Q4 2021 Myomo Inc Earnings Call
Good day and welcome to the Biomarin fourth quarter 2021 earnings Conference call.
All participants will be in listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the star can you follow Advisee Roe.
After today's presentation there'll be an opportunity to ask questions.
To ask a question you May press Star then one on your telephone keypad.
To withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Ken go against with please go ahead.
Thank you operator, and good afternoon, everyone. This is Kim Garland F. L E K welcome to the Myanmar fourth quarter 2021 financial results conference call.
Earlier today, Miami issued a news release announcing financial results for the three months and fiscal year ended December 31st 2021, if you would like to be added to the company's email distribution list to receive future announcements. Please register on the company's website at <unk> com or call L. A and New York.
At 21283837, 77 and speak with Carolyn Curran.
With me on today's call from Miami, All I'll talk with John as Chief Executive Officer, and Dave Henry Chief Financial Officer.
Before we begin I'd like to caution listeners that statements made during this conference call by management other than historical facts are forward looking statements the.
The words anticipate believe estimate expect intend guidance outlook confidence target project and other similar expressions are typically used to identify such forward looking statements.
These forward looking statements are not guarantees of future performance and may involve and are subject to certain risks and uncertainties and other factors that may affect my most business financial condition and operating results, including the impact of the ongoing COVID-19 pandemic.
These and additional risks uncertainties and other factors are discussed in the risk factors and other qualifications contained in my almost violent.
Ladies and exchange Commission, including the Form 10-K for the year ended December 31st 'twenty, 'twenty, one which is expected to be filed shortly.
Actual outcomes and results may differ materially from what is expressed in or implied by these forward looking statements.
Except as required by law by Yamana undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call. It is now my pleasure to turn the call luggage in Myanmar, CEO , Paul The Delaware Paul. Please go ahead.
Thank you Kim good afternoon, everyone and thank you for joining us.
After I provide a business update Dave will review, our fourth quarter and full year financial results and discuss our financial outlook and following the financial update I'll give some closing remarks, and then we'll take your questions.
During our last call in mid November while we were delighted with our third quarter financial results I flagged a few short term issues that were impacting the fourth quarter I mentioned that we were dealing with some supply chain challenges as well as unexpected post deliberately claim denials by one of our larger payers.
I'm very pleased that despite these issues, we generated $4 million of revenue in the fourth quarter of 2021.
Was up 6% from a year ago and in addition for all of 2021, our revenues were $13 9 million up a substantial 83% from the prior year, while operating throughout the second year of the COVID-19 pandemic.
I'm also pleased to report that we have resolved the supply chain issues, thus, enabling us to enter 2022 with the ability to continue to grow our revenues and deliver mile pro devices to a larger number of patients this year.
Our fabrication contract or GRE was able to hire and train new technicians. So shipments returned to normal levels by December which will lead to 2022 revenues as insurance payments are booked.
We also announced in January the introduction of the next version of our primary product line. Some Io pro two plus two plus includes custom three D printing of the Asada components and we also began in house assembly of the units in our facility here in Boston, thus, reducing our reliance on outside suppliers.
And we delivered the initial bio pro two plus units to patients in early February .
With respect to reimbursement you may recall that we had a development is one of our larger insurance payers. This payer began denied claim payments. Despite the receipt of Preauthorizations and the deliveries of my approach to their covered beneficiaries as.
As a result, we had a submit appeals in order to be paid for our claims and we're continuing to operate in this manner with this payer.
We've been informed by this payer that upon review of the mile probe like a lot of new innovative medical devices. They still considered experimental and investigational, although we have written testimony, which contradicts dispositions along with substantial clinical research and industry experience with my electric technology.
They've told us that the denial of claims as part of a temporary internal monitoring process, but we do not have the timeline and when will this will be discontinued.
Since this change began in late September we've been paid on the vast majority of more than 50 Bonafide claims after successful appeals and only for appeals have been denied however, we're confident that these denials will eventually be overturned.
