Q1 2022 LivaNova PLC Earnings Call
Good day, ladies and gentlemen, I will commit to you they leave in NEVA plc first quarter 2022 earnings conference call.
If you would like to ask a question. Following today's presentation. Please press star followed by one on your telephone keypad I said remind that this conference call is being recorded.
I'd now like to introduce your host for today's conference Mr. Matthew Dodds <unk> Senior Vice President of corporate development. Please go ahead Sir.
Thank you Melissa and welcome to our conference call and webcast discussing <unk> financial results for the first quarter of 2022.
Joining me on today's call are Jamie Macdonald, our Chief Executive Officer, Alex <unk>, Our Chief Financial Officer, and Lindsay Little our senior director of Investor Relations before we begin I would like to remind you that the discussions during this call will include forward looking statements factor.
Or is that could cause actual results to differ materially are discussed in the company's most recent filings and documents furnished to the SEC, including today's press release that is available on our website, we do not undertake to update any forward looking statement.
Also the discussions will include certain non-GAAP financial measures with respect to our performance, including but not limited to sales results, which will all be stated on a constant currency basis reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, which is available.
On our website we.
We have also posted a presentation to our website that summarizes the points of today's call. This presentation is complementary to the other call materials and should be used as an enhanced communication tool you can find the presentation and press release in the investors section of our website under news <unk> events and presentations.
At Investor Dot, leaving.
<unk> com.
With that I will now turn the call over to Damien.
Thank you, Matt and thank you to everyone for joining US welcome to our conference call for the first quarter of 2022.
I'll start off by discussing sales results, then review our strategic portfolio initiatives and conclude by describing our recently completed a tuck in acquisition.
After my comments, Alex will provide you with additional details on our results and the outlook.
Then I'll wrap up with closing comments before moving on to Q&A.
In the quarter, we achieved 9% sounds great excluding heartfelt.
This was driven by above market growth in cardiopulmonary and neuromuscular license sales, which accelerated after experiencing COVID-19 related pressure early in the quarter.
Advanced circulatory support sales were unfavorably impacted by hospital staffing shortages and a decline in respiratory cases, including Covid cases.
Below the top line, we expanded gross profit, which was partially offset by investments in our strategic portfolio initiatives preparations for the phased launch of our next generation heart lung machine essence, and expanded commercial efforts in Acs and epilepsy.
Now.
Turning to the segment results.
For the Cardiopulmonary segment sales were $117 million in the quarter, an increase of 12% versus the first quarter of 2021.
Oxygenator sales grew over 20% globally, driven by procedure volume recovery across all regions, particularly in Europe and rest of world.
Heart lung machine sales increased in the high single digits due to growth in rest of world.
We now expect cardiopulmonary south to grow 1% to 3% for the full year 2022.
This increased range takes into account the first quarter performance the read through of year over year comparisons and the sales transition to the essence HL M.
Yeah.
Global epilepsy sales increased 8% versus the first quarter of 2021 with growth across all regions. This increase is attributable to procedure boardrooms that improved each month during the quarter.
U S epilepsy sales increased 6% versus first quarter 2021, with total implant growth in the low single digits.
Similar to recent quarterly trends total implant growth was driven by replacements, which physicians continue to prioritize the new patient implants.
The progress in U S. Epilepsy continues to be supported by a go to market initiative, which currently encompasses 14 dedicated CEC teams two of which were formed during the first quarter.
These teams accounted for 21% of U S thousand implants in the quarter as compared to 18% on the same account basis during the prior year.
They continue to deliver sales and important thrusts that trended above the baseline business compared to the first quarter of 2021.
Epilepsy sales in Europe grew 14% versus prior year, primarily led by the U K.
We also achieved 14% growth in rest of world led by APAC.
For full year 2022, we continue to expect global epilepsy sales to grow 5% to 7%.
Our forecast includes growth in new patient implants as patients and their caregivers returned to in person physician visits and hospital capacity improves.
In addition, we anticipate a continued tailwind in replacement impacts related to the backlog created during the pandemic that has continued into this year.
