Q3 2022 Shockwave Medical Inc Earnings Call
Good afternoon, and welcome to the Shockwaves third quarter 2022 earnings conference call. At this time, all participants are in a listen only mode.
We'll be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes.
I'd now like to turn the call over to Debbie Kaster, Vice President of Investor Relations at Shockwave for a few introductory comments. Thank you you may begin.
Thank you all for participating in today's call joining me today from Shockwave Medical are Doug Godshall, President and Chief Executive Officer is exactly right, President and Chief Commercial Officer, and Dan Puckett, Chief Financial Officer.
Earlier today Shockwave released financial results for the quarter ended September 32022.
A copy of the press release is available on Shockwave website before we begin I would like to remind you that management will make forward looking statements. During this call within the meaning of federal Securities laws, which are made pursuant to safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.
All forward looking statements, including without limitation.
That's related to our sales and operating trends.
Hiring prospects financial and revenue expectations and future product development and approval.
Based upon our current estimates and various assumptions. These statements involve material risks and uncertainties, including the impact of the COVID-19 pandemic 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 and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our annual report on Form 10-K on file with SEC and available on Edgar and in our other reports filed periodically with the SEC.
Shockwave 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 and is accurate only as of the live broadcast today November 7th 2022.
I'll turn the call over to Doug.
Thanks Debbie.
Good afternoon, everyone and thank you for taking the time to join US to review shockwaves results for the third quarter of 2022.
We are pleased to share the results of another strong quarter delivered by our global team.
Sales in the third quarter of $131 $3 million represented an increase of 102% from third quarter of 2021.
The team delivered these results. Despite some of the macro headwinds that have been described by others in our sector.
Fortunately our team and our customers have become very nimble in their ability to adapt to the changing circumstances around them.
And to remain focused on optimizing patient care.
We continue to witness strength across the entire Shockwave franchise, which reflects the widespread appeal of our technology and bodes well for the long term health of the business.
In the U S.
Coronary and peripheral sales both more than doubled from the third quarter of 2021.
Internationally, our progress was also quite impressive with sales up 68% from a year ago.
The direct investment we've been making is paying off nicely and our international sales and marketing team now stands at 53.
Later in the call.
Isaac will provide additional insights from the field, but I would first like to share some commentary around recent progress across the Shockwave organization.
I will start with a few updates on some of the new products in our portfolio.
We're pleased to be granted CE mark of our C to plus coronary product in Europe in late August .
Ctrip plus adds 50% more pulses going from 80 to 120 <unk>.
Since our initial launch of <unk> in Europe , our customers I've often wished they had more pulses. So they can deliver more energy to a particular lesion or treat additional lesions identified during the procedure.
The additional 40 pulses should go a long way towards satisfying our customers and further enhancing outcomes.
We started a limited market release in Europe , and if all continues to go well, we'll move forward with the U S regulatory process.
We also received FDA approval of our L. Six peripheral catheter a bit ahead of schedule and are about to commence a limited release of that product.
All six offers to new features larger diameters and more concentrated power.
Our customers have expressed interest in larger diameters for the larger vessels above the SFA.
In response <unk> has eight 910 and 12 millimeter diameter versions.
We position these six emitters in Essex closer together than in our other catheters, which concentrates the power and will enable delivery of the sonic energy over a greater distance.
This approach will enable L. Six to maintain the superb efficacy and large vessels that our customers have become accustomed to in smaller diameter vessels.
Next Empire plus continues to perform extremely well and we are encouraged to see an increasing use of the three and a half in four millimeter sizes, which indicates an increasing use for below the knee lesions.
The longer shaft of Empire, plus enables it to be used below the knee, whereas the original Empire was generally unable to reach those lesions.
And five plus offers a 50% longer treatment zone that S. Four which is attractive for longer lesions and we see the expansion of Empire plus into the V Teekay segment.
As a first step towards a more sophisticated below the knee portfolio.
Okay.
We are also continuing to invest in data generation to both support and expand the use of IV L in different patient populations.
At TCT, we announced the initiation of empower CAD, which you'll be the first ever prospective coronary interventional study consisting entirely of female patients.
