Q1 2022 Sonendo Inc Earnings Call
Speaker 1: Thanks operator. Good afternoon that. Thank you for participating in today's call. Join me from ceendo are B N Berg, President and CEO , and Michael wat, CFO . Earlier today releasefinanci results for the courarter ended March 30 first 2020. twoa copy of the press releasees available on the company's websitebefore I'd like to remind youthat management will make statements during this call and include forwardlooking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation perform Act of 1000 Y five any statements containing this call that relate to expectations or predictions of future events, results or performance, or forward-looking statements. All forward-looking statements, including those relating to our operating trends and future financial performance, the impact of COVID-19 on our business expense management, expectations for hiring, growth and organization, market opportunity, revenue guidance, commercial expansion and product pipeline development, are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those implied by these forward-looking statements. Accordingly, you should not place underue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, Please refer to the risk factors section of our most recent annual report on Form 10-K , filed with the Securities and Exchange Commission on March twoy thir 2020. two and available on EDGAR and in our other public reports filed periodically with the SEC.
Speaker 2: This conference call contains time-sensitive information, exaccurate only as of the live broadcast on May tenth, two Y and 22. Senator discims 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. And with that I will now turn the call over to Bard.
Speaker 3: Hey thanks, Matt. Good afternoon everyone, and thank you for joining us for today's call. I will provide opening comments and a business update, followed by Mike, who will provide additional detail regarding our quarterly results and updated 2022 guidance, before opening the call to QA.
Speaker 4: Total revenue for the first quarter of 2022 was $9 million above our estimates, provided a burd the Q4 2021 earnings call, representing growth of two 22% over Q1 of 2021.
Speaker 5: Growth in the quarter was primarily driven by continued increas procedure utilization and increased Gen wave console sales.
Speaker 6: As a reminder, first quarter capital equipment sales are typically our lowest seasonally adjusted quarter, following heightened calendar year-end demand, which is influenced by various factors, including tax benefits.
Speaker 7: Overall we re very pleased with our start to the year.
Speaker 8: As to March thirty-first, genonewave ending installed base was approximately 850 units, compared to approximately 710 units on March thirty-first 2021, representing growth of two thousandtwenty percent.
Speaker 5: Mike will later provide more details on our quarterly financial results and additional detail regarding full year 2022 guidance.
Speaker 8: Before providing a business update, I wanted to address two topics that have had a broad-scale impact across the medical device industry.
Speaker 5: First being COVID-19.
Speaker 9: While we did see a slight temporary slowdown in patient volumes early in the quarter due to amacron, this did not appear to materialally impact performance.
Speaker 6: Based on our estimates and what we're hearing anecdotally from endonpists.
Speaker 6: Patient volumes are currently trending at or near precoed levels.
Speaker 7: While our growth is heavily predicated on our ability to penetrate the root canal market and sell consoles to new usersthe durability of patient volumes in dental offices is a positive sign that the end market is strong and there is demand for our technology.
Speaker 8: Second are to supply chain headwinds impacting the global economy.
Speaker 6: That's a reminder on our last earnings call in March. We communicated variability in the supply chain of certain raw materials, which caused us to incur additional costs in the fourth quarter of 2021 and first quarter of 2020. -two and.
Speaker 9: The impact has been limited to our procedure instruments and, despite this disruption, all customer orders were fulfilled in the first quarter of 2020 -two.
Speaker 7: While our operations team has made considerable progress in navigating through this dynamic period, the supply chain environment has become incrementally more challenging.
Speaker 5: Although raw material supply variability is likely to continue for the remainder of the second quarter, we believe we have sufficient capacity to meet our revenue targets.
Speaker 6: In future quarters we expect a risk to gradually mitigate as we recover safety stock positions as overall volumes transitioned to clean flow procedure instruments.
Speaker 5: Which in most instances, do not utilize the same raw materials and suppliers as our legacy procedure instruments.
Speaker 6: Now turning to quarterly business updates, starting with clean saw.
Speaker 4: On April twentieth, we announced the full commercial launch of clean flow ahead of the American Association of anadopus, or AE, annual meeting in Phoenix.
Speaker 9: The timing of this announcement and launch was critical, as AE is our largest and most important industry conference of the year.
Speaker 6: While we have been working diligently through our limited marketts release.