We're pleased with the progress of the go to market initiative and plan to add two additional dedicated teams in the U S. During the remainder of 2022.
ACS sales were $12 million in the quarter, representing a decrease of 10% from the first quarter of 2021.
Results were impacted primarily by hospital staffing shortages and less to be of Covid cases.
Respiratory cases, including Covid cases declined approximately 30% year over year as fewer hospitalized patients required ecmo therapy.
Non respiratory cases were flat year over year as account acquisitions were offset by the impact of hospital staffing shortages.
Given these headwinds we now expect Acs growth to be in the low single digits for 2022.
As a reminder for comparative results heartfelt was divested on June one of last year heart valve sales for the first quarter of 2021 were $21 million.
Turning now to our strategic portfolio initiatives DTD sales for the first quarter were $1 $4 million.
For 2022, we anticipate DTD sales of approximately $10 million.
Turning to the recover study during the first quarter, we achieved a key milestone of implanting at 250, its unipolar patient.
The randomized controlled study is designed with frequent interim analyses that will assess if predictive probability of success has been reached or if the study should continue.
As stated previously we believe a series of interim analyses is likely needed as we collect patient follow up data over time.
Our interim analyses confirm continuation of the study.
We still anticipate the transition to registry to occur for the unit Paul a cohort in late 2022 or early 2023.
In heart failure, the anthem <unk> pivotal trial continues to advance.
During the quarter independent statisticians conducted the first interim analysis reviewing safety.
A trend towards the primary endpoint and success in the three functional endpoints.
The review indicated that one or more of the conditions were not yet achieved and recommended continuation of the study according to the protocol.
The next interim analysis will occur after the 500 patient is enrolled which we anticipate in the fourth quarter.
If the results are favorable we may submit the functional data to the FDA.
Moving to OSA Aerospace trial continues to enroll patients with the first patient implanted in February we now have activated approximately 15 of the 20 study sites.
The Osprey trial is a randomized controlled trial to evaluate the efficacy of hypoglossal nerve stimulation for patients with moderate to severe OSA.
We still assume submission for FDA approval to occur in the latter half of 2023 with a decision anticipated in 2024.
Now turning to the acquisition of Elan.
On my second we acquired <unk> Technologies, Inc. The purchase price included $10 million paid at closing and contingent consideration payable on achievement of sales based milestones.
Ireland was a privately held developer and manufacturer of an innovative lung assist device for treating respiratory failure called the hemo lung respiratory assist system or RIS.
This system is an alternative or supplement to invasive mechanical ventilation.
The hemoglobin <unk> is the only FDA cleared platform designed specifically for low flow extracorporeal carbon dioxide removal for acute respiratory failure.
I along provides a complementary technology to our Acs portfolio in the respiratory market the business, which will be integrated into our Acs segment, and we expect to initiate commercialization of Haim along later this year with nominal sales expected during 2022.
The impact of the acquisition is expected to be neutral to adjusted diluted earnings per share.
And with that I'll turn it over to Alex. Thanks, Damien during my portion of the call I'll share a brief recap our first quarter results and provide commentary on the full year 2022 outlook.
Turning to the results sales in the quarter were $240 million, a 9% increase versus 2021, excluding heart valves.
Foreign exchange had an unfavorable year over year impact of approximately $7 million or 3%.
Adjusted gross margin as a percent of net sales was 71%.
Which was up 290 basis points from the first quarter of 2021.
Adjusted gross margin was favorably impacted by product mix and the divestiture of heart valves.
Component of inflationary pressure was offset by manufacturing efficiencies.
Adjusted R&D expense in the first quarter was $40 million compared to $42 million in the first quarter of 2021.
R&D as a percent of net sales was 16, 7% in line with the first quarter of 2021.
Adjusted SG&A expense in the first quarter was $102 million.
To $96 million in the first quarter of 2021.
SG&A as a percent of net sales was 42, 5% up from 38, 9% in the first quarter of 2021 the.
The increase was primarily driven by costs related to the acquisition of Avon.