Historically females with coronary artery disease tend to have less favorable outcomes than males, particularly when using atherectomy.
Our existing data have consistently shown similar safety outcomes for IV L. In both sexes.
Which caught the attention of our investigators and motivated us to explore a female only study which will include a broader set of real world lesions that were studied in our earlier trials.
Yeah.
There were multiple IV old datasets presented at TCT This year.
The session that seem to have the most significant impact was our symposium entitled controversies and calcium.
And open minded debate on approaches to nodular calcium.
As we mine the data from our trials the results across our studies confirm that I V. L delivers consistent results in terms of stent expansion minimum stent area.
And procedural safety, regardless of the presence or absence of nodular calcium within these target lesions.
Yeah.
These findings have been very well received by our customers at large and we are anticipating a publication in the not too distant future.
Lesions with calcified nodules account for roughly 20% of the problematic calcified lesions and we see a meaningful opportunity to move these nodular cases into the IV L. Camp now that we have such compelling data from our trials to help our customers to make the right choice for their patients.
And the final point on the clinical front, we are fortunate to be accepted for a late breaker presentation at Veeva for the third year in a row, where the results from our pad observational study presented last week.
This study included over 1300 patients, which is the largest number of severely calcified vessels treated in a core lab adjudicated peripheral study.
So as president at the meeting were impressed by our commitment to generating robust data in the peripheral space.
The key takeaways, we heard from the attendees were that our results are remarkably consistent in terms of the efficacy of our therapy, regardless of which vessel is treated and that Ivy I'll continue to demonstrate extraordinarily low adverse events and a very complex population.
These data capped off an overall strong shockwave showing at Veeva.
And lastly, a quick reimbursement update.
We were pleased last month to be granted a category one CPT code for coronary I V L, which means that physicians will receive an additional professional fee when they used to.
This process now gets turned over to the Rux committee to determine payment level, which will be memorialized in the final rule about a year from now and will become effective January one 2024.
We were also pleased to have recently been granted reimbursement for coronary IV by the Ministry of Health Labor and welfare or NHL W. In Japan at a level of 429000 in Japanese yen, which equates to about 3000 U S dollars given current exchange rates.
Our <unk> system will be officially reimbursed in December and our current plan is for our team to launch <unk> two in January in Japan.
We expect that the Japan launch will start slowly, but it will become a meaningful contributor to our business starting in late 2023 and will be a great complement to our other growth engines.
Our global customers continue to adopt IV all across a wide spectrum of their patients, which has enabled us to deliver consistent results. Despite external speed bumps like staffing challenges and exchange rates.
Given the various internal and external considerations, we now anticipate delivering topline revenue in the range of $483 million to $488 million for the full year of 2022.
Presenting growth of 104% to 106% from 2021.
With that I will turn the call over to Isaac and then Dan will share more detail on the broader business and financial results.
Is it.
Thank you Doug.
I've mentioned, we had another strong quarter across U S coronary U S peripheral and international.
Plus launch continues to go very well positioned to depreciate the enhancements that Empire plus brings compared to its predecessor, and we're seeing strong volume growth in the U S and international markets.
Our target is to complete the launch in the U S. This year. So that we can enter 2023 focused on driving penetration versus bumped into accounts.
We are very pleased with the unit growth we are seeing for the M. Five product this year.
In the U S. The volume for the M. Five product family year to date is nearly 70% higher than the same period last year. The M. Five plus price uplift further contributes to the revenue growth and five product line in the U S. The team has executed very well on this launch and we are seeing year on year growth rates.
The average daily sales for the M. Five products accelerating 2022 with Q1 up 52% Q2 up 75% in Q3 up 124% compared to the respective quarters in 2021.
In our international markets, we added marketing resources last year to focus on the peripheral business with the efforts from the marketing group and the launch of M. Five plus we are seeing over 100% growth in the unit volume of the M five products internationally.
Still a relatively small component of our revenue the international peripheral business will be an important long term contributor.
We also continue to see solid progress in the S. Four business and we look forward to increasing the growth in our beauty care business with improved products and strong clinical data both of which are currently being developed.
