Q2 2022 Cutera Inc Earnings Call
Thank you for joining to terrorists second quarter 2022 earnings conference call. After the prepared remarks, there will be a question and answer session to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star.
Zero.
The discussion today includes forward looking statements. These forward looking statements reflect management's current forecast or expectations of certain aspects of the company's future business, including but not limited to any financial guidance provided for modeling purposes forward. Looking statements are based on current information that is by its nature dynamic and.
Subject to change forward looking statements include among others statements regarding financial guidance regulatory approvals productivity improvements and plans to introduce new products and then expand into additional geographies for words that may identify forward looking statements. We encourage you to refer to the safe Harbor statement in our press release earlier.
Today, all forward looking statements are subject to risks and uncertainties, including those risk factors described in the section entitled risk factors in our Form 10-K as filed with the Securities and Exchange Commission and updated on our form 10, Qs subsequently filed Q. Tara also cautions you not to place undue reliance on forward looking statements.
Which speak only as of the date. They are made to Terra undertakes no obligation to update publicly any forward looking statements to reflect new information events or circumstances or to reflect the occurrence of unanticipated events future results may differ materially from management's current expectations. In addition, we will discuss non-GAAP financial measures.
Including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into cute Harris ongoing results of operations, particularly when comparing underlying results from period to period. Please refer to the reconciliation from GAAP to non-GAAP measures in our earnings release.
These non-GAAP financial measures should be considered along with but not as alternatives to the operating performance measures prescribed by GAAP with that I would like to turn the call over to our CEO Dave Mowry.
Thank you Ariel I'd like to welcome each of you to <unk> second quarter 2022 earnings call.
I'm glad that you're able to join US for this important update with me on today's call is Ron <unk>, our Chief Financial Officer.
Before I dive into a recap of the quarter I'd like to mention that during the period, we successfully raised $240 million in convertible debt financing, allowing us to retire 50% of our prior convertible debt and add to our existing cash position. This activity places catcher and exceptionally strong cash position and provide.
Just with the flexibility to bring other innovative first mover products to market.
Turning now to the second quarter 2022.
During the remainder of the call I will provide an overview of our second quarter performance along with some operational highlights, including an update on our experience to date with the IV clear during the initial quarter of our limited commercial release.
Ron will then provide a detailed review of our financial results.
And our updated fiscal 2022 financial guidance after which he will turn the call back over to me and I will spend a few minutes discussing our plans for the remainder of the year.
Along with some specific details on our plans to expand customer access to our I'll be clear device in the second half of 2022.
After these remarks I will hand, the call over to the conference operator, so that we may take your questions.
As I've done in previous updates I will begin by sharing our high level observations of the energy based aesthetics market and how we expect the current geopolitical and macroeconomic factors to impact customers and patient patterns during the prevailing uncertainty around the macroeconomic environment and elective procedures I.
I'm pleased to say that acute care continues to thrive as you'll hear reflected throughout our business result underlying market fundamentals remain robust in our and our customers continue to maintain approximately two months of forward looking demand in their schedules.
Patient traffic remains intact with no signs of weakening beyond expected third quarter seasonality.
And as mentioned in previous updates aesthetic practitioners continue to see demographic shift in their patient base with younger career oriented individuals with access to greater disposable income seeking routine procedures.
This expanded patient group prioritizes aesthetic procedures within their spending plans each month, providing greater resilience in the overall demand and a more stable patient traffic forecast.
We anticipate that the capital selling environment will remain robust with this continued level of patient treatment volumes.
This further enforced by some early capital equipment demand, we service in third quarter 'twenty, two and some deals flowed into this period from second quarter 2022.
Moving on now to an update on the global macroeconomic environment and its impact on kuchera.
Hey, Tara. Unlike many other companies has limited exposure to the Lockdowns and movement restrictions in China associated with Covid. However, we do have a material exposure in Japan as seen in our skincare results within the period with.