Adjusted operating income was $28 million compared to $30 million in the first quarter of last year.
Adjusted operating income margin was 12%, which was in line with the first quarter of 2021.
The adjusted effective tax rate in the quarter was 7% compared to 10% in the first quarter of 2021.
The lower tax rate is primarily attributable to changes in the valuation allowances in geographic income mix.
The full year, we expect the tax rate range of 10% to 15%.
Adjusted diluted earnings per share was <unk> 48.
Compared to 34 in the first quarter of 2021.
Our cash balance at March 31 was $443 million, including $314 million of restricted cash held as collateral for the Snia litigation guarantee up from $208 million at year end 2021 total.
Debt at March 31 was $461 million.
Up from $240 million at year end 2021.
This increase primarily relates to the bridge loan facility that was entered into during February to secure the Snia litigation guarantee.
Adjusted free cash flow for the quarter was $17 million up from negative $8 million in the prior year.
Capital investments were $5 million in the first quarter compared to $8 million in the prior year quarter.
Now turning to our 2022 outlook.
We're maintaining the guidance ranges shared in February as we navigate evolving pressures such as supply chain challenges foreign currency headwinds and market conditions impacting Acs.
This includes constant currency sales growth between 3% to 5%, excluding heart valves and adjusted EPS range of $2 50 to $2 80.
And then the adjusted free cash flow range of 90 million to $110 million.
Our outlook now assumes a 2% to 3% sales headwind from exchange rates.
With that I'll turn the call back over to Damien Thanks, Alex.
In summary, the first quarter was a testament to our diverse portfolio, which allowed us to weather the challenging market conditions.
Several variables in our original guidance assumptions have changed we remain confident in our full year outlook.
We continue to focus on executing on our core growth drivers delivering on our extensive clinical and product pipeline opportunities and further improving profitability and cash generation.
This emphasis on our strategic triangle underpinned by the live and I have a business system positions us to increase shareholder value.
And with that Melissa we're ready to open the call for questions.
Thank you Damian if you have a question at this time please press the star and the number one key on your Touchtone telephone.
If your question has been answered or you wish to remove yourself from the key. Please press Star then the number two.
As we enter the Q&A session. Please limit yourself to one question and one follow up question.
And then returned to the key if you have additional follow ups.
We'll be taking our first question today from Rick Wise of Stifel.
Rick I V G E.
Okay. Thank you good morning Damian.
Just to start off.
<unk>.
I think a solid start and as you said.
Some parts of the business did a little better.
Offsetting weakness elsewhere, let me start with Acs just because that was the biggest change the rest of the business seemed on track or maybe ahead. So one is that am I interpreting it at a high level correctly is that how you're seeing it and maybe just help us dig into Acs.
You bet.
And maybe break down if you would the hospital staffing slowdown impact.
How do we think about the Covid case declined when when do we get past that.
Non respiratory flat, how do we think about.
You know the progress from here, how do you get it back on track more in line with your original expectations.
Well first of all thanks for joining us good to hear your voice Acs.
Disappointed us in the quarter and a lot of that had to do with this headwind we talked about and you talked about the staff shortages, but also I think the big thing for US was this decline in patients using ecmo for Covid, there's a 30% decline in that case load euro.
A year and those really were important given our expectation for those.
Procedures, we really did anticipate also that the procedures that we saw through the quarter declining would be offset by other respiratory cases or other non respiratory cases, I think the modest flu season had an impact we haven't been a pretty interesting CDC data that shows a big slowdown in also.
Historical lows in the.
The mild respiratory cases.
Ecmo RV market declined 15% year on year. So I think we did slightly better than the overall market but.
We were anticipating a better response in our ability to move from one segment to the other so I think through 'twenty two as we see the staff shortages abate.
We expect this to start bouncing back.
We also added a lot of our head count in the commercial expansion late in the year.
F 'twenty one so they wont start reading through until mid year.
And so the effectiveness of that team will I hope right through in the back half of 2022.
Thank you for that.
Turning to the DTD registry.
It seems like.
Again, correct me, if I'm wrong the timeline you've.