Turning to the coronary business, we continue to see strength in all geographies. This is a credit to our sales teams and distribution partners as they had been able to deliver strong growth in our coronary business, while executing a launch event five plus and.
In 2023, we expect incrementally more focus on driving coronary adoption.
Now I'd like to spend a few minutes, providing some detail on how we look at the future potential of the coronary business.
We will update at the Investor deck with specific references from clinical studies that show moderate to severe calcium is present and at least 30% of stable and unstable coronary P. C. S.
That is reflected in our current Tam.
Are these studies were loud angiographic core labs to identify calcium.
However, we know that when Intravascular imaging is used calcium is detected more often than it is by geography.
The prevalence of moderate to severe calcium is likely higher than 30% of PCI and is growing as the prevalence of significant predictors such as age and diabetes are on the rise.
The use of Intravascular imaging is increasing in the U S, particularly in complex PCI and as you know it is used nearly 100% of PCI cases in Japan.
Bottom line. It is increasingly evident that the prevalence of calcified PCI likely exceed 30% and is growing.
Our goal is to maximize the penetration of IV iron Calcified P. C is relative to the prevalent as Jeff mentioned, we are still in the early innings to realize this potential we need to have a steady cadence of new products supported by robust clinical data.
First of these new products in situ plus.
We're also well into the development of the next version of our coronary product that will follow C. Two plots in the market in the coming years.
We've invested in the empower study and are currently assessing other coronary trial opportunities.
We have recently initiated new sales tactics and organizational changes intended to drive continued near term penetration increases.
In the U S. We spent the early part of this year analyzing rep physician and account behaviors to determine why we have variable penetration and accounts for context. We have many accounts that are already using IV all at mid teen percentages of their P. C is.
We also have many accounts that are using IV out in the low single digit percentages of P. C. S.
Based on this work we have initiated six work streams that will help our team increase adoption of coronary I B M D.
Acquiring better procedural and physician level data to improve our targeting enhancing our sales training and increased peer to peer physician education.
I'm confident that this work will help us continue to change how and when IV is used.
We are also focusing on optimizing the structure of our territories. We currently have approximately 1.6 clinical specialists in each territory.
The ratio of clinical specialists. The territory managers has increased from one point to in Q3 of 2021 as we added approximately 20 territories and 50 clinical specialists over the last year.
Territory managers focused primarily on launching accounts and managing the business aspects of the territory, while clinical specialists work to drive penetration within those accounts via training education and case support.
In Q3, our average territory generated approximately $1 3 million of total revenue note.
Note that this compares to average territory revenue of approximately $1 million in Q1 of this year.
By the end of 2023, we expect to have between 110, and 120 territories and will average over two clinical specialists per territory.
As we grow next year, we also expect our territory productivity to increase so that our average territory in Q4 of 2023 will have substantially more revenue than our average territory does today.
The additional territories and increased ratio of clinical specialists to territories will result in having fewer accounts to service, which enabled the team to work closely with all physicians in each account.
He will also ensure that we can support the peripheral business, while launching new coronary products and vice versa.
In addition to evolving sales tactics and organizational structure, we expect to see continued progress on coronary reimbursement.
The procedure economics for the hospital and physician both have an impact on expanding adoption of new technologies.
Using the peripheral U S business is an analog I noted previously that we have seen the average daily sales growth of the M. Five product family accelerated each quarter. This year in the U S.
This acceleration was based on a launch up by new products, coupled with improved hospital economics.
With the reimbursement change this past January hospital payments weren't outpatient above the knee procedure involving IV all increased by five to $7000.
It is greater than the hospital cost of purchased an ideal Kathryn.
Currently coronary IV catheters are reimbursed under a transitional pass through payment, which is intended to offset the cost of the device.
It really has helped facilitate access to the C. Two device, while CMS gathers data on the cost of coronary IV all procedures.
As we look beyond the transitional pass through program to the eventual long term reimbursement scenario. We're on a path that is similar to peripheral.