With significant exchange rate movement over the last seven months, the Japanese yen has fallen to multi decade lows against the U S. Dollar as a reminder, our skincare line distributor line, we provide only in the Japanese market is purchased in U S dollars, but sold in Japanese yen. This arraignment arrangement has resulted in a painful curran.
See squeeze that we feel on both our top and bottom line performances.
Global Foreign exchange rates had a significant impact and we expect that this will continue into the second half of the year.
With these market conditions and economic pressures as a backdrop, let me share key terrorist commercial highlights during the second quarter of 2022.
In the period, we delivered a total revenue of $64 2 million, representing approximately 10% growth over prior year's period as reported and a 15% growth on a constant currency basis.
Discounting the impact of foreign exchange rates in the period topline revenue would have eclipsed our previous all time high revenue of $65 6 million in our seasonal peak in the fourth quarter of 2021.
This topline performance was driven by the continued momentum in our capital and consumable businesses offsetting the aforementioned economic challenges we saw in Japan.
During the second quarter of 2022, we posted $43 7 million in capital equipment revenue a record result for the company. In this segment are capital equipment revenue performance was led by our true body family of products. In addition to strong capital equipment sales, we nearly matched record revenues for consumer products is well within this peer.
Good.
Looking forward, we intend to further expand our body country offering as well as increase our marketing and promotional efforts around the true body product family during the back half of 2022.
Specific to our capital revenue performance, our North American sales team continued to demonstrate momentum in the period, posting $25 2 million of revenue, representing a 27% growth over prior year period.
These results come from the investments in sales force expansion during the second half of 'twenty 'twenty. One in combination with the continued focus from sales leadership unimproved productivity through sales process execution.
International capital equipment sales were $18 4 million, representing a 17% growth as reported and 26% growth on a constant currency basis compared to previous year's quarter International.
International Capital performance was strong in aggregate as well as across the key regions as expected our European capital sales rebounded sharply from the decline reported in first quarter 2022, posting second quarter revenue of $5 3 million or 36% constant currency growth over the prior year period.
Following the second quarter results the European capital equipment revenue now represents 11 point, 11% growth year to date on a constant currency basis.
We benefited from favorable trends in our distribution markets as well posting 26% growth during the quarter in Australia, and New Zealand also provided healthy year over year growth with $5 2 million in capital equipment revenue, representing 17% growth and 26% constant currency growth over the prior year period.
Similar to our 2021 capital purchasing trends.
We believe that the third quarter recap of revenue will be impacted by the timing of our C. U C. F events conducted during the second quarter.
These professor.
Professional education events typically pull forward a handful of deals that would have normally flowed into three Q2022.
As such we anticipate a slight step back in capital sequentially.
Our recurring revenue category defined as the combination of skincare service and consumable products was $20 6 million in the period, a decrease of 11% over prior year period as reported and a decrease of 2% on constant currency basis.
Skincare, the largest contributor to our recurring revenue delivered in only $9 6 million in revenue during the period, representing an 18% decline from prior year's quarter on a reported basis and declined 6% on a constant currency basis.
In comparison to the previous period foreign.
Foreign exchange rate was responsible for two thirds of the decline while the remaining third reflects the impact of the regional economic headwinds on buying patterns.
Without near term relief from these issues, we believe that our skincare revenue for the back half of 2022 will reflect a similar run rate to our second quarter results.
Service revenues of $5 six in the quarter represented a decline of 17% as reported and a decline of 13% in constant currency as discussed previously we expect to recover our service part inventory and book higher volumes of time and material work orders in the second half and expect to return to approximately six 6 million.
Per quarter.
Consumable revenues of $5 3 million in the quarter represented approximately 20% growth over prior year's quarter as reported and 23% on a constant currency basis, driven by the growing demand for treatments from the true body family of products.
We anticipate strong patient traffic in the second half bolstered by the continued expansion of the installed base.
Shifting now to our RV clear limited commercial release.
As discussed during our previous earnings call, we crafted a very thoughtful initial entry into the market for I'll be clear.
As a reminder, the introduction of already clear represents a launch of a new and disruptive technology, a vastly different business model and a device, bringing multiple customer disciplined bridging multiple customer discipline to include medical dermatologists.
