Q2 2022 Inari Medical Inc Earnings Call
Okay.
Yeah.
Good day and thank you for standing by welcome to the Ari Medical Inc. Second quarter earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press star one one on your telephone please be advised that today's conference.
Is being recorded.
I would now like to hand, the conference over to your speaker today Caroline corner Investor Relations. Please go ahead.
Thank you operator, welcome to <unk> second quarter 2022 earnings call. Joining me on today's call are Bill Hoffmann, President and Chief Executive Officer, who Hite, Chief operating Officer, and Mitchell Chief Financial Officer.
This call will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, all statements made on this call that do not relate to matters of historical facts should be considered forward looking statements, including statements regarding the markets in which <unk> already operating trends and expectations for products and technology trends and demand for <unk> products.
<unk> financial performance expenses and position in the market and the impact of COVID-19 on an already has operations and our customers' operations. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results performance or achievements to differ materially from any results performance or achievements expressed or implied by the.
These statements. Please review and always must be some filings with the SEC, particularly the risk factors described in <unk> annual report on Form 10-K for the year ended December 31, 2021 for additional information any forward looking statements provided during this call including projections for future performance are based on management's expectations of up to date and all right.
To take no obligation to update these statements except as required by applicable law.
In our press release, the second quarter of 2022 results is available on <unk> website, www dot and already medical Dot com under the investors section and includes additional details about our financial results.
Our website also has the latest SEC filings, which you are encouraged to review.
A recording of today's call will be available on our website by five PM Pacific time today.
Now I would like to turn the call over to Bill for his comments and second quarter of 2020 to business highlights.
Thank you Caroline and thank you everyone for joining us today.
After nearly eight years as CEO of an army medical I am pleased to announce the transition.
The Chief Executive officer role and responsibilities to drew hikes effective January one 2023 I have loved every second of my time on this mission and with this team and I have no professional plan beyond continued service on an army medical board of directors I do however have a lot of work to do on my my own <unk>.
All bucket list drew of course is well known to all of you as he has participated in all of our public facing communications since we began preparing for our IPO in October of 2019.
<unk> drew is shared in all key decisions at an army medical since his arrival in 2017 key Tom Mitch and I have been in lockstep not only in our decisions, but equally importantly.
Commitment to our mission and to our plan drew is fully prepared for and capable of assuming the CEO role and I am personally excited for him as I am enthusiastic about <unk> future under his leadership.
You'll hear from drew shortly about the progress we've made recently on all five of our growth drivers, but I'd like to share with you now as always a patient story that conduct conveys the extraordinary impact of our products and our people on.
On the lives of our patients.
And their families.
A couple of months ago, 14 year old boy a competitive athlete.
Excellent physical condition collapsed, while playing basketball with friends. He was rushed by ambulance to a nearby hospital with multiple generations of family arriving shortly thereafter.
Imaging showed large blood products and both of us left and right lungs.
As physicians use flow trees, along with flow favor towards 12 times until all of the clot was removed from as well.
<unk> was completed in 52 minutes is pulmonary artery pressures heart rate and breathing returned to near normal levels immediately.
And he was discharged from the hospital within 24 hours.
The store is remarkable for several reasons first syncope or fainting suggests a high risk presentation of PD and it carries a mortality rate of up to 50%.
Second any remaining in the lungs of PD survivors conveys terrible long term consequences, including persistent right heart strain shortness of breath exercise and basic functional limitations.
Poor quality of life scores, removing all of the matters.
And this young man has no residual cloud.
He is not only alive, but the trajectory of its hopefully very long life has changed in the most beautiful ways his entire family openly wept.
Upon hearing the good news about the procedure.
Seeing the pictures of the clot removed from as long as we remain committed to idea is bigger than ourselves.
And more important in business.
I'd like now to turn our attention to our Q2 financial performance.
Our revenue in Q2 was $92 $7 million up $29 3 million or 46% from the same quarter last year and up $5 9 million.
Or 7% from Q1 of 2022.
Our core business was strong as we expected.
We saw additional revenue based on more rapid than expected stocking and adoption of our interest sheets essentially transferring some of our Q3 expected revenue into Q2, we are especially pleased with these results given the significant headwinds we encountered.
Most notably hospital staff shortages in addition to the well documented contract supply shortages the.
The contract issue impacted our procedure volumes and modest but real waves.
This issue seems to be largely resolved and we expect limited impact on our business in Q3.
Hospital staff shortages, Conversely, we will remain a headwind for the foreseeable future such resource constrained operating environments are not new to us and we remain well suited to weather. This storm our procedures target high acuity disease States consume limited time and resource.
And produce excellent clinical outcomes for patients and economic outcomes for hospitals as always our team finds ways to execute our plan regardless of external headwinds with that I'll now turn things over to drew.
Thanks, Bill before I review the growth drivers I'd like to comment briefly on the CEO transition first and foremost I want to thank bill for his contributions to minority over these last eight years with Bill started at the company. We're a scruffy 10 person venture backed startup with no approved products today, we are an established public company.
With over 1000 cloud warriors multiple products and multiple large markets increasingly broad based capabilities and a shared ambition to change lives in the venous space and beyond under.
