aesthetic portfolio that will support our growth projections in 2022 and beyond.
We are also most pleased with our Q4 execution of commercial strategy priorities. The most important starts at the top.
We promoted a recruited or vice President's for North America.
Our vice President of sales U S East.
<unk> President of sales U S West a VP of sales, Canada, and North American National accounts, and our global VP of Bureau here, we added a sporadic industry expertise.
Our expertise while also promoting top Venus concept was static leaders. We also did the same at the regional level to.
To maximize our hair restoration advantage with artist near graph.
We added four robotics specialists in the U S and one in EMEA reporting directly to our global VP of Bureau hair.
This commercial strategy execution resulted in record sales and our hair restoration franchise in Q4, we expect to do the same strategy with Venus Freedom later in 2022.
Another commercial strategy priority was adding more static experience at the area sales manager and territory manager level as well as standardizing sales training.
We continue to attract proven aesthetics sales leaders, while also providing comprehensive sales training.
The goal in Q4 was to establish the targeted North America head count for 2022 of 79, consisting of four bps five regional directors for robotic sales specialists 40 area sales managers 22 territory managers for inside sales manner.
Yours.
We have filled 90% of these positions with the remaining 10% at the field level.
Outside the U S. We have direct commercial sales teams in the highest growth areas in EMEA, APAC and Latam or over 12 countries are O U S. Sales head count is 48, we also have distributors in over 40 countries with that I'll turn the call back to Tom for closing remarks, Tom.
Thanks, Ross in closing I wanted to share some of the key assumptions supporting our growth expectations for 2022.
Our 2022 total revenue outlook assumes more than 75% of our total revenue year over year comes from two key growth franchises, specifically the first our body franchise, which includes systems and procedure related revenue for Venus Bliss, and Venus Bliss Max products and second.
Our hair restoration franchise, which includes our systems and procedure related revenue from our artists and Neil graft products. Together. These two key growth franchises represented approximately 38% of our full year 2021 revenue and we expect these growth franchises to increase more than 40% year over.
A year in 2022 importantly, we expect the contributions of total revenue growth from these two growth franchises to fuel continued growth in sales and procedure related recurring revenue and to be accretive to our total company gross margins.
Our 2022 total revenue outlook also assumes growth contributions.
From a portion of our business dedicated to medical aesthetics outside of the body franchises discussed earlier.
This portion of our business includes contributions from six commercialized aesthetic plus products, including two of our largest product lines, the Venus legacy and venous versa sales.
Sales of these aesthetic products represented approximately 68% of our full 2021 total revenue and have demonstrated highly durable stable growth over time, we expect the sales of these products to increase in the mid to high single digits year over year in 2020.
It reflected reflecting a continuation of the durable stable growth profile of this trend is demonstrated in recent years.
There are two additional items that bear in mind, when evaluating full year 2022 growth expectations first as mentioned earlier, our body franchise will be a material driver to the total company growth. This year fueled by the commercialization of our Venus Bliss outside of the U S and commercialization of our venous Blix Bliss snacks in the U S.
We do expect growth in our body franchise to be stronger over the second half of the year, given the timing and expected ramp up of the introduction of the Bliss Macs continuing into Q2.
Second our 'twenty to 2022 revenue guidance does not assume material contributions related to the limited release of the Amy in.
In Q4 of 2022, we intend to update the investment community on the potential contributions from this initial commercial release of Amey. Following the receipt of five 10-K clearance well amey is not expected to materially impact 2022 growth. It is fair to assume that we will be highly focused on ensuring that we are well prepared to execute our commercial strategy.
For this highly differentiated robotic technology as soon as possible following receipt of regulatory clearance and would expect Ami to be a material contributor to the total company growth beginning in fiscal year, 2023, and beyond and with that operator, we'll now open the call to your questions operator.
Thank you.
To ask a question please signal by pressing star one on your telephone keypad.
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We do ask that you limit yourself to one question and one follow up.
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And our first question will come from Marie Thibault with BT I E.
Good morning.
Thank you for taking the questions and congrats on the recent progress.
Wanted to ask a question here first is not less snacks would love to hear how that product is being received now that's a it's a in a in the market can you tell us a little bit more about how the commission there given that that I'm.
Sure Ross you want if you want to take that question from Marie <unk>.
Sure.
Murray, obviously, we are very excited with bliss backs and the only system that has the three platforms for skin tightening fat and muscle.