We also continue to obtain a significant number of new preauthorizations for their beneficiaries and we're continuing to deliver my approach to these patients. So right now it's business as usual for patients covered by this payer except that we must take that initial additional step in order to get paid.
Were pleased that during the last year, we added a significant number of new payers, including Medicare advantage plans commercial plans and several state Medicaid plans, which covered their first smile probe.
And in Germany mile Pro coverage continues to expand with more payers covering the device for their beneficiaries on a case by case basis.
Overall, we had a record year of my approach is approved by the patient's health insurance plans in 2021.
Our candidate pipeline, which was 808 at December 31 did not increase sequentially during the fourth quarter I believe several factors came into place.
Because of the greater competition for social media audiences during the holiday shopping season, the price for online ads went up and.
And we decided not to spend additional advertising dollars to generate the same lead flow.
This impacted our cost for pipeline add which approached $5000 in the fourth quarter. Instead, we are increasing advertising spend in the first quarter now wants to online competition has typically dropped off so that we get more bang for our Buck.
We also found that in Q4 patients and their families are more focused on the holiday season, they're not exploring a new medical treatments a pattern. We also saw in the fourth quarter of previous years.
In addition, we saw more candidates drop out or go on hold possibly due to the spike in Covid cases caused by the omicron variance that erupted late last year, thus postponing their interest in <unk>.
These behaviors resulted in fewer patient leads completing evaluations and a greater number of dropouts during the pre authorization process.
Lastly, we are consciously allocating a reimbursement resources toward patient cases, and appeals, where we believe the prospect of winning an authorization is highest unfortunately that means having to tell some patients we won't be able to service them at this time, resulting in the dropping them from our pipeline.
So as we enter 2022, we've ramped up our online advertising and we move more new patient prospects into our pipeline with just over 200, new candidates added in the first two months of this quarter in an amount approximately the toll number added for all of the fourth quarter of 2021.
And our expectation is for a lower cost per pipeline add in the first quarter compared to the fourth quarter.
In Q4, we recorded revenue on a record 107 units and received authorizations and orders for 104, New Microprose.
Direct billing represented 73% of total revenues in the quarter, reflecting higher sales from the VA in orthotics and prosthetics channels in the United States and from International markets as we prioritize deliveries we were able to complete in the fourth quarter, given the supply chain constraints towards channels, where we would recognize revenue upon.
Delivery.
Our international operations represented approximately 10% of our overall revenues and we're seeing strong growth in patient interest, especially in Germany.
And we've been successful and now having 52% of the German population covered by insurance plans that are reimbursed for one or more of my approach on a case by case basis.
With respect to our China based business, we negotiated some changes to our joint venture agreement with Riser medical which will increase our upfront payment as part of the technology license agreement, which was also executed together was the trademark license agreement.
Last year, we announced receipt of patents for our technology and design for China, and Hong Kong, and we recently announced a patent for our latest multi joint EMG activated orthosis in Japan.
This new patent will be valuable in establishing any future business ventures for the Japanese market.
We entered 2022 with a backlog of 154 units representing over $5 $8 million of potential revenue of note both our backlog and our candidate pipeline are larger than they were at the beginning of 2021. So we expect continued revenue growth. This year as we've seen good additions to the pipeline.
We've addressed the short term capacity insurance issues and we have a growing number of payers that are reimbursing for the my approach.
Medicare advantage plans, which cover 40% of seniors in the United States are among our largest payers and we continue to engage with SaaS and medical directors at the centers for Medicare and Medicaid services or CMS to establish a pathway for part B Medicare beneficiaries to gain access to my approach for their paralyzed.
Arms.
In 2022, we intend to employ a dual track strategy to try and speed access to the myopia for Medicare part B patients.
First we expect to submit a benefit category change requests with CMS in the second half of the year to try and have our benefit category changed from Jamie rental to embrace or arthrosis and in parallel we intend to submit claims as a rental to the D me Max before the end of Q2 and engage with their respective medical.
Directors on a case by case basis.