Under Bill's leadership.
<unk> growth has been driven by our steadfast commitment to our patients our people and to big ideas.
Bill has been a friend and mentor to me personally and I look forward to continuing to work closely with them. Both during this transition and beyond as he continues to serve on our board.
Lastly, let me just share how humbled I am to assume this role as we pursue our next phase of growth I couldnt be more excited and confident about our future and the opportunity we have to impact the lives of countless more patients.
I would now like to share with you. The recent progress we've made on all of our growth drivers.
Our first growth driver.
Our sales organization.
Youll recall that we committed to at least 275 territories by the end of 2022.
We entered July with over 270 territories, nearly reaching our annual goal in just the first six months of the year.
We made this decision to accelerate the expansion of our sales organization for three reasons.
First we were encouraged by the traction we saw at the start of the year.
Smaller territories have had a highly favorable impact on our second growth driver producing deeper penetration in accounts.
Third this expanded sales organization will enable us to launch several new products later this year with nearly the full complement of sales professionals. We had planned for 2022 and with a complete focus of our commercial management team.
Notably, we matched hire more than 100, new sales professionals in the first half of the year, while also delivering best in class revenue performance and navigating a set of especially challenging macro headwinds.
We are pleased with our execution in the first half of the year and we're optimistic about the back half of the year.
We're also making solid progress with our second growth driver producing deeper adoption within existing hospital customers.
Most <unk> patients despite our commercial success.
<unk>, even see a physician with the skills and expertise to make the most informed clinical decisions.
Our goal is to establish the systems and processes that ensure patients are consistently identified in triage to DTE expert.
As I mentioned smaller territories are especially useful for this effort.
Our third growth driver is to build upon our base of clinical evidence.
We have a few updates with some exciting news here.
First the subgroup analysis of the Flash data was presented at the annual meeting of the society of Interventional radiology.
The study focused on the 60 patients who presented with severe pulmonary hypertension.
These patients are extremely sick and the potential for morbidity term any sort of treatment as high yet.
Yet even in this fragile patient population the safety profile of <unk> was again exceptional nuomi.
No major adverse events, no 30 day readmission and all cause mortality was less than 2%.
Both the excellent safety and efficacy results were statistically indistinguishable from the broader and less fragile population of flash patients.
These results are unprecedented and the P/e thrombectomy literature.
Competitors, sometimes suggested flowed through procedures are staggering.
Our expectations.
This is simply not true.
Next the Peerless randomized control trial is enrolling nicely Peerless as a reminder, is a superiority trial comparing floats river against catheter directed thrombolysis for intermediate high risk <unk> patients.
Looking ahead to the fall conference season, we expect to report out both the complete 500 patient cloud DVT dataset and the 800 patient U S cohort of the flash P/e dataset as late breaking clinical trials like.
While we expect to complete and report our frame survival study on massive P/e later this year as well, which we believe will change guidelines.
In summary, we continue to commit significant resources to the production and publication of clinical data.
Every new RCT every new data from our large registries every new investigator initiated research protocol, we establish and report advances our efforts to change the standard of care for <unk> patients.
And while not the goal. It's also further differentiate us from competition.
Our fourth growth driver is to expand our product portfolio, we have several exciting developments to share here as well.
First we just entered full market release of our Gen four flowed through our system.
This device combines a number of features that make it more deliverable and easier to use.
During our limited market release physicians used fewer floater EVAR devices removed more clot and required fewer total passes per procedure, while case times were reduced.
<unk> faster procedures with better technical results translate to more procedures and better outcomes for our patients.
Transition for our customers to this new technology is seamless and Costless and it's already underway.
Several recent product launches are also progressing well.
The interest rate that now stock is being used routinely in several hundred of our accounts feedback has been excellent.
Because it is included in our purpose cedar pricing. It also removes costs from the procedure further improving economics for the hospital.
Attributable is also now in full market release is delivering excellent results in both acute and chronic DVT patients.
Finally, we recently obtained FDA clearances for two new products, the Arctic balloon guide sheet and appropriate device.
Both devices are in limited market release, we are excited to share much more about these devices the unmet needs their address and their corresponding target markets soon.
All of these new products are a direct result of the investment we have made to build a robust R&D engine that is delivering a steady cadence of new products designed to address unmet needs you.
You can expect more new products later this year.
Our last growth driver is expansion into international markets. We now have general managers full installed in each of our three main international geographies.
In Europe , we again saw sequential case growth despite the challenging operating environment.
Back half of the year, our European team will be focused on continuing to open new accounts, while also driving increased penetration at existing accounts.
Beyond Europe , we saw good case growth during the quarter in Latin America, Canada, and Asia Pacific, albeit off a still modest base.
We are working towards additional market launches across the geographic regions during the back half of the year.
As we've noted previously international will not be a material component of our overall revenue mix in 2022.
Taken together, we believe we're making good progress across all of our growth drivers in many ways. This progress reflects the deliberate and intentional investments we have made and will continue to make.
These investments are designed to enable us to treat more patients we.
We believe our strategy is working and that has served both our mission and our investors well.