Offered or suggest is basically youre reiterating the timing of a shift to registry as late this year early next year.
Can we take from that that enrollment is progressing well.
And have the initial looks been encouraging can you give us some more color there.
Yeah. So I think you've hit the headline which is it's continuing to progress well, we implanted at 250 <unk> patient in the quarter the unipolar patient in the quarter and conducted the first and second interim analysis.
So we're pleased with how thats progressing we're still expecting a transition to the registry in late 'twenty two early 'twenty three.
And we will continue to provide the best information. We can again like we've said, we don't want to outrun our communication with CMS, but we're pleased with how it's progressing and Rick It's Matt we are completely blinded from these interim looks so our independent statisticians review it and all we are told is basically yes.
Keep going.
Which again, we think is good stopped due to futility, which is not good and then stopped because you've hit the primary endpoint. That's all we know so the good news is as you know as Damian said after two looks.
We're not we're not checking the box of futility and it's continuing to enroll.
Gotcha and just last from me on the <unk>.
Some have reps.
You indicated that.
The data analysis confirmed continuation of the study.
I don't know.
I don't want to overstate. This is that slightly disappointing how are you feeling about it I know that the trial has an adaptive design.
Could take another look I think you said by the end of this year.
How are you feeling on that front.
Yes, I think again positive the fact that the first interim analysis confirmed to keep the study going.
It's a fairly complex study there are five green lights that youre looking for in the interim analysis.
One is safety I'm pleased that we're continuing to enroll so I think that means safety puts us in a pretty good luck at spot.
I think the fact that the others.
Working in a very complex environment, including Covid cases.
We're making progress.
As you say its an adaptive study we got to have looks at it instead of waiting for one primary readout and the fact that we're continuing to recruit is a good sign.
Really appreciate it thank you.
Thanks, Rick.
Thank Keybank will take our next question from Mike Polak of Wolf, Mike <unk>.
Hey, good morning.
Follow up on the depression commentary there so you've looked or that Youre independent statisticians have looked twice and so does that.
I assume there would have been one look at $2 50, Uni polar implants.
Am I understanding the protocol as you get the second look at $2 75. So it is having had two looks mean that the enrollment now is north of $2 75 is that the correct read.
This is Matt that is a correct read.
Okay.
So I guess.
I had this question come in a few weeks ago. So is the.
Your plan is to continue to enroll in the trial to get.
The subsequent interim looks versus you know kind of slowing enrollment down and just letting the sample accrue.
Time on therapy is that fair or or is there a balance that youre striking here as you kind of enter the meat of.
Of the.
Sample, where you might slowdown fresh implants, and just let the.
Time accrue to the patients that.
Have been implanted in.
Hopefully that question is clear just how are you thinking about the pace of enrollment here over the next quarter or two or three.
No. It's a good question. If you look at the design of this study we do want to have more patients enrolled into your point once we hit statistical significance on the assumption. We do then we would want to stop enrolling in that arm because we have to follow every patient for 12 months. So the team is still very focused on enrollment.
And as you noted every 25 patients we can continue to look so as we move forward not only do get more patients the average follow up per patient increases as well.
The other thing is there's two arms don't forget the unipolar and bipolar so we want to keep the momentum of recruiting.
We've explained we're skewing Uni pulled up both in terms of our effort and the patients we are seeing but we want to continue the momentum at all of the site. So that we can continue to enroll the bipolar patients in that secondary arm as well.
And to put a fine point on the timing.
I ask because I know I'll get out so you announced the 250 at Uni polar implant on March the 14th I presume. That's when the first look was taken by the independent statistician. The second look was taken when I presume within the last week, two or three I'm, just trying to get a sense for the.
How.
The pace of.
Every 25 implants as it kind of $4 six weeks is that is that how youre running at the moment.
So every four to six weeks I think is a good estimate if you if you're modeling that.
Okay.
And just last one for me and ill hop I know that was a series of <unk>.
Questions bipolar, whereas that enrollment stand at the moment.
Yes.
Slower again, given our emphasis on the unipolar.