With a limited release in Q1 with a full launch coming in Q2.
Sales have been fantastic, we actually quadrupled our availability at Bliss maps.
For the quarter and close we just recently attended the a D. A.
And actually did some boot presentations and muscle stimulation demos I can also tell you that we've had key K O L purchases to build the infrastructure.
And the foundation for the growth that we expect from the products. So it's been outstanding received.
And mostly because it's a proven platform with bliss with fat and skin tightening with our M. P. Two technology and by adding the EMS muscle stimulation has created phenomenal interest.
Okay, that's great and it looks like to be a broader launch here.
And then a question on Amy.
Oh, sorry, 31st deadline is.
We only three days away. So a two part question here.
What needs to happen until Oh before that.
Well that would put a lot of computer it sounds like it's really just kind of a finding of a letter sort of deal here and then secondly, why.
Why are we waiting until Q4 for what limited launch.
And in between.
Yeah, Yeah, great. So summary.
First of all the first part of your question.
We're confident we're going to be able to file by March 31, we had a meeting with the FDA earlier in the year.
And they indicated to us that this pathway, we worked with them and so we feel fairly confident that we're going to be able to get our clearance.
The timelines that is typical for the FDA now FDA is usually a 90 day process. So we built in a little bit of cushion quite frankly to make sure that if there are any questions or.
Sort of delays at the FDA level, we could account for that in our on our assumptions when it comes to launching the product we have a build process in place already for the Amy.
Supply chain issues when Youre doing a few at a time does impact a little bit of the timelines. So we also want to give ourselves a little bit of cushion there as well, we feel pretty confident that we should be able to be able to get the product commercially viable and available in early Q4, but thats why we gave ourselves.
A bit of room.
Alright, thank you so much.
Yeah.
Your next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann.
Uh Huh John dominated Ross how are you.
Good morning, how are you.
First to our suite of company.
Uh huh.
A couple of years ago. So a couple of questions from our end so could.
Could you give us some some thoughts about the.
The trends on buying versus leasing.
For which are most of the cloud for them as far as how we're modeling.
Going forward, our new trends there to read into it was there any spill over at all from a from Q4 that we should expect to get pull through into Q1.
Yeah, I think that I'll, let dominic touch on a bit of the trends, but just just to be clear that when we look at the the sale the traditional cell versus our subscription slash lease programs.
There is a difference between units as a percentage of our business and actual dollars. For example, when we're looking at the restoration wrote like the artist system for hair that is not available under our subscription model and but it also has an ASP in the area of $250000 or so so it doesn't materially impact the percentage of.
Dollars generated versus.
Subscription same thing with Venus Bliss.
In terms of the trends DDP, you want to touch on where we're going there yeah and in the fourth quarter, we had a significant.
Uptick in system sales, which are cash sales a lot of that was driven by the fact that we had a record quarter for.
And in the artist side of the business in terms of units shipped so artist is sold strictly on a cash basis.
So that kind of skewed it more towards cash in the fourth quarter and that's not a bad thing.
I think that in Q1 that will kind of rebalanced back as our subscription business picks up slightly in Q1 relative to the kind of mix we saw in Q4.
But clearly both of both subscription and and system sales are growing.
They will vary a little bit quarter to quarter, depending on how good a quarter, we have on the artist side, but with a focus on plus Max going forward, we expect that a certain component of Bliss smack sales will continue to be on subscription.
And that'll kind of rebalanced things in 2022.
Okay, and then could you walk us through how you're thinking about me in Detroit assures first your actual architectures.
Additionally.
Our clearance on the resurfacing with with with one such device.
Chip, both norm and then tack on others, such as our wrinkles et cetera, my thoughts around virtues.
Yeah, I think you hit the nail on the head in terms of what Amy is and to remind the audience that Amy is an acronym for artificial intelligence me and we feel very strongly that robotic technologies will play a more significant role in and are in an industry, where typically manual intervention has been.
Norm and we think that this will address a number of different skus most of which is efficiency of our platform whereby our system has been designed where we'll be able to take a variety of different energy based solutions and integrated into the.
The robotic arm and using artificial intelligence machine learning the imaging that we can do with the device the the level of.
Precise.
Our assessment of this tissue for example through the cameras et cetera. All of these things help we believe improve the clinical outcome predictability safety profile of platforms and so we do expect to have.
A number of units available. This year, we don't know exactly what the number will be but just to be clear.