Incremental payments to hospitals for procedures involving coronary IV L should exceed the cost of the device. We expect that the cost data from the T. P. T program will support an incremental 7000 dollar payment to hospitals for coronary IV all procedures compared to the payment for a standard stenting procedure.
Similar to our above the knee situations this incremental payment would be greater than the cost to purchase a CTO catheter.
Turning to the physician fee. We are pleased that coronary Ivy Hill was granted a level one CPT code starting in 'twenty 'twenty four this should enable physicians to receive incremental professional fees when using IV L.
So looking ahead in the U S. We will have new product in situ plus and a larger field footprint with improved hospital and physician economics that will enable a deeper penetration of coronary I B L.
Outside of the U S. We are fortunate to have very strong payments that in Japan at the outset of our launch for both hospitals and for physician fees.
We are also working on reimbursement in other countries, although they tend to be less predictable than Japan wallen.
While uncertain, if we can improve the reimbursement in any country it would be an incremental tailwind for future growth.
Our highest volume customers already have an IV off first mentality and have quickly changed their behaviors when it comes to treating calcified PCI.
With the efforts discussed above we hope that every customer will have an IV I'll first mentality when it comes to calcified PCI. So with that I will now turn the call to Dan to review the financials.
Thank you Isaac good afternoon, everyone Shockwave Medical's revenue for the third quarter ended September 32022 was $131 $3 million, 102% increase from $65 $2 million in the third quarter of 2021.
U S revenue was $110 $5 million in the third quarter of 2022 growing 109% from $52 $8 million in the third quarter of 2021 coronary.
Products contributed $77 $3 million to U S revenue in the third quarter of 2020, 209% increase from $36 $9 million in the third quarter of 2021.
Peripheral products accounted for $32 $9 million of U S revenue, an increase of 111% for $15 $6 million in the third quarter of 2021.
Generators accounted for $3 million of U S revenue in the quarter.
The growth in U S revenue was driven by increased utilization of existing accounts, new account adoption of Ivy Hill and continued sales force expansion.
International revenue was $28 million in the third quarter 2020, 268% increase from $12 $4 million in the third quarter of 2021.
International revenue from coronary products was $15 $7 million in the third quarter of 2022, a 54% increase from $10 $2 million in the third quarter of 2021.
International revenue from peripheral products was $4 $1 million in the third quarter of 2022, 95% increase from $2 $1 million in the year ago quarter.
Generally theres accounted for $9 million in international revenue in the third quarter of 2022.
The increase in international revenue over the prior year period reflects continued geographic expansion, including China growth in customer demand and the growth of our direct sales force in Europe .
The increase in international revenue was partially impacted by unfavorable foreign exchange rates.
Looking at total revenue by product line, our coronary products accounted for $93 million of total revenue in the third quarter of 2022 compared to $47 $2 million in the third quarter of 2021, representing a 97% increase our peripheral products accounted for $37 million of total revenue in the third quarter of 2022.
Two compared to $17 $7 million in the third quarter of 2020, 109% increase in addition to sales of generators contributed $1 $2 million in revenue in the third quarter of 2022 compared to <unk> $3 million in the third quarter of 2021 O 369% increase.
Gross profit for the third quarter of 2022 was $113 $5 million compared to $54 $2 million in the third quarter of 2021 gross margin for the third quarter of 2022 was 86% as compared to 83% in the third quarter of 2021.
Improvement in gross margin was primarily driven by product mix as well as continued improvements in productivity and process efficiencies.
Total operating expenses for the third quarter of 2022 were $76 $7 million or 49% increase from $51 $4 million in the third quarter of 2021.
Sales and marketing expenses for the third quarter of 2022 were $42 $1 million compared to $28 $4 million in the third quarter of 2021.
The increase was primarily driven by sales force expansion.
R&D expenses for the third quarter of 2022 with $22 million compared to $13 $7 million in the third quarter of 2021. The increase was primarily driven by head count growth.
General and administrative expenses for the third quarter of 2022 were $14 $4 million compared to $9 $3 million in the third quarter of 2021. The increase was primarily driven by higher head count to support the growth of the business.