I'd like to close by Restating that we believe we can and will grow consistently for many quarters to come our markets are large the patient needs are significant and we are serious about our responsibility to do better for our patients.
To date, our journey has been guided by an unwavering commitment to our patients our people and to big ideas.
Couldnt be more committed to the same ideals are more enthusiastic about this next phase of our growth with that I'd like to turn things over to Mitch.
Thank you drew and good afternoon, everyone.
Revenues for the second quarter of 2022 were $92 $7 million, representing 7% sequential growth compared to $86 8 million for Q1, 2022, and $29 3 million or <unk>, 46% from $63 5 million for the same period of the prior year.
Compared to Q2 of 2021, our revenue growth is due to our continued efforts to open new customer accounts.
Focus on expanding our sales force and deepen our relationship with our existing customers.
<unk> also been successful introducing multiple new products to expand our flow <unk> and cloud <unk> product lines.
The revenue split between product lines, who are substantially the same year over year with 33% of our revenue derived from the sale of <unk> products. During the second quarter of 2022, and 67% derived from the sale of flow tremor, all consistent with 2021.
Gross margin was 88, 8% for the second quarter of 2022.
Paired with 92, 4% in the second quarter of 2021. The decline was primarily due to a decrease in our operating Leverages as we completed our move to a much larger manufacturing facility in the fourth quarter of 2021, coupled with the addition of new products to our flow cheaper toolkit, which add additional cost of goods.
<unk> to our per procedure pricing approach.
Operating expenses were $91 7 million in the second quarter of 2022% compared with $54 5 million for the same period of the prior year.
R&D expense was $18 6 million in the second quarter compared with $11 6 million in the same period of 2021 to.
The $7 million increase in R&D expense was primarily driven by an increase in head count as well as product development and clinical evidence development costs. These initiatives are consistent with the company's previously discussed growth drivers.
SG&A expense was $73 2 million in the second quarter of 2022, compared with $42 9 million for the same period of the prior year.
The $30 3 million increase was primarily due to personnel related expenses as we increased head count across the organization and secondarily due to higher marketing costs travel expenses and facility related costs.
Net loss for the second quarter of 2022 was $10 2 million compared to net income of $4 1 million for the same period of the prior year.
The basic and fully diluted net loss per share for the second quarter of 2022 was 19.
Based on the weighted average basic and fully diluted share count of $53 2 million.
These compare with a basic and fully diluted net income per share of <unk> and seven.
Based on weighted average basic and fully diluted share count of $49 7 million and $55 6 million respectively for the same period of the prior year.
Before I moved on to the balance sheet updates I'd like to comment briefly on the company's Q2 operating loss.
<unk> operating loss for Q2 was $9 3 million during the past year, we've invested aggressively in all of our growth drivers, most notably our commercial growth drivers.
Have considerable discretion and flexibility around these investments over the coming quarters as we continue to grow during 2023, we expect our quarterly operating performance to return to intermittent profitability.
We have been profitable in five of our nine quarters as a public company.
Moving to the balance sheet, our cash and investments at the end of Q2 totaled $335 million, consisting of $79 7 million of cash and $258 million of short term investments.
A way of reference our cash and investments as of the end of Q1 of 2022 were $338 7 million.
Our cash flows used in operating activities were $3 1 million for the second quarter of 2022 compared to cash flows generated by operating activities of $7 3 million in the second quarter of 2021.
Finally, I'll close my comments by addressing <unk> financial guidance for the full year 2022, we are reaffirming our guidance of $360 million to $370 million in revenue.
With that I'd like to turn the call back to the moderator for questions for the Q&A segment, Bill drew and I will be joined by Dr. Tom Two <unk> Chief Medical Officer.
Thank you as a reminder to ask a question you will need to press Star one one welcome to <unk> second quarter 2022 earnings call. Joining me on today's call are Bill Hoffmann, President and Chief Executive Officer, who Hite, Chief operating Officer, and Mitchell Chief Financial Officer.
This call will include forward looking statements within the meaning of the private Securities litigation.
One moment.
I open the lines for Q&A.
Our first question comes from Cecilia furlong with Morgan Stanley . Your line is open.
Great. Good afternoon, and thank you for taking the questions and Jim and Bill Congrats on your upcoming new roles as well.
But I wanted to start just.
And get a better sense. If you can talk to what you saw in more detail from the contrast supply shortage in the quarter on the staffing dynamics that you called out both for <unk> as well as how youre thinking about it in the back half of this year and really with your reiterated guidance what that does it seem from a staffing and capacity standpoint.
Judy you want to get started okay. Thanks, Thanks, Cecilia yeah. Thanks.
Yes, so as you know we guided flat.
For Q2.
And we.
Pretty good about how we executed during the quarter. Despite the macro headwinds that you identified. The contrast shortage was certainly present, particularly early in the quarter.
Nothing shortages were present in essentially all of our accounts to some level across the country and we see those staffing shortages manifest themselves in reduced interventional capacity, we see that manifest themselves in fewer steps beds and the ability to carry full census at the hospital.
Level.
Despite those headwinds we were able to execute well.
Core business performed as we expected we were able to execute some of these new product launches most notably the <unk> hundred 24 that actually exceeded our expectations.
