Q4 2021 Avinger Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the fourth quarter and full year 2021 results call. At this time all participants have been placed on a listen only mode and we will open the floor for your questions and comments. After the presentation. It's now my pleasure to turn the floor over to your host Matt Kreps.
Sir the floor is yours.
Thank you John and thank you everyone for participating in today's call I'd like to walk you to <unk> fourth quarter and full year 2021 conference call joining.
Joining us today are having jurors CEO , Jeff the landscape and Chief Financial Officer, Mark Weinstein.
Today, <unk> released financial results for the quarter and year ended December 31, 2021, a copy of the release is posted on the average your website under Investor Relations.
Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of $19 95.
The statements contained in this call that are not statements of historical fact should be deemed to be forward looking statements. All forward looking statements, including without limitation, our future financial expectations are based on our current estimate and various assumptions.
Yeah.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
You should not place undue reliance on these statements for a list and description of the risks and uncertainties associated with our business. Please see our Form 10-K and Form 10-Q filings with the Securities and Exchange Commission.
Average or disclaims any intention or obligation except as required by law.
Our revised any projections or forward looking statements, whether because of new information future events or otherwise.
With that I'd like to now turn the call over to Jeff.
Thank you Matt Good afternoon, and thank you all for joining us Avon's, you've made significant progress across the company in 2021.
We grew revenue by 16% fueled by the launch of our new Tigereye CTO crossing catheter early in the year and the growth of our CTO business overall, which increased 47% year over year.
This increase in revenue allowed us to improve gross margin by four percentage points during the period and we expanded penetration of our platform with the launch of 23, new accounts during the year, including eight new accounts in the fourth quarter.
In addition to our commercial progress we took important steps to provide future growth opportunities for the company in.
In 2021, we filed five 10-K submission sport two strategic initiatives and in recent months announced FDA clearance for both applications.
November we received pre marketing clearance to add and in stent restenosis clinical indication for Pam tariffs based on the outstanding clinical data from our Insite trial.
<unk> is the only directional atherectomy device to have received this highly differentiating indication.
In January of this year, we announced FDA clearance for our light box three next generation imaging console, which brings significant advancements to our platform in a compact and portable form factor.
We believe that both initiatives will prove to be significant growth drivers for <unk>.
I am proud of how the team has performed in the face of the continued challenges presented by COVID-19 resurgence during the year.
The emergence of the Delta variant in the third quarter, followed by the onset of the Omicron variant late in the fourth quarter led to hospital restrictions and staffing shortages that limited procedural volume in the second half of 2021.
While we have started to see signs of improving market conditions. In recent weeks all micron has negatively impacted procedural volume and revenue in the first quarter of this year.
We are optimistic that the recent improving trends will continue and the procedural volume will return to more normal levels and allow the company to return to growth in the second quarter.
As we look ahead in 2022, we are continuing to invest in strategic initiatives to expand penetration of our platform for the treatment of P. A D and provide new catheter usage opportunities, including the development of our first product for the treatment of coronary artery disease, where C E D.
First we plan to expand availability of our Lightbox III next generation imaging console to full commercial launch in the second quarter, which we believe will energize existing users and bring efficiency to our new account acquisition activities.
Second we expect to file a five 10-K applications for two new catheter line extensions in our peripheral product portfolio designed to broaden the appeal of our product line expand our user base and drive volume growth.
And third we have initiated a formal program to expand our platform for the treatment of coronary artery disease with the development of the first ever image guided CTO crossing catheter.
We believe expansion of the coronary market provides a transformational opportunity for avinger due to its large addressable market existing reimbursement profile and the compelling clinical advantages of our luma vascular approach.
Let me share some details on these initiatives.
We're excited about the potential for our new Lightbox III imaging console to positively impact our business. The Lightbox III is a compact and portable console incorporating an advanced solid state laser for high definition or <unk> imaging, a more powerful computing platform and a redesigned software assist.
With an intuitive user interface design for procedural efficiency.
In February leading advanced interventional cardiologists and Premier hospitals in Chicago in Arkansas successfully completed the first cases with the Lightbox III.