And what we're trying to do is get that one over the <unk>.
<unk> first.
Nah I expected I think the 150 implants like 'twenty two early 'twenty three.
But I think you've got to look at this as an indication expansion opportunity.
First maniacally focused on unipolar, if we get bipolar patients through through the consenting system, great, but the real focus is on unipolar and then we'll move on to bipolar is the idea to expand the indication later on.
Okay. Thank you.
Cheers Mike.
Thank you Mike. Our next question comes from the line of Mike Matson from Needham.
AVG.
Yeah. Thank you.
Just following up on that line of questioning around the recover trial so youre.
<unk> revenue step down a meaningful amount I think it was you said $1 4 million in the first quarter I think you did about $3 million in the fourth quarter.
Can we read anything into that about the pace of enrollment here and the timing of the trial.
So Mike its Matt so the enrollment did slow down a little bit in January and February similar to what you've heard with a lot of people talking about revenue you can assume the same thing occurred on the clinical side. It did pick up in March and April . So that is that is the primary reason.
Okay got it and then as far as the <unk>.
The litigation in Italy in the Italian Supreme Court decision do you have any feel at all in terms of the timing of when you would expect something there.
No.
I mean, a long process. They don't have statutory timelines that are published so.
We're playing this day by day.
Okay got it and then finally, just on the heart lung machine growth was.
Surprisingly strong given you've got this.
Launch coming so.
One I guess, you've launched essence outside the U S or Europe , maybe so has that did that help at all and Conversely, it didn't seem to hurt I guess in the U S that customers are waiting for the new product.
Hey, Mike It's Alex we were pleasantly surprising in terms of the unit placements in the quarter, we Havent launched essence in Europe . As you described that is.
That's scheduled for the second half of this year.
We were expecting a slowdown in the us five placements sort of customers anticipating.
Essence in the back half but.
That has not happened, which is which is great for us and we continue to.
Well on that front.
Okay got it thanks.
Okay.
Thank you Mike. Our next question today comes from other major of Piper Sandler.
Jim. Please go ahead.
Hey, good morning, everyone. Thanks for taking the questions and congrats on the start.
Maybe just first one from me very dynamic procedure environment would just love Damian.
Matt a little bit more color on kind of what youre seeing real time.
You know kind of exit velocity.
In March how things have trended in April just puts and takes for some of those different segments and I had a follow up thanks.
Sure Adam Hey, you're welcome.
So when we spoke in February late February I think we talked about the patient funnel improving through the quarter.
That was definitely the case as March progressed and into April .
We're still seeing the same physician bias to the end of service product I think the two bottlenecks that remain.
Surgical scheduling where staff shortages are definitely impacting new patient implants.
The IMU capacity for new patient work ups. So I think the dynamics that look a lot of people are reporting definitely what we saw a very slow January ramping in March through March.
<unk> into April I think can see PE cardiac surgical volumes have returned to the pre pandemic level.
And demand has remained strong in April do you want to add anything Matt.
I think that said again as Damian said earlier with Acs that was the one that went the other way because of the staff shortages and the reduction in COVID-19 patients that use ecmo.
That's helpful color guys and then next question is on the EPS guidance adjusted EPS I think it's $2 50 to $2 80, so fairly big range. There, maybe just unpack some of the key assumptions in that range. What's contemplated for example for <unk>.
Currency impact to EPS and then if I saw correctly in the materials I think you are non-GAAP in the the interest from the bridge loans. So maybe just kind of walk through some of those items and kind of how to think about the high end.
Versus the low end of the guidance range and that had one quick follow up thanks.
Sure.
So our gross margins are expected to increase in 2022.
By more than 200 basis points.
The expected increase is primarily driven by the heart valve divestiture positive product mix.
And other efficiencies that are offsetting our supply chain cost challenges.
As far as R&D is concerned as a percent of sales.
That's going to increase slightly versus prior year and this was largely due to initiation of the osprey trial with.
As well as the investments in Acs and epilepsy commercial.
Sorry in <unk>.
<unk> R&D programs.
