Q2 2022 AtriCure Inc Earnings Call
Yeah.
Good afternoon, and welcome to the H Cure second quarter 2022 earnings Conference call. My name is Michelle and I'll be your coordinator for today's call.
At this time all participants are in a listen only mode. We will 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 would now like to turn the call over to Marcia Bush from the Gilmartin group for her introductory remarks. Please go ahead.
Thank you.
By now you should have received a copy of the earnings press release you.
If you have not received a copy please call 5137554136 to have one emailed to you.
Before we begin let me remind you that the company's remarks include forward looking statements.
Forward looking statements are subject to numerous risks and uncertainties many of which are beyond our control, including risks and uncertainties described from time to time in Asia.
E filing.
These statements include but are not limited to financial expectations and guidance expectations regarding the potential market opportunity for each occurrence franchises and growth initiatives, including the adoption of the hybrid procedure and future product approvals clearances and reimbursement.
<unk> results may differ materially from those projected.
You took your undertakes no obligation to publicly update any forward looking statements.
Additionally, we will refer to non-GAAP financial measures.
Luckily revenue reported on a constant currency basis.
Adjusted EBITDAR and adjusted loss per share.
A reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures.
In our press release, which is available on our website.
With that I would like to turn the call over to Mike Carrel, President and Chief Executive Officer, Mike.
Good afternoon, and thank you for joining US today, we hope everybody is doing great.
I am pleased to report another exceptional quarter for <unk> as we continue changing the standard of care for patients with our innovative therapies in the second quarter of 2020, we generated $84 $5 million in revenue, reflecting growth of 18% over the second quarter of 2021.
A remarkable achievement given the strength of the comparable quarter.
Performance was once again, driven by increasing adoption across key product lines throughout the business.
On our first quarter call, we discussed the pandemic hospital staffing related pressures on cardiac procedure volumes early in the year.
I'm glad to share that as we transition into the second quarter. Those pressures have continued to decline leading to modest residual impact on elective procedures involving our products.
We are gaining momentum across our platforms and therapies and remain confident in our ability to execute our 2022 objectives.
As a result, we are increasing our 2022 revenue guidance to $323 million to $333 million, reflecting full year growth of approximately 18% to 21%.
Now I would like to review our business highlighting several initiatives driving growth over the next decade, starting with our convergent hybrid F therapy with the Epicentral system.
As we've mentioned in previous quarters, the impact of Covid on elective procedures staffing and new program advancement has affected our ability to expand adoption more quickly. Following the PMA approval. However, we are immensely proud of the progress that we have driven in this environment and remain bullish about our growth prospects long term.
More specifically in the second quarter U S represents revenue product revenue increased 12% year over year, and nearly 20% on a sequential basis.
I would like to share our thoughts on progress over the past year, focusing on the impact of our training and education programs for convergent hybrid <unk> therapy.
We conducted our first didactic physician training program in June 2021, and we've extended our training efforts steadily since then including the addition of both mobile and traditional labs, where physicians receive hands on experience.
Today, we have trained over 100 surgeons and Electrophysiologist and the hybrid F technique and we have educated many more cardiologists and hurricanes on the benefits of these most difficult to treat patients.
As a result, we have both grown the number of convergent accounts as well as the average procedure volumes per account.
We're also excited to convergent is now in several well recognized leading cardiology hospitals in the country, notably Mayo clinic, UCLA, Cleveland clinic, Northwestern and John Hopkins and anticipate many more in the coming years.
While these institutions are varying stages of adoption. We are encouraged by the strong interest from each of their teams and believes it gives us further credibility to the <unk>.
Procedure and approach to care for these long standing persistent afib patients.
After experience with hybrid and therapy. Many have also started outreach programs to help even more patients.
As a result, we expect the journey to establish our convergent hybrid <unk> therapy as the standard of care, we'll provide an expansive growth opportunity for <unk> over the coming decade.
Turning now to our open ablation franchise earlier.
Earlier this year, we announced our full scale commercial launch of the encompass clamp in the United States on five 10-K clearance in 2021.
The encompass clamp leverages, the proven technology of our synergy ablation system.
Offer a simpler and faster approach to ablation and open heart procedures, we are seeing excellent physician reception and adoption and exited the second quarter with strong momentum from the launch.
Sales for encompass clamp accelerated our domestic open ablation revenue growth over 13% this quarter, representing a mix of new adoption and additional revenue per procedure upon conversion to the encompass claim.
With this unique and differentiated technology and a world class education programs, we are excited and increasingly confident in our ability to further penetrate the cardiac surgery market for many years to come.