In March we expanded our first case experience with six additional hospitals in the northeastern Ohio, using the portable configuration of the system.
Since initiating the field evaluation program nine physicians have performed 35 image guided CTO crossing in atherectomy procedures, with our Tiger I, and Pantera catheters, and a wide variety of lesion types and anatomy.
<unk> feedback has been extremely positive with users commenting on the enhanced imaging ease of use and increased efficiency of the new console.
Based on this positive feedback in the performance and reliability of the console in real world clinical conditions, we plan to expand the lightbox three to full commercial availability in the second quarter of this year.
As part of this expansion, we will make portable configurations of the system available to our sales territories for use in onsite demonstrations and evaluations to support catheter utilization and new accounts.
As we continue to build inventory, we will make the lightbox III available for permanent installation and sales to new accounts as part of a defined evaluation process as well as provided upgrade options for existing accounts.
With its dramatically reduced size and weight lower cost and enhanced capabilities. We are confident the lightbox III will play a crucial role in fulfilling the potential of our lunar vascular technology for both peripheral and coronary applications. We're thrilled with our experience with the new console, so far and look forward to reporting.
Our progress with Lightbox three in the coming quarters.
Regarding our new product initiatives, we've continued to make significant progress in the development of two new catheters for the treatment of P. E D.
We believe these new products will increase usage with current positions and broaden the appeal of our product line to new users.
Our first new product in development as a line extension of our Tigereye CTO crossing catheter for the treatment of fully blocked arteries.
This new device builds upon our experience with our current Tigereye catheter. It has an integrated spinning out or chip for tough caps and calcium and advance shaft design for push ability and torque response in a challenging environment and a three marker imaging system to facilitate consistent image interpretation across our platform.
We expect to submit a five 10-K application for this innovative new device in mid year 2022 with anticipated commercial availability in the second half of this year.
Our second new catheter in development as a line extension of the pen Terrace family of image guided atherectomy devices.
This new device is designed to provide a more streamlined approach for physicians and expand our capabilities for the treatment of larger vessels, such as the SFA and popliteal arteries, where the majority of procedures are performed.
It utilizes a proprietary design for plaque acquisition without the need for a balloon and is designed to operate at higher rotational speeds and challenging plaque.
This new Pan theorists line extension also adds rotational control for efficient Guidewire management, and a modified plaque management system for tissue packing.
While we've experienced some recent challenges regarding delivery times from suppliers on parts, which has impacted our schedule. We anticipate filing a five 10-K submission for this new device in the second half of 2022, which we expect to lead the commercial availability in the first half of 2023.
On a very exciting note we've advanced our initial development efforts for our first entry into the coronary market and image guided CTO crossing catheter for the treatment of C E D.
This revolutionary new device Leverages. The advances we've made across our platform to address a massive potential market with unmet clinical needs for a safe and reliable patient oriented solution for what can be complex expensive and uncertain procedures.
It's estimated that approximately 50000 CTO PCI procedures are performed in the U S. Each year at a growing number of hospital centers.
T O P. Ci crossing is a highly complex procedure, requiring specialized and demanding technique with a steep learning curve.
And the use of multiple devices. These procedures also require extended time under fluoroscopy, which results in high X Ray radiation exposure and contrast burden problematic for both the medical team and patient. In addition, an estimated 200000 plus highly invasive coronary artery bypass grafting.
Where cabot's the surgeries are performed in the U S annually with estimates of up to 30% of these procedures related to the treatment of coronary C. T. OS. We believe this market provides an attractive target for.
For our proprietary new image guided system that would make a percutaneous approach more accessible and reduced the need for extended time under fluoroscopy radiation.
Percutaneous CTO crossing in the U S already has high reimbursement of 10 to $16000 per procedure. In addition, we anticipate that our high resolution Oc T guided catheters with anticipated diagnostic and measurement capabilities would qualify for existing OTT diagnostic imaging re.
Amberson in the coronary arteries.
We believe that an image guided catheter designed for crossing efficiency and the need for fewer support devices combined with an attractive reimbursement scenario provides the opportunity for a highly positive clinical and economic value proposition.