From an SG&A perspective, a slight increase versus 2021.
Our total Opex I think we've talked about this before quarterly run rate is approximately 140 million that's for both R&D and SG&A.
Our kind of base interest expense is $11 million to $12 million and as.
He said were non gapping in the bridge the interest related to the bridge facility.
That's related to the Snia litigation.
So that will be called out in our non-GAAP reconciliation and our tax rate, we're projecting at 10% to 15%.
As the range.
And then you're right currency currency is 2% to 3% headwind for the full year.
And I think you asked.
Guiding this range I mean, I think there's a lot of puts and takes.
If we continue to expand the U S epilepsy penetration I think thats, an upside I think supply chain challenges.
As we go through the year.
Applying that month by month, but the cardiopulmonary business, and especially heart lung machines.
Swing to the upside.
Depending on how people react to essence.
We continue to see heart lung machine demand, but.
We're anticipating that people will wait for that launch.
And.
Also counter measuring the Russia, Ukraine hedge.
Headwind.
All of those things the puts and takes and Thats why we have this range and we're sticking to our original February guidance on net EPS range of $2 50 to $2 80.
Very helpful and if I can just sneak in one last one.
And this is a question that I get from clients.
Just around communication strategy or kind of the pathway for the street looking ahead.
Hey, guys. What is the next update that we should be looking for.
It sounds like things continue to track in line with previous expectations in terms of transition to the registry.
Late late 'twenty two early 'twenty three.
But what should we be looking for whats going to hit the tape is it is it really around kind of the submission of the data package to CMS to move to the registry or kind of what's the next kind of milestone are or marker that we should be keeping our ISO piece.
<unk>. Thanks, so much.
Yes, and you hit it there.
Our next milestone is the communication of that transition to registry, which will follow our communications CMS again, we don't want to end around the discussions with CMS, but thats the next milestone.
Okay.
Okay very good thank you.
Thank you Adam we're now moving over to Amit Hazan of Goldman Sachs.
<unk>.
Hi, Thanks, it's Phil on for Amit.
Most of mine have been asked in some form or fashion I'll try and put a finer point on a couple of them. So the.
The incremental FX headwind I'm, hoping Alex maybe you can speak to the drop through rate and how much of an impact youre offsetting down on the bottom line for FX and maybe.
Asking the last question slightly differently, where where that offset is coming from given the incremental supply chain challenges and the FX, that's incremental as well versus the kind of guidance that you provided back in <unk>.
So the revenue impact of <unk>.
2% to 3%.
As a pretty significant drop through in terms of EPS impact.
Sure.
We're obviously.
Counter measuring it with.
With cost reduction productivity initiatives, and Thats and Thats kind of the way, we're able to to offset.
The impact of the inflationary and as well as the FX challenges that we have.
Okay. So we're going to see it in both SG&A and GM from the productivity is that correct.
Sure.
It's the largest impacts on gross margin.
Actually get a little bit of a benefit on the SG&A side.
From FX.
R&D is largely neutral from that perspective, so that's why it's a significant drops are on.
From a gross profit perspective.
<unk>.
We have approximately 20% to 25%.
2000 to 2025.
EPS exposure, but again, we're counter measuring it with productivity.
Sure.
And cost reduction.
Okay, that's really helpful context. Thanks.
The other one.
You just mentioned the argue conflict I was I was hoping maybe a finer point on your rest of world. The exposures, maybe talk to China exposure, obviously rest of world was actually quite strong in the quarter I'm wondering exposure to are you and the impact you've seen China impacts seen kind of where we are today and any other markets you'd call out that have been incrementally.
Yes.
Yeah, we saw limited impact from from China really hardly any.
Obviously the lockdowns.
<unk>.
Now had an impact in the market, but we haven't really seen it on <unk>.
Read through on.
From a performance perspective.
Okay can you remind us exposures for for China and for Russia in relation to that 20% rest of world business.
Yes.
Russia, Ukraine was.
1% of revenue in 2021.
And China is about 3% to 4%.
Okay. That's really helpful. Maybe if I could just sneak one more in a.