Fantastic product was really good.
Clinical feedback. It's also the first product we've had that's actually remove cost that's a procedure level for.
For the hospitals as a result, we actually outperformed.
Entry and actually pulled in some of the revenue that we would have anticipated in Q3 from that product into Q2.
So having said all of that.
We still see those headwinds out ahead of us, particularly the staffing shortages those are not going away anytime soon and that certainly.
It was part of our forward guidance.
We feel that we're positioned pretty well relative to those staffing shortages. After all we've got two products that treat high acuity emergent procedures, we are able to do so with a modest resource footprint no ICU stay a really compelling economic value proposition. So we feel like we can navigate.
Those staffing shortages, but they are real and they are not going away.
The reality is we're competing against not only ignorance and apathy, but now in some cases stemming in stroke and other highly emergent procedures for that limited interventional capacity, so with all that as a backdrop.
We felt that reaffirming guidance.
Giving us high confidence in hitting that commitment was the right decision at this point.
So it makes it makes a lot of sense and if I could follow up to your comments on what you saw in the quarter with entry 24.
And if you could comment just the attachment rate to date and then how should we think about just the stocking component of their business.
Really what impact that had on <unk> and then as you think about Q4, Q, especially some of the pipeline products that you've called out.
Just how we should think about the impact to top line just from stocking and thank you for taking the questions.
Keep going.
Sure. So Joe maybe just to level set on what entry is for everybody. So again, it's a sheath that we purpose built for our float fever procedures, it's the <unk>.
First product that the physician inserts into the patient becomes kind of the highway for the rest of the procedure up until entry we had been relying on a third party sheath from another manufacturer that was candidly difficulties.
Suffered from.
Spotty supply chain issues and it added incremental cost to the procedure.
Other than that it was a great. It was a great solution.
So thats obviously those reasons, we're obviously why we developed entry for our own.
We purpose built that product specifically for float fever.
Much easier to use it's got a large bore aspiration capability that is important for our procedures and as a result, as I said the uptake has been fantastic the feedback has been excellent.
We're able to stop that product into several hundred accounts during the quarter, which again exceeded.
Our expectation because it's part of the PPP it actually removes cost of the procedure level for the hospitals.
And the feedback has been excellent it's being used essentially in the places that stopped its use essentially at 100% of our flow <unk> procedures, maybe the last part of your question looking ahead to the back half of the year, we will have additional product launches and as always those new product launches will offer us some incremental revenue.
Opportunity as we get those products placed onto hospital shelves.
Great. Thank you for taking the questions.
Thanks for <unk>. Thank you.
Our next question comes from Larry <unk> with Wells Fargo. Your line is open.
Good afternoon. Thanks for taking the question Bill Andrew Congratulations Bill.
Bill I know you're going to be around for a little while longer but you'll certainly be missed.
Thank you so much Larry I appreciate you, saying that.
Yes definitely.
So two for me one just on the guidance in.
In the first half you grew almost 50% the guidance implies about 20% growth in the second half the comps are easier. So I guess my question is.
Is there something youre seeing in the environment that resulted in this.
<unk> guided or maintaining the guidance.
Or is this conservatism, which you guys typically do guide conservatively and how do we think about the Q3 Q4 cadence and I had one follow up.
Yes, I can get started on that one Larry and maybe make sure bill want to jump in as well So I think what was.
Important to us as we thought about guidance was the remaining headwind that we see out there relative to staffing shortages and as you heard me talk about we see that impacting essentially all of our accounts to some level.
Those headwinds are not going away anytime soon and we wanted to make sure that when we put guidance out there.
We had a high level of confidence.
Of hitting those numbers and matching those commitments, we do see as you look out.
Further into the back half of the year. Some important catalysts right. We have this mega class of sales professionals that we've just brought on board that will be ramping their productivity as we move through Q3, and particularly into Q4 there'll be hitting kind of the sweet spot of.
Their productivity, we've got important readouts coming in both cloud and flash in fact and flash the TCT just announced the late breaker for our 800 patient dataset for Flash we've got another one coming for at another conference for cloud, we've got some new products coming in.
For that we think will also offer some incremental revenue opportunities and just another quarter of progress on our <unk> excellence I think all of that gives us some confidence we're going to have a fair amount of momentum exiting the year, but we did have the staffing shortages.
In mind is we reaffirmed guidance for.
For this point forward.
That's helpful Drew and second you guys are hosting an investor meeting next month can you give us a little bit of a sneak preview of what we should expect and then one question I've gotten from investors is deep.
Do you plan to give any long term financial targets. Thank you.
Yes, maybe I can dive in there Larry so we.
The.
It's been a lot of time planning on this as you might imagine and I think we want to share as some of the nearer range I know most people are interested in narrow range.
Product offerings, so there'll be plenty of that in some demonstration touch and feel and so forth, but I think one of the things that we're really excited to share as you have mentioned this.
Referenced our.
Communications about a transformation in the organization I think it is underway and the capabilities that have been installed throughout the organization the depth of the <unk>.
Bench.
Depth of the talent.
Talent on the on the team not just at the executive level, but much deeper into the organization I think we want to convey that as well.
