Q1 2022 electroCore, Inc. Earnings Call
Greetings and welcome to electric or at first quarter 2022 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. Richard Cockerill. Thank you you may begin.
Thank you all for participating in today's electric <unk> earnings call.
Joining me today are Dan Goldberger, Chief Executive Officer, Brian Posner, Chief Financial Officer, and Dr. Peter Staats Electric <unk> Chief Medical Officer.
Earlier today electric car release results for the first quarter ended March 31 2022.
A copy of the press release is available on the company's website.
Before we begin I'd like to remind you that management will make statements. During the call that include forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of $19 95 <unk>.
Any statements contained in this call are not statements of historical facts should be deemed to be forward looking statements. All forward looking statements, including without limitation, our examination of operating trends and our future financial expectations are based upon the company's current estimates and various assumptions. These statements involve <unk>.
Risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements for a list of risks and uncertainties associated with the company's business. Please see the company's filings with the Securities and Exchange Commission.
Electric cord disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information that is accurate only as of the live broadcast today may five 2022, and with that I'll turn the call over to Dan go ahead Dan.
Thank you rich.
Hello, everybody.
Thanks for joining us on today's call our U S business performance was solid in the first quarter ended March 31, 2022, more than making up for a slow start.
King conditions revenue for the first quarter of 2022 hit a record $1 $9 million, increasing approximately 58% over the first quarter of 2021 and approximately 27% sequentially.
Gross margins expanded to 81% and net cash used in operations was about $4 8 million for the quarter ended March 31 2022.
Our U S cash pay commercial heading of channels are starting to accelerate and we expect them to continue those initiatives through the rest of 2022 weeks.
We currently have about 345 active prescribers in our GEC direct program that allows our prescriber to send a prescription directly to our home office for processing by our customer experience team.
We work directly with the patient to dispense therapy and collect the payment.
We have an additional 50 to prescribers NRG concierge program.
<unk> dispense model, where the prescriber purchases and inventory from electric core at a transfer price and provides therapy directly to their patient from their own inventory.
E Commerce channels, we established in January 2022, we're off to a good start.
Consumers can go to our website fill out.
Questionnaire that is adjudicated by a telehealth process obtain a prescription and then move therapy into a shopping cart to obtain again of course sapphire for their own personal use.
Our customer experience team is available to patients in all of these channels, providing training and support for new prescriptions and following up with patients to ensure they are staying in compliance with their therapeutic protocol.
We plan to continue investing in our digital awareness campaigns initially through paid search and social media in an effort to drive headache patients to our various channels in the United States and the United Kingdom.
Net revenue from the U S commercial headache channel was $277000 for the quarter ended March 31, 2020 to a 90% increase from a $145000 in the first quarter of 2021.
Approximately $254000 of our U S commercial revenue in the first quarter came from cash pay programs.
Net sales from the department of Veterans Affairs, or the VA and department of defense, or Dod, where $1 3 million.
An increase of 86% as compared to $679000 in the first quarter of 2021.
A total of 105, VA and military treatment facilities have purchased <unk> products through March 31, 2022, as compared to 79 through the first quarter of 2021.
Note there are approximately 1300, VA health care hospitals, and clinics and over 400 military hospitals and medical clinics. So we still have plenty of potential growth ahead of us.
Revenue from channels outside the United States decreased 20% to $305000 in the first quarter of 2022 as compared to $380000 for the first quarter of 2021.
The UK business was affected by the resurgence of Covid, which severely impacted access to headache clinics in January and February .
We saw some recovery in March and April has been encouraging we look forward to returning to growth in this channel in the second quarter and for the rest of 2022.
On April five 2022, we announced an exclusive license agreement with Asian limited for Japan.
License coverage, our proprietary noninvasive vagus nerve stimulation technology for headache, and provisions to expand to additional indications <unk> territories in the future.