Does this pre coverage process will likely involve appeals, we cant provide timetables for either decision on a better food category change or for you need to obtain coverage as a rental on a case by case basis as it really depends on other priorities and projects with CMS, but we're going to continue to press our case for these patients.
To support further reimbursement to the mile Pro product line, New Independent Research reports were published last month by researchers affiliated with the VA in Cleveland, who started the my approach treating stroke traumatic brain injury patients and by the Mayo clinic for brachial plexus injuries, the clinical and functional outcomes they reported.
<unk> supports the case for use of the mile probe for individuals with chronic upper extremity paralysis, and there's more research underway at various other institutions as well.
Now I'll turn the call over to Dave Henry to review, our financial results in more detail and I'll come back and provide some additional updates and comments on our plans for the rest of the year Dave.
Thank you Paul turning now to our fourth quarter financial results revenue for the fourth quarter of 2021 was $4 million, which as Paul noted was up 6% over the prior year fourth quarter.
Direct billing channel accounted for 73% of revenue, which is down from 85% of revenue in the third quarter of 2021 and down from 77% of revenue in the fourth quarter of 2020.
This is due to channel mix favoring VA and international revenue as we prioritize deliveries that could become revenue given the supply chain constraints, we dealt with in the quarter higher revenues in these channels resulted in a lower sequential ESP.
We recognized revenue on 107 mile Pro units in the fourth quarter of 2021 up from 97 units in the fourth quarter of 2020.
The 107 revenue units 26, we're filling units, which means we received orders and authorizations in the same quarter that revenue was recognized.
46% of fourth quarter revenue units converted from the beginning fourth quarter backlog.
As Paul mentioned, we successfully manage the reimbursement issue with a large payer.
Though we've won appeals and collected payment on the vast majority of Bill claims at September .
The post delivery denials are expected to continue for the foreseeable future. This.
This means an extended aging of accounts receivable as the claims move through the appeals process during.
During the fourth quarter patients insured by this payer represented 26% of revenues compared to 32% in the third quarter.
Our backlog of units consist of insurance authorizations received but not yet converted to revenue as of December 31, 2021, our backlog was 154 units, which was down slightly from 177 units as of September 32021.
Year end backlog reflects 104 authorizations in orders in the fourth quarter, and 20 patients who exited the backlog without converting to revenue.
The reimbursement pipeline as of December 31 was 808, <unk> units, which reflects 221 additions to the pipeline during the quarter and 229 dropouts, representing about 25% of the pipeline entering the fourth quarter by.
By comparison, there were 331 additions to the pipeline in the third quarter.
As Paul mentioned, the lower number of pipeline adds in the fourth quarter was driven by seasonal competition and social media advertising during the holiday season, which drove it up.
Drove up advertising rates and a decreasing percentage of leads that we're able to convert into successful evaluations.
With respect to advertising during 2022, we intend to spend more in advertising in the first half of the year compared to the second half in the belief that our advertising dollars will be more effectively spend given past experience.
The drop percentage from the pipeline was higher than we've typically seen.
By comparison in the third quarter, 20% of the patients in the pipeline dropped out.
The increase in the drop percentage was driven by patient behaviors and an increasing number of decisions by the company to not go forward with patients during the appeals process as we prioritize our resources on Appeals, we believe we can win.
Gross margin for the fourth quarter of 2021 was <unk> 77, 4%. This is up from 73, 4% in the year ago quarter.
The increase primarily reflects a larger number of revenue units versus deliveries as you know.
Deliveries as when the company recorded cost of goods sold.
There were 72 my approach delivered to patients in the fourth quarter on which we recorded cost of goods sold compared with 107 revenue units.
As we've mentioned deliveries were negatively impacted by the supply chain constraints, we experienced early in the quarter, which assist been successfully addressed.
Operating expenses for the fourth quarter of 2021 were $5 8 million.
This is up 30% compared with the same quarter, a year ago, and primarily reflects higher research and development expense as we continued development of the <unk> plus our completed development I should say at the micro two plus as well as higher advertising costs.