Our development efforts are focused on catheter with designs that combine real time, Oc T guidance with precise control and steer ability to facilitate an integrated approach and allow physicians to safely and efficiently cross coronary C. T OS.
Avoiding damage to the vessel wall.
We're designing our first coronary CTO catheter and a low profile four French size to provide for accessibility and maneuverability and small coronary vessels similar to averages peripheral catheters are first coronary device will incorporate a precise measurement capability ideally suited for physicians to properly size be.
<unk> stents prior to placement, which is critical for optical outcomes, we anticipate the U S regulatory pathway for this new device to be a five 10-K submission supported by data from an <unk> clinical studies.
In addition to the progress in our development activities. We've also meaningfully advanced our clinical initiatives over the past year.
We're continuing to build the clinical body of evidence in support of our alumina vascular approach, which we believe is critical to driving adoption.
Groundbreaking clinical data from our Insite trial evaluating <unk> tariffs for the treatment of in stent restenosis or ISR was presented at the Veeva clinical conference in October .
The positive data from this <unk> study provided the basis for our successful five 10-K submission to expand the pen therapy clinical indication to include the treatment of ISR.
With 200000 stents deployed in the lower extremity arteries annually and a high propensity for restenosis over a two to three year timeframe ISR as a large recurring and underserved market that will continue to grow as more sensor placed each year.
Our Pantera system provides the ability to visualize and direct treatment, while avoiding the stent struts, which contributes to positive patient outcomes and provides a compelling competitive advantage in a challenging market.
We're very proud of the data generated in the Insite trial Pentair has provided an 82% luminal gain following the procedure.
93% of patients in the study were free from target lesion Revascularization or T. L. R. A measure of restenosis at six months post procedure and 89% were free from T L or at 12 months.
Both results are significantly better than those achieved by other atherectomy devices in their clinical trials for ISR.
We've also made progress on our image be Teekay clinical study image be teekay as a post market study evaluating the safety and effectiveness of Panther assess V for the treatment of below the knee lesions in a real world clinical setting.
We anticipate enrolling up to 60 patients in the study with patients evaluated 30 days six months and one year post procedure.
We're currently enrolling patients at two key opinion leader sites in the U S and are in the process of expanding the study to include two leading clinical centers in Germany.
Most patients enrolled to date suffered from critical limb ischemia or CLI. The most severe form of P. E D.
We expect to complete enrollment in 2022 with interim data results available for presentation later this year.
We're excited about the clinical outcomes, we've seen to date and the insights the physician investigators are already gaining from the high definition visuals visualization of below the knee disease provided by our Pentair SP catheter.
We made important strides to advance our business in 2021 and we're excited about the potential to expand our platform with the commercial launch of Lightbox three this year.
The filing a five 10-K submission for two new PID catheters, and our continued progress on the development of our first coronary product we remain committed to our mission of radically changing the way vascular diseases treated and supporting physicians and providing the best possible care for their patients at this point I'd like to.
Mark to cover our financials, and then I'll return for Q&A Mark.
Thank you Jeff total revenue for the full year 2021 was $10 1 million an increase of 16% from the prior year.
Fourth quarter revenue was $2 4 million, reflecting the impact of hospital access limitations and staffing shortages due to a surge in COVID-19 cases across the U S, which impacted medical device companies supporting hospital based physicians.
Catheter sales increased approximately 20% year over year, a good indicator of user case growth as we continue to focus on increasing utilization with strong market interest in our Panthers SVP and CTO catheters.
These catheters are more likely beams for the treatment of CLI patients, whose procedures are less likely to be elective.
Growing our recurring revenue stream continues to be a core element of our commercial strategy.
Looking at the first quarter of this year, we have seen the continued impact of the omicron variant on case volumes as elective procedures were restricted or deferred in the first couple of months.
As Jeff mentioned, we are seeing an improvement over the last few weeks and usage levels recovering.
Gross margin for the FERC for the full year 2021 was 34% our highest annual gross margin in five years and 30% in the fourth quarter.