<unk> will be responsible for the regulatory process in Japan occasions expense with support from electric cord, leveraging previously published pivotal data.
The initial license fee will be recognized over the next four quarters starting in the current quarter ending June 32022.
<unk> provides for additional license payments tied to successful completion of regulatory and commercial milestones in the future.
It also requires an annual license fee that will come due every year starting in April of 2023.
In addition to the cash consideration.
License agreement further validates the long term commercial opportunities for N VNS therapy around the world.
On April 19, 2022, we announced the Gamba core noninvasive vagus nerve stimulation has been selected for additional funding by the department of defense biotech optimized for operational solutions impacted.
Boost program.
Bush Research program, which will be conducted under the leadership of the 711 human performance wing optimization branch of the United States Air Force seeks.
Seeks to optimize and validate the efficacy of N VNS and accelerated training sustained attention reduced fatigue and improves mood among air force personnel.
The boost program confirm previous finding the project schedule calls for electric core to supply field ready devices to the Air force in the second half of 2023.
We're optimistic that the solution, we ultimately providing to the air Force will also find favor among the other branches of the active military in the future.
Now turning to our clinical progress, we continue to advance and DNS across several trials, we participated in a pre submission meeting with the FDA on May <unk> 2022, where we discussed our plans and post traumatic stress disorder, or PTSD mild traumatic brain injury or concussion.
BNS has a bridge therapy for inpatient substance abuse programs and acute stroke among other topics we.
We believe our presentation was well received and we have several follow up items to pursue.
In February this year data was presented at the international stroke Congress, suggesting that N VNS therapy could be an effective acute intervention for ischemic or hemorrhagic stroke.
A subsequent larger trial notice is more than 50% enrolled towards a 100 patient target.
No. This is on track to complete enrollment early next year.
Stroke data is exciting as there are relatively few acute interventions approved for treating stroke and none that can be deployed foreign ischemic hemorrhagic determination has been made.
And VNS could be a very exciting new tool in fighting this debilitating condition.
We look forward to the anticipated full publication of the <unk> study in a peer reviewed journal later this year.
On January 12, 2022, we announced the Gamba core and BNS received breakthrough designation from the U S food and drug administration or FDA for the treatment of PTSD highly prevalent and disabling disorder with limited approved treatment options, we will schedule the sprint meeting with the agency shortly.
Based on what we learned in our May 2022 pre submission discussion.
Now I'd like to turn the call over to Brian for a review of our financials and other guidance items Brian .
Thank you Dan for the first quarter ended March 31, 2022 electric core reported net sales of $1 9 million as compared to $1 2 million during the same period of 2021.
This represents a 58% revenue increase over the same period last year.
Gross profit for the first quarter of 2022 was $1 5 million as compared to 840000 for the first quarter of 2021.
<unk> margin was 81% and 70% for the periods ended March 31, 2022, and 2021, respectively.
Our evolving commercial strategy has resulted in the launch of cash payment models under which we licensed certain startup devices.
The cost of the license started devices being recognized as cost of goods sold over the estimated useful life of the starter device versus expensing the cost of goods at the time of sale.
Moreover, in recent quarters, we have sold an increasing amount of longer duration therapy, resulting in a higher average selling price.
These factors along with favorable absorption of labor and overhead costs contributed to the increase in gross margin.
Total operating expenses in the first quarter of 2022 were approximately $7 $1 million, an increase of approximately $896000 from $6 2 million in the first quarter of 2021.
Research and development expense in the first quarter of 2022 with 934000.
Compared to 499000 for the same period in 2021.
R&D expense for the quarter include investments for our next generation product currently under development.
Selling general and administrative expense in the first quarter of 2022 was $6 $2 million as compared to $5 7 million for the same period in 2021.
Total SG&A expenses for the first quarter of 2022 included increased investment in our sales and marketing efforts to support our cash pay initiative.
