Q4 2021 MiMedx Group Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to my metrics for fourth quarter 2021, operating and financial results Conference call. At this time all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session.
I would now like to hand, the conference over to your Speaker, Mr. Jack Howarth Senior Vice President of Investor Relations. Please go ahead Sir.
Yeah.
Thank you operator, and good afternoon, everyone welcome to the <unk> fourth quarter 2021, operating and financial results Conference call.
With me on today's call are Chief Executive Officer, Jim Wright Chief.
<unk> financial Officer, Pete Carlson.
<unk>, Vice President and Chief Commercial officer, Dr. Rohit, Ketchup, and executive Vice President Research and development Dr. Robert Stein.
Given Pete will provide a summary of our operating and financial results for the quarter and at the conclusion of their remarks, Tim Pete and doctors Cassia and spine will be available for your questions.
Before we begin I would like to remind you that our comments today will include forward looking statements, including potential timelines for our ongoing clinical trials and FDA submissions and approvals and expected market size for these products.
These expectations are subject to risks and uncertainties and actual results may differ materially from those anticipated due to many factors.
The actual timing and FDA approval will depend on a number of factors, including the results of our clinical trials. Our interpretation of those results the impact of COVID-19 actions by others that affect our timelines and other factors that the FDA deems important.
Additional factors that could impact outcomes and our results include those described in risk factors section of our annual report on Form 10-K , and our quarterly reports on Form 10-Q .
Also our comments today include non-GAAP financial measures and we provide a reconciliation to GAAP in our press release, which is available on our website at www Dot <unk> Dot com.
With that I'm now pleased to turn the call over to Tim right Tim.
Thank you Jack.
Good afternoon, everyone and thank you for joining us on the call today towards 'twenty, one was a defining year for <unk> in.
In 'twenty, one we advanced our understanding of our Purion process put central tissue, both scientifically and clinically we delivered above market double digit growth in our continuing tissue in core commercial portfolio, Despite COVID-19 and the impact of the end of enforcement discretion.
We are well positioned to execute against our goals and objectives for 2022.
We are innovating by introducing new purpose designed and developed products, we are expanding into areas of surgical recovery and across the globe with our anticipated launch of <unk> in Japan.
And we are advancing the body of scientific evidence to support expanded applications of our placental biologic platform.
The unmet clinical need across the markets. We address today is significant.
10%.
Of the U S population have diabetes with calculated annual cost exceeding 300 billion.
A key driver of costs for patients with diabetes is lower extremity diabetic ulcers.
Which present, a substantial final financial burden to payers.
A significant burden to patients.
Patients with these lower extremity ulcers based challenges with mobility the risk of infection. The risk of amputation decreased quality of life and a shortened lifespan many of which are exacerbated should amputation actually be required it.
It is estimated that up to 85% of amputations are avoidable with the adoption of best practices of treatment.
Results of our recent peer reviewed study clearly demonstrated that in the medics is proprietary purion processed <unk> fix should always be considered as part of a best practice treatment regimen.
When following these guidelines M. P. Fix was shown to provide better clinical outcomes by reducing major amputations emergency room visits inpatient admissions and readmissions all with statistically significant P values less than 0.0001, not only was that P. Fix noted as a.
Dominant treatment strategy. It was also found to be cost effective providing increased quality of life and a lower willingness to pay your threshold.
The results of this recent peer reviewed study are meaningful for patients physicians and payors.
<unk> will continue to pursue evidenced based approaches to support the clinical use of our products. We can only do this by substantiated, the clinical and economic attributes of our foundational play simple biologics platform.
We are advancing not only scientifically but we're also delivering revenue growth.
I'm extremely pleased to report another outstanding quarter of growth fourth quarter net sales from our tissue imported products also known as our 361 product.
Were $66 9 million, reflecting a 13% increase versus the same period one year ago.
Net sales of the same portfolio of products increase an impressive 15% year over year for the full year 'twenty 'twenty. One we exceeded our stated 21 objective of greater than 10% growth as well as beat the market average growth, which is estimated to be between six and 8%. Despite the end of enforcement discretion.