Due to the disruptive nature of this product and its positioning we intensely focused on a very targeted in the secret of introduction to test our assumptions using a few dozen sites.
This limited release was aimed at gaining a fully informed perspective on how to best expand into a full national launch by the end of 2022.
As expected we generated a very small amount of revenue from the patient treatments during the quarter, but gained significant insights into the product performance product acceptance and practice onboarding processes.
We are pleased with the progress we've made with our field placements and energized by the clinical outcomes. Our physician partners have shared with US many physicians, who adopted I'll be clear into their practice have already begun to see results with their patients and in some cases early clearance results seem to exceed those results that we witnessed in our own trials.
These data serve to boost physician confidence and increase their comfort and selling the procedure to their patients suffering from acne.
During the second quarter of 2022, I'll be clear physician partners treated over 100 individual patients we were especially delighted with the patient survey data. We received after the Avi clear treatments from 53 different respondents captured via the key terrorists smartphone app.
As of today patient respondents have rated the Avi clear treatment with an average reported score of 4.9 out of five with no patients rating below for the.
The survey prompts patients to provide ratings in areas such as general procedure satisfaction pain levels procedure tolerability their value proposition as well as the overall ease and convenience of this procedure.
To date, we now have over 500 treatments under our belt and we continue to learn from each and every treatment provided one of our critical learnings what's that normal practice patterns, coupled with patient accused of roughly two months directly impacts the speed of account conversion. However, once I'll be clear is adopted and incorporated into these.
Practices patient conversions and device utilization ramps up very quickly as physicians build confidence in the procedure and recognize their own patient satisfaction.
With that I'd like to turn the call over to roll on to provide you some additional color on our financial performance.
Thank you Dave as I review my prepared remarks, I want to note that I will be discussing some non-GAAP results a complete reconciliation of GAAP to non-GAAP is included in our earnings release, we encourage listeners and readers to review our non-GAAP metrics in conjunction with the GAAP results is contained in this earnings.
Release.
Total revenue for the second quarter was $64 2 million compared to $58 6 million for the same period in 2021 representing an increase of approximately 10% and 15% in constant currency.
During the quarter, we continued to face meaningful foreign currency headwinds, particularly in Japan with the Japanese yen accounting for approximately 70% of the impact.
Based on current exchange rates, we expect that we will continue to face ongoing headwinds from foreign currency food throughout the remainder of acquaint playing too.
Second quarter, North American capital equipment revenue of $25 2 million increased 27% over the prior year International capital equipment revenue for the second quarter was $18 4 million up 17% as reported and 26% in constant currency from the second quarter of <unk>.
2021.
Recurring revenue defined to include our consumables global service and skincare product lines was $20 6 million in the second quarter down, 11% as reported and down 2% in constant currency.
The decrease over the prior year was driven by skincare revenue of $9 6 million down, 18% as reported and down 6% in constant currency as well as a decline in services revenue of $5 6 million.
Down, 17% as reported and down 13% in constant currency.
Services revenue continued to be impacted by parts availability. These declines were partially offset by growth in our consumable products up 20% as reported and 23% in constant currency.
non-GAAP gross profit for the second quarter of fiscal 2022 it was $35 7 million with a gross margin of 55, 6% representing a decrease of approximately 250 basis points compared to the same period last year.
Excluding acne program impacts of approximately 180 basis points, and then additional 180 basis points and foreign exchange headwinds the non-GAAP gross margin in the second quarter would've been 15, nine 2% and approximately 110 basis point increase as compared to the same quarter last.
Last year was.
While we did experience supply chain and macroeconomic inflationary pressures as well as FX headwinds at the gross margin level during the quarter, we were able to offset them with ongoing cost improvement initiatives as well as leverage on our fixed cost base.
Total non-GAAP operating expenses for the second quarter of playing 22 were $37 3 million compared to $27 2 million for the same period last year.