<unk> contribution margin from incremental sales of disposable products, it's far higher than our reported gross margin providing important leverage in our operating model as we scale the business to drive more revenue continued margin expansion is critical to our long term success.
Operating expenses for the fourth quarter were $5 3 million consistent with the third quarter, reflecting our continued investment in our R&D and clinical activities and focus on our sales and marketing team to drive case activity and adoption of our platform.
We have seen significant strategic benefit from our R&D investments, including our next generation catheter solutions and more recently on new Lightbox imaging console, we will continue to invest in development activities in 2022, as we look to expand our.
Product offering to drive revenue growth and make progress on our coronary CTO crossing device.
Net loss attributable to common shareholders was 6 million in the fourth quarter consistent with the prior quarter.
Adjusted EBITDA, which is a non-GAAP measure that excludes certain excess and obsolete inventory charges depreciation and amortization expenses stock compensation and other items as noted in the tables in today's press release was a loss of $4 3 million compared to a loss of $4 $1 million in the preceding quarter.
A copy of the reconciliation from net loss to adjusted EBITDA can be found in today's press release, which is also posted on our website at www Dot adventure Dot com under the investors section.
Cash and cash equivalents ended the year at $19 5 million. Please note that subsequent to year end, we raised $7 6 million in gross proceeds through a preferred stock offering in January 2022.
In March we execute a reverse stock split which allow to allow us to regain compliance with NASDAQ stock market minimum bid rules as discussed previously we are in a strong cash position and have the resources, we need to fund our operations into 2023 at this point I'd like to turn the call back to Jeff for Q&A. Thanks, Mark.
Avid you're has significantly advanced its strategy over the past year, and we're well positioned to continue our efforts in 2022, we remain focused on driving adoption and utilization of our luma vascular platform as well as the continued advancement of our technology and both the peripheral and coronary market.
We're starting to experience an improvement in market conditions as the impact of the omicron surge lessons and we're focused on executing our strategy to grow our business and advance patient care through the deployment of our proprietary products and technologies at this point, we'd be happy to take your questions.
Yes.
Thank you ladies and gentlemen, the floor is open for questions. If you have any questions or comments. Please indicate so by pressing star one pressing star to removing from the Q shows your question be answered and lastly, while posing your question. Please pickup your handset of listening on speaker phone to provide optimum sound quality. Please hold while we poll for questions.
And the first question is coming from <unk>.
Mark Weisenberger from B Riley Mark Your line is live.
Thanks, Good afternoon I appreciate you taking the question.
Can you frame the impact on clinician workflow with the light box three relative to the.
Maybe more cumbersome lightbox $2 50, and as well from the perspective of your field staff.
Yeah. Thanks, Thanks, Mark Thanks for the question I had the opportunity to be in the field for many of the first cases with the Lightbox III and there's really two ways. We approach. It one we installed the box in two very important accounts in Chicago and in little Rock, Arkansas, and so we had an opportunity to experience.
The utilization in kind of an install type situation first of all the the ability and the pathway to get into a case with so much more efficient and so much faster due to the improved and simplified user interface.
Second of all.
Although we expected a reaction and a positive feedback as we've seen in our early you know kind of physician feedback and in sessions with the light box due to the small size and small footprint, what I really underestimated was just how impactful the improvement in the imaging was.
I had to sum it up into one word that the physicians and their staff said when they saw the lightbox images and these are people who'd lightbox three images, who would work quite a bit with the current platform. The one word would be Wow. There was just such a clarity of the characteristics of the artery wall.
All of the plaque in the different kinds of plaque morphology, making image interpretation easier, but also making the whole procedure seemed to just slow a little a little better.
The advance was was notable the ability to connect into the image Bank, where you can have the presentation not only on the Lightbox three but also on the image Bank next to the Fluoro image.
We're all very very positive.
Improvements and and and they are I think very very well received by the physicians we did over.
But 35 cases, probably more now since we're adding new cases every day on the Lightbox three in eight hospitals and the device.