And this past May total net sales in 2020 , one grew 4% versus the full year 2020 in adjusted net sales grew 7%. These strong results are a direct reflection of our investment we've made to support our sales professionals and our medical science liaisons.
In addition, our territories are designed to focus on high growth areas. We are equipping our teams with meaningful clinical scientific and economic evidence and reinforcing their efforts with medical education initiatives designed to amplify the important benefits of our products to patients clinical decision makers and pairs.
Our commercial business is getting stronger and we are expanding into new markets. Our strategic expansion into surgical recovery markets is one component that propels our continued growth here, our direct and agency sales professionals are laser focused on identified.
Areas, where our tissue products can help reduce complications across several specialty such as most procedures colorectal anastomose, he's spinal decompression complex surgical reach constructions and lower extremity repairs, where a patient may have an increased likelihood of complications.
Complications such as the instance, adhesions hypertrophic scarring and others may affect both the recovery of the patient and the outcome of the surgery, we are targeting certain procedures for use of our products based on the unmet clinical need potential procedural complication rates clinical relevance and economic.
Factors plus overall business priorities.
As an advanced wound care, we believe that surgical recovery market is expanding due to the demographic trends such as ageing obesity diabetes and other co morbidities that can complicate healing and increase of patients' susceptibility to non healing chronic wounds.
At our recent company Investor Day, we outlined our strategy for achieving sustainable annual growth of 11% to 14% in our continuing commercial portfolio.
This above market growth rate includes growth in our existing products that'd be fixing MP court, along with an increase in our surgical recovery setting using our amnio fix and amnio cord products I'd like to spend a moment on two additional contributors to our anticipated growth our global expansion into Japan, and a robust near term organic.
<unk> product pipeline.
First Japan, because we had previously discussed memetics received regulatory approval from the Japanese Ministry of Health Labor and welfare in June 2021 to market fix in Japan.
As the first amniotic tissue approved for hard to heal chronic wounds, such as diabetic foot ulcers, and venous leg ulcers, which do not respond to conventional therapy, we expect to secure reimbursement approval mid 2022 subject to the government's ability to continue to progress our application in light of Covid constraints.
Our commercial team is establishing the necessary structure medical education programs and market development initiatives to operationalize, our commercial strategy as of today, we have already trained more than two 200 Japanese clinicians on the use of that would be fixed and we are working to build consensus on establishing a treatment.
Practice guidelines as well as leveraging the power of peer to peer education in partnerships with expert key opinion leaders.
We believe these results could lead to.
To the treatment of as many as 100000 patients annually success in Japan is an important step in our aspiration is to grow our business geographically outside the U S.
I'd like also to highlight an area I'm personally excited about.
We are innovating I've asked the organization to develop too substantial.
New products every year, and we are well on our way to achieving this goal the native and multimodal therapeutic properties of our Purion process placental tissue provide an almost unlimited range of new organic product innovations, including 361 products as well as five 10-K products.
We have outstanding scientists in our research and product development organization.
We have the capital to invest in these important product development initiatives initiatives that broaden our portfolio and expand our addressable markets.
The first two of these product innovations are planned to be introduced later this year amnio effect and our placental collagen matrix product.
And the effect is a membrane product similar to M. P fixing amnio fix but as a uniquely process to produce a thicker more robust scrap. The initial feedback we have a mass do multiple focus groups customer preference testing and key opinion leader dialog indicates that this new platform has the applicability for operative procedures.
A surgeon needs to anchor or suture the graph.
Such as in a rotor cuff repair or a complex complex wound reconstruction.
Our placenta collagen matrix product is made from the placental disk.
It is a simple.
Extra cellular matrix in a particular format.
Its clinical utility will be and complex wounds that are deeper tunneling or simply difficult to reach with conventional products. We see this as an additional platform into which we can incorporate innovation center and iterations that have the potential to improve the process of care and patient outcomes.
Our commercial team will be well prepared to bring these new products to the market. Later this year benefited by the armamentarium of evidence and medical education support designed to facilitate clinical adoption.
Overall, we made great progress in 2021, and we're putting the company in a solid position to achieve a number of significant milestones in 2022, let me reiterate <unk> commitment to developing new products, our commitment to expanding the market opportunities and our commitment to generating science based evidence.