Plenty of discussion about financial.
About the financial performance of the company.
We're trying to.
We're still in the process of.
Determining long range, how much we want to.
Convey in terms of the long range now performance of the company, but I think what we've already shared here is that we will at least when we released already confirm that we're going to return to.
Operating.
Close to profitability, a little above little below but by next year. So I think we have plenty of discretion in terms of the way that we deploy resource and Thats served us extremely well and I think youll begin to see that as early as the fourth quarter with regard to this new this new class.
That we are the largest class that we've ever hired begins to hit their sweet spot in their productivity curve. So anyway lots more to share here, Larry we get another six weeks or so before that.
Yesterday, so stay tuned.
Thanks, so much.
Thanks, Larry.
Thank you we have a question from Marie Thibault with BT I E.
Hi, just wanted to offer my congrats as well on the CEO role, that's very well deserved.
And Bill we're going to Miss talking to you every quarter, but I hope you get some time to work through that bucket.
Got it.
Yes, so anytime.
I wanted to touch here on the new sales reps you mentioned over 100 in the first half of this year.
Thank you Bill you were just talking about the sweet spot on the productivity curve remind us.
About how long it takes a new rep to really hit their stride here at NRA and what your expectations are then for the back half of the year, you're cooling off on hiring.
And happy to sit at that 275, or so territory goals that you started at the beginning of the year.
Drew you want to yes, thanks Marie.
So that was the largest class that we've ever brought on board, we did that very intentionally in anticipation, particularly some of these new product launches that we see coming in the back half of the year, we wanted to get territories down to a smaller size as possible.
And we wanted to put ourselves in a position where we could really focus in on executing those.
Those new launches on having some stability across the field team and really kind of growing into the investment that we made in pulling in some of those hires. So we like how we're positioned right now just north of $2 70.
I do think as we look ahead to the back half of the year, we will continue to make some.
We're kind of opportunistic and incremental adds to that team, but I think the real focus going into the back half of the year here is going to be less on bringing onboard another big class and more on some of the things I described around execution and new product launch and really trying to settle into to this much.
Larger group that we just brought on board.
In terms of the productivity.
We see folks come up to speed pretty quickly keep in mind at this stage almost all of our or essentially all of our new Rep adds are stepping into some kind of established territory and it's some kind of a split so they have existing accounts that they are inheriting and that also helps the <unk>.
Ups come up the productivity curve relatively quickly.
We're really tested the upper limits of that productivity, because we tend to split.
Before where you've been able to see what the upper limits are but certainly as we work through.
Q3, they will continue to ramp many of them are just hitting their territory within the last several weeks. So they are really just beginning to settle in their territories fully trained so we'll see that productivity improve during Q3 and as I said I think as we enter Q4 they'll begin really performing.
Like established territories Youll, certainly see the impact on the P&L.
Many of those folks were not on board certainly for the full quarter in Q2. So you will see the full burden of that.
A large complement of reps youll certainly see that reflected in the P&L again in Q3 as a fully burden class.
If I may just add one thing one thing there on marine one of the things that we've seen and it will I think.
It's obvious in the P&L is that our commercial system has been incredibly efficient right.
<unk> of our sales.
In the presence of a really strong gross.
Gross margin and has put us in position much earlier in our.
In our commercial history in our history as a public company two to hit that breakeven Mark.
Is getting to exactly the same spot our productivity slightly an all time low.
Just because.
Public company to hit that breakeven, Mark and I see us getting to exactly the same spot our productivity probably an all time low.
Just because sales professionals, who come onboard are at their lowest productivity in the first month and we have a bunch of them now.
Literally in there in their first month, but that efficiency has not changed the productivity that we've seen.
With our sales professionals.
Strong early and it improves at least.
Consistently through the first 12 months and as drew said, we don't give chance give too many of these territories the chance to mature beyond 12 months before they are split. So so we really and Thats why we are quite optimistic as we get to the back end of the year and into <unk>.
Into next year not only in terms of growth, but also in terms of.
<unk>.
Net income and net operating line.
Yes, that's very helpful. Maybe I can segue to my next question from what Joe mentioned about the prepared on the P&L.
You gave us a good sort of hints at what 2023 could look like in terms of intermittent profitability, but when we think about the rest of 2022.
How should we think about that Opex line and sort of the expense outlook here for the rest of the year.
Yes, Thanks Marie.
I guess I sort of addressed jumped ahead, a little bit to talk about 2023.
And that intermittent profitability comment I made and just thinking a little bit back to 2022 and looking at Q3 and Q4 I think you've heard through our prepared remarks, we continue to see some difficulty in terms of the operating environment. We've talked about that that's also reflected.
In the guidance, which we provided so that's kind of the topline outlook probably for Q3.
Getting better in Q4 as you heard from both from both through and Bill and then from an operating expense point of view, we will have the full cost of that big a class that we hired.
Kind of hitting the P&L in Q3 were kind of looking at more.
Probably levels of consistent spend and some of the other opex categories for the business, but the impact of that I think could take US friends, let's say the $9 $3 million operating loss that we just reported to something that could be in the kind of the low to mid teens I would call. It in Q3, and then hopefully improves.