GAAP net loss for the first quarter 2022 was $5 6 million as compared to a GAAP net loss of $5 4 million for the same quarter of 2021.
Adjusted EBITDA net loss in the first quarter of 2022 was $4 7 million.
As compared to a loss of $4 $2 million during the first quarter of 2021.
A reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net loss has been provided in the financial statement tables.
In today's press release.
Net cash used in operating activities. During the quarter ended March 31, 2022 was approximately $4 $8 million as compared to $4 2 million in the first quarter of 2021.
The increase in net cash usage in the first quarter of 2022 compared to the fourth quarter of 2021 is largely due to seasonal factors and the timing of disbursements affecting working capital and continued investment in sales and marketing activities.
Cash and cash equivalents at March 31, 2022 totaled approximately $29 9 million as compared to approximately $34 7 million at December 31 2021.
Looking ahead.
For the second quarter of 2022.
We expect net revenue to be in excess of $1 $9 million and net cash usage to be approximately $3 $5 million.
You may recall that on December 22021.
We received a notification from NASDAQ, indicating that we are not in compliance with NASDAQ listing rules because the minimum bid price of our common stock on the NASDAQ global select market.
Those below a dollar per share for 30 consecutive business days.
The NASDAQ letter had no immediate effect on the NASDAQ trading or listing of our common stock.
Pursuant to the initial NASDAQ notice and NASDAQ listing rules, we have 180 calendar days from the date of the notice or until June 22022 to regain compliance with the global select rule by achieving a closing bid price for our common stock of at least $1 per.
For sure for at least 10 consecutive business days.
Yes.
If we do not regain compliance with the global select rule by June 22022.
We intend to apply to transfer our securities from the NASDAQ Global select market to the NASDAQ capital market.
Which will require that we satisfy the requirements for initial listing on such market as set forth in NASDAQ listing rules with the exception of the minimum bid price requirement.
If our application for this transfer is approved we would have an additional 180 calendar days to achieve the minimum bid price requirement for at least 10 consecutive business days in order to comply with the rules of the NASDAQ capital market.
We believe that the transfer if required will not materially affect the NASDAQ trading or listing of our common stock.
And now I'll turn the call back over to Dan.
Thank you Brian I'm very excited about our operating results this quarter and we continue to be in a strong financial position.
Longer term indications beyond primary headache supported by the ongoing clinical development as discussed earlier.
We expand the BNS therapy market.
<unk> license, we announced in April brings in some non dilutive cash and is a huge validation of the commercial appeal of N VNS therapy around the world.
The boost project being financed by the Air Force and the Defense Advanced Research Project Agency DARPA could accelerate the adoption of <unk> for a variety of new indications among our active duty military we continue to build our intellectual property portfolio and we are developing a very exciting next generation product platform.
To leverage it.
Our VA Dod channel continues to grow as the pandemic recede and our direct to consumer initiatives are showing results in our commercial channels.
While our UK business was negatively impacted during the first quarter of 2022, we look forward to return to growth as the pandemic receipts.
I've seen many potential growth drivers through 2022, and 2023, including continued penetration of our VA Dod channel in the United States continued penetration of the United Kingdom market as the pandemic recede.
In our U S commercial channel driven by cash paid business models and direct to consumer advertising, while we continue our efforts to gain commercial insurance coverage.
And fourth expansion of our international business through our distributor network and added traction within the U K E Commerce store.
Longer term there are real opportunities for label extensions into PTSD opioid use disorder and mild traumatic brain injury.
Airports boost program could lead to incremental product sales to the active duty military as soon as next year.
Lastly, we're exploring growth opportunities to enhance and leverage distribution channels through acquisitions.
We're focused on revenue stage targets that might enhance topline growth and offer other synergies.
At this time I will turn the call over to the operator.
Operator, please open the line for questions.
Thank you.
We will be conducting a question and answer session if you'd like to ask a question. Please press star one on your telephone keypad.
Information tone will indicate your line is in the question queue.