Perform virtually flawlessly flawlessly through all of those cases, so that is always a test when you get out in the real world setting. The other thing that is extremely different about the lightbox. Three is the portability of the device. So six of the hospitals that performed cases, so far with the Lightbox three utilized the law.
Eight Bucks three it was brought in that same day very easy transport by the sales rep or the clinical specialist set up in minutes.
And again very efficiently able to get into a case. We think this adds an important dynamic because now instead of having to go through a capital contracting even for a placement.
Process to to have a new account evaluate or try catheters, we can get in there very quickly.
We even had in our Philadelphia area, one of our sales professionals are clinical.
Leaders was able to take the Lightbox three into three hospitals in a single day that would be unheard of the box has been on an airplane and going out to Ohio to give a couple of kols in that market experience with the device. So it totally changes the dynamic of how we can engage with new accounts, while providing absolute.
First rate high definition of C T imaging.
That's really helpful.
I guess, besides the clinician and field staff.
<unk> could you talk about kind of the manufacturing and logistical impact.
For you guys and the process on the cost changes that youre going to experience.
Yeah, So I'm going to go ahead and ask Mark to answer that question since the that process reports up through him yes.
So obviously the one of the key factors of the Lightbox three was the fact that we could bring down the actual capital cost in.
In addition to a lot of the benefits of Jeffs already noted so for US our goal was to basically have a more flexible arrangement in order to us to assemble a box and actually be ready to fulfill orders. So were actually utilizing both in house and external methods to actually assemble manufacturer and actually do order fulfillment. So we're really excited about the fact that.
We've added this level of flexibility to our our internal operations. So that we can be much more fluid in terms of our ability to respond to potential orders or opportunities to respond to physician usage. So I think you'll be seeing some some very positive things about the lightbox three hopefully in the near future.
Understood very helpful. Thank you.
You did talk about the impact of omicron late in the fourth quarter and early in the first quarter.
When I look back at the first quarter of 2020, there was a 12% sequential decline from the fourth quarter of 19.
And then really when calls it really first hit in the second quarter. There was a 35% sequential decline from Q2 'twenty from <unk> to 'twenty.
How do we think about the kind of sequential move from the fourth quarter of 2021 into the first quarter of 2022.
You know it has been an interesting experience for all of US as we as we deal with the continued challenges and unpredictability of Covid.
Absolutely as you said, we were significantly impacted by Covid.
In the first part of 2020, and we started to show a strong recovery of some of the deferred procedures came back in the second half of 'twenty.
'twenty and in the first half of 2021, we printed two very strong growth quarters.
And as we entered into the third quarter of course, there was the impact of the Delta variant and then coming into the fourth quarter. You know the the early months of the fourth quarter were very strong from a procedural volume standpoint, but as you mentioned late in the quarter Omicron really reared its ugly head we've.
Seen that continue through most of the first quarter. It was really not until the latter weeks in this quarter that we've started to see improvement, we're very kind of optimistic and hopeful that the improvement in volume will continue through the second quarter and I think in many way we're positioned.
Well for a recovery in Q2 as the elective procedures return so.
Maybe history repeating itself a little bit here, but the impact in the first quarter.
Was more significant than it was at least in our experience than it was in the fourth quarter.
Got it that's helpful.
Two more for me I think.
There were some.
Each schedule changes to the office based labs and I'm wondering have you seen.
That impact kind of where procedures are taking place and how do you expect that to evolve throughout 2022.
Yes.
So on the reimbursement side, you're right there was about a 15% reduction in OBL.
Reimbursement, which was of course better than the initial 22% proposed and there also was some indication that the reimbursement will continue to decline over a four year transition period. The hospital reimbursement as you know was not impact and remains strong in many ways we are less impacted.
Approximately 80% of our business is in the hospital market and we do see.
A lot of potential not only to grow in our existing hospital accounts with the ability to add new hospital accounts.
I think the OBL reimbursement at least what we're seeing is it's putting more price pressure on a part of the market that already had a lot of price pressure and so our response to that is to continue to support our current OBL accounts. You know obviously, we are with our Panther <unk> SV device.