Our operating loss for the fourth quarter of 2021 was $2 7 million compared with $1 7 million in the prior year's fourth quarter.
Net loss available to common stockholders for the fourth quarter of 2021 was $3 4 million or <unk> 52 per share.
This included a deemed dividend of approximately 600000, which I'll discuss momentarily.
As a comparison net loss available to common stockholders for the fourth quarter of 2020 was $1 7 million or <unk> 37 per share.
Adjusted EBITDA for the fourth quarter of 2021 was a negative $2 4 million compared with adjusted EBITDA in the year ago fourth quarter, which was a negative one 5 billion.
Turning to our full year financial results revenue for 2021 was a record $13 9 million up 83% over $7 6 million for 2020.
The 2021 operating loss and net loss attributable to common stockholders were $10 3 million and 11.1 million respectively. In these compared with $10 5 million and $12 2 million respectively for 2020.
Net loss attributable to common stockholders for both years included deemed dividends of approximately 600000, and 700000, respectively related to the re pricing and discounting of certain warrants.
Full year 2021, adjusted EBITDA improved to a negative $9 million from a negative $9 8 million in 2020.
Turning now to the balance sheet cash and cash equivalents as of December 31, 2021 were $15 5 million cash used by operations was $1 8 million in the fourth quarter.
Accounts receivable were $2 million as of December 31, 2021, compared with $2 2 million at September 32021, and about 900000 at December 31, 2020, the sequential decline was due to receipt of payments from a large insurance payer I mentioned previously.
During the fourth quarter, we received net proceeds of approximately $4 8 million from an agreement with select warrant holders from our 2020 follow on offering to exercise their warrants at a discounted exercise price of $5 per share discounting. The warrants resulted in the deemed dividend I mentioned earlier there were no shares.
Old under ATM facility during the fourth quarter.
With a cash position of $15 5 million at December 31, 2021, we believe our existing cash is sufficient to fund operations for at least the next 12 months.
Finally, turning to our near term expectations, we entered 2022 with a higher year over year backlog and are pleased that our fourth quarter supply chain challenges were resolved and we've been able to manage through the post delivery denials by the large insurance payer.
As a result, our revenue recognition practice with this payer remains unchanged.
With that backdrop, we expect revenue for the first quarter of 2022 to be in a range of $2 6 million to $3 million, which would be an increase of 11% to 28% over the first quarter of 2021 with continued year over year revenue growth expected for the full year 2022.
With that overview I'll turn the call back to Paul.
Thanks, Dave.
Our strategic goal is to assist more paralyzed individuals regained function with <unk> and to increase our market penetration in this new product category.
The strategic pivots, we undertook several years ago to do direct to patient marketing and direct billing are really paying off with strong revenue growth a higher ASP and expanded margins.
A key aspect of improving our operating efficiency is the digital transformation we've undertaken.
We've been a leading adopter and the one P industry of telehealth for patient evaluations therapist training and online support and with the new Micropro two plus we've added lower cost three D printing.
And the ability for our clinicians to use remote measurement technology, our clinicians can now measure a patient's arm and hand remotely and immediately transmit the specs to our sweeny component vendor. We expect this approach will enable us to offset the general inflation that we're all experiencing and maintain our margins while.
Reducing our staff travel costs and increasing productivity of our team.
This concludes the formal part of our presentation operator, we're now ready to open the call to questions.
Thank you.
We will now begin the question and answer session.
I ask a question you May press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys.
So let's draw your question, Please press star and team.
At this time, we will pause momentarily to assemble our roster.
Before we take the first question I want to mention that we are available for virtual and in person investor meetings. So please contact <unk> investor relations to set up a time, we plan to be in person at the Roth Conference in Dana Point, California next week, and we will be participating in the virtual Oppenheimer and company.
Later in the week, please contact Jay if you're planning to be there, we'd like to meet with us in person their contact information is on today's news release.
Okay, operator, we're ready for the first question.
Our first question comes from Scott Henry with Roth Capital. Please go ahead.
Thank you and good afternoon.
A lot to go through but yeah, let me just pick a couple of things.