These three things all position us to achieve 11% to 14% growth in our commercial business in 2022.
Transitioning to another area I'm excited about our late stage muscular skeletal pipeline, we're advancing in this area as well with our clinical operations team. We are confident in the therapeutic potential of micro nicely hack them and are methodically focused on initiating our phase III Gateway program in order to demonstrate its effectiveness.
In the clinic and its potential to remodel soft tissue, demonstrating a demoed characteristic or disease modifying characteristic.
We are diligently working on site selection clinical trial protocols and design and the final analysis of the 12 month readout from our phase two B K away study. This may provide an important look into the durability of patient response to micronize. The hacker and these studies will be considered as we advance our plans for phase III.
We intend to hold confirmatory meetings with the FDA to review, our statistical analysis plan as well as well as finalize our study protocols as soon as possible.
Our phase <unk> study results provided important insights into the properties and behavior or any amnio fix injectable product.
The number one thing we discovered from the first 190 patients visit our placental biologic is both safe and effective the P values for these 190 patients were statistically significant and clinically meaningful.
Consistent with published retrospective studies and real world experience to mass for more than 138000 vials that had been used in the clinic prior to enforcement discretion.
I would encourage you to read both our press releases on these results and also watch this segment of our Investor day presentation available on our website for additional detail.
The piece of the puzzle we had to solve is what went right in the first 190 patients and why that result wasn't continue through the remaining 256 patients. Fortunately after an extensive root cause analysis.
We learned that the potency of the investigational product faded as an age from time of manufacturer and that our proprietary biochemical and biological test can detect this reduction in potency.
Possibly the best news is that from what we've learned this is fixable, the scientific and financial benefits from this root cause analysis are potentially enormous and I believe the findings from our phase two b trial have increased our probability of technical and regulatory success as we commence our phase III.
A clinical study program later this year.
The cash we're generating from our growing commercial business is going back into advancing this important program and I'm excited about the potential of these investments have to transform the treatment of kols by providing rheumatologist and orthopedic surgeons, a safe effective and novel Central Biola.
Jake modality.
I will now turn the call over to Pete who will take you through our fourth quarter and full financial results Pete.
Thank you Tim and good afternoon, everyone.
As Tim mentioned earlier, we had a great quarter and peeling the onion a strong year.
This is the second full quarter following the end of FDA enforcement discretion in which the company is no longer able to market section 351 products in the United States.
As we have previously disclosed these products represented approximately 13% of total sales in 2020 and the team is working hard to grow back into our pre enforcement discretion revenue levels.
We reported net sales for the fourth quarter of 2021 of $67 $4 million, a $1 $1 million decreased compared to the three months ended December 31 2020.
Which we recognized revenue of $68 $5 million.
Fourth quarter 2021, net sales included revenue recognized on the remaining contracts.
$100000 compared to $500000 for the same period, one year ago.
As a reminder, these are the remaining contracts relating to the historical pattern of revenue recognition.
Adjusted net sales, which excludes the cash collected on the remaining contracts were $67 $3 million for the three months ended December 31, 2021, compared to $68 million for the fourth quarter of 2020.
Declining 1%.
Strong result, given the headwind from our inability to sell or market. The section 351 products in the U S.
Sales of our tissue and cord products were $66 $9 million in the fourth quarter compared to $59.3 million in the prior year growing a double digit 13%.
Net sales for the full year 2021 were 200, and food the $8.6 million compared to $248 $2 million.
An increase of four 2%.
Versus the full year 2020.
Adjusted net sales grew seven 1% to $257.6 million in 2020 , one versus $245 million in 'twenty one.
For the full year 2021 .
Tissue and corn products grew 15% to $240 million.
$208 $6 million in 2020, a year impacted by restrictions implemented at the onset of the COVID-19 pandemic.
Results in 2021 reflect the initial progress of our commercial efforts to focus strategically on areas of surgical recovery.
Growth in our fixed sheet portfolio and a positive impact in sales of our F. B Court expandable product launched in September 2020.