Complementing both opened in hybrid ablation platforms as our appendage management franchise.
Consistent performance of our <unk> product line continued into the second quarter of 2022 with 18% worldwide growth this quarter over an outstanding second quarter last year.
We are advancing product innovation efforts with a focus on less invasive and easier to use devices.
There is ample opportunity ahead in our existing markets as we grow demand and hybrid therapy, and an increased penetration in cardiac surgery.
Moreover, we are pursuing clinical studies to extend our addressable markets, most notably the leaps clinical trial <unk>.
Last quarter, we announced FDA approval to move forward with this landmark trial examining the prophylactic use of <unk> devices in cardiac surgery patients without a preoperative afib diagnosis.
Over two thirds of the nearly 1 million cardiac surgery patients worldwide do not have preoperative afib diagnosis.
Our team has begun preparing for trial initiation followed by patient enrollment later this year.
As a reminder, the trial will involve 6500 patients at up to 250 sites worldwide.
We have strong interest from accounts to participate in the seminal work with.
Which should change the standard of care for all cardiac surgery patients.
While the <unk> trial will take number of years to complete all progress puts us closer to a truly meaningful distinction for the Asia clip device and an extension of the addressable market for our appendage management franchise.
Now shifting to our pain management franchise were crowding or block continues to be one of our fastest growing therapies.
The crowd sphere probe uses a unique freezing method to block nerves from transmitting pain signals after thoracic surgery provide.
Providing a long lasting form of annually for patients we.
We reached quarterly revenue exceeding $10 million in United States Martin both another quarter of sequential growth and increasing traction within our account base.
We are also starting to expand this therapy globally and ended the second quarter with growing interest in Europe and Australia.
Despite great progress since launch a crown or block in 2019.
We believe we are still in early stages of therapy adoption as we work to impact more patients undergoing thoracic surgery and explore new opportunities and applications of our technology for pain management, and thus again, expanding our overall market opportunity.
Finally in addition to our focus and driving adoption across these platforms. We are cultivating new markets by building upon existing technology and leveraging the unique position relationships we have developed.
On our last call, we announced FDA approval for the <unk> trial, along with efforts for a dedicated device for this therapy.
ISG will study the treatment of patients with inappropriate sinus tachycardia or ISP using hybrid ablation procedures.
<unk> is characterized by an elevated heart rate and distressing distressing symptoms of heart palpitations contributing to the inability to sleep or exercise.
It affects millions of people around the world and currently there are no approved treatments for those suffering from this debilitating condition.
We're excited to share that the trials underway initial cases have been performed in Belgium, and the United States.
While we are just beginning.
This market represents another opportunity for <unk> to dramatically improve many patients' lives with our innovative technology and robust clinical science.
In summary, our results this quarter demonstrate the strength of our many catalyst for accelerated growth.
Simultaneously, we are investing in new areas, such as steel ISG Leafs encompass and converge launches and cryo nerve block therapy expansion, all driven by insights and technology that is unique to <unk>.
Foundational to our success has been disruption been disruptive innovation and a patient focused culture and team we have built over the past decade.
I'm incredibly proud to work alongside nearly 1000 agent your teammates as we advance our patient focused mission.
And I'm humbled by the recognition of our Cincinnati, Ohio, and Minneapolis, Minnesota, and Amsterdam, Netherlands locations as top workplaces this year.
That I will simply say, thank you to our HR team together, we have created a truly special company.
Now I'll turn the call over to Andrew Weirich, our Chief financial officer to discuss more details and results from the quarter.
Thank you, Mike our second quarter 2020, Q worldwide revenue of $84 5 million increased 18, 4% on a reported basis and nine.
At eight 8% on a constant currency basis, when compared to the second quarter of 2021.
As Mike noted earlier, we saw very solid growth across key product lines and geographies bolstered by outstanding results in pain management and appendage management.
The sequential basis, we experienced growth of 13, 3% and our worldwide revenue from the first and second quarter.
In the second quarter 2020, Q U S revenue was $71 $3 million at 18, 6% decrease from the second quarter of 2021.
Ablation product sales, which now exclude pain management for $22 1 million compared to $19 5 million up 13, 2% over 2021, showing early strength from the encompass lunch with a combination of new adoption and incremental revenue per procedure.
Estimate open concomitant procedure growth was roughly half of the growth for the quarter consistent with our expectations.
And steady growth from penetration of the cardiac surgery market.
Hey management sales were $10 2 million compared to $5 7 million.
78, 8% over the second quarter of 2021.