Included within this number our $6 $4 million in expenses related to our acting device.
non-GAAP sales and marketing expense for the second quarter of 2022 was $24 6 million compared to $16 7 million for the same period last year driven by continued expansion in our sales force hires commissions increased travel as well as $4 4 million and expenses associated with the launch of Avi.
Sure.
non-GAAP R&D expense for the second quarter of claim 22 was $5 7 million compared to $4 5 million for the same period last year, driven by increased investments in Novocure and additional clinical studies.
Finally, non-GAAP G&A expense for the second quarter of acquiring 22 was 7 million compared to $6 1 million in the same period last year, driven by inflation and expansion in our head count.
For the second quarter appointing pointing to our non-GAAP operating income, which we referred to as adjusted EBITDA was a loss of $1 6 million compared to a profit of $6 8 million in the prior year period.
As anticipated.
Our investment in Novocure was the most significant driver of EBITDA decline on a year over year basis, excluding acne program impacts of $7 5 million for the second quarter of 2022, and foreign exchange headwinds over the prior year of 2.4 million adjusted EBITDA would've been $8 $3 million.
As I mentioned earlier embedded within our non-GAAP opex of $6 $4 million spent on our acne spend.
On our acne program, 70% of which is in sales and marketing and the majority of the remainder is in R&D.
Finally, there were no material or significant changes to our tax position.
Turning now to our balance sheet.
Dave mentioned earlier during the quarter, we raised $240 million from our convertible debt offering announced in may that will net $154 $6 million of incremental cash after accounting for the extinguishment of 50% of our 'twenty 'twenty six notes at $45 8 million capped calls of 31.
One 7 million, which were done to limit dilution and $8 million and issuing issuance costs.
With this addition, we ended the quarter with $278 $2 million of cash and marketable securities compared to $131 8 million at the end of the first quarter. The sequential increase of approximately $146 $4 million was primarily driven by the cash raised in our convertible debt offering.
We continue to expect cash burn to be approximately $20 million for the remainder of the or we do not expect cash consumption to be linear as we build in place initial inventory to launch I'll be clear.
With a strong balance sheet in place we are well positioned to continue supporting the growth of our business, while ensuring a successful launch of all Victor.
Before I turn the call back over to Dave I would like to provide you with an update on our outlook for the full year of 2022.
Starting with revenue.
Reiterating 2022 guidance of 255 million to 260 million entirely absorbing the impact of the unprecedented foreign exchange headwinds of $15 million annually, implying constant currency growth of 17% to 19%.
This guidance does not include revenue from our obviously our device as we continue with its limited commercial release.
Moving onto adjusted EBITDA FX pressures have continued to worsen and we now expect a further impact from FX of around $3 million on the full year adjusted EBITDA, bringing the full year impact of approximately $11 million.
As a business we are continuing to respond to these pressures and we expect to offset most of these headwinds. Therefore, we are reaffirming our full year adjusted EBITDA guidance to be in the range of $5 million to $10 million.
I would like to now spend a few minutes discussing the acne business model and the related accounting in greater detail.
As Dave mentioned in his remarks, we are launching this innovative product under an equally innovative business model to maximize its reach with patients and clinicians alike. Instead.
Instead of selling the capital we will instead be licensing the device over a period of three plus years.
Licensing fees, we collect will be ratably recognized as revenue over the term of the lease and treatment revenue will be recognized as arndt.
As the units will remain on Q terrorist balance sheets on the P. P N D line.
We will depreciate these units over their useful life.
Finally, the treatment and licensing fees will be considered recurring revenue.
During the second quarter, our Acme related revenue was recognized within the consumables category and was approximately 0.1 million as the business grows we intend to create a separate line for acne with that I will now pass pass the call back over to Dave.
Thank you Ron.
Cause air continues to prepare for the full launch of the Avi cleared device in North America by the end of 'twenty 'twenty. Two we believe that this product and its novel business model will drive unprecedented growth accu, Tara excelling the tranche accelerating the transformation of our business.
Avi clears a recent health Canada approval in combination with the previously secured F. D. A five 10-K, five 10-K clearance eliminates any additional regulatory risk and secures our ability to launch across the entire north American footprint.