Overall, our strategic initiatives are taking shape and as Tim mentioned earlier expansion into Japan, and the launch of two new products in the U S. This year should further help drive growth above the industry average.
Gross margin for the three months ended December 31, 2021 was 84.0% compared to 84, 2% for the fourth quarter of 2020.
For the full year gross margin was 83, 3% in 2020 , one compared to 84, 2% for 2020 one.
I'll remind you that we recorded reserves related to products impacted by the end of enforcement discretion in 2020 , one which had a 0.4% impact on 2021 gross margin.
As I have said, we expect gross margin to decline slightly in 2022 from our recent levels.
Yeah.
Selling general and administrative expenses or SG&A for the fourth quarter 2021 were $53 $1 million.
Compared to $48 $7 million for the fourth quarter 2020.
The increase in SG&A expenses during the period was driven by higher professional fees as well as increases in travel expenses over the prior year period. When the company continued to have restrictions in place due to the pandemic.
For the full year ended December 31 2021.
SG&A expenses were $198 $4 million compared to $181 million in 2020.
The full year 2021 increase reflects restoration of full salary levels and merit increases which were restricted for a portion of 2020 as part of our response to COVID-19 pandemic.
Along with increased commissions from higher sales volume.
As access to hospitals and other health care facilities increased.
The company also incurred $3 $9 million of expenses associated with the proxy contest during the second quarter of 2021.
Research and development expenses were $4 $6 million for the fourth quarter of 2021 <unk>.
<unk> $234 million for the same period in 2020.
The increase reflects higher personnel costs driven by growth in head count to support clinical research efforts.
These expenses were $17 $3 million for the full year at.
At the bottom end of the range. We previously provided that we do expect these costs to increase in 2022.
Investigation restatement and related results were a benefit of $4 $5 million for the three months ended December 31st 2021.
Compared to an expense of $24 million.
For the three months ended December 31, 'twenty 'twenty.
For the full year. These results were inexpensive of $3 $8 million.
Reflecting expenses incurred towards the advancement of legal fees.
Of certain former officers and directors of the company offset by recoveries from our directors and officers insurance program.
While we expect to continue to incur some litigation costs moving forward. We anticipate continued low levels of the investigation restatement and related expenses.
Yeah.
Turning to the bottom line.
Net income was $2 $2 million for the fourth quarter of 2021 .
<unk> to a net loss of $16 $6 million in the same period a year ago.
For the full year 2021.
Net loss was 10 $3 million compared to a net loss of $49 $3 million in 2020.
When investigation restatement and related expenses were $59 $5 million.
Adjusted EBITDA was $3 $5 million or five 2% of adjusted net sales.
In the fourth quarter of 2021.
Compared to $10 $3 million or 15, 2% of adjusted net sales in the same period a year ago.
For full year, 2020 one.
Just any EBITDA was $17 $9 million.
$6, 9% of adjusted net sales compared to $36 million or 12, 7% in 2020.
As of December 31, the company had $87 $1 million of cash and cash equivalents compared to $95 $8 million as of December 31, 2020.
In summary, despite the loss of section 351 product sales in the back half of 2021 as.
As well as some of the Covid challenges facing the industry are tissue and cord business has returned to growth based upon multiple initiatives designed to reinforce the differentiation of our products and convey the clinical and economic value of our brands.
We aim to be free cash flow breakeven in the next 12 months and expect overall revenue to return to pre enforcement discretion levels during that period as well.
Yeah.
With respect to annual revenue growth in 2022 we provided our outlook at the Jpmorgan conference last months.
Which highlighted 11% to 14% growth.
In our advanced wound care products and reflects our mid year expectation of launching <unk> in Japan.
And the launch of MTO effect, and our placental collagen matrix product this year.
Let me remind you that the 11% to 14% growth percentage is based on the advanced wound care section 361 tissue and cord products, only which totaled $240 million in 2021.
We also provided quarterly breakouts of revenue for modeling purposes to help clarify for investors supposed to the cadence of our business typically impacted by seasonality in the first quarter with the reset of patient deductibles as well as the timing of our planned product launches that we anticipate contributing in the back half of this year.