U S sales of appendage management products were $28 8 million up 14, 6% over the second quarter of 2021, and finally minimally invasive ablation sales were $10 2 million up four 7% from 2021.
Sure.
U S minimally invasive ablation sales.
Revenue increased approximately 12% year over year, and nearly 20% on a sequential quarter basis.
However, at least Thats revenue growth was offset by approximately 13% decline in our legacy MAA ablation revenues, which are trending below pre pandemic level.
While this quarter's contribution from episodes does not fully reflect the incredible opportunity in front of US we remain confident in the long term outlook for our convergent hybrid AF therapy.
Earlier I noted several indications of progress in the FSS Watch let me answer the following metrics. This quarters at defense revenue has improved 50%.
The pandemic and Kris <unk>, our 2019 average quarterly volume, which we believe is convincing side and just the beginning of our progress as we passed the first year anniversary of approval this quarter.
Turning to international revenue, which was $13 3 million up 17, 3% on a reported basis and 26, 3% on a constant currency basis as compared to the second quarter of 2021.
European sales accounted for $7 $8 million up 11% over the prior year, driven by rebounding procedure volume and increased activity in the Netherlands, and the United Kingdom, partially offset by unfavorable exchange rates and slower activity in Germany.
Asia and other international markets accounted for $5 $5 million in international sales up 27, 7% over the same period in the prior year on strength in Australia and Japan.
Overall international markets are fueled by growing adoption of <unk> of devices, resulting in an increase in appendage management revenue of 35, 1% in the second quarter of 2021.
Turning to another key metric for the second quarter of 2022 gross margin was 75, 1% down 70 basis points from the second quarter of 2021.
With similar geographic mix each quarter.
Decline in gross margin, primarily reflects cost increases, resulting from inflationary and supply chain pressures as well as shifts in the U S product.
Despite the current operating environment, we are encouraged by the balance of our results for the quarter and continued focus of our operations and quality teams.
Moving to detail on operating expenses for the quarter, we maintain the level of investments in research and development activities at approximately 17% of revenue each quarter.
Leverage in selling general and administrative costs over the prior year, despite increased spending to drive awareness and adoption.
In total our operating expenses increased $8 million or 11, 6%.
$69 $2 million in the second quarter of 2021 to $77 $2 million in the second quarter of 2022.
A significant driver of this change is the expansion of our team and increase in travel costs.
Additional physician training program, a resumption of in person meetings and trade shows as well as the investment in our product development pipeline and related regulatory costs.
As a reminder, when comparing operating expenses year over year. The second quarter of 2021 included a $2 $6 million charge related to the contingent consideration liability.
Adjusted EBITDA was negative $3 2 million compared to a negative adjusted EBITDA of $2 7 million for the second quarter of 2021.
Our loss per share was 32 cents in the second quarter 2022, compared to a loss per share of various expense in the second quarter 2021, while the adjusted loss per share each period was 32 and.
At 30 cents respectively.
At the end of the quarter, our balance sheet is strong with $183 million in cash and investments.
Now finally, turning to our outlook for 2022.
Given ongoing strength across our business and results for the second quarter, we now expect to achieve approximately $323 million to $333 million in revenue for the year.
Reflecting growth of approximately 18% to 21%.
With the current environment, we do expect some modest pressure in elected procedures to last for the remainder of the year influencing the top end of our guidance range and outlook for Mif's ablation revenue.
However, the overall growth rate of our business is an acceleration over historical results, reflecting the combination of our many growth catalysts.
As we look to the next quarter, we anticipate a return to normal seasonality to be slightly moderated by the building momentum for therapy expansion.
Similar to the sequential growth trend, we experienced from the second to third quarter of 2021.
Followed by an acceleration into the fourth quarter.
We continue to expect 2022 gross margins to be comparable to the full year 2021.
The potential for bearing impact from increase in Cogs and net.
We are maintaining our level of investment in research and development activity with spending in product development clinical sites initiatives across our platform.
Additionally, our plans anticipates, a thoughtful expansion of our commercial team.
Our training and awareness programs and market development activity.
Therefore, we continue to expect adjusted EBITDA to be a loss of approximately 2 million to $4 million for the full year 2022.
Corresponding to an adjusted loss per share for 2022 of approximately $1 seven to $1 12.
With improvements to the top line in the second half of the year, we should realize improvement quarterly adjusted EBITDA.
And now I will turn the call back to Mike for closing comments.
Thank you Angie beginning of 2022 has truly been exceptional showing breadth of our many platforms of growth.
Theres measurable progress in each franchise as we establish and advanced the standard of care for millions of patients globally.