Speaker 9: Ae was a great event which allowed us to showcase our new procedure instrument to the entire market and allowed customers to perform or observe a procedure using an extracted tooth in our booth in what we call a test drive.
Speaker 9: As a company, we have built our reputation on providing superior clinical outcomes and delivering a positive patient experience.
Speaker 9: This was in full display at AE, as the cylinder team reinformed.
Speaker 5: The benefits of clean flow to not only existing but prospective customers.
Speaker 6: Specifically the clean flow. We have improved the gewayave procedure by removing certain steps.
Speaker 6: With the practitioner now only needing to open and prepare the tooth to allow the procedure instrument to be put in place.
Speaker 6: During educational and clinical demonstrations at AE linging F' simplicity and ease of use resonated with the end-adoped community, which gives us more confidence.
Speaker 9: In not only the cleanfill launch, but to also in our ability to drive increased utilization at the practice level. As a reminder, the clean IL procedure instrument works with our existing consoles, So there is no need for existing customers to buy a new machine to access this latest technology.
Speaker 5: This will allow us to ship clean flow procedure instruments to new customers and seamlessly convert existing customers.
Speaker 9: Another reason why we're so excited about cleanfile is that we have a clear pathway to improve our contribution margin for consumables.
Speaker 9: cleanfo was a major component of our future higher gross margin expansion and pathway to profitability.
Speaker 9: Given the simpler design of cleanfil compared to the previous generation procedure instrument.
Speaker 9: There are fewer components, which lowers material costs and allows for easer assembly, which we believe will drive increased production efficiencies at higher volumes.
Speaker 6: From an operations standpoint, we have expanded manufacturing capacity, who have developed strong relationships with key suppliers, who have ensured theirur ability to meet increasing demand.
Speaker 9: We continue to strive to manufacture the highest quality product for our customers.
Speaker 9: To ensure a successful rollout of clean flow, we have been working to optimize every step of the supply chain.
Speaker 9: From malls to final assembly and packaging process. All our efforts are focused on scaling processes to manufacture at higher volumes.
Speaker 5: Additionally.
Speaker 9: Our full market release will ensure our commercial and clinical education teams can provide a world-class onboarding experience for new customers.
Speaker 5: As a reminder, we will continue to manufacture and sell our current generation procedure instruments for current gleman customers, with the goal of educating and converting them over time, allowing them to transition at their own pace.
Speaker 5: Conversely, our strategy will be to primarily train new customers using cleanflow to ensure immediate adoption.
Speaker 8: Given this dynamic and the fact that we have an approximate 850 gener wave installed base, we expect a full adoption of clean F may take up to 24 months as we expand a commercial use in a responsible and considerate manner.
Speaker 8: Turning to our commercial strategy.
Speaker 8: Our barurcated sales team remains an important driver of growth as we penetrate our record market: over approximately 17 million richal procedures performed annually in North America, representing a market opportunity of approximately $1.9 billion.
Speaker 6: As of March thirty-first, we more than double the size of our commercial sales team when compared to June thirtieth 2000 and twenty-onefirst over the past year. The key addition is the building of our consumable rep team.
Speaker 5: We believe this team will be an integral part of our growth and execution in 2022 and beyond.
Speaker 6: Given the number of capital and consumable reps we have hired, our plan is to maintain the size of our commercial team at this level for the near term, as we fo cus on sales force effectiveness initiatives and sales execution, before expanding further.
Speaker 8: In connection with the expansion of the number of consumable reps and bifurcation of our sales force. We're starting to see early signs of increased productivity and pipeline generation from our capital reps, who are now fully focused on selling capital equipment to new customers.
Speaker 5: As a reminder prior to the establishment of the consumable rep team, capital repps spendent roughly 50% of their time servicing existing accounts.
Speaker 5: Regarding procedure instrument trends, we continue to receive positive feedback from new accounts that have completed our updated training protocol as compared to legacy customers. While still early, we believe this is a positive indicator of increased utilization, as these endautists are becoming more comfortable.
Speaker 5: Not only with the technology, but also being able to treat a broader range of routinal cases.
Speaker 8: As our sales force matures, specifically consumable reps. we believe their consistent training with new and existing customers will drive average utilization rates higher, as they support the clinical workflow, practice workflow and patient demand generation for our doctors.