For 2022, we expect mid single digit growth in the first quarter building to a high teens or 20% growth in the fourth quarter.
Slide 16 in our Jpmorgan presentation includes the specific ranges we provided.
For further reference this is available on our website.
From a gross margin standpoint, we believe gross margins in 2022 will be slightly lower due to competitive dynamics.
<unk> mix focused on surgical recovery and the launch in Japan.
As I mentioned, we expect R&D spend to increase over 2020 , one with the initiation of our phase III <unk> clinical trial program.
Estimated at approximately $30 million for two trials, representing $15 million per trial incurred over a period of three years.
2022 R&D spend Additionally includes the new product development initiatives, Tim referenced in his remarks.
Yeah.
Importantly, I want to reemphasize that we expect to be free cash flow neutral in 2022, including the investments we are making to initiate our phase III.
<unk> OE program.
<unk> has made extraordinary progress over the last two years, restoring the company's financial credibility reputation and overall foundation.
I would like to take a moment to acknowledge the progress the team made to strengthen our internal control environment.
Remediation of the remaining material weaknesses with a defined priority for us in 2021.
I am proud of the team involved in these efforts and I'm pleased to share on their behalf that management and partnership with our internal and external auditors as evaluated these controls and is determined them to be effective as of December 31, 2021 .
Finally as disclosed in the 10-K, we amended our loan agreement to add a financial covenant based on minimum levels of net sales, replacing the adjusted EBITDA leverage covenant.
The Amendment also includes an increase in the minimum liquidity covenant to $20 million.
This is a strong net positive for the company that provides continued financial flexibility to invest in our commercial business and our pipeline.
I will now turn the call back to Tim.
Thanks Pete.
Closing I'd like to thank our <unk> team for their exemplary contributions.
Over the past three years.
We've been rebuilding.
And securing the foundation of our medics three years of innovating expanding and advancing.
Have redefine who we are.
And what we hope to do to transform medicine.
We have made significant and necessary improvements to our infrastructure processes and systems to support our robust growth strategy and invested heavily in our commercial organization as well as other essential sales, enabling support functions. The medics is a unique business with a unique business model that begins with a unique.
Oracular, Oregon Center.
Our simple biologics have the potential to transform medicine in patients' lives today and tomorrow, we are well positioned to advance the understanding.
And clinical application of placental science across advanced wound care surgical recovery, including most surgery musculoskeletal diseases and sports medicine.
From donation to innovation to commercialization, we aimed to be unmatched and unrivaled.
As always I. Thank you for joining our Q4 earnings call and your interest and support are appreciated.
Operator, you May now open the lines for questions.
Thank you.
Ladies and gentlemen, we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
All information as I will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys for participants who are not in my medics covered covering research analysts. Please limit to one question and one follow up and then please return to the Q1 moment. Please while we poll for questions.
Our first question comes from comes from Carl Byrnes with Northland Capital markets. Please proceed.
Great. Thank you thanks for the question and Greg and congratulations on the progress.
I'm just wanting to know if you can drill down a little bit in terms of the increase in R&D given the.
The anticipation of new product development, you know two per year and then also.
Timing of the inception of the pivotal.
Phase three trials for knee OA.
[noise] governance, yeah, Karl good to talk to you.
We will see an increase in those expenses, it's they've been artificially low in the past couple of years, we did think they'd be higher this year, but the way the trial schedule played out.
It wasn't the increase we thought we haven't given specific numbers, but it's certainly going to increase.
As we go through 2022, how much is a little dependent on the timing of some of the aspects, but you know this.
This is an important investment in our business and we're focused on making sure. The team has the right resources to do the work they need to do.
Well this is Bob Stein call, we do plan to initiate our phase three program in the second half of the year and we anticipate being on time in the BLA.
BLA filing in the late part of 2025.
Great. That's helpful I'm going to cheat, a little bit and just squeeze one more question. It looks like in terms of the advanced wound care products.
Adjusted basis, you were up 15% year over year for the full year of 13% in the quarter year over year and up 7% sequentially with respect to the sequential.
Increased 7% was there any seasonality or any uniqueness in terms of.