While it remains early days of our convergent hybrid.
<unk> therapy, we continue to be excited by the vast opportunity ahead of us.
To drive greater adoption of <unk> is the only solution for long standing persistent afib patients.
I would like to conclude by announcing an analyst and investor Webinar focused on our hybrid <unk> therapy to be held in September we will be hosting key opinion leaders, who have been intimately involved in hospital program development for <unk> to discuss the substantial impact and benefits of this therapy as we scale our efforts to lead adoption.
Additional information will be available shortly and we hope that you can join us. Thank you again for your support and participating the call today are futures bright talk to you soon and we'll open up for questions now.
Thank you to ask a question you will need to press star one one on your Touchtone telephone we ask that you. Please limit yourself to one question and one follow up and then return to the queue for additional questions. Please standby, while we compile the Q&A roster.
Our first question comes from the line of Robbie Marcus with JP Morgan. Your line is open. Please go ahead.
Oh great.
Thanks for taking the questions and congrats on a good quarter.
Maybe to start I appreciate all the extra commentary on.
We all do.
Just assume that it's the bulk of the sales are from the converge procedure. So it sounds like that's doing really well.
I was wondering.
Since it's such an important growth driver of the company going forward, how do you think that might start to tick up.
In terms of third and fourth quarter for MFS I know you don't guide specifically, but just qualitatively should we be thinking about that business overall, moving up dollar wise sequentially third and fourth quarter.
Well I think.
It's a great question and thank you and we do feel really good about the progress that we're making on converge with the growth rate of 22% sequentially as youre looking kind of in the back half of the year, we do feel good about it overall there is the seasonality effects in the third quarter that youll, probably that we'll see them pretty much every one of our franchise that you would see in that franchise as well with a big uptick we.
Late in the fourth quarter, and then into next year as well. So we're getting a lot of net new programs more sites per program and as you heard we've got some top sites around the country. There are many of them are just beginning their programs just beginning to start to send patients and start to get their experience and then we'll start to see some of that in the back half of this year and then into next year as well. So hopefully that gives you some guidance and help.
Yes, certainly.
I know, it's not top of mind, usually on the calls, but I'm glad to see you're holding the adjusted EBITDA.
Guidance it implies a pretty healthy back half of the year.
Just wanted to make sure we should think about the rest of the year is being positive on adjusted EBITDA and is that a trend that should continue into 2023 and beyond thanks.
Yes.
Ravi it's a good assumption for the second half of the year could be positive when you think about the second half in totality.
It would be pretty disciplined with our spending really focusing on maintaining our R&D investment. That's an expansion of our ablation include technology platform, some of which Mike talked about in the call as well as key clinical activities, mainly heal ISP and couple that with kind of a thoughtful expansion of our team.
The commercial team, where we are starting to see some good leverage.
That team and then continue to incremental investments on training and awareness programs.
That kind of makes it part of the thought process relative to the original we're making investments I think.
That said some of the costs that we saw in the first half of the year are transitory project related costs that shouldn't recur.
But youll continue to see leverage out of the P&L, which is what you've seen in the past I think each one of these investments when you think about where we're really spending the money and really focusing these are in areas that are going to help enhance our growth.
Many years to come.
Have made progress on the bottom line comparing.
Last year Q, we're pretty close to EBITDA profitability at a $2 $2 million to $4 million range. This year and I think that's the best news is really good strong balance sheet really to fund the progress towards profitability.
Great. Thank you.
Thank you and our next question comes from the line of Rick Wise with Stifel. Your line is open. Please go ahead.
Hi, Mike Hi, Angie this is actually John on for Rick today.
First one for me on guidance kind of just looking to the back half of the year. We've heard about how staffing has been noted headwind for several companies throughout kind of the quarter, but it's become more of a larger issue later into June and July have you seen any kind of impact in that regard and are you kind of.
Building in anything in that for the second half of the year or do you feel so far your procedures has kind of been insulated from that.
When you look at our guidance and we definitely have they are definitely staffing and I would say even COVID-19.
Related items that continue to kind of be there, it's not completely gone away.
In my comments I talked about kind of it's a lot better than obviously it was in the first quarter.
But you are definitely still have effects of it still have the variant that is out there and you still have some impact happening and I think youre going to have some aspect of that throughout the back half of the year and that's definitely in our guidance in terms of the way that we gave it.
As an example, I mean, if you think about kind of the bottom end of the guidance and the high end of the guidance the bottom end would assume that your.
It really kind of snapback, something really bad happens and then the top end of the guidance would assume that none of that happens. Obviously in that you have are returned to complete normality on that.