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One moment, please while we poll for questions.
Our first question comes some trauma pakula with H C. Wainwright. Please proceed with your question.
Thank you this is RK from HC Wainwright.
Good afternoon.
Hi, Darren how are you.
Okay. Good.
Certainly.
An exciting quarter.
In terms of sales growth.
And also obviously some interesting programs.
Got you are trying to embark on.
Regarding the boost program.
I'm sure, it's a really exciting opportunity.
Yes.
Do you work with the Air Force and then China.
And I'm trying to.
Assimilate your technology for their needs.
In terms of the development cycle itself.
Now how should we think about this.
Both in terms of.
Is it.
Is it the electrical thats going to spend initially and then build them.
For the expenses or is it.
The funding you even before you start your initial work on the project.
And then.
Second part of that question is once.
You will develop the device such that the air Force.
Could you use it.
It required any additional regulatory approval.
To ensure that they can prescribe it for military personnel.
So.
Let me try and unpack the questions RK just by coincidence I'm speaking to you from.
Port Hulbert in Florida, where we're having a kickoff meeting.
First program so.
Okay.
To go into the secret Roland. Please go ahead.
So where we are we're getting our arms around it all so so the air force has been doing quite a bit of work quietly.
Behind the scenes they have done a few publications about the use of.
Nerve stimulators in general and the gamma core noninvasive vagus nerve stimulator in particular.
The first place that they wanted to deploy this technology is in what they call a <unk>.
Saar, which is there in <unk>.
Telegent surveillance.
And.
So these are the analysts who work in not an office environment, but.
But.
And a light industrial environment, where they're looking at a lot of monitors and they have eight hours 10 hours 12 hour shifts.
The next cohort after the ISR are the.
Remote.
Moat pilots the drone operators so again.
The initial and the <unk>.
Initial deployment is going to be relatively benign physical environments, but.
Looking forward over the long haul.
Two.
To deploy it to the special tactics community.
And ground tactical operators, so talking beyond the air force to two.
The Army and special forces command about Gip.
Deploying this therapy pretty broadly.
As far as how does the money flow.
The Air Force has been buying devices in very small quantities from us.
And there are two pieces to this program.
They're going to be buying a few more of our commercial devices.
To continue there.
Validation.
And theyre going to be fully funding the development of a hardened more robust.
Version of our device that would ultimately be deployed first in that.
Analysts and remote pilot environment, and then hopefully longer term into the.
Boots on the ground opportunities so.
The cash impact on electric or is.
Is small we are we're going to be providing.
Our staff and our Knowhow.
But the vast majority of the development work for their airports implementation is fully funded.
As far as regulatory process.
We may or may not.
File a special slide 10-K that'll be up to that.
Up to the Air Force, we're not going to be looking for any additional indications beyond what we are FDA cleared for today.
There will probably be.
A variety of Mil spec.
<unk> as far as mechanical ruggedness.
Our electrical.
Interference those kinds of things that are common.
Certification requirements for deploying to active duty military.
Hopefully I answered the question, but we're very excited about the program.
Thank you.
The.
Deploying revenue units towards the end of 2023.
It is achievable.
But it may take a little bit longer than that.
Yeah.
So no this is suddenly a migrating opportunity right.
Also.
When when you're certainly done with this with this new version of <unk>.
<unk>.
<unk>.
Hof freely can you take that.
Even if it is is a protocol of a prototype.
And work with other military groups color.
Yeah, the idea from Israel R. R.
The Royal Air Force and U K could you do that.
You'll have certain dark and documentation with the.
The U S Air Force.
You could not.
Take this elsewhere.
So in principle it is going to be exclusive to the U S armed forces, but presumably with the government's permission we could.
We could take it.
More internationally.
Okay.
Great and then just trying to understand.
The commercial business, especially in the.
In the commercial business, how is that working out because I know.
As a management team.