I Wouldnt say by end, but anything that would have translated there.
Hey, Rohit and I think that would be a great question for you to.
Respond to.
Yeah.
Carl while rubbish.
His phone ready USD.
There is seasonality and even between the third and the fourth quarter there.
Similar to people waiting until their co pays are.
Paid up and in the first part of the year. We do think there is a little bit of activity at the end of the year. So in the fourth quarter of people electing procedures.
When they.
But while their co pays are all used up so you know.
Yeah.
That's fine.
Owen issues, but that's a great question like a speed mentioned, we do see some seasonality from Q2 to Q4.
And it's related to like Beach set as people have met their deductibles for the year and Theres a run into which are getting some of the things that they might have shaken out and done.
You also saw it that's coming out of Q3 into Q4 accurate. She was at the beginning of Q T was impacted definitely by.
David variant of.
The virus and then we saw that we had more of a robust access in Q4. So those are the contributing factors and also we continue to build momentum in that execution actually.
It's more and more of our team.
He may have you had a big bolus of hiring done in the first half of the year.
Also trained our salespeople in the first half of the year. So it takes a good six months for them to become more and more productive and he also started picking up that pace.
And towards the end of the year. So all of those are contributing factors.
What I would think is that a pretty good robust.
In Q4.
Yeah.
Great. Thank you that's very helpful.
Our next question comes from swam Pascua Lama.
Brahma <unk> with H C. Wainwright. Please proceed.
Thank you. This is all came from Hep C. Wainwright good afternoon, Ken.
Bob.
So I'm just trying to understand the guidance so you.
You know that.
Pat.
You would have.
And we would expect 11% to 14% growth.
Or the net sales of $240 million.
So what's the what's the push and pull on this number.
How should we think I mean, you already gave us the guidance.
Clean quarters are you now.
But I'm just trying to understand you know.
That range.
Hey, RK. This is Tim I'm going to let rohit and address that.
Yes.
Good question again.
In terms of the overall guidance of 11% to 14% and the and the flow throughout the year into quarters.
I think the the the beginning of the year. It was in fact paid by the insurance resets. So typically we would get out of the gate a little bit slower in Q1.
But that in fact.
Actually you already answered in the prior question as we think about what are the drivers for growth in our business and we've talked a lot about innovation and the expansion into Japan.
Both of those things start impacting the business in Q3, and Q4 and as a result are there perhaps.
But the growth rates that we expected the second half of the year.
Significantly higher and overall the combined effect of that is 11% to 14%.
Uh huh.
Okay. Thank you again.
Tim I apologize if you already discussed this during the day.
The commentary because I got to date on this under this call.
I'm talking about Japan.
Is there anything that you can add in terms of.
Certainty of than you would have a decision from them.
Then I'm just going to play in a quick question to Bob on the knee OA I heard that.
I know you are planning to start this program for sure by that but in the second half what is required of your fall off your team to get done.
So that you can get this BLA and and <unk> decided not to be able in the the study and get that enrollment started in the second half.
Yeah.
Okay. This is Tim.
Reimbursement approval in Japan is certainly going to be predicated on the ability of the government to processor and application.
We don't really have any additional information.
We still feel that.
Mid year approval around reimbursement is certainly feasible, but we'd also have.
You have to consider.
Consider that the COVID-19 , many impacted the government's ability to process or application. So.
If we get any updates on that obviously, we will get that out.
Bob you want to address.
Okay.
Question around the corner.
Yes, Hi, RK, it's Bob Stein.
Before we initiate the phase III will need to meet with the FDA.
<unk> two <unk> trial results I also want to share with them our protocol design for the phase III, so that get they'll buy into what we plan to do.
We will continue to work on addressing the issue that led to the.
Trading and potency of the time with the investigational product and we believe we have that wrong.
Yeah.
Perfect. Thank you very much gentlemen, thanks for taking all my questions.
Take care. Thank you okay.
Okay.
Ladies and gentlemen, as a reminder, if you would like to ask a question. It is star one on your telephone keypad.
Our next question comes from Jon Vander Molson with Zacks SCR. Please proceed.
Hey, good evening everyone.