Thanks, That's super helpful and then.
One product specific question.
<unk> cryo nerve block your pain management segment has been tracking with.
With really strong growth I think this quarter it looks like it grew.
25% sequentially over the first quarter and just if I do some math at this quick rate. It seemed like it was 14% of U S sales this quarter.
I'm not sure exactly if that's going to be if it's utilization that's helping this growth so much increased utilization or more docs trained but do you see a pathway to 20% of U S sales.
Potentially even at the end of this year at some point in 'twenty, three and is that going to come from utilization or for more docs trained just love a little more color on that.
I'll actually maybe I'll give you some more color about the crowded or blocked therapy in general and our excitement about that what percentage of sales I think I'm not going to I don't know that I can pinpoint that specifically because I'm also hopeful as things kind of get back to the growth that we expect out of the hybrid convergent longer term that's going to obviously have an impact on it to some degree as you look out over over.
The next several years, but.
<unk> block has been a fantastic business for us.
Still just scratching the surface in terms of access into the U S market, there's over 150000 or so thoracic procedures in the U S market. There are double that when you start to look internationally and so far this year, maybe we've treated about 7500 or so patients. So we're just scratching the surface, we're not penetrated less than 10% over.
Raul.
Or around 10% in terms of the penetration that you annualize those numbers I think we've got a long way to go and the feedback we're getting is great. We're in over 400 sites in the United States already we're starting to get traction outside of the United States.
And that doesn't include the expansion of the Tam that.
Can possibly occur as we get into other areas, where cryo nerve block can be used if you call the call before but hesitant to explain or talk about the expansion of the Tam relative to other areas because we wanted to enough confidence to work through and make sure. We are patient about how we took care of this therapy to get it right and make sure people are doing it safely.
Effectively and so we're starting to look at Sternotomy and other areas, where cryo nerve block can be used and I do anticipate that that should impact revenue in future years.
Super helpful. Mike Thanks for taking my questions.
Thank you and our next question comes from the line of Marine Type Atlas <unk>. Your line is open. Please go ahead.
Hi, Mike Hi, Angie Thanks for taking the questions and congrats on a really strong quarter.
I just wanted to ask my first question here on the legacy minimally invasive ablation business. You mentioned it was down I think 13% year over year or versus pre pandemic levels I forget which.
Is that something that you expect to continue or do you think.
That eventually it could get back to pre pandemic levels, what's sort of the dynamic happening there. That's a really good question Mario because the most impacted part of our business because of the elective nature of the procedure.
Legacy, it's a group of customers that do really good work help patients out with the most complex forms of the disease. It works incredibly well and they're not <unk>.
Places that will adopt converge so when they get hit by some of the elective procedure issues are staffing our COVID-19. The jet they definitely were probably the most most of them are still excited about that procedure, we anticipate that it will come back, but I do think it will be under pressure for <unk>.
The short period of time.
Looking at right now.
Just a follow up it's a 13% decline year over year, but that being said that leads to revenue that still trending at a level that.
Our pre pandemic kind of run rate for that business.
Okay. So one way to sort of try to triangulate. The converge revenue was to go back to 2019 levels and think about any increase there plus some would be coming from converge essentially picks up.
Eric Fair way to think about it.
Okay. That's really helpful. And then Andrew I think you mentioned on gross margins that U S product mix was influencing some of that can you remind us which products have more beneficial gross margins versus not.
Yes, I think in the quarter when you see an uptick with Etsy product revenues and then any of RFP clip.
Egypt clip products those are very beneficial to margin I would say that the impact that we felt this quarter probably had more to feed with the encompass launch that's.
That's becoming a bigger really the first quarter of meaningful revenue contribution to our open ablation franchise.
A new product as we work through kind of first full year of production, but fully expect.
The cost will be themselves out but in the first year. It is a margin that's below our standard ablation margins for the rest of the portfolio.
Okay. That's very helpful. Congrats again on the broad based strength here. Thanks.
Thank you.
And our next question comes from the line of William <unk> with Canaccord. Your line is open. Please go ahead.
Great. Thanks, Good evening can you hear me okay.
Yeah.
Excellent.
Thanks for taking my question so.
A couple of maybe different types of questions is you start the leaps trial and that gets moving along that's a lot of patients.
Will the <unk>.
Device.
Paid for by the customers considering it's already an FDA approved device.
Yes, the device will be that we will not the device will be paid for yes.
We're not paying for the device.
Sites will be paying for the device because we obviously already have a <unk> product.
Out there and so both in the U S. <unk> U S. We anticipate that they're going to bancorp.