Speaker 6: Lastly, in April we announced an amendment to our credit agreement with Perceptive credit holdings, which provided sennendo an additional $2 billion of available credit by expending the borrowing deadlines for two tranches of $1 million to September 2020 -two and June 2020 -three respectively.
Speaker 6: In addition to our strong balance sheet consisting of 66 million of cash, this restructuring provides optionality, if needed, to further support the growth of our business.
Speaker 6: In summary, we have a revolutionary technology backed by compelling clinical data and Kv supportour focus continues to be investing in expanding our commercial infrastructure to penetrate the endonas channel to make gelave the standard of care for routineal therapy.
Speaker 6: Additionally, we will continue to prioritize Ross margin expansion and clinical practice efficiency with a full commercial launch of clean flaw.
Speaker 10: With that, I will turn the call over to Michael Watts, selendo's Chief Financial Officer.
Speaker 11: Mike.
Speaker 12: Thanks buret. As previously mentioned, an Endo total revenue for the first quarter of 2022 was $9 million, compared to $7.4 million for the first quarter of 2021, an increase of 22%.
Speaker 13: Growth in the quarter was primarily driven by increased procedure instrumment sales and increased genal-wave console sales.
Speaker 14: In the first quarter, general wave console revenue was $2.1 million compared to a $1.8 million in the first quarter of 2021.
Speaker 13: gener wave Conant 11. selling prices in the quarter were roughly $6 thousand, an increase of approximately 6% compared to the prior period, while flats sequentially compared to the fourth quarter of 2021.
Speaker 13: Turning to procedure instruments, PI revenue was $4.3 million, compared to $3.3 million in the first quarter of 2021.
Speaker 13: An increase of 29%.
Speaker 13: Pi revenue growth was driven primarily by increased procedure instruments sold and a roughly mid-single-digit percentage increase in average selling prices compared to the prior year period.
Speaker 13: Procedure instruments saw in the quarter totold approximately 66 thousand, representing growth of 20% compared to the prior year period.
Speaker 13: Total software revenue for the first quarter was $1.8 million compared to one point six million doll in the first quarter of 2021. An increase of 13% and.
Speaker 13: The increase was driven primarily by new licenses and services.
Speaker 13: Gross margin for the first quarter of 2022 was 25%, compared to twotwenty-three percent in the first quarter of 2021. The increase in gross margin was driven primarily by improved de overhead absorption and average selling price, partially offset by increased costs relating to supply chain.
Speaker 13: As Buren stated earlier, we are closely monitoring our supply chain and working with vendors to mitigate any potential disruptions.
Speaker 15: As a result of our increased efforts in this area we expect pressure on gross margins to continue into Q2 and.
Speaker 13: Total operating expenses in the first quarter of 2022 were $16.8 million, compared to $11.6 million in the same period of the prior year.
Speaker 13: The increase was driven primarily by higher personnel-related expenses, commercial expansion, as well as higher general and administrative cost, primarily legal and accounting associated- operating as a public company.
Speaker 13: lounss from operations was 14.6 milliondoll in the first quarter of 2022, compared to nine point eightmilldoll in the first quarter of 2021.
Speaker 13: Net loss was $15.5 million for the first quarter of 2022, compared to $10.9 million in the first quarter of 2021.
Speaker 13: Our cash and cash equivalence as of March thirty-first 2022 was approximatelyme $66 million, while long-term borrowings total $3 million.
Speaker 13: As beyond previously mentioned. On April sixth, we expanded on our credit to include an additional $2 million, subject to certain milestones, of which we have yet to access.
Speaker 13: We believe this funding will provide the liquidity and capital resources needed to support UN growth.
Speaker 13: In our current business in 2022 and beyond.
Speaker 13: Moving to our financial guidance.
Speaker 13: As we move forward in 2022, we have severate positive structural tailwinds, including a launch of sales force, increased underlying demand for genalwave and the full commercial launch of clean flow.
Speaker 13: For 2022, we continue to expect annual revenue to range between 40% to $43 million, representing year-over-year annual growth between 20 and 30%, and.
Speaker 13: Given the supply chain dynamic mentioned previously, we expect our second quarter of 2022 gross margins to be in line with the first quarter of 2022.