I guess first with the reimbursement pipeline adds sort of the top of the funnel.
Hi.
It sounds like you said the first two months of.
The of 'twenty or first quarter, you've got about 200.
Which would imply you know around 300 for the quarter.
Last year it was about $3 86.
The question is do you think you can continue to grow.
Reimbursement pipeline adds do you expect to have a greater number of pipeline adds in 2022, then 2021. Thank you.
Scott absolutely we do we're off to a good start already in Q1.
As Dave mentioned, what we see is seasonality and social media advertising costs, we compete in the holiday season with lots of other advertisers looking at for that same audience. So we've shifted more advertising dollars in the first part of the year, but we've also looked at ways to improve that yield I expect.
Our cost per good evaluated patient candidate into the pipeline is going to go down in Q1 from what I've seen so far and you know our plan is to continue to grow that pipeline strongly. So we can continue the revenue growth we've seen.
But we're also seeing.
That seasonality were anticipating that.
An election coming up in 'twenty in the fall of 2022 that there'll be even more increased.
Competition for social media advertising in the fourth quarter and.
Even the third quarter as well that's why we're shifting a lot of our advertising spending to try to prioritize it in the first half of the year to stay away from that competition in the second half of the year and also we're going to be testing other forms of media.
Things like television for example.
If we can't.
Bolster lead generation, even further and also bring down that that cost per pipeline yet.
Okay and then.
Obviously, there's a lot of variability from quarter to quarter.
But this quarter it seems like you've got a higher number of of patients dropping out of the pipeline higher number dropping out of the backlog.
Would you say that that's variability or perhaps could you be getting a little more conservative given that you had the reimbursement issues.
Perhaps being a little more selective in your patients to try to avoid that or or do you think it's just noise.
I'll speak to the backlog I think the backlog drop rate was just a little over 10% which was.
In the in the ballpark of where it's been I think the pipeline drops were higher and I think Paul went through there is theres a number of reasons, we think why we can't.
We can't pinpoint one reason exactly we think it's a number of different factors.
But.
It's something that world.
Some of it we can control.
Some of it we can't like patient behaviors.
So we we just have to try to do the best we can with the leads that we generate and focus on improving yield.
Throughout the process throughout the patient's journey.
Okay and the shift.
I mean, it seems like it was such a strong shift towards direct billing and now its kind of went the other way in this quarter.
Same same question is that a trend or is that noise.
I think thats, a little bit noisy.
Noise as well because.
As we mentioned earlier, we because of the supply chain constraints, we re prioritize deliveries, where we could take revenue and so.
Direct billing for much of the direct billing revenue, we couldnt take revenue in the fourth quarter, if we delivered in the fourth quarter.
So.
That's a reason why you saw the direct billing percent come down and I would expect as.
As the supply chain noise cleans out here.
Fully in the first quarter.
That that that percentage should start to creep back up again, although Scott I'll add that there are other couple of good things going on there is.
With all the new research published by the VA.
Expanded a number of VA medical centers now from 40% to 60 that have purchased at least one mile probe further veterans in their care.
And as I mentioned in my remarks, we're really doing some strong growth, especially in Germany. So that is adding revenue growth as well to the company.
Okay, great and this repricing of warranty instead of legacy.
Issue is that contractually obligated or you know what why is that happening we just did that.
In October we did that to incentivize.
The exercise of some of the warrants that were in the money that were issued in the 2020 offering that we did.
And so.
That brought some cash into the company and took some warrants off the.
Off the rolls, which where we believe to be an overhang on the stock. So we felt it was.
Good thing to go ahead, and do but from an accounting standpoint, the discount of the warrants is treated as a deemed dividend.
Okay. That's helpful. That's that's.
Good clarification.
Okay, great. Thank you for taking the questions.
Our next question comes from Benjamin Hanger anyway.
Global Partners. Please go ahead.
Good afternoon, gentlemen, thanks for taking the questions.
As the <unk>.
Previously mentioned a lot of ground.
<unk> been covered but.