You were pretty excited about growing that throughout.
Right.
Where do you think that processes at this point.
What should we expect from that segment going forward.
So.
We've been building out our position dispense model that we call GEC direct and GE concierge mhm slowly, but surely and.
Earlier, we talked about some of the numbers of prescribing physicians.
And and Thats, a starting to accelerate.
In January we launched our E Commerce initiative.
And we've been ramping up our spending on.
Search paid search and social media.
The e-commerce was relatively small revenue but.
All indications are that it's going to scale with our media spending as we go through the year.
And our physician dispense models also get a lift from the direct to consumer awareness spending that we're going to do so.
I think we're trying to be.
Thoughtful and methodical about the timing of ramping up of our.
Consumer spending.
And.
And make sure that we have channels that.
As we spend more on advertising that consumers have a place to go to acquire the therapy, either through our ecommerce platform or Tom.
From our physician dispense partners so.
It's off to a great start and now we've got approved.
That we have.
We're tracking a parameter that we call media efficiency ratio in other words, how much do we have to spend on advertising.
To generate a dollar of revenue and I'm looking forward to.
Increasing that investments and getting the associated increase in revenue.
Thank you and then last question from me is on the <unk>.
License agreement.
What should we expect from there.
Is it is this.
Going to turn into commercial revenues.
Anytime soon R. R.
You will need to go through the Japanese regulatory agency.
Which obviously could take a little bit of time, but I'm just trying to understand when that occurred.
Start flowing through.
Yes, that's it.
An interesting challenge as you know the Japanese Ministry of Health is.
There is no more expeditious and the FDA.
A key determination is going to be later this year.
Tegan tapes.
The legacy pivotal data that we used for U S and European clearances.
So the Japanese Ministry of health and ideally they will be able to use the existing pivotal data.
But it's entirely possible that.
Japanese regulators will say that they needed a small in country cohort.
Our pivotal data in which case the timeline will be extended to go execute that trial. So.
I'm going to Dodge that question until we know a little bit more.
Absolutely fine. Thanks is there any point. Thank you very much for taking all my questions.
So.
Our next question comes from Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
So a hard turn Brian and Peter how are you good. Thanks.
Are you so sure.
So just firstly.
Do you have any commentary on this.
Transitional coverage for emerging technologies, the sheer mesh $34 21.
If that ever goes through I know Ashish for proposed or just kind of where I am.
Replacement.
Correct upon the company mature in nature.
So not this year.
No.
We really have not petition.
For Medicare coverage at this point have not negotiated with any of the Max yet so.
We don't have any any.
Reimbursed, we don't have any CMS reimburse channels at this point in time so.
As to the reimbursement process in the future.
I'm not really sure yet.
Okay.
I heard you say was it 5200 on the Q2 insurers program.
No.
I think we have 52 prescribers that are signed up at this point.
Okay, and those who are already Cpus.
Yes, absolutely yes.
Okay.
Any early.
Color on the.
On the direct channel to patients directly.
We're not breaking out that T cells, just yet youre asking about the E Commerce channel.
Yes.
Did you see direct.
Right.
The only detail we've given our the number of prescribers, so roughly 345, GEC direct prescribers and a smaller number of.
So <unk> prescribers.
Okay.
From the standpoint of the.
<unk> will ensure you take care of about 100 end of year and one off far is now could you give us a sense of.
Number of new centers, we should expect to come on board during 'twenty, two or more importantly, some of the trends youre seeing existing facility reduces for us.
Number of patients as well as.
Utilization trends, yes. So.
We've.
Focused in the short run, we're focusing more on going deeper into our existing accounts.
So youre going to see that total number increase but.
As we spend more money on direct to consumer awareness.
That also allows us and the VA hospitals to go to other departments by that I mean, traditionally we've been going through the headache specialists and neurologists, but as we drive consumer awareness, we can go to women's health.
Pain management.
We can go to psychiatry.