Speaker 16: That said, as we transitioned into the back half of 2022, we expect sequential gross margin expan, sion with positive contribution from the adoption of clean flow and increased volume.
Speaker 13: At this point, I'd like to open up the call for questions.
Speaker 12: Thank you. We will now begin question and-answer session.
Speaker 17: To ask a question. You may press star, then one on your telephone keypad. If you were using me speak a phone, Please pick up your handset before pressing the kingens. If, for any time, your question has been addressed and you would like to withdraw your question, please press star Ed.
Speaker 12: The first question we have from the phone lines today comes from Jason bednow of pakistander. Your line is now working.
Speaker 12: Thank goodconacting everyone Congress, the result here and they next taken the questions, the. I was hoping we start with the full year revenue guidance. The 40 to 40, three million- how are you feelal with the set up here for the rest of the year- were more than a third of the way into 2022. that seems to us external, like the stories tracking to or had a plan. But it would be great to hear how you see the rest of the year unfolding and along those lines, because could you discuss how you see the cadence playing out for new system sales and procedureyour instrument sales would be: think through the progression of the year and consider those P I apply chain dynamics you referenced and prepared remarks.
Speaker 12: A Jason and thank you, thanks for joining us call and thanks for the question. So obviously we're very happy with the first quarter of this year.
Speaker 3: And as we sit here today, we also feel feel good about Q2. We have launched a clean flow successfully at the AE. We see strong demand for consoles and obviously we saw significant signs of that at the aewe also see a strong patient and procedure volumes, as we, like you're talked about before. We can obiously monitor these trends live here across our console ininstall base.
Speaker 8: But like we talked a little bit about in our prepared remark, we are seeing some temporary supply chain headwinds with, specifically with the procedural instrument packaging.
Speaker 8: So because of that we have decided to apply somewhat level of conservatism here on our numbers and reaffirmed a total 40 to 40, three million num, despite top line beat here in Q1. But so in summary I would feel that we continue to feel good about that guidance.
Speaker 6: With respect to new system selves, we see strong demand for consoles.
Speaker 3: And I think that that's something that was very parent, I think also during the AE really exciting conference for us, we had a busy boost, we had great activity level and I think that is a strong leading indicator for not just console sales here in Q2 but also leading indicator for what we should expect to see into the year.
Speaker 12: All right, that's all mebe. Just to clarify real quick. I mean it sounds like maybe there would have been some upward bias or I don't know if you're willing to point to the upper end of that guide. I M just trying to figure out if there's, if there's, anything that's constraining you on delivering on the procedure instrument side here in two Q, or that it's just your remain conservative, given the supply chain dynamics that are out there right now.
Speaker 18: Yes Jason, I would say that' probably a little bit of of both. Like we alluded to we, the thing that we're looking at right now is, of course, the temporary supply chain had been associated with procedure instrument packaging.
Speaker 6: Let me just give a little bit, maybe a little bit more color on that. And specifically, what we're talking about are the plastic lids that we have we put on top of the single-use procedure instrument kits. This is something that is, in short, demand right now across the metech industry.
Speaker 19: Good thing for us though, is that, as part of the clean fil launch, we have already made step to transition to a lower cost, more elegant pouch. In other words, a different way to package the procedure instriment.
Speaker 8: But because of these supply chains constraints, are these plastic lids? We're enough speeding up this.
Speaker 3: Speeding up the transition to these pouches and coincidentally we have a strong, very strong inventory position on pouches. So when we make that transition we will be, I think, in much stronger shape. But again I just want to reaffirm here that we still feel good about the overall guidance for the year.
Speaker 12: All right, very helpful and make sure the color, just if I I, I that's one more. There has been some some mixed feedback regarding the state of the capital, equipment demand out there and dental market, but byy and large it still seems pretty helpalthyme in the U's beyond. You made some pretty encouraging comments here regarding activity at AE. Maybe just talk generally, outside of the feedback you're hearing out there, ardingthe Al this to invest in new capital and what is your funnel of sale and sale leads look like today versus maybe where we've sat three to six months ago.
Speaker 18: Sure So first let me just give some color on AE because I think that helps frame the question a little bit. We just talked about obviously, a great activity level at the AE which is, like we think, a leading indicator that we have, that our pipeline is building and that in fact have a strong pipeline.