Just hitting on the pipeline.
Drops.
And one more fashion, you mentioned behaviors by patients.
What would kind of go into that bucket.
Are there things in there that we haven't seen historically.
I think.
Lot of it might be just.
I would throw things like COVID-19 into that omicron was.
Was.
Pretty prevalent in the fourth quarter, if a patient is not willing to go see their doctor to in order for us to be able to obtain.
The written order in a letter of medical necessity, we can move forward.
And.
So there is but there is a lot of that that happens and.
You'd be surprised how much of it happens actually and so.
It's something that we try to work through internally we're looking at.
Constantly looking at and assessing whether our patient contacts if we can improve those when we when our customer service people contact them.
Looking at our.
People that handle the.
The communications with the insurance provider and trying to keep.
Keep the patient.
<unk> and engaged throughout the process, which can last several months and so.
We're trying to constantly try to improve that to bring that down so it's not something that we're just.
Sitting by and looking at and wondering why we are actually trying to do things to try to correct. It.
Okay.
Yes.
But as I said, it's we.
We can only control what we can control right.
Yes.
Yeah.
Understandable.
So then.
Turning to the Q1 guidance as to what it takes to $3 million.
I believe there is.
$2 $7 million that you guys will be getting during the quarter from rise or does that show up as other income and then.
Any other color you can provide on the.
The China.
But.
Yes.
If the if the.
If the payment comes in it would be recorded as revenue.
<unk> that we gave was for product revenue.
<unk>.
And.
We've been told that.
We will be paid by March 31st I don't have the cash in hand, yet will.
Well, we'll report it when we get it.
Okay, So stay tuned and that would be something that you would.
Put out a press release or at least planned.
There will be some well communicated come out somewhat.
Okay.
Paul.
And then just wanted to kind of get it get any color you can provide on kind of the early reception to the mile Trop two slots.
Not only from a patient standpoint, but also the logistical improvement that that.
Should enable.
While we're ramping up our production of that so.
Production ramped up in February more orders are coming in.
Doing the fittings of patients.
We do have the new remote measurement kit, but I think we explained.
Actually that we are doing in person usage of that remote measurement kids, so that our field clinicians that hands on experience, we get that measurement right and then we will start to migrate where we'll just be able to ship out the briefcase to the patients in our crucial beyond a zoom call walking them through the process. So I'll take a picture of the.
Scan.
Scan the hand, and the net it comes right back into our model for the <unk> printing production, so that will save.
Hold on one more visit we used to do three visits with a patient in person.
<unk> then the casting of their arm and then the city. So as we migrate to a greater percentage of our orders being remotely measure we will have eliminated two out of those three visits so that means our staff can be more productive.
Shorter cycle time and lower costs.
Okay, and do you think that helps.
Ultimately converting them to revenue units.
The shorter cycle time that is.
Well, yes, that's the time from when we actually get the insurance authorization. If I can just ship a measurement kids do them overnight.
Measure them the next day.
A lot faster than if we have to set up an appointment to see them, which it might be two weeks out right. So that's part of that cycle time reduction and also I don't have to then ship a cast to GRE, our fabricator in Ohio that takes a couple of days they used the fabricated ship it back to US here in Boston for final inspection.
We're basically are going to be compressing the cycle time.
Okay got it.
Just one more follow up.
Do you have any idea on how long the tech transfer might be once that gets underway.
It's going to be.
It'll be an ongoing process really I mean.
Initially what they'll do is.
We'll start with devices that they can supply to.
Our rehab hospitals and other facilities, where they can.
Start to develop a pipeline of patients that will actually.
They could actually deliver the device to once they have the equivalent up there.
FDA approval to begin manufacturing so.
That's their initial process and so it will be first teaching them how to build these these units that will go into the hospitals and that will.
Go forward with actually than the two plus after that.
Okay.
Got it.
Thanks for taking the questions gentlemen, that's it for me. Thank you.
Yes.
Our next question comes from Jim Sidoti with Sidoti <unk> Company. Please go ahead.