As we continue our rollout we expect to significantly accelerate placements each quarter with over 100 placements plans for the third quarter 2022 we expect to further increase upon those placements in the fourth quarter and scale our device footprint throughout 'twenty twenty-three.
Actually we intend to work closely with our customers to accelerate their patient conversion processes.
We are delighted to be in such a strong position at the midpoint of 2022 fortified by the strength of our core business performance backed by a strong balance sheet and energized by the building momentum of the Avi clear opportunity.
With that I'd like to turn the call back over to the conference operator to open the call to your questions.
Ill.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request. If you were using a speakerphone. Please pick up your handset before pressing any keys to withdraw. Your question. Please press Star then two we will pause for a moment as colors.
In the Q.
Our first question comes from Jon Block from Stifel. Please go ahead.
Great guys, Thanks, and good afternoon.
Hmm, David maybe I'll just start on the base business. You know you mentioned a pipeline of two months.
That's largely unchanged from your talk track in <unk>.
You talked about a step down sequentially from <unk> capital, which is normal but just to push you.
Not seeing any weakening of the capital environment, maybe just talk to us about the pipeline what youre hearing from sales reps does it remain robust. The pipeline are you witnessing any more trepidation from the docs I'm just trying to push you a little bit there because obviously, there's been a lot of questions are incoming from investors just due to the overall environment.
I'll ask a follow up.
I totally understand that the backdrop the economic backdrop, certainly would would kind of cause that question would be to to come to the forefront.
We check regularly and routinely with our physician customers on what's going on in their practice, how are things going and whats. The bookings are for them and you know the other thing we we asked them about occasionally as cancellations, because sometimes they'll see cancellations indicative of maybe some some nervousness.
On the patient behalf and we're not hearing anything that would be even remotely concerning to us at this point I think that that's certainly makes us feel very very good about patient traffic about the underlying business and the volumes of patients seeking treatment. In fact, we believe it continues to grow.
I think you know that the only concern I would hold out there is what are the capital environment look like what the leasing look like what does financing look like for some of these physicians.
But I just want to remind folks that you know generally speaking, we're a little bit more of a higher end provider and we provide more to the higher end customers and generally they don't have credit concerns, but that being said you know we're always watching we're always looking and we are we have we are a little bit paranoid John and that is why.
We check so often.
Oh, good I'm paranoid as well and maybe the second question and I'll shift over to I'll be clear. So just talk to me about the next steps maybe for more I'll be clear data we've come across some sites that I believe are seemingly enrolling for post market studies is that specific to you know acne as it for longer term data or is it on the acne scarring side of things and maybe.
Just to tack on maybe you could take a step back David you know what are you seeing from the practices that are running at the call. It the high end of the utilization our scale versus those that are running at the lower end what are they doing differently to separate one versus the other thanks guys.
Yeah, sorry, I just was taking notes I didn't forget your questions. John So let's take them in order, let's let's talk first of all around you know the ongoing studies.
We are really quite bullish that the feedback that we continue to get and I mentioned in the prepared remarks suggest that our physicians are seeing even better results than we did during our trials and I think that comes from just getting it out there in the hands of experts.
And having them think about it beyond just the monotherapy that we did in our treatments.
They're seeing great results in fact I was on a conference call earlier this week with four positions and one of them is in the process of treating his own daughter, alright, So so theres, great confidence and great kind of bullishness. If you will in both midterms, which this person was as well as with the aesthetic.
<unk>. So I think that has really made us quite bullish frankly and in in in what's going to happen and how it's going to happen I think the concern as you talk about the high and the low some of this is timing based.
It's certainly something we've learned through this process you know in many cases, you've got people that are booked out two months. So when somebody comes in and they present, the Avi clear and then send that patient home to think about it. It's two months before they come back or you know a month and a half before their scheduled visits to come back in so.
There's a big delay that we've seen in in kind of that that kind of that pick up that ramp. So we're working with different positions and different practitioners to understand how we can maybe start to affect that that gap and that lead time in other cases, we've got.