And our seat and our CTO crossing devices, we treat CLI patients and that is very very meaningful and impactful in the hospital market.
And those two products overall accounted for over 50% of our revenue and grew strong growers year over year and.
For for our business.
We don't see utilization of our CTO specialty devices in the OBL market. So the reimbursement cuts in the OBL will not impact our R. R.
Our CTO business. So overall I think what we're seeing is more price pressure.
In the OBL, pushing us to focus more and more on our core hospital customers in our core regional areas.
Does that answer your question Mark.
It does yes I appreciate it and then just the final one kind of around similar dynamics I think at the end of last year, we saw IDL payment increases associated with that atherectomy have you seen any impact from that dynamic and then how do you think it plays out in 'twenty two thank you.
Yeah, that's an interesting one in and I'm sure, it's something that that others, including yourself have been exploring in the context of shockwaves presentations, but.
There had been a proposal made to the a M. A CPT panel twice now for a complete recast of the lower extremity codes, which would include providing add on reimbursement for shockwave.
That has been deferred twice now and it's been deferred.
Postponed indefinitely coming out of the last meeting.
So I'm not sure when that would actually come back to play there has been other reimbursement codes added.
For Shockwave through CMS I'm not sure how much that reimbursement is flowing through to actual payment.
I would expect that and in many cases, it is but but I think where they would really benefit in our markets is through the addition of a CPT code.
In many ways, we are very very complementary to shockwave, we primarily treat soft plaque mixed black and mild to moderate calcium and we work inside the lumen Shockwave, primarily targets medial wall calcium and is exclusively focused on.
Calcified vessels, so as we look at Shockwave, we we see that as a complementary technology of course, we're all competing for the same reimbursement dollars, but other companies who are more focused on that calcium space.
Thank or potentially going to be more impacted than us.
Understood. Thank you very much.
Once again, if there are any remaining questions or comments. Please indicate so by pressing star one and the next question is coming from Nathan Weinstein from Aegis. Your line is live.
Thank you and thank you, Jeff and Mark for taking my questions.
Very nice thoughtful questions from the previous analyst and.
We've spoken about this before but maybe we could just hone in on the coronary market and you could help us think about both the size of the market and kind of what the relevant opportunity would be for avid.
Yeah. So so just from a thanks Nathan it's good to good to talk to you from a just from a procedural size of the market currently even with the challenges of treating C. T OS on a percutaneous basis, there's about 50000.
CTO PCI procedures performed in the U S. Each year now those are very challenging multiple wires multiple support catheters balloons devices are used they can take and this isn't an exaggeration four to five hours under fluoro with a lot of contrast used in the <unk>.
Asian, So a very challenging procedure and that does provide limitations on who will do them and and.
And even with the strong reimbursement that's quite an investment to make in our percutaneous or crossing of the C. T O.
There's about 200000 cabbage procedures performed in the U S. Each year and our best estimates at about 30% of those are related to coronary C. T OS and so our whole value proposition here is if we can empower more physicians to efficiently and safely because of.
The advantages of real time imaging and the precise control of our catheters.
Cross a CTO using a a kind of the first.
The first method, that's almost always tried an integrated approach, which is which is a much more efficient that we can expand the market for not only CTO PCI and take some of those cabbage procedures, but also bring more interventional cardiologist into play here and being.
Willing to take on these procedures and so we're very excited about the progress we're making with the device we had an advanced user summit.
In January where we had 13 of our top users and Kols and several of them actually are interventional cardiologists, who who do treat C. T OS on a percutaneous basis, then and based on the feedback that we received at that meeting based on the feedback we received from our other interactions with our physician advice.
Others, who are focused on the coronary CTO space, we really believe we're on the right track with this product. It also leverages a lot of the learning and the advances we've made in our platform not only of course with our new Lightbox three with the for the platform overall and this improvement in imaging, but also in our Tigereye CTO crossing.
Catheters are current iteration and the one that's in development.
So for US we think this is an opportunity very much to create a market. There are very few devices used currently is specialty devices for crossing C. T OS and certainly none that incorporate real time imaging. The other advantage we have in the coronary market. In addition.