Hi, good afternoon, thanks for taking the question.
With the direct bill locations when do you recognize revenue.
Or.
For most of the for most insurers and I will say its about 60% of the direct billing revenue we recorded a payment.
For the rest of that.
Primarily that large insurance payer that we've been talking about where we have.
<unk> had the.
The denials of post delivery claims, we do recognize that revenue at delivery as well so for the <unk>.
That's the only revenue in the direct selling channel that will recognize that delivery.
Okay.
Everything else is a payment.
And in the quarter you made the decision to ship more to the VA customers because those those shipments you recognize you.
You recognize those orders.
Shipment as well is that correct.
Delivery as well as in the in our in Germany as well.
Germany was more than 10% of revenue in the fourth quarter.
So you are able to grow the gross margin despite that shift towards the lower paying VA.
Yeah, the volume went up.
Well there is a there.
There was a disparity between the number of revenue unit. So we are able to take hold.
Able to take revenue on which was 107 and the number of deliveries was 72. So in essence, we had 35 units where we.
Cost of goods sold in the prior quarter.
In prior quarters, but we took revenue this quarter.
Okay. So those 35 units were direct billing payments to insurers that you don't recognize revenue.
Until you actually get the payment.
That's right.
Okay, Alright that makes sense and then.
On the advertising cost.
SG&A expenses ticked up to about $5 million in the quarter and I assume that's as a result of the.
The increase in advertising costs does that kind of the new number going forward around 5 million yes.
It's going to be.
I would say that yes, I mean advertising costs in the <unk>.
In the fourth quarter were $1 1 million and they were $3 5 million for the full year. So by by comparison for the full year last year. They were $800000. So you can see what.
Companies like Facebook and Google, If you're wondering where there where their earnings are coming from when you look at that number.
Yes.
Yeah.
Alright.
I think this is.
Hum.
One of the first quarter.
Well I guess you would utilize quota to when you had the supply chain issue is this going to be the new trend to provide quarterly guidance for one quarter forward.
We gave we gave guidance this quarter because we're so far end of the quarter.
And we have a fairly good idea of where things were going to end up and so.
So it's a decision between you say nothing.
Have people wonder why Youre, saying nothing when you are so far in the quarter or just give a range and so we landed on giving a range.
Okay alright, thank you.
Yeah.
Our next question comes from Edward <unk> with Dundee capital. Please go ahead.
Thank you for taking my question. My question is on your international business is it as strong as your domestic business.
I think in term I mean, well, it's an overall revenue dollars is still the U S is still young.
Little almost 90% of revenue, but <unk>.
International is growing we were it was more than <unk>.
A little bit more than 10% of revenue for the full year, we're adding head count there.
The pipeline is growing there and we're looking for more growth over there.
In 2022, we're also seeing other comp, but other locations, Italy, Australia.
We've got units going out.
Going out to those places as well so.
We're optimistic about the international market and certainly look to grow it.
Because we do get.
From the standpoint of sort of a hierarchy of asps.
There.
Overall, the best ASP channel, except for the U S direct billing channel so.
Well you guys maybe spend more resources there.
Yes, yes.
As I mentioned, we've added heads and we expect to add more head count there in 2022.
Great well, thank you for answering my questions and good luck. Thank you alright, thanks Ed.
Our next question comes from Kyle Voigt with <unk>. Please go ahead.
Great. Thanks, good evening, and thanks, probably updates maybe I'll start.
The.
The the large insurance payer that had begun to deny preauthorize claims Paul.
I didn't quite catch it so it.
It sounds like you've been able to appeal those and then get paid.
Except for maybe for claims could you just walk through that and do you plan on appealing now again, just kind of curious yeah. So there's been more than 50 since September since this all started.
We've filed more than 50 claims with this insurer of those 50 claims the vast majority of them have been paid.
Some that haven't been paid yet for the for for.
For claims that were filed in the January February they might be.
Still open and they haven't been denied yet.
But then.
Except for those for that.
The appeals were denied everything else has been paid.