Net income for the third quarter of 2022 was $35 million compared to a net income of $1 $9 million in the third quarter of 2021 basic net income per share for the third quarter of 2022 was 97 cents diluted net income per share for the third quarter of 2022 was 92.
We ended the third quarter of 2022 with $257 million in cash cash equivalents and short term investments. Additionally in October 2022, we entered into a 175 million dollar revolving line of credit as a matter of routine corporate governance and to provide further financial flexibility.
At this point I would like to turn the call back to Doug for closing comments.
Thank you all for joining us for the call today I'm encouraged by the results we achieved this quarter. Despite the continued macroeconomic challenges.
Our global team remains focused on execution and operating efficiencies balanced with investment in our pipeline to drive continued growth as we strive to provide the best solutions to improve the lives of patients.
That will open the call for questions.
Thank you.
We like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star. He is our first question.
Is from Adam Nadir with Piper Sandler. Please proceed.
Hi, Good afternoon, guys. Thank you for taking the questions and congrats on another nice quarter.
Maybe you could start to start in the new guidance I think it implies Q4 revenue of about $140 million at the midpoint, if I'm doing the math right, which is up about 6% quarter over quarter sequentially Q4 is typically a seasonally strong quarter for med Tech you grew close to 9% sequentially Q3 over Q2.
Maybe just walk through some of the assumptions in the new guidance range and and how you're thinking about Q4.
Any color on kind of how the business has trended in the past weeks you know was there some conservatism baked in and then I had a follow up thanks.
Yeah. Thanks, Adam I, just got out probably tag team on this one.
Certainly it as as reflected in the first quarter we have.
Great underlying momentum in the business and then then traction across all of our.
All of our product lines and all of our geographies. So our businesses are very healthy well, we tried to factor in to two or a sort of the next well this quarter.
Is the that strong momentum overlaid against the fact that there are there are other things like we do have more FX.
Headwinds as we get to the back end of this year than we've seen historically.
There are a few shorter a few fewer days selling days than in the third quarter.
Uh Huh and well we've our team has executed.
Incredibly well in the face of staffing shortages and the like there are some larger centers.
Where we see.
Some impact on their volume and we tried to as best we could factor in the fact that there are both in the U S and to some extent internationally.
There are some procedure movements that we tried to consider what what modest impact they might have and of course, we factor.
What what we what we considered some impact on the on the volumes that we might see in the topline and relative versus the fact that we continue to see tremendous traction with our customers.
Yeah, I think Adam Hi, Isaac.
We don't see anything.
That gives us pause at the momentum in the business is good we're seeing great momentum internationally and in the U S.
Had.
What TCT ER scripts, and Viva recently, and the customer interactions there where we're great.
Talking to the team you know our team members that were there I think we like the momentum we see going into the quarter and then think a.
It'll be a strong quarter for us in Q4.
Very helpful color guys. Thank you and then for the follow up.
Maybe for for Dan.
Looks like another nice step up in.
And operating margin I have Q3 at 28% in my model, that's I think 350 basis points improvement quarter over quarter, you've been making some pretty significant jumps here over the past few quarters.
On the operating margin line. So how do we think about op margin in Q4, and also for 2023 and just walk us through kind of some of the key puts and takes there. Thank you.
Sure.
Providing this next year just yet.
But Q4, I think really fairly consistent with Q3, we're going to see some some fluctuations based on mainly R&D line. You know we've got timing in there between clinical and just straight R&D that could cause some variations, but we've had a very.
Very favorable trend in.
Looking forward, we're going to continue to focus on the full P&L of the revenue and the and the Opex and the gross margin.
But we're not we're not tightened the screws to optimize our margin we're spending what we need to spend to grow the business long term.
And the main focus on obviously R&D.
Thank you.
Our next question is from Bill <unk> with Canaccord. Please proceed.
Hey, great. Thanks, Thanks for taking my questions I like to zero in kind of on the guidance and maybe on the U S. Coronary in the past you've kind of provided us maybe I missed it on what the reorder rate was on C. Two in the U S. And just you know as you think about the fourth quarter guidance it looks like the U S.
S coronary sequentially.