In Q4 for the reasons, we've discussed so that's sort of the perspective I would say for the remainder of 2022 2023 is sort of already commented on that.
The real interesting.
Interesting thing and positive thing about and nori.
Thinking longer term and this may actually go back and touch on a little bit of the question that Larry asked was this sort of the longer term opportunity for profitability of the company.
All of the ingredients they really.
Terrific.
<unk> that will be a sustained producer of significant operating profit to the company you look at the market opportunity. If you look at the <unk>.
Productivity of the sales team you look at the gross margin of the business the opportunity to really drive leverage through the productivity of the sales team is as Bill just mentioned and we think thats something that we are certainly.
Looking forward to we're not in a position.
<unk> today to really comment specifically on the timing of the level of that but we are confident that we have every ability to become that kind of a business.
Okay very good I wonder if I could sneak one last one in here at the risk of pushing my luck I just wanted to circle back to <unk> question on stocking revenue.
I wanted to try to determine how much of your outperformance came from procedure volumes versus some of the stocking uptick any chance you can give us that kind of range was it low teens percent of revenue somewhere in that range.
Yes.
We did disclose those figures.
And our past Murray as we did our earnings notes for Q1 back in May.
Tried to telegraph to everybody that we would no longer be sharing specific kind of percentage figures for stocking revenue and procedure counts and things like that.
As Bill and drew both mentioned in their remarks, we were really pleased with the performance of the <unk> hundred 24 sheets and the way that was accepted by our customers for the for all the reasons. We've discussed you said there was definitely some revenue that probably move forward in time, so kind of from the Q3 timeframe to Q2.
I'm reluctant to really say much more about it than that.
We are just kind of looking back at the core business again, we talked about the fact that we're very pleased with the performance of the core business in Q2.
So I hope that helps you a little bit without.
Without really digging into any specific numbers.
Okay got it thanks, so much.
We have a question from William <unk> with Canaccord Genuity. Your line is open.
Great. Thanks, Good evening can you hear me okay.
Yes, we got you.
Great.
Thanks, I look forward to giving you my congratulations you may see in person next month.
So a question to your first product.
Any feedback you can provide on the Arctic spoon and when do you think there is that is that one of the products that is.
They did for full market launch half.
For the year.
Yes.
Jump in Eric drew yes, so bill.
You know that we had the first component of that Arctic system that we already received FDA clearance for.
I don't know its probably 90 days ago, now and what Youre referencing is the second component of that same system. The Arctic ballooned guiding sheath, which we just got clearance for within the last couple of weeks. We've got now those first two components of the overall Arctic system underway in our LMR the first phase of our.
Rollout, where we really gather some initial feedback not only clinically but commercially as well and then we use that to inform the full market release. So we're still in the early days of that LMR work, but.
But clearly as we move through that phase and look ahead to the back half of the year.
We will be presumably hopefully.
Moving forward with a full market release for the overall Arctic system and as I think we get to that point, we'll be in a position to talk more.
In more detail about what kind of unmet need and patient population that system is designed to address it is a new patient population outside of our existing <unk>.
<unk> Tam.
But as part of our kind.
Kind of a normal approach here, where we'll probably stop short of talking about a whole lot of additional detail until we get the LMR behind us and feel like we are ready to shift into full market release with that product.
Okay, great. Thanks, and then.
If I could switch over to the DTE I don't think we really talked about that center of excellence program.
Uh huh.
How many centers are yet just how is this kind of progressing and do you expect having how much impact do you expect having a DTE coordinators.
Help out in terms of especially with the staffing issues and any you guys can give along with the hospital with the facilities.
Yes, so bill, we're making good progress quarter after quarter on developing that <unk> excellence approach.
Just to remind everybody that entire program as part of our second growth driver and as really designed.
To address one of the key challenges of the market and Thats. The fragmented care that has existed historically for these patients and the lack of systematic systems and processes that identify these patients 100% of the time risk stratify them and bring them forward.
Third to a group of caregivers that really understand the disease and can make a fully informed decision on how best to care for those patients.
It's that kind of fragmented care that lack of a systematic approach.
Like you see in <unk>. Unlike you see in stroke. That's the problem, we're trying to solve with our VT Excellence program.
We're making progress quarter after quarter, we continue to kind of refine and hone and iterate and improve that overall program.
But we are seeing success in moving accounts, along the continuum from what we call engage and to empower and finally excel.
And as a result the.
Penetration at the account level and to the Tam.
Also goes up and increases as we help support accounts and developing those programs and moving along that continuum.
Placement of VT coordinators, and supporting accounts and helping accounts understand the business case, if you will for investing in the boutique coordinator is an important part of that overall VTS <unk> program, particularly in the later stages of of work that we help accounts during the later stages of that program.
Work, we did add incrementally into that group of ETE coordinators, and we're also I think even more importantly, better understanding the profile of the optimal VT coordinator what kind of scope of work.
Give us the biggest impact where they can really help move the needle most efficiently at the account level. So all of that continues to move forward, we like what we're seeing but.
By the same measure I think we've got lots more work still to do across the account base.