Definitely understand the inflationary and supply chain issues.
Is there any concern about ability to kind of fulfill demand, especially with the increase.
Increased interest in demand for oxygenate or is there anything that you're worried about on the component side.
It might limit your ability to satisfy this increased demand that's coming through the pipeline now.
Yes.
Yes, So look I think that's one of our big things that we've really focused the team on with the whole supply chain logistics.
Microelectronics availability of proxy availability transportation logistics.
And lead times, all the things that we're focused on with that team what they're really doing is working very aggressively to give our suppliers more visibility to our long range plans.
Working very hard on that.
The critical supply reviews with them, we've increased inventory in.
Several areas.
Guidance contemplates that so out process. So far has been increasing communication with suppliers looking for alternative suppliers, where it is.
Where there's a need or as I said building inventory ahead of this demand, but so far the team has progressed well, but like everyone. We continue to face those headwinds.
That's great Damien Thanks, very helpful across all fronts. Thanks, guys.
Thank you thanks, Sean.
Thank you Amit we'll take our next question from Zack <unk> of Jefferies.
Please proceed with your question.
Hey, good morning, everyone. Thanks for taking the questions.
One on an epilepsy can you just remind us where backlog currently stands.
Memory serves it was roughly 800 procedures at the beginning of this quarter. So I'm just curious how much of that backlog to work through and you know how much you expect to work through through the course of the year.
Yeah. So we're expecting that backlog to continue through the rest of this year and into next year right. Now we think the numbers around about 700, so we've been through about 100 in the quarter.
And again I think people continue to put this at the top of the stack versus new patient implants, it's an easier process to put patients through that cycle and ensure that they have continued therapy. The workup for new patient implants is quite considerable.
They're definitely skewing physicians are definitely skewing these end of service patients and.
And we're gradually working our way through that backlog.
Got it that's helpful. Thank you.
Sure.
Thank you Zack our last question today will be a follow up from Mike Pollock of Wolfe Research, Mike Ewald E.
Thanks for taking the follow up CFO question, just with the inclusion of the bridge facility now to backstop, the Italian surety Alex I'm, hoping you could bridge the adjusted free cash flow guidance for the full year of <unk> $90 million to $110 million.
If you were to an adjust that.
Frame traditional free cash flow inclusive of the bridge cost the <unk>.
The other items that you or your <unk>.
Excluding what is the sum total of those adjustments just to level set here for the full year.
So the bridge facility is kind of a temporary vehicle and so we're looking to refinance that in.
Probably in the next quarter or so so.
If we are modeling based on what we're seeing.
We're kind of leaning towards sort of public debt as a refi facility. So modeling kind of the current interest rates we're looking at.
$15 million to $20 million.
Potential impact on an annual basis.
Uh huh.
Okay I can follow up on that so we'll will that then come into your <unk>.
Adjusted earnings as it transitions from bridge facility to public debtor since it's kind of this you know.
Limbo moment, where you're backstopping.
And Thats grow for the case that you are.
Pursuing.
Remedy for that you would continue to exclude it towards the treatment of of that transition from bridged to public debt as it relates to your adjusted earnings guidance, if and when that happens.
That's right. So we're going to continue to.
Adjusted.
From operating earnings until.
There is a ruling.
On the case, if we end up winning it's obviously a non issue.
If we lose in half two.
PE.
For this.
The damages than we would.
Essentially becomes a.
Permanent part of our capital structure, and that's what we'll move it into operating earnings.
Okay very clear thank you.
Thanks, Mike Thank you Mike.
That was our final question today, I would like to hand back to Jamie Macdonald for any closing remarks.
Well, thanks, Melissa and thank you to everyone for joining our call and on behalf of the entire team I. Just appreciate your support and interest in living over and we look forward to updating you on our Q2 call. Thank you.
Yeah.
Thank you. This concludes the <unk> plc first quarter 'twenty earnings Conference call. Thank you for attending you may now disconnect.
Yeah.
Yes.
Okay.
Uh huh.
Okay.
Yeah.
Okay.
Yes.