The slowest quarter, we've seen nominally since the launch of C. Two and just some of your thoughts as do you think that may be you know are you just starting to hit kind of more of a penetration rate, where it'll be a little slower sequentially going forward or was there potentially some summer slowdown that we saw in the quarter.
<unk>.
Yeah, Hey, Bill I think we.
Shows this quarter to provide a little more color on long term a coronary and how we how are we going to get it from where we're where we're at today, which we're pleased with where we think it can be.
And you know from a kind of launch metric standpoint, we've now while we're 18 months into that launch so the kind of metrics on.
Centres, and who is using both and.
Reorder rates that's it everything is moving in a consistent direction with what we've reported previously but it's just not very interesting going forward as we've launched most of the accounts at this point and we still got some to go.
But we've launched most of them I think from a sequential standpoint in the quarter, we expect it to be a strong quarter for Q4. So.
We're again, we're pleased with the momentum I think as you you know as we get through with launching the accounts now to <unk>.
Now it's going to be you know more of a focus on driving penetration within the accounts and I think we've got the structure and the tactics going forward to make that happen.
And also you know, we're really focused as I said in the call to close out our M. Five plus launch in the U S. This year. So we turned the corner next year, we've got a.
We've got that conversion of accounts to M five plus behind us and we're focused in on penetrating all the all the product lines that we that we have versus flipping flipping accounts from M. Five five plus.
Yeah.
Okay, and just clarification from Dan just when you said for fourth quarter and the operating margin you would think it would be consistent and you know except for maybe the R&D line could move around I would assume that there might be more R&D spend in the fourth quarter versus less and then.
On the P&L, how do we think about taxes, you basically don't pay taxes do you think you'll start paying taxes and if so what should we plug into our models. Thanks.
Sure and yes, you expect more spend in R&D in Q4 than Q3.
On taxes at the end of 12, 31, 21, we had $351 million in Nols.
So we're burning through those and what's her burned through those will have a nominal rate of about 25%, that's 21% U S 4% other.
Yeah.
Thank you.
Our next question is from Michael Pollack with Wolfe Research. Please proceed.
Good afternoon. Thank you for taking the questions you know clearly not evident in your performance, but I am curious for anecdotes on what you've seen in the field you know staffing challenges is kind of a.
Catch all description, but what does that really mean for your customers day to day kind of you know what what limitations are most pronounced and you know kind of how did.
How did three Q feeling.
Feel in the Cath lab versus you know the first six months of this year.
Yeah, it's it's it's an interesting dynamic.
Very different than say COVID-19, where it would be like a wipe out in some areas.
This is more and I just can I were comparing notes were at Viva last week in both its been a bunch of time in the field and some hospitals no difference they've ratcheted down on travel nurses getting things under control in other areas.
One Big Center I was talking to last week like they had a they were struggling to even get travel nurses. So they were for a couple of weeks on a sort of emergency cases only.
So it's pocketed suddenly the that the Ah <unk> in the past we've talked about.
Staffing challenges being the new norm and I'd say they are the new norm although.
The the there's sort of a severe centers of pockets and then no change whatsoever with momentum.
Being quite strong and the procedure volume so it's not a it's not like a major downdraft, but it does affect volume when hospitals have to restrict cases and so.
It's a factor it's a I wouldn't say, it's a sort of where we're certainly obviously, we're not we're not terribly concerned other than its frustrating for our customers when they can't get their cases done at the time, they want to get them done.
Yeah, and I'd just add to that it's not it's not worsening yeah, I mean, I'd say generally across the U S. The staffing is improving and has been this year that the where we see some problems, though it will limit the ability of the typical Q4 surge of procedures. If that center doesn't have the staff to support it and that's.
Where you'll hear that's what we hear pockets of that happening.
You should not gonna be able to get procedures going from Q3 to Q4 like you typically will cause theyre, just not letting them schedule that many elective.
I appreciate that color and maybe for the follow up on coronary I was like you provided a lot of good detail in your.
Remark and you know you you said, how do you see accounts, where penetration of PCI is low singles with I V. L. And you see accounts were consistently folks are mid teens and I.