Please also read the minds of Delta.
500 patients won't necessarily get the slip in this with any multiyear trial that'll take time, but don't expect it to 6500 to be added in the next year in terms of volume.
Understand thank you and then.
The SG&A spend.
It was a pretty big jump up I know on a percent of sales.
It was.
Down a little but on a dollar basis. It was a pretty big chunk, but I'm just kind of curious is there anything onetime in nature conferences.
No.
Right.
<unk> said as we kind of think about the next couple of quarters.
Yes, there are conferences that happened in the second quarter I think those tend to be more front loaded into the first part of the year as we've seen.
In general more activities resuming Q&A person format and virtual and you would have seen in the past couple of years. When you think about the step up in revenue in the second half of the year, we typically see.
Decent.
Yes.
We're better leveraging your SG&A expenses.
Fair to kind of the growth that you see in the second half of the year, which is really the calculus. When you think about kind of the bottom line.
I'll turn to EBITDA profitability for the balance of the year.
Okay, and then I just wanted to clarify on the converge and the commentary that your thoughts were on.
Paraphrasing here. So please correct me, but that is we hit into the fourth quarter of this year and into 2023, we should start to see kind of that adoption and acceleration in growth is that how we should think about it and if thats. The case is this because you've been out there for a year with it now.
Kind of what's going to change between now and then and thanks for taking my questions. So I think you're already starting to see some of that even in this quarter. As we came out of really the heavy hit that Chuck we've got a lot of programs going at the end of last year.
Covid and other aspects effective kind of our ability to we did accelerate but didn't accelerate as much as maybe I think everybody would have liked and ourselves included but as we've looked at.
We did accelerate into this quarter, 20% from Q1 to Q2, and we anticipate a combination of a lot of things. One is a lot of these major large centers are getting involved two is the level of education and training and programs that we are aware of we have got more sites than we've ever had before that number continues to increase in terms of the net new sites that are actually.
Getting trained and then converting that into actually helping and treat patients longer term, we're adding and have a greater adoption of the clip and attachment rates were getting than we've ever had before you start to combine all of that and begin to start to see things continue to accelerate again fourth quarter and into next year for sure.
Great. Thanks for taking my questions.
Thank you and our next question comes from the line of David Saxon with Needham. Your line is open. Please go ahead.
Okay.
Yeah, Hey, guys congrats on the quarter and thanks for taking my questions.
Maybe on cryo sphere.
At the sense I mean, it seems like crossfire is emerging as maybe a more significant driver for aged care at least in the near term.
So maybe over the next 12 or 18 months do you think that can continue or do you expect epicentral adoption and revenue contribution to kind of outpace.
Chris here.
I think both are going to keep both are going to grow fast crown Urbach will continue.
To grow at a very fast pace adoption continues we have almost 50 people at about 46 people or so in the field today up almost double from where we were maybe 18 months ago or so.
Well trained and we're now expanding into other new markets as we look out over the next several years as well. So we anticipate continued penetration in the ground or block area.
But I also believe that converge is going to begin to accelerate and I think that that's going to become a major contributor to the business.
Based on as I mentioned, just to Bill earlier Youre going to continue to see those sites get deeper within those areas start to market to their referring physician base youre going to start to see more and more sites come online from the trainings that we've been doing and then watching them progressed that in fact, one of the reasons that we're posting this hybrid session. In September is we want to show to you.
Two examples of sites in terms of kind of how they've developed a therapy over the years and what are they started with several and then how that kind of has cascaded into really large sites that it's a part of their core practice and a part of their standard of care and so theyre going to be well known well recognized sites.
<unk> EPS from both the eastern West Coast. So it's going to kind of give you a real good feel for broad around the country on that front to kind of show you. How that's going to continue to be a big driver for us long term and why I'm confident that and yes ground robots, great. But I think also convergent hybrid is going to be a really big contributor for us as well.
Okay. That's helpful.
We will look forward to that session in September .
Maybe my follow ups just on steel <unk>, maybe can you talk about that market for inappropriate sinus tachycardia.
We've tried to do some work around just prevalence in sizing the market it seems like it could be potentially.
Potentially very significant opportunity for you. So maybe just some color on how youre thinking about that market from a patient population perspective, but also on a dollar basis. Thanks, so much.
Youre right I think it has the potential to be a very large market, but much like the way we took the cryo nerve block or we took it slow at first we want to make sure that we get the right clinical data that we make sure that we've trained everybody effectively we get them to do the procedure correctly safely and effectively that's our core focus really over the next 18 to 24.