Some early adopters that really are fundamentally full believers and they have ongoing patient traffic that they're able to harvest very very quickly, which was you know some of our assumptions with some of these med germs and larger practices, where the patients are already sitting in the waiting room and it becomes a conversion effort.
From ice to threaten one just some other treatment to the Avi clear and the ones that are having the greatest success are the ones converting at the highest rate and have probably the greatest belief in the product and Theres always that bell curve of early adopters you know mid level adopters in late adopters and I think we see that firsthand.
Okay.
Got it very helpful. Thanks, guys I'll follow up offline.
Yeah.
Our next question comes from Chris Cooley of Stephens. Please go ahead.
Good afternoon, and thanks for taking the questions. If I could just follow up on John's line of questioning there kind of coming back to.
The current economic environment, and what you're seeing there.
Could you maybe give us some additional color just regards to the types of procedures that seem to be in demand or these body contouring or are you seeing.
Greater focus on maybe some facial type of procedures, just just trying to further parse out you know, what's driving that step up in demand and if that those types of procedures are being done predominantly out of med derm type location that maybe its diversified you know throw out there.
The COVID-19 pandemic and do a little bit more cosmetic application or a high end cosmetics.
In practice as opposed to maybe a.
More economical med Spa, just just wanted to get some clarity around that and then I have a follow up thanks.
Okay well.
It tastes Chrysler today, I think you know one of the points I tried to stress in the prepared remarks is this business is as strong as it's ever been in the pipeline is exceptionally strong in our view and that goes across the entire portfolio quite frankly, so as I think about your question in and wonder about the treatment that the volumes.
We track those on the consumable side of the business in particular, and we've seen great uptake and continued up tick in the body and the true body portfolio to skilled portfolio. If you will we also see strong presence in the secret RF are as you know people continue to use zoom in and.
I wanted to look their best and feel their best when they go into work even if they are they zoom from one one Cuba go to the next Theres still looking in and trying to look their best as they they invested themselves. So I would say that the the true body in the secret micro needling, it probably had great uptake but in.
Addition to that with zoom, we've seen a lot of X L V and vascular laser work and interest in our you know across the board now as we think about Avi clear and the rollout of Avi clear I think the one thing I would point out to you is as you get into the med germs the access to a device like X L V income.
Combination with having Avi clear allows you not only to treat acne, but to effectively treat rosacea are.
Which is another large obviously indication in pathology. So we believe that there's a little bit of a halo effect with IV clear to potentially bring more X L V into the market specifically around the med germs.
Thank you I appreciate all that color and then maybe just quickly as well on on all the clearer you know I know there was a lot of buzz around this when we were back in Iceland.
Earlier in the year I'm, just curious as you've been rolling this out seeing the adoption kind of fine tuning the go to market plan.
Kind of what you're seeing or in terms of the initial patient commentary on the out of pocket.
Aspect of this and similarly.
Thank you said 100 plus.
Locations in the third quarter, our new clinics I should say in the third quarter with a further acceleration in the fourth.
That would still I think imply a pretty big backlog of potential demand. So just trying to think about how you can start to address that as you come into the first half of next year from an inventory perspective, Thank you and I'll get back in the queue.
Yeah, Great Great series of questions. So let me start with your first comment around patients and their willingness to pay you you know I I really do believe that one of the learnings. We have is that the med dirhams, who are not used to asking patients to pay out of pocket I'm, probably a little bit more concerned on that that.
Price point than the patients are frankly in our market research you know beforehand certainly indicated.
That patients would be willing to pay that up to that amount or a little bit higher than that amount and I think we've seen that we had some pushback early with some of the med derm, saying that it was too much and they didn't think they could get it you get people across the finish line and every chance that we had to intervene into those accounts.
The position, we've been able to get them and their staff more comfortable with the process and ultimately converting patients at at the price point that we've talked about so we don't really believe that to be assembling.