Yes, as you bridge that divide kind of what are the one two or three things that stand out you know what are the kind of what's the handholding and support that your team can provide to take that low single digit account up towards 10 or beyond.
Yeah, I think that means so probably the number one thing still is.
Economics or perceived economics, and I think some centers.
And maybe our team with some centers have done a better job of bridging that with with the administration and that's all you know kind of an ongoing effort and we talked about how we see that improving over the midterm I think beyond that.
Our best centers, our centers, where you have you know there might be five interventional cardiologist doing procedures, there and all five of them have kind of bought in and have adopted coronary I B L.
And that a physician at that center is as good as a physician as we have anywhere but you'll have other centers, where you have a physician who is doing a lot of complex work. They bought an IV out and Theyre doing theyre doing it as appropriate you know and kind of where we see it should be but.
But you have other cardiologist at that center, who for any number of reasons, we haven't been able to spend enough time with where the convert kind of into it into a higher volume user of IBM. So.
So a lot of the work is kind of this territory refinement ware.
We can continue shrinking territories in terms of the number of hospitals that a territory has.
Add FCS is into that territory. So that you now have kind of people per hospital that give you more time to focus in the account with each customer in the account.
And then what that then will enable us to continue pushing penetration of M. Five plus for instance, when we launch C to plus or continue like we did this year pushing the penetration of coronary why we executed a big launch.
Five plus so I think you know as we go forward, it's at and as there are kind of revenue base grows we'll be able to continue refining our territory. So that we got time to really work in the accounts and and launch products, while continuing to drive penetration in bottom line for US we see a lot of upside to the penetrations that we're in the early innings.
Yeah.
Thanks for the questions.
As a reminder, this star one on your telephone keypad, if he would like to ask the question. Our next question is from Larry <unk> with Wells Fargo. Please proceed.
Hi, This is Nathan trade back on for Larry Congrats on great quarter, what while I appreciate you're not giving guidance for 2023 and in light of the macro factors that you called out impacting Q4 can you just help level set of consensus revenue growth of 30% is directionally, an appropriate way to model.
So yeah.
You are right, we're not going to guide 'twenty two 'twenty three yeah, we we see we see strong growth.
As we head out of this year and into next year and sustaining it for for for multiple quarters to follow.
Okay, and how should we be thinking about the contribution from Japan and China. You previously ranked grow within 2023 as you know U S. Coronary U S peripheral and then China and Japan as they're still kind of the right framework like those are the top three drivers.
Yeah, I think theres still the top three chip chip, Japan will come on more slowly and we think be.
Sort of analogous to our U S peripheral reimbursement, a very nice steady slow methodical not slow methodical growth engine.
And sustainable growth engine and China as we've seen.
Came came on quicker.
Quickly second quarter with the stocking order, but the third quarter are all on Reorders. So are we.
We don't expect given the sort of the nature of the debt.
And in Japan that will step up that quickly.
But will will contribute very handsomely and and given all the.
Given all everything we're putting in place and continue to see and in terms of the traction we're getting in the U S.
Coronary will continue to to drive handsomely next year, and where we're really pleased with what we're seeing on the reimbursement.
New product combination on the peripheral side, it's it's doing what we had hoped it was going to do with M. Five plus combined combined with a step up in and and payment levels for the hospital. Yeah. I would just add to that I think I agree with Doug. We're seeing you know I feel like we've got great momentum kind of across the business product line and geography.
The Japan team is ready to launch we're.
We're pleased with our image.
Michelle W in and kind of where they've they valued the product from a reimbursement standpoint, and I'd say if I go back 12 months I'm. Most surprised this year by the strength of our U S peripheral business.
You know I would not have predicted it to be the stronger growth. This year, even after we knew about the reimbursement uplift, but I think that's a that's a great sign of you know what we can we will continue to see in the U S. Peripheral business and then what we'll see in Japan with reimbursement and what will eventually see as reimbursement improves in the U S with coronary.
Thanks.
This will conclude our question and answer session and this will conclude our conference I'd like to thank you for your participation you may disconnect your lines at this time.
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