The first phase like any startup or startup in terms of our initial launch will be dedicated to attracting the top kols they will be able to help us not only.
Articulate the benefits of this platform, but also help us expand the clinical indications as they learn more about what the platform can do with our clinical.
And R&D teams. So by the end of the year, we're going to have a pretty good assessment as to the potential for 2023 and will build obviously, our financial models off of that that experience.
Got it and one last one if I may for Dominic just on the modeling purposes, you called out 98 to 101 on Opex or is that a GAAP number.
Yes.
Perfect. Thanks for taking our questions no.
No problem Jeff.
The next question comes from the line of Jon Block with Stifel. Please proceed with your questions.
Great. Thanks.
Good morning morning.
Maybe the first one just on the Iot data you know again you guys are unique you get a real time look in there you talked about the trends exiting 'twenty, one, but you know what.
I'm a proud persisted into January and then people are always curious on aesthetics as the world Reopens, how dollars get reallocated if they do so unless I missed it my apologies, but any color that you can give us you know what.
Now the Iot trends played out from a patient perspective call. It Gen said March.
Yeah.
We're seeing trends now that were that are similar to 2019 ahead.
Ahead of where we were so the good news for US is that as we look globally on a consolidated basis I mean, there's always pockets John here and there, but overall globally and especially in the U S. We've seen really no impact of the omicron.
Two patient trends, so I think that we feel pretty good about how we're going to see that patient utilization improve and continue to improve as I mentioned earlier the trends right. Now are consistently ahead of the 2019 numbers that we saw when we first brought Iot to the market.
Okay. That's great color. Thank you and then maybe to pivot you know I know, we've talked about plus bags and Amy as well on the call, but you got a robust pipeline and then you mentioned the freedom earlier I think you called out a $1 22 U S. Launch you know how do we think about our revenue contribution this year from a freedom and then anything more that you can share on the business model.
I think it was last earnings call you talked about you know a little bit of a different business model because of the target market being the obgyn and you've got to be a little bit more sensitive capital cost perspective, but any other color that you can provide there.
Yeah, I think whats really important is that we're doing this in a two step process. John I mean step one is as with every product Bliss Max doesn't matter. What it is is establishing a strong network of kols and in order to be able to establish a strong network of kols, especially in the obgyn market you have to have solid click.
<unk> data one of the things that we're proudest of the most over the six years that we and there's a reason why we took six years to develop and bring this product to market versus some of our competitors is that we wanted to have strong clinical data to be able to support the claims that were making about how this particular product benefits.
We have different wealth health issues for women.
And so we were comfortable with what we have available to be able to demonstrate to the kols in the obgyn community who are routinely looking for you know not a I'll call. It the the sizzle theyre looking for the steak right. So they want to make sure that the product is properly position. So they feel comfortable with it the second part of this and this.
Is equally if not more important obgyns are typically used to spending a lot of money on capital equipment.
They are quite.
They don't want to do it and so what we did is we built a business model that was going to have a modest licensing fee to get into the business somewhere in the area of $15000 a unit.
This this will get the ball Rolling and then what we will do is have a utilization fee per each each procedure that will contribute in a meaningful way we didn't plan on a big number for for 2022 just to be clear because obviously, we want to make sure that we can get the appropriate kols in place we have.
Those kols that place in place in Canada, We're now working on the U S and so therefore, we will start to see some contributions, but it's not going to move the needle dramatically in 2022, unless we're surprised by the pace of adoption.
But we feel that once we've established a good clinical team in the field in terms of Kols, we will be able to build momentum through the year and we will start to see the benefits of that and hopefully it's accretive in Q4 and beyond.
Okay, that's great and maybe last one for me a two parter GDP for you.
The supply side. It looks like you are caught up with the backlog maybe just broad.
Brush question are you out of the woods there the balance sheet look good from sort of an inventory perspective, and then just for Amy.
And that's why I build on Geoffrey's question, but I know you said no material impact in 2022.
But can you talk about the receptivity from the docs with a general label for tissue excision and skin resurfacing versus the future expanded label for facial wrinkles in other words can you really get going with the law and trunk called the general or do you need the enhanced label. When you think about it from a commercial standpoint. Thanks, guys. Okay. Yeah. So I'll, let <unk> answer the.
First and then I'll answer the question, yes from a supply chain perspective, we think the worst is behind US obviously, we've adjusted to the longer lead times that that the.