Bill I might add one little bit of color about the VT coordinator role.
Clearly staffing shortages remain tremendous.
Headwind in terms of the operating environment, one unintended consequences. That's viti coordinators are actually used as a potential retention tool for nurses, who.
Fine.
Remaining in clinical work are challenging, but we can preserve their experience and add them to the patient.
Patient care pathway through that mechanism.
Okay. Thanks, and then lastly, if I could just ask.
Yes.
Yes.
Any color regarding year over year total Asp's and then.
Help us understand.
Real question is unit growth tracking to.
Year over year percentage revenue growth as their asps up down help us out with that base.
Bill we've been pretty consistent in terms of our asps for the float fever toward the cloud fever, I think we've discussed in the past.
Sort of approach to the company our pricing strategy. The company has really been to price based on value and as we've added additional products into the let's say the flow Cheever toolkit and for some customers the country ever is become a tool kit as well.
It's actually a really nice position to be in in terms of going into those hospitals, whether they're independent hospitals or whether they are large part of larger hospital systems to say, let's look at the value, we're providing to the interventional physicians and the tools that they can sort of pick from.
To get the best possible outcomes for their patients.
And Thats helped us a lot in terms of maintaining the kind of pricing that you've heard from us in the past. So there hasnt been any really meaningful changes there on the pricing side, that's been something we've obviously been pleased too.
To see as we're building the business.
Business.
Certainly with the macroeconomic stuff going on in the U S.
We're wanting to make sure that we wouldnt face any pricing pressure for the business and we are.
We're comfortable with where we are.
Yes, I would add one more thing.
So yes pricing pricing has been rock solid if anything just minor little tick upward as contracts expire and so forth that the.
The economic proper.
Proposition for the flow treatment plant fever.
Procedures for hospitals is still really really good.
So that's that's.
It's one of the reasons I think that we've been able to perform through challenging operating environment. The other thing I want to say, though.
We've guided kind of flattish.
For Q2.
And.
We recognize that several things were going on in Q2, not just the headwinds, but also the tremendous amount of.
Work and effort that is required to hire as many people as we hired in Q2.
A major lift and we are really happy with the way we performed.
As we said on the on the core business I think what we Didnt quite anticipate was the.
The pace will be up in the uptick in.
In.
Adoption of the.
The.
Entry chief, but overall I mean for the.
For the year I think we're feeling quite confident as we always have been about the impact of this large.
Our group will have and our ability to execute through the challenging headwinds, which is why we kept the.
Kip.
The guidance, where we were we had that does imply a pretty pretty significant Q4.
Great. Thanks for taking my questions.
Yes, Thanks Bill.
Thank you as a reminder to ask a question press star one one.
We have a question from Adam <unk> with Piper Your line is open.
Hi, good afternoon, thanks for taking the questions and I'll Echo My Congrats Bill and drew on the transition.
Maybe just to start wanted to ask one on the operating environment, just looking for a little bit more color or detail in terms of kind of what youre seeing there given some of the headwinds you called out are you able to share volumes and kind of how those trended over.
Our month over month basis in Q2, and then what are you guys seeing kind of play out thus far.
Throughout July and then I had a follow up thanks.
Yes, so I think thanks, Adam I think maybe to talk about the two primary headwinds that we saw during the quarter. The contrast shortage in staffing shortages contrast shortages I think clearly we're.
Present for most of the quarter, but I think as we exited Q2, we began to see those.
Contrast shortages begin to lift in many accounts Im sure thats consistent with you've heard from other manufacturers as well. So I think hopefully the worst of that one is behind us and I think thats consistent with what you've.
What you've seen and heard even from from GE on.
The staffing shortages that has been very consistent.
Throughout the quarter, we see that pretty steady over time, and we see it also very consistently geographically we see it in large hospitals in small hospitals academic centers.
We're seeing in between it looks a little different at the account level, sometimes it's more significant.
For the Cath lab staff and the ability to do interventional procedures I think in other accounts, we see it.
More prevalent and their ability just to staff the number of beds that they have and carry a full census, and have the kind of inpatient volumes that you would expect so there is some variability in terms of what the impact looks like at the account level.
But again over time very consistent as well as a lot of consistency, having some impact across nearly our entire account base.
Okay. That's that's helpful. Thank you and then maybe for the follow up I'll ask about some of the data sets that are coming down. The Pike later this year I think I heard.
More data from cloud claim and flash in one of those sounds like it's slated for a late breaker at TCT when should we expect the other datasets and how impactful do you think these updates can be from a commercial standpoint, thanks again for taking the questions.
Thanks for your question and Adam It's Tom here. So you are exactly correct in the three major registries that we anticipate data releases for by the end of this year. The first being the flash 800 that is the complete U S cohorts of patients treated in the flash registry that has.
Been accepted as a late breaker at the TCT meeting I can't imagine a better platform.
Arguably the most important U S interventional Cardiology conference now taking on pulmonary embolism.
An area of interest so we're very excited about that.
Cloud registry has the final 500 patient complete cohorts.
Being reported out.
We anticipate that will be short time later this year at an upcoming conference and then I think.