All of these.
More primary care departments within this facility that are seeing headache patients and and maybe getting a little bit of demand from our direct to consumer advertising. So.
We're seeing.
Pretty excited about the return we're getting on those efforts are.
Going to our existing customers and opening up additional call points with it.
The hospital campus.
Okay got it and one more if I may I know that you've got a lot of readouts coming.
Pivotal in pilot studies.
In the coming quarters, but any commentary specifically on all on.
I agree and the separation in migraine.
Your cluster headache indications in that market.
So.
There have been publications now.
That.
In VNS therapy should be considered first line therapy in cluster headache.
We're able to make quite a bit of.
Traction with headache specialists that you see that subset of cluster headache patients.
And we're going to continue to drive that clinical differentiator.
Migraine is far more challenging both because of the.
Heterogeneity of of migraine rights of right its a large cohort, but there are.
<unk>.
Different phenotypes.
And as well as our direct to consumer promotions are bringing forward patients who would not have heard about the therapy from their primary care physician. So.
Not nothing definitive yet, but we do believe that all of these channels are going to get a lift from the direct to consumer awareness.
Okay perfect.
Ross Thanks for taking the questions absolutely.
Our next question comes from John vendor Matson with sacks. Please proceed with your question.
Good evening, everyone I've got some additional questions on on Jason Hey, Dan how are you.
What are the chart I think you mentioned there are some other territories that they might develop for you. What are those does that is that other Asia I assume is there any specific countries that are identified.
I'm, sorry, I didn't catch the beginning of the question patient you mean.
Yes.
Yes, right. So you think you had mentioned that there were some but yes.
Yeah in our in our negotiations with patients.
Look there they are.
Pretty established international company, they have a substantial footprint in the U S and in Europe .
More specifically they're interested in.
The Pacific Rim.
And China.
And.
But the real business opportunity in the short run is around Japan.
Internally, if they can get comfortable about that.
Effectiveness of our therapy and the business model for our therapy in Japan.
They're probably going to want to do something much more substantial with us.
Okay. So it sounds like Theres, some opportunities to deepen the relationship there.
Absolutely.
Okay.
And.
On the boost program.
Is there any more clinical work that needs to be done it sounds like that has already been.
Completed and the only thing that the air force needs to see for me was just the higher spec.
More durable, perhaps or you said the electronic interference.
Issues.
Regarding the device does that is that all that needs to get done or is there any more clinical work okay.
So.
The researchers that have really champion in the project.
Want to take it to other cohorts of <unk>.
Air Force personnel and.
And personnel beyond the beyond the Air Force and continue to demonstrate.
The various benefits of this therapy.
<unk>.
And sort of other cohorts as some end users so not sure that rises to the level of clinical work.
Got it.
Part of it is demonstrating.
The.
The effectiveness of this therapy in different groups and.
Therefore opening up additional groups to purchase.
And does it does it does the air force need FDA clearance to use it for another indication.
So.
Yes.
They are primarily using it for mood and exact anxiety in the peripheral benefits of.
Increased attention span and.
Energy levels, what Theyre looking at things like.
Caffeine consumption and reducing caffeine consumption.
They're looking at it.
As an alternative to.
Unfortunately, our soldiers self medicating with alcohol so.
These are not FDA.
Indications per say these are more wellness indications.
Mhm.
Okay, and then last one Brian this one's for you on gross margins.
It continued to be better than our estimate.
How should we think about the different channels and their associated margins or is that is that not the driver because I think there's some are growing faster than others should we.
Some of those growth rates to help modify our margins going forward or are there other factors to think about.
Well.
<unk> been in the mid Seventy's or better for the past couple of quarters, we've been 80 or better.
Past two quarters or so so I think the margins should be mid <unk> to low eighties, depending depending on the mix. Obviously the VA is the biggest part of our business right now, but like Dan said, we're optimistic on some of the other channels.