Months relative to the trial and getting things running that being said as it does get success as we've seen in the single centers that have actually done this procedure, where they seem both incredible results for the patients and then it's also been very safe those are two critical things.
Prevalence of this is millions of patients around the globe have inappropriate sinus tachycardia and they could benefit from a procedure like this and so I do believe that once we're able to prove that out with the clinical data.
Youre going to start to see a meaningful talk $300 million to $500 million type Tam.
Long term for this procedure. If you did the millions of patients. It's obviously a lot larger obviously youre not going to get that right upfront you have got to train and educate but I'd say look at crime nerve block and how we develop that and I think that you'll see something similar over the next three to five years as we begin to kind of get this trial out there to get the data and then youll start to see some uptick in the back half of that.
Great. Thank you.
Okay.
And our next question comes from the line.
<unk>.
Suraj Kalia with Oppenheimer. Your line is open. Please go ahead.
Finally got my name right.
Mike Angie can you hear me all right.
It's Raj.
Yes.
So hey, Mike.
A lot of information provided on the call.
Obviously price for your growth trajectory seems to be the standout in the quarter.
Maybe I missed it on the call or Andrew if you could provide us just give us some guide posts on the number of sites how should we think about your utilization for <unk>.
For cryo sphere.
We did not give a specific number of sites on this call, but previously we've talked about we're in well over 400 sites in the United States today, and we're just getting started in Europe . There are more thoracic centers in cardio thoracic centers in United States. There are call it 1100, or so cardio centers.
Cardiac surgery centers, you've probably got about another two to 400 or so sites that are doing thoracic or pediatrics.
Etcetera, So I think that that kind of adds to the numbers that we can kind of get from that standpoint in terms of sites, but right now we're in about we're in over 400, or so and we are getting both we're adding additional sites.
But probably more importantly, right now we're just getting deeper within the sites that we have because what youre starting to see is word of mouth within hospitals, beginning to talk to their fellow surgeons. So new people are adopting and.
Adaptation of this is actually very easy for the surgeons, it's very easy to train.
Not only know it we've done it with a lot of surgeons around the country. They can pick it up very quickly and that's why it's able to adapt so fast.
Got it.
And Mike.
Converge again, I know a number of questions have been asked and converge maybe let me just ask it a slightly different way.
Roughly 200 sites, we're doing converge.
Pre data release, you talked about going deeper.
Into a lot of the sites.
As we exit FY 'twenty two.
How do you characterize how should we think about utilization.
Insights and part of the reason I also ask is if you look at <unk> there are two different buckets right.
<unk> is going down, but converge is picking up.
Not sure how the outlook is incorporated for second half 'twenty, two but just if you could tie all of these together for us how should we think about utilization for converge.
So that we can triangulate in terms of what this line item will look like exiting FY 'twenty two folks thanks for taking my questions.
Fair question, we continue to expand the number of sites that were more sites today than we were pre PMA by quite a bit and we're getting deeper within those sites for converge, where theyre doing more cases per site. We anticipate both of those numbers to go up as we kind of progress throughout this year, which would obviously build into the acceleration to get into.
Next year as well, we're doing more per quarter than we've done in terms of number of sites.
PMA and we're doing more per site. So that's those are on the converge side on the legacy side look at it as that's the area that is getting those elective procedures. We don't anticipate really any growth. There there may be some slight pressure on that part of the business kind of as we move forward, but I would say, it's kind of flat to down slightly as kind of a.
We would anticipate thinking about that business on a go forward basis.
Thank you.
And our next question comes from the line of Matthew O'brien with PSC. Your line is open. Please go ahead.
Alright, thanks for taking our questions in one of these days I'll figure out these new phone lines.
So Mike, Mike and Angie I mean, and just to follow up on what everybody else is kind of asking about here I mean this is deja vu.
Q2 versus Q1, you beat pretty much across the board with softer than what people were modeling.
So what can you just be more specific on some of the headwinds maybe that were carrying over from Q1 into Q2 as far as Covid staffing you got it.
Thank you Kevin.
Okay.
Hello.
Hi, Michelle I think we lost connection can you hear us.
I can ma'am and we have Matthew O'brien with PSC asking a question.
Yeah.
Mike can you hear me.
Hello.
Mr. O'brien give them just a moment sir to get reconnected.
Okay. Thanks.
Okay.
Hello This is Michael.
Michael Your line.
Sorry, everybody.
Somehow lost our connection so my apologies.
Alright, Mr. Carroll Mr. O'brien go ahead with your question Sir.
Sorry, Matt Okay. That's okay. No worries can you hear me.