Point in the long term, we think it's a it's something we can train people through and they can adopt too but it does change it does create a little bit of that hesitation early in the process and we've learned through our limited commercial release, thus far and intend to apply those learnings in the third and fourth quarter to help accelerate some of these pre.
This is aneth adoption.
So that being said we also you know have have fundamentally going into patient financing with the view that that will help accelerate this and will be a lot more aggressive in the rollout of that in the back half of 'twenty 'twenty. Two so we're trying to take away all of the obstacles and all the hindrances in.
To adopt because frankly, the clinical results have been so overwhelming we want to make sure that everyone has access to this this this treatment.
Kind of moving on to the backlog and the pent up demand I think it's totally true we know that there is pent up demand and.
We have inbound leads that would suggest there's a lot more placements, we could make but taking it slow and understanding what we've understood dates and and and teasing out some more insights are going to help us be a lot more effective in the rollout of this on the long term and we're not playing this for a quarter or two quarters, we're playing the long term transformation of the.
Company with this device. So my view is learning a little bit more and taking the time to do it right is the is the correct approach here, we've already learned quite a bit you'll see some of those learnings applied in the third and fourth quarter.
And I think where we should be in a really strong position to apply all of those going forward with a full commercial lease no later than the end of this year.
Yeah.
Thanks for all the color and congrats on the quarter.
Thank you very much Chris.
Once again, if you have a question. Please press Star then one.
Our next question comes from Louise Chen of Cantor. Please go ahead.
Hi, congratulations on the quarter and thanks for taking my questions here. So I wanted to ask you do you have any metrics to look at repeat customers or is that still too early and what is the exact out of pocket cost for patients and last question I had for you because we get this question a lot.
How to think about the magnitude of sales for 2023. Thank you.
Okay. Thanks, Louise and as always I appreciate I had my pencil in hand, very quickly knowing that you're going to give you a multipart question. So thank you.
We do have a lot of metrics that we track them I can tell you that this launch.
Far exceeds any other launch in <unk> history in the amount of focus energy and data that we're collecting along the way each and every site is monitored our devices or are kind of tracked individually. So we know firsthand when treatments are happening and how they're happening.
To the point, where we can see not only a patient, but a patient being whether it's their second or their third treatment. Starting you know in the process. If you will keeping in mind, there's three treatments three treatments due to each and every patient.
Procedure. So we can track that that detail and we know wanted to the first treatment and when it's a repeat treatment.
In terms of the cost we don't set costs, that's something we can't do and what we won't do however, we have been very clear with our customer base on you know our expectations for revenue associated with the person with their conducting a procedure and you know we've set that you know at kind of a 1500 dollar.
But at a minimum at this point in our initial release.
And we'll continue to monitor and adjust that upwards if need be as the value of this procedure continues to improve.
So at this point you know we have not seen a whole lot of of anxiety from the patient side of that payment and with financing, we think that will reduce even further.
In terms of the magnitude I think you know we've been slow and steady this year and we intend to be slow and steady this year, but we have the capabilities and the capacities to ramp this very very aggressively we've made arrangements with external manufacturing to ramp and have access to greater device.
In 2023 and that should not that in itself should not be a barrier for us in terms of capacity in the sales organization. Obviously as this ramps, we can continue to hire and expand and get a greater footprint.
And that obviously will pay for itself in the variable costs. So you know we do have the ability to ramp this pretty aggressively in out years, but I think what's going to be most important is that we get it right. This year.
To all of those are you know to be able to accelerate it in kind of in an optimal fashion in out years and that's what we're focused on.
Thank you.
This concludes the question and answer session I would like to turn the conference back over to management for any closing remarks.
Thank you very much I just want to leave the the conversation with this this business has never been any stronger than it is right now on both the core capital and consumable side of the business, we believe that headwinds and FX is a transient issue that will move through quickly.
And the results, thus far and Avi clear have given us great great expectations for what the future holds for this company with that we couldnt be more excited to be where we are right now with what we have.
So we look forward to giving you an update in third quarter with those results until such time be healthy and and and thanks for the the following.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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