Speaker 5: Just want to also one give one additional, perhaps color on the AE. No, I had the opportunity to visit AE color 10 years ago when the the conversation at the ll on the commvention floor was really all about files and we had large file manufacturers having large boots.
Speaker 3: You know discussing files.
Speaker 6: Then selendo came along and started to introduce this concept. That is not about the file, it's about how you clean in this, in fact.
Speaker 4: And we see now, when we come there today, or rather when we attended a AE, the file manufacturers have significantly smaller boots. The conversation is not around files anymore, it is about how we're going to clean and disinfect these teeth. So we think that is a leading indicator for this verdus industry is going the effact that we see a, an industry that's really right for for disruption. So that that's the a AE.
Speaker 3: Now I let me just comment on the capital equipment demand across across the industry and I think it's obviously there's a number of different dental companies that are giving insight into the orall market.
Speaker 5: I think what's important for us is to make the distinction between elected versus non-elective procedures. We are obviously in the space of non-elective procedures and when patients need to get a roucane, we believe they will get that rcanal.
Speaker 19: So like we've talked about before, we also obviously have a strong value prop and I think, as you have these external dynamics in the marketi think doctors will look for new revenue sources and I thinkwhen man applied correctly, generentle maype can really be really an opportunity to really obviouslyimproved overall efficiency to practice, an overall increase the overall revenue for those practices. So, taken all that in, I kind of summarizing thatwe feel good about the sales funnel that we're developing and that we continue to develop into the year.
Speaker 12: Alright, Thanks so much, very helpful.
Speaker 12: Thank you. Your next question comes from joh.n block a steal. Your line is open, Jo.
Speaker 3: Gray. Hey guys, this Tom steep on for John . Thanks for the questions. Want to start on consumables with a small handful B? ond. You talk about the early traction with the consumable rep so far kind of your thoughts on the ramp or contribution to results. Maybe do you still feel good about that six month ramp you've talked about. And then to confirm one item be: I believe you said utilization was a growth driver year over year. Just want to clarify that. So is utilization up year -over-year in the quarter. Sorry, in the last one Mike. Can you help us with just how we should think about the cadence of P I utilization for the rest of the year?
Speaker 18: So Hi, Tom' Ike, I'll start with the answer working backwards and then we'll go to your first part of the question. So we think of cadence for utilization of the. What we have talked about can expand upon this when we talk about attraction with the consumable reps, that the consumable reps now are being introduced to a lot of their customers and they're getting very good reception on that and they're also training new customers and we have a new protocol for training that we mentioned and we believe that TR, that training protocol, is driving more utilization from the start with these customers and as we go back to our new accounts and retraining them will see more and further procedure adoption. So we'would expect is utilization to step up sequentially as these consumable reps are able to work through their accounts over the coming months.
Speaker 13: With respect to utilization within the quarter, what we essentially saw year-over-year was as, at a macro level, utilization was essentially in line per account year-over-year, but what we are seeing is increased utilization, net with our new accounts and then also our existing accounts, driving further adoption as well. So I'll passest best to be on.
Speaker 3: Thanks Mike in, thanks for the question Tom, and maybe, maybe I'll start off by saying that to just give some high level commentary on our- you know, our- commercial team here now we've seen a lot of sales teams across btheistryet and I I had to say that I believe that we have with the more professional sales team, not just on the capital sales SI, but also on the consumable sales side. So to your point, to Tom, we did hire obviously more capital sales reps, more consumable sales reps, in Q4 of last year. We've spent a lot of time and focus now on training these reps and we're starting to see the early signs that we're getting better utilization in the accounts where we have consumable reps.
Speaker 8: But to our earlier point, to your question, we expect to see more meaningful increases in the second half of this year. So yes, So we are still still believe that in that six -month ramp that we have previously talked about.
Speaker 12: Got it. That's helpful. If I comppeivot to supply chain a bit, sorry to go back here and be, you've given some very helpful color on just how you think these challenges play out. Can you talk to your level of confidence and visibility a bit? If you're just able to flesh that out? And then, as a attack on to that Mike, is there maybe a four Q exit we should think about on gross margins? I know you, you know, again gave some good color on kind of the cadence there, but might be helpful just as we think about maybe 2020 three.