I think I lost connection.
I apologize.
That's what so.
I Love all the comments from our buy side friends right now, but we.
We did pay our phone bell for what it's worth but.
So.
This is this is kind of deja vu on Q2 rate versus Q1, you beat across the board with the exception of MIF on the topline and so theres a lot of good stuff going on here everybody is going to focus on MIF theyre going to say something is wrong with the launch.
Can you talk a little bit more specifically and then specifically on convergent can you talk about some of the things that carried over at the end of last year through the first half of this year that were a headwind be it.
The pandemic getting into hospital staff and you got to coordinate everybody how much of that did you feel are you still still feeling and then on the.
All of these new centers that you're talking about in training and utilization is there a way to give any kind of quantitative figures to have people confidence.
This isn't a failed launch that things are going to really come shooting out here in the back half of the year into 'twenty three I don't know if its like a percentage growth in new centers or training or utilization numbers something along those lines just to give folks a little bit more.
Confidence about convergent late this year into next year.
Yeah, I mean, I guess I may use different language I don't think it's deja Vu personally I think that we grew 20% sequentially from Q1 to Q2, so I feel actually very good coming off of it. It is the most elective procedures.
The things you talked about are exactly you got staffing you've got Covid. The continued to linger to some degree to kind of get those centers back up and running but we did make really good progress within those centers and saw really good growth from Q1 to Q2. After Covid hit Q1 quite dramatically across the board again in the most selective area of it so I don't think.
It's a soft launch at all I think we are launching in the middle of a pandemic and the way that we view. This as we've got really disruptive great technology with incredible data I mean, the data is absolutely rock solid and centers are not pushing back on the need to have this in their centers. It just takes time to get it going and we're trying to launch in the middle of a Panther.
Amit I think we made great progress this quarter, we've trained well over 100, cardiac surgeons and electrophysiologist across the board. Many more when you include kind of IB fees and other nurses.
And we are making.
Really good progress on that particular front as well and feel like we're also getting deeper within accounts that we've got on top of that I mean, I think I mentioned my comments. When you look at just the types of centers that are now coming on board, we've always talked about and we've got lots of strength in community based centers that were easier to get up and running it into.
We've made great progress as I mentioned Mayo clinic, Johns Hopkins UCLA.
Just a few of the major centers at northwestern.
Of the major centers that are getting involved in actually getting to Cleveland clinic, getting convergent programs up and running and they are marketing to their referring base. So we've got lots of confidence relative to that I think we've got a yes. We are faced with the fact that it's an elective procedure and is affected by COVID-19. So when people cancel the cases, because it can balance COVID-19 or staff.
Come down with the goal, but thats definitely affecting us which is why you are not back to complete normal and we're trying to launch in the middle of that but I feel like we've made great progress and that there is nothing that would indicate to me.
Both in the back half of this year and in the long term that this isn't going to be a standard of care over the coming years.
Okay, and then just to kind of put another finer point on this and Mike I know you think convergent is going to do a lot better than what I am going to say here and I don't disagree with you.
That process is.
Say that say that you get through the legacy.
Headwinds on the <unk>.
Syed convergent say, it's just a 10% grower. The next couple of years, because it's difficult to get all of these centers going can you still be a 15% grower just with the remaining open business and then the long.
Strength that youre seeing in clip plus pain management, even if MIF doesn't put up 20%. This top line growth. Thanks.
Yes.
Im not going to play what if scenarios on converge I think it's going to grow significantly north of what Youre talking about long term for this business. So I feel really confident in our ability to kind of grow at those kinds of levels and so I don't have any concerns on that front, we've talked about accelerating the growth rate in being above above the historical averages, which we've proven this year.
Now raising guidance to the 18% to 21% and we anticipate that we're going to have very strong growth for many years to come across all the platforms. So yes, I feel really confident all of ours, but I also have great confidence in converge growing at a very strong growth rate as well.
Got it thank you.
Thank you and this does conclude today's question and answer session and I would like to turn the conference back over to Mike Carrel for any further remarks.
Great.
And I apologize for the.
The phone issue there for a moment, we kind of got cut off but a great quarter. We're really proud of the progress that we've made across all fronts of the business as.
As we mentioned growth of 18% to 21% for the year.
Terms of our guidance raising that guidance on both bottom and top line and we feel really good about how we're going to both end of the year and roll into 2023. So thank you for your support and we look forward to talking to on the next conference call have a great night Bye now.
This concludes today's conference call. Thank you for participating you may now disconnect everyone have a good evening.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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Okay.
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Yes.
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