We will contribute in an increasing fashion too so I think right now.
Again, we've been at <unk> since the middle of last year, and I think Theres No reason to maybe change your model significantly at this point.
Okay and are they are materially different.
Margins between the different channels are.
Yes, they are mature.
Yes.
There's differences.
Between the channels and sometimes there's differences within the channels as well depending on the product mix.
Within that particular channel.
And if I could interrupt it's also I think Brian what you said earlier is duration of therapy, which is another way of saying.
Refill prescriptions because of our fundamental model is.
Is the longer you use the device the better your clinical results are going to be in basically in we generally get paid on that.
Occurring revenue model.
Got it.
This channel has the most.
All of them.
Okay. So there is no material difference.
The number of refills that people get depending on channel.
Not yet, but we are just minor okay.
Yeah.
Okay, great. Thank you for taking my questions.
Of course.
Yeah.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment, please while we poll for questions.
Our next question comes from Anthony Vendetti with Maxim Group. Please proceed with your question.
Hi, Dan This is actually Jeremy on the line for Anthony a couple of quick quick follow up questions. So I know you mentioned you said there were 345 active prescribers of <unk> 52 for GC direct and G concert does that through the end of the first quarter or is that to date.
That was at March 31.
That was the market was okay, and then could you maybe give us any more information than what <unk> seen in the first month and second quarter has that pace increase or is it is it really go in tandem until your marketing spend.
So.
April was with.
Was solid.
But there is more and more excitement about signing up to work with us and I think thats not directly driven but is in part driven by the direct to consumer awareness that we're spending money on so were.
We continue to feel like it's accelerating nicely.
You mean, you're referring to signing of physicians to be part of the program correct.
Correct.
Okay. That's great and then just I know you mentioned also one of the prior questions that right now Youre short term focus is to drive deeper into current accounts, but just let's say looking a little bit past that I don't know if at the end of this year, maybe next year or 2023, what are some initiatives you have planned or that youre throwing around that will help to bring in more facilities in <unk>.
<unk> not just extend and broaden your reach as opposed to just driving deeper into the accounts and the initiatives you could share.
So the VA Hospital channel.
Is driven by our field sales force to a great degree.
Supported by our customer experience team in New Jersey and so.
We've been selectively adding.
Direct employees to our field sales function, but the bigger.
Cohort is coming from.
Independent distributors that have a call point and the VA hospitals and so.
That cohort of.
And so these are folks who were working for straight Commission.
And we always like that because while it's a little bit more expensive on the SG&A line.
It's all variable expense and they only get paid if we're generating.
<unk> revenue in that Leverages, the manpower or smaller direct employees.
<unk>.
Okay I understand and then just last question I don't know is there any any update on the commercial coverage side or you are just still in negotiations that are just proceeding at a slow pace.
Yes.
We've got some bright spots, but theyre not ripe yet.
Forward too.
Announcing that in later in the year.
Okay, Alright, Thats all from me Thanks for taking my question.
And Rob we have time for one more question.
Is that within the VA Hospital system PTSD is treated by psychiatry headache is treated by neurology. They don't always talk to each other and that's that's what we're trying to bridge.
So there is nothing really holding it back on the VA and then it's just a matter of access to the different departments.
<unk>.
It's more subtle than that but that's the gist of it yes Sir.
Okay. Thank you.
That's all.
We've reached the end of the question and answer session I would like to turn the call back over to Dan Goldberger for closing comments.
Thank you everybody.
Greatly appreciate your time.
Been a difficult day on Wall Street, I know that.
I'd like to give a special thanks to all of our employees, who work tirelessly to deliver our amazing therapy to patients their hard work and commitment are setting the stage for growth in 2022 and beyond.
I also want to thank our healthcare professionals and their patients for their loyal support of gamma core therapy.
We've made tremendous progress and it couldn't have been done without your unwavering support. Thank you everybody and have a better day.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.
Okay.