Perhaps the unsung hero of the bunch. The flame registry. This is the largest contemporary registry of high risk <unk> patients the ones with the highest rate of mortality, we anticipate an interim analysis coming any minute now and hopefully that data.
Thats can be presented later on this year as well as far as the impact to the.
The commercial uptick of these procedures frankly.
At this stage of the game quantity is quality, we are presenting multiple times at major meetings every year I think thats moving.
<unk> in terms of interest and excitement about treatment of these disease states with our products hopefully.
<unk> the kind of.
Sentiment that has had for heart attack and stroke, but I will remind.
Everybody that what we've said before we don't anticipate any inflection points anytime soon adoption is going to be really good.
On the ground trench warfare, convincing hearts and minds, one at a time.
Yes, if I may just underscore one thing.
I want to make sure this is.
Highlighted.
The fact that.
TCT.
Is that <unk> in our flash registry is going to be front and center on the engage at arguably the most important.
Most important.
Interventional conference in the World.
Deal not just for our stuff, so that's really cool, but Tom but for PD generally I think thats a signal there that suggests this is becoming mainstream was unimaginable, even 12 months ago unimaginable.
And of course 800 patients.
800 patient studied with the flow through of a device and high.
Volume.
Our centers with excellent reputation that is no joke that that's a pretty big deal and still we believe me.
A major inflection point this is a grind it out.
Execution play and we've been pretty good at that.
Yeah, Thanks for the color.
Yes.
As a reminder.
Sorry, I might actually jump in there, we're having some technical problems with Bofa.
<unk> had a question for the team here I'll go ahead and ask that since he is not able to connect grabbing some challenges with the phone, but he just wanted to know why.
<unk>. This is the right time to step aside in light of some of the new product announcements and some of the other exciting things happening at the company.
I wish Travis we're here I'd like to say Hello to him too. Yes, we've had I think you've heard we've had some technical challenges here as the new system and so thanks for thanks for bearing with US at Somebody's children were very very sad to see me go and I was happy to hear that.
So so thanks, thanks Travis.
Look theres a few few things going on here why am I, leaving purely personal has been.
Now here for almost eight years.
Before that seven five years of the previous company that was.
Acquired.
And it's a long time and it's been a grind maybe some people find a way to do that without the.
The intensity.
That is all consuming but I haven't found that path.
I have loved every second of my time here on this mission and with his team I really love it.
But I've had no time to love so much of anything else and so I'm, hoping to spend a bit more time with books and bikes.
And my family and my Kids and <unk>.
An exciting time in that way.
Why now I mean, I think you even in your question is wrapped up the answer is wrapped up in the question. The company has never been in better shape.
The.
Pipeline is full of new products, we have 1000, plus quite warriors sales team now has more than 300 people all in with managers and so forth all of the growth drivers in great shape. Tom just described the tsunami of data that's coming down the Pike here.
According the safety and efficacy of our devices will be in new markets. Shortly in this product pipeline, which we've emphasized all year as being spectacular for 2022 dozen hand right. There is there is an equally.
<unk> arguably even more exciting pipeline beyond.
Largely due to the systems and processes that drew has begun to install and then I will see.
One last thing.
All of you have seen and heard through since the beginning I can make a pretty compelling argument that drew was.
It is now much better.
Public facing CEO than I ever could have been his mindset is training.
Problem solving skills, the single best executive I've ever seen.
<unk>.
And I think he is.
He has his skill set.
Is going to it's already been on display the reason that we promoted him to CEO .
A couple of years ago was because you just really good at the problem solving a lot of the systems and the processes.
And the programs that are necessary for the explosive growth of cross functional communication the complex.
That have allowed us to explode with new products.
Team members and a lot of that was installed.
<unk> installed and executed by drew.
And there's not a shred of.
Not even a sliver of difference between the two of us or anybody here on this call are the rest of our team in terms of the commitment to the mission. So so it seems like a pretty good time.
Let me just say one last thing.
When we raise money.
Three or four months ago.
Everyone asking we have a strong balance sheet your operating income pretty consistently near breakeven don't really need the money why are you raising money and I said at that point.
If I were you the.
The question that I think you'd really want to ask but you brought two nice to ask it is are you about to do something really stupid with this money and of course, we didn't.
<unk>.
Merger of equals or spend a $1 billion of half a billion dollars on the new company something like that and I think the same question is true now.
Is there something else and hopefully it's pretty apparent that the company is in fantastic shape and we are the envy of all and these to have probably a better CEO in weighting than we had.
Exiting and that is an exciting time for the company. So I'm really excited.
For my own greedy personal reasons to have opportunity to do what I, what I'd like to do.
And I think equally excited about drews rule and the impact that he has already had and seen him front and center.
Watching from a front row seat is going to be a real pleasure.
Pleasure from the board.
Sorry, you asked arent Travis.
That's it operator, we got nothing else on this and how about you.
There are no other questions in the queue.
Alright, thanks, everyone. Thank you so much.
This concludes today's kind of queue for participating you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial one one.
[music].
Okay.
Yeah.
[music].
Sure.
Sure.
Okay.
[music].
Yes.
[music].
Okay.
Yes.
[music].
Okay.
Okay.
[music].