First question is on the recent study you guys put out on lower extremity diabetic ulcer and the demonstration of cost effectiveness there.
Are there any other indications that merit this kind of study because it certainly seems to make a strong argument for <unk>.
In addition to the debentures of the patient. There is also the economic argument to make any other work that you or others might do there in other indications to help them make the case to physicians.
I said this is Tim I think this whole area.
Wounds it do not heal these chronic wounds. So this happened to focus on the abuse. The other area could be venous leg ulcers and I think this is what the agency for health care and research.
Some of their commentary around there theres a lack of hum.
<unk>.
Clinical strong clinical work in this area as well as health economic work. So I think the whole field of wound care would benefit from the approach that we have taken.
To combine the looking at the clinical efficacy and safety as well as <unk>.
Economic outcomes.
That's where all this is headed and we're committed to generating data not only efficacy data, but this economic data.
Okay, Yeah, Thank you Tim and.
Another question.
On your targets for growth this year.
There's a couple of components to it there's I guess the base same store sales or same product sales component of it and then there's the <unk>.
Regional expansion and then new products on top of that how would you break down that 11% to 14% into those those categories and obviously you know some of that second half weighted I'm not exactly sure where you are with sales right now for the two new products you announced if that's going to starting to to you, but how would you break that down.
As we look at that 11 of 14% to break that down Okay. Yeah, John It's Pete good afternoon.
Okay.
What we've talked about is over the course of several years those pieces are 7% to 8% growth in the existing products, 2% to 3% from these two new products, we're introducing this year than 2% to 3% from the international expansion. That's how you get to the 11 to 14.
It was really good said you know a lot of the growth or the impact of both the new products in Japan is in the back half of the year.
So who knows.
That that ratio we have does not.
Not necessarily this year's ratio you would certainly get to the lower end of those ranges for both Japan and.
The new products and on the upper end, if not above the range on the existing products just for this year.
Given their second half.
The midyear to second half impact on the revenues.
Okay, and I mean, it almost seems like maybe that mid single digit number you gave in the first quarter will kind of continues through at the same store sales and then the other additions as well kind of add on to that perhaps as you get to the 20%.
Not exactly.
<unk> <unk>.
Because of that seasonality there is an odd growth you wouldn't think would be seasonal there is just more opportunity to grow even in the existing business as the year progresses.
Not as.
Distinct in that first half second half is things like those new products, but I would think.
I'd say it would be more high single digits.
Okay across the year.
Very good and.
Last one for me is on just the Covid restrictions. It seems like in recent days, even that a lot of these restrictions have kind of fallen off and I was wondering if there is any observations you've made so far in sales and marketing activities as a result of that change.
Well certainly the restrictions are lowering I'm going to let rohit.
To give you his perspective since he's interacting with their folks on the ground every day.
Okay.
Thanks, Tim that's a great question when we keep a close eye on this.
I think I'd see began this quarter and January obviously these restrictions have pretty high up probably the peak of restrictions we have seen during the course of the last at least 12 months.
And as I think I have to have enough and you hear it in the news every day those restrictions have come.
Come down improving the access.
At both patients and for our sales teams to be in front of fab customers, we still see pockets of where these restrictions are high.
For example, in VA hospitals and things like that.
And in pockets in specific Zip codes, but.
We adapt to them one of the great things is that we have adapted to the last two years of having to adapt to it and our business model, which says our continuum of care across the care settings of a hospital in wound care clinics.
That's about that's the private office allows us to approach patients imbalance and we might see them doing this different phases.
Access issues and so on so do you have in after that business model and flexible and being able to address the needs of the market Accordingly.
Okay. Yeah. Thank you all right that's good.
That's all for me.
Thank you.
Ladies and gentlemen.
We have reached the end of the question and answer session I would like to turn the call back to Tim Wright for any closing comments.
Well I certainly do appreciate everyone. Joining your continue interest is important I think we're off to an exciting 2022 and look forward to continuing dialogue with our investor base. Thank you.
Yeah.
Thank you. This concludes today's conference you may now disconnect your lines.
Right.
Okay.
Yeah.
[noise].