Speaker 12: Tom a good, good question, and you know the reason why we want is to specifically highlight, you know, the instrument packaging here is that we just wanted to give that full transparency. What is going on, and I think the you know for us, if we look at all the different things happening on the supply chain side and if everything that we know today, like we alluded to in our you know, you know initial comments, we believe that most of these things will be solved for the middle of of this year, So that that is obviously what we see today. So we have good confidence, you know, when we talk specifically about the conversion to this pouch that we just talked about, we have good confidence in you know, in that, and that is also obviously, by the way, other thing that will help facilitate lower margins for for the business. I just want to give some you know additional comments, maybe setting this up also a little bit for how Mike is going to talk about the some of the elements for the the margin side, because you know the pathway to improve margin is something that's really important to us.
Speaker 6: And also the pathway to profitability, something that that's we're working on and is very important to us. And the clean flow launch is the biggest lever that that we have in the business here to really drive- you know to drive- margins So the faster we can convert customers over over to clean flowobviously that's going to be a significant you know drive gross margin. You know we'regoing to continue to obviouslywe're going to know contribution margins on the clean flow. We think we have some opportunities there as we go forward. We's going to continuecontinue to increase overhead absorption meeting, expanding the business, selling more console driving utilization, like we've talked about, and so you know what we- and this back to really your you know earlier question as well- while we see, while we are in some under some pressure now because of supply chain, we see this is a temporary issue and underlying programs that we have are on track to get our us to our gross margin targets. So maybe that's a good point to hand over to you for some additional comments. Yeah no, I think that's a great segment. So when we announced the commercialization of clean flow, April is great, exciting time for us, very exciting at a we're already see pluseit, momentum and utilization and feedback on the procedure instrument.
Speaker 13: So we're anticipating that we're going to see good adoption- customers are asking for it- and we'll also see further improvements in the cost structure of clean flow. As we start to ramp up the volumes and it replaces our existing mold instrumentsowe'll see those sequential gross marginimprovements. As we stated in the past, we haven't given specific guidance on gross margins, but I think the way we should think about that- as we work through the volumes and improve both adoption and everything, something in ordertomagn to low Thirty's as a percentage of gross margin.
Speaker 13: So what we expect is we exit the year and then, as our volumes gre higher into 2023, we'll see that uptick.
Speaker 13: Begin to accelerate into the year of 2023. totfully, that helps.
Speaker 3: Very helpful and if I can squeeze in just a quick clarification question I M might to missmiserd, is the conversion to the pouch? Is that margin neutral or sorry? I just just want to clarify that.
Speaker 18: Yes good question, Tom. That actually helps us on margin. So it's a simpler device, simpler way of packaging this more elegant and also lowers the cost of the packaging and plus it's takes up less space and it's easier for us on the manufacturing line.
Speaker 18: Perfect BS.
Speaker 20: Thank you and done.
Speaker 17: Thank you, we now have.
Speaker 21: Mason richch of Goldman Sachs. Your line is now and Nathan.
Speaker 18: Hey good afternoon. Thanks for the questions. Maybe to start, can you talk about what the console selling cycle looks like post a conference, like a- I mean' the first time you've had one in person in a few years- and what the expanded sales force that you now have. How quickly do you think that the interest you saw that event event can translate into system placements?
Speaker 12: yesthanks n. I think there is aarrange of answers for your questions were: when we have a busy boost like we had at the AE, there will definitely be a certain number of counsels that are closse on the convention for.
Speaker 6: But there will also be initiation. So conversations with doctors they may be. Maybe they go through a test drive like we talked about in our prepared remarks for day clean a tooth and me. Our sales reps will start that conversations with with the doctor and how this can be incorporated into their practice and then we make close to console a week after the console or four weeks after the console, as are after the after the AE event.
Speaker 19: So I think the way we should view AE is that this is really a way to really build our pipeline, not just for the quarter but for the rest of the year, and this gave us a lot of touch points and significantly increase our pipeline for the year.
Speaker 12: Okay great, and maybe a follow-up for Mike. You mentioned the additional two million of liquidity on the credit facility. Could you maybe just talk about how you're thinking about cash needs for the business over the next year or so and do you feel like the current liquidity levels are kind of sufficient to fund those needs that you have?