The supply chain are providers of demand in terms of our contract manufacturers. So we've gone through that adjustment process, we were able to build more bliss Max's that we were targeting to build by the end of Q1, we were able to have a few more units constructed in time.
So we're feeling pretty good about the.
The balance of the year from a supply chain point of view.
And does that answer your question John for GDP.
Yep.
Okay. So from a from an A&D perspective.
As you know Theres always early adopters right. There are there are doctors out there that are going to want to be first to market with a platform.
We fully anticipate that that'll be consistent and the reason I can say that with a fairly high degree of confidence is that I've had a number of doctors reaching out to me directly.
Proactively asking about robotics, and where we're going and they want to be the first on the podium to talk about the advancements in aesthetic medicine. So all of those things are strong signals to us that we're heading in the right direction as it relates to the general clearances versus specific clearances traditionally in our industry.
Doctors really well I'll call. It the aesthetic doctors know dermatologists plastic surgeons typically are less concerned about specific clearances and more concerned about being market leaders. So we fully believe that based on the conversations we've had with the for physicians who have been.
Selected to be our our investigators for the second clearance with Amy for the face and we.
We feel that we have a very high probability of having doctors who will use this device.
Fairly quickly out of the gate and and then tell us quite frankly, with where theyre treating patients as opposed to us telling them. So you know because like I said, most times doctors, who have any kind of ability to be on the podium like to be first are first to market with these platforms and so we feel we have a good opportunity here to.
Make an impact in 2022, how big that impact will be remains to be seen but we feel pretty confident that we'll be able to get out of the gate fairly strongly.
Great. Thanks for the color guys.
No problem.
As a reminder, you May press star one to signal for a question.
Our next question is from the line of Anthony Vendetti with Maxim Group.
Hi, Good morning. This is actually Jeremy on the line for Anthony just a quick question and you know the end of your prepared remarks, you told us the break down of.
The two key franchises, if you assume that 75%.
Your revenue for 2022 is going to be from those two franchisees I'm just trying to figure out the math based on what you said from the 2021 revenue was coming from your legacy more for 68% with sort of your legacy products. And then you had you know you said, it's going to be a high single digit growth I'm just trying to figure out could you maybe just explain a little more how that breaks out going into.
2022, if you expect 75%.
From the two key franchises.
As we look at the two key franchises. We described right. The body franchise includes the Bliss.
And the Bliss Max we have clearance for the <unk> from the FDA and that'll be the primary go to product in the U S with a higher ASP.
And the Bliss, which does not have any element of a disposable cost to it.
And we've already seen the trends in Q4.
Is starting to gain traction O U S. In the price as I said earlier the price sensitive markets. So thats one of the franchise the hair restoration franchise, which includes artist Neo graft and the utilization per procedure will represent the second that was well established in Q4, because the trends.
I think these two franchises contributed 38% of our revenue in 2021 today, we believe based on the trends that we saw in 'twenty in Q4 of 2022 and with the early interest in the blood.
Bliss smacks that it'll represent 75% of our total business, so I think that.
As you look at our business overall.
It really is consistent with.
How we.
Strategize about going to the market being very very specific about how we.
How we hire our sales organization, how they target the market so.
So 75% year to year growth, that's not necessarily revenue rates, we're talking about overall performance and for the company.
Correct.
That 75% is the so towards.
We're growing 20 million, 75% of that $20 million of growth is coming from the.
These two franchises.
Okay. So the total revenue growth, okay that makes a lot.
Couple of others, but those just total revenue okay, great and then just one for you you mentioned for when you're giving your thoughts on the 2020 outlook about gross margin. You mentioned there were some inflationary headwinds there was going to pressure your cogs there what type of steps you've taken any steps to try and mitigate that you could help us understand.
We've commented that the range of 68 to 71, so depending on the nature of these inflationary pressures because we could get a big increase on component parts in this half of the year and be somewhat surprised by it our point is that we have.
Selectively managed our pricing grid, such that we're looking to extract out extra margin through 2022 now.
Now depending on what those Cogs headwinds or like we could do better than 70 70, 71%.
But the plan is that we've taken enough initiatives to offset the cogs hedge headwinds that we're anticipating we've seen a bit of a twit trickle through and where we are hearing rumors of more pressures coming down the road, but we're prepared to head those off such that we hope to balance so it's somewhere around the seven.
Per cent range and possibly better.
Okay, Alright, great. Thank you very much I'll hop back in the queue.
Thank you.
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Thanks, everybody. Thank you.
Thank you.