At a high reimbursement that already exists for C. T. O is that the interventional cardiologists, who are treating coronary disease are much more familiar with Oc T imaging, that's where they are currently as reimbursement for diagnostics. That's really the use occasion for abbott's dragonfly device. So there.
I'll be a we believe a shorter learning curve on an image interpretation and be able to integrate the device into their practice.
We are of course early in the process, but we're excited about where it's going we're very excited about the opportunity in and we look forward to sharing progress as we move forward.
Wow, great. Thanks, Jeff I appreciate the color on the coronary definitely it seems like an interesting.
To watch for Avon's, you're going forward.
Maybe just for a market question to follow up on a few of my next questions here honestly coming through some color and then just wanted to get a sense from you whether you saw hospitals and OBL, it's kind of in good shape financially or they're in good shape and what are they saying in terms of maybe some pent up demand.
Yeah. So so you know I think one of the issues that hospitals are dealing with in addition to the deferment of elective or had been a deferment of elective procedures is there are and I am sure you've heard this from many other companies who have hospital based procedures. There is a continuation of pretty.
Significant hospital staffing shortages and so that does also create an impact.
The OBL market I think overall has.
It is.
Again, depending on whether they are treating CLI patients or clotting events.
<unk> less impact, but but but for us the focus on supporting the CLI cases in the elective procedures as they come back hasn't changed are our sales force and our clinical specialists have remained present.
Present in the field.
We are in we're engaging and again I as I said earlier. The fact that we have our pentair is S V, which is treating primarily Claude akins, I mean, sorry, CLI patients as opposed to <unk> before the certain shoes, a severe below the knee disease and our CTO crossing catheters, which typically is a C.
<unk> situation.
That really has advantaged us to continue to to support our positions. During this time, but we are encouraged by by the the volume we see coming back you know there is the potential for deferred procedures to come back in the second quarter and potentially that provide some upside as we go forward, but but obviously we'll will be.
There and we'll react to the market conditions, but the best we can.
Very good and then just a final question from me and this one I just wanted to start by saying I have noticed that Avenue.
Senior leadership team a strong very strong operating expense discipline in recent years, just nice to see so if we just step back and maybe you could opine on you know kind of what do you think it's going to take for the top line to scale to a point, where you could achieve profitability are the pieces to do that there today or kind of what needs to happen.
You know I'll, let mark add some some color to this but obviously and I. Appreciate you, making the comment we have been very focused on an.
On controlling operating expenses, we are in a position now as I think Mark mentioned on the call, where we can get operating leverage based on our growth in revenue. That's one of the reasons that you saw the significant increase in gross margin in 2020.
One overall and so revenue growth in itself certainly improves our gross margin, but I'll, let mark add some color, yes, so just to give a little bit of detail.
Aperture has very very high direct margin. So you know we've talked before about being a significantly more than 60% kind of direct margins on our on our disposable sales. So as we're able to increase the amount of volume and usage that we have in the field in terms of usage of catheters for procedures, we will see a significant increase in our gross.
Margins and in our opera and improvement in our operating results.
We have a lot of opportunity for growth in the future.
In addition to usage of our existing products. One important aspect is having more products in the bag for our sales team in the field. So you know in 2022, we're going to be we have two new catheter products that we're going to be working on from a development standpoint.
Hopefully going into five 10-K's, and then being able to get clearance. So that we can add those to our bag to even increase the amount of amount of sales that we have on a on a per unit on a per salesperson basis, which again should help us improve our operating results.
We have made a lot of changes in terms of reducing our cost structure over the last few years and we feel very good that at this point, we have an opportunity to with revenue growth to see the improvements both in terms of our gross margin line and also on the bottom line performance.
Okay, great. Thanks, so much again guys for taking my question.
Thank you Nathan I appreciate it.
I'd now like to turn the floor back to Jeff Slowinski for closing remarks.
Well, thank you and I'd like to thank you all for joining our call today. We appreciate your continued interest in our business I. Appreciate the questions today, and we look forward to updating you on our further progress on our first quarter 2022 call. Thank you very much.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.