Speaker 22: Yes thanks, Nathan. So when we we're looking at my all businesses, we're continue looking at our options and sources of capital, and Perceptive 'has been a great partner in that, So we're certainly appreciative that we're able to secure that additional two million. So we're looking at all other sources as well and our ongoing basis. But right now we're in a very good position and our main priorities to continue to invest in the business and drive growth and increase our generally installed base and then also continue to support our sales team as they drive utilization.
Speaker 12: Great Thanks very much for the questions.
Speaker 23: Thank you, goodbye.
Speaker 17: Thank you again. If you would like to ask a question, please press ANS goodbye one on your teleon Ke pad.
Speaker 21: We now have another question on the line from Ellen bright of Morgan Stanley .
Speaker 17: Please go ahead and youalready.
Speaker 17: Bright.
Speaker 24: Great thanks and thanks for the questions here. How, with the rollout of clean flow at this point it sounds like you still anticipate the 24 -month transition there. Could that be exedited at all if you did see some of the supply chain dynamics? Per it tihere.
Speaker 12: Yes a good question there and yes, obviously we're early in our launch of clean flow. We're re going to continue to execute on the plan that we have and just to kind of give you a high-level overview of the key elements of that plan, obviously we already have some customers that are already on boarded M clean felt and we're going to continue to support them.
Speaker 19: But all new gman customers going forward, that our buying consoles and being trained on gener labe will now be trained on clean fve.
Speaker 6: And then the third element of this is that we're going to convert our existing inall base of 850 customers and this is where our consumable sales team will come in and play know, a significantyou part of actually converting those, those customers. And I think you're asking a good point ER, in terms of you know, are there ways to speed that up? Yes, there are, and I think you we, you know we take it perhaps measured and perhaps a little bit of a conservative approach to that two year conversion. But for us know, the reason why we're going to continue to really push to convert that faster is that that ultimately hel us drive improved margins in the business. So you, you're going to see on an hour side here and our consumable sales team, they're going to working, we're going to be working hard to really you to convert those customers quicker, such do we can get access to better margins quicker.
Speaker 12: Okay Scot it great and it's. It was interesting how you were mentioning that the change in conversation at a and with a focus on more on some of the disrupt, ORs such as yourself in the industry here, and I guess you've M well ahead of the game. But have you seen any sort of competitive response out there and how have the industry consituents evolved around this? And on the flip side of that, are there opportunity for partnerships across the industry as well?
Speaker 12: A good, good question. '. It's really fascinating to see that conversion and kind of have the conversations have changed at the AE because those large file companies that had those large boots, they they don't have large booth anymore and they don't have a strong presence anymore and the conversations, like we talked about, have changed to cleaning in this infection. If you know, regarding competitive response, you know, if you look across the entire industry of enodonics, there are no new technologies that have been introduced into this field for the last one or 2, two decades.
Speaker 19: There are. There are obviously companies out there that are trying to take resspend existing technologiesto now because of cyendo success. Try to go directly against us.
Speaker 3: butwe're still like we talked about. We talked about in our rest one and that we've talked aboutin other the other areaswe're very confident that we havea superior technology in terms of enabling a good cleaning, disinfections in the teeth and enabling good, good outcomes and antodonteics, So we don't see anything on their horizon that can really compete head to hide us with us from an outcome perspective and and provide something obviously, that patients want to for treating their broutal procedures.
Speaker 3: So with regard to the partnering side, you know I think the you know obviously that's something that will continuously be monitoring, but we think that big value creation opportunity here in in the business eror is just continue to build on the gentlemanate technology that we have, continue to build around the gentleate platform to continue to drive efficiencies in these procedures and then obviously continue to convert the market to generentleway. We're doing less than 2% of procedures across reoutcannot therapy and the United States and Canada today, So obviously we see a very large opportunity ahead and bullish on our ability to continue to take, share and grow the business within in this, in this market.
Speaker 12: Pe great. Thank you much.
Speaker 25: Thanks saron.
Speaker 17: Thank you.
Speaker 21: As that was our final question, I'd like to handle that to beyond for some closing remarks.
Speaker 20: Well Thank you, operator. Let me just close out by saying that we appreciate everyone spending time with us today. Mike and I look forward to meeting many of you as we go forward, both at future investor conferences and also for individual meetings. Have a great day.
Speaker 17: Thank you for joining. That does conclude today's call.
Speaker 17: Please have a lovey day. You may now disconnect your line.