Either in whole or in part in the FERC.
People that for claims that have been paid in part we're working on getting the rest.
So.
From that standpoint, the whole process is right now just an exercise and having to go take an extra step in order to get paid for the for that haven't been paid we expect that we've looked at that.
The reasons that the denials are happening and we don't think they are valid and that's why we think that those will ultimately be overturned and so.
It's a process that we're going to continue to monitor its unfortunate that we have to go through this but.
The insurer told US that this was they told US it was a temporary situation.
And we've worked well with them in the past and hopefully.
This hopefully this situation will end up resolving itself and we'll just go back to.
Doing business as normal but in the meantime.
Theyre, putting us theyre, making us jump through these hoops, but they continue to preauthorize new patient so.
So right now it's just as I say, it's an exit.
It's an extension of our aging right now.
Right.
Got it that makes sense.
<unk>.
Is it like four times you can appeal at five.
The the process.
The post.
This post delivery appeal process is new to us.
So I'm not sure of the exact number but generally in the when you are trying to appeal and authorization.
Your appeal.
Two times and then you go to an ALJ hearing.
Yeah.
Post denial payments, it's been one appeal and again the vast over 90% of the cases its been paid after that first appeal.
Got it.
And is this.
And your assessment, just kind of a glitch or is it is it more broad across other.
Goodbye.
This insurer told us.
We were expecting awaiting a.
A few months ago that maybe there was just a change in the system that was done by somebody that was sort of all kicking out the our claims.
A systemic way what we've come to understand is that the insurers.
As is actually there.
What they did it wasn't done by.
Mistake, it was done consciously and they're just making sure that our claims are thoroughly reviewed before they're paid because it is still that theyre still there policy that our device as experimental and investigational.
Got it but I mean the <unk>.
Access rate has been basically 100% so.
Okay, Okay got it.
Yes.
Again, continuing to Preauthorize and we've got written testimony from ALJ hearings.
Considered experimental and investigational anymore.
We've already had.
Of course, what's 500, plus devices are reimbursed by various payers and in the field.
No for sure no that makes sense.
And.
And just switching so you moved fabrication in house.
And.
So what are the kind of the margin improvement implications for that and maybe more broadly.
What else do you anticipate in the future may be bringing in house or are you kind of good to go for a while.
With respect to the two plus.
I think what will for the first half of the year I mean, we have seen some price increases everything from laptop computers to transportation costs et cetera.
So whatever cost reductions that are in bedded in the in the material cost of the two plus for the probably the first half of the year are being offset by those price increases that we've already seen.
We're back to sort of status quo any cost improvement, we expect will occur starting in the second half of the year after our clinicians get get fully comfortable with the remote measurement devices.
And then and then begin to actually using them on a remote basis and not traveling.
See a patient once that happens we.
We think that we can save.
Upwards of $1000 per unit.
Once that once that travel is eliminated.
Got it that's helpful. I appreciate that.
Well, great Great update I appreciate you taking my questions.
Sure. Thank you.
We have time for one more question that question comes from Paul Miller.
With noble equity. Please go ahead.
How much of the accounts receivable balance is from this and sure that youre going back and forth with.
It's around.
I'm going to guess the number off the top of my head, it's somewhere in the neighborhood of between 30% and 40%.
Okay.
And on average how long is it taking too.
Collect from this insurer.
Right now from the time that we submit a claim.
It's taking at least two to three months.
Okay alright, thank you.
This concludes our question and answer session I would like to turn the conference back over to Paul <unk> for closing remarks.
Well, thank you operator.
In closing it appears that the worst of the pandemic is now behind us.
And we hope that the military conflict between Russia, and Ukraine can be resolved, we do not are not directly impacted by this conflict since we don't have any customers or suppliers in either country. We.
We do provide an essential product to people suffering from neurological disorders, and upper limb paralysis, and we will continue to focus on reaching more patients receiving more buying from payers and ultimately from Medicare part D and additional state Medicaid plans as well.
Once again, thanks for your time and your interest in <unk> have a good evening.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.