Q3 2022 Penumbra Inc Earnings Call
CEO and Sandra lesson for a president of interventional will provide a business update Maggie Yuen, our Chief Financial Officer will then discuss our financial results for the third quarter and Jason Mills, Our executive Vice President of strategy will discuss our guidance with that I would like to turn over the call to Adam Elsesser.
Thank you Jim Good afternoon. Thank you for joining the numbers third quarter 2000, 2022 conference call. Our total revenues for the third quarter were $213 seven.
$7 million a year over year increase of 12% 12, 4% as reported and 15, 1% in constant currency, our global vascular revenue grew to $123 $4 million up 17% year over year, while our global neuro revenue increased to 93.
Growing six 7% compared to the same quarter a year ago growth in our vascular business was driven by a peripheral thrombectomy franchise, which increased 19, 8% year over year led by share gains in venous, while our peripheral embolization business grew 12, 4% year over.
A year.
In neuro, our global stroke business grew 16% year over year, partially offset by our embolization and access businesses.
Gross margins were 63, 3% up slightly year over year and down sequentially due to product mix, we significantly increased our non-GAAP operating income to $7 8 million, representing three 7% of revenue in the third quarter, which does not yet include any.
<unk> will benefit from the reorganization of our immersive health care business that we did during the second quarter.
It's also important to note that we were having a very strong start to the fourth quarter.
Now looking forward to next year, we expect to accelerate our growth and achieve at least $1 billion in total revenue.
We are excited to launch three paradigm changing products.
And beyond exceeding the 70 per cent level and a few years or gross margin improvement won't be linear we have confidence in the work we're doing to deliver higher gross margins over this time period further and perhaps more importantly, we expect to continue driving higher operating profitability.
And 2000 twenty-three notwithstanding prevailing macroeconomic headwinds.
And some reflecting on this are 29th earnings call as a public company. We believe that the combination of our strong innovation engine and our prospects for accelerating growth expanding gross margins and increasing profitability makes this upcoming year. The most.
Writing in our company's history.
I would like to spend most of my time on this call talking about what's to come next year and why we think it matters so much to patients.
Sandra and I have spent a large portion.
For the last three months meeting with physicians and attending medical meetings in both vascular and their own.
Without question the prevailing theme permeating. These conversations has been a focus on advancing solutions for removing more clot faster easier less dramatically to patients and with even less blood loss with this in mind, we're very excited to say.
That what the world wants today is here.
Latest advances to our proprietary computer orchestrated technology will be delivered through the anticipated launches of lightning flash lightning bolt and Thunderbolt, which accelerated our journey, along arc of innovation and thrombectomy and both vascular and in Europe .
He didn't advancements have been made possible because of our microprocessor controlled software algorithms that orchestrate the interaction of our pump and our catheters.
Giving us the ability to innovate even faster and.
And some are proprietary computer orchestrated innovation gives us a unique ability to deliver exponential advancements within the field of thrombectomy that are simply not possible.
With mechanical devices alone.
Mm slash will be the first of these new products launching in 2023 and it will be focused on the Venus anatomy.
We expect lightning flash will be the most impactful product launch in the company's history to date.
Building on the momentum of lightning 12th.
Indeed lightning 12 had its best quarter ever in the third quarter, continuing to take share and both U S and international Venus Thrombectomy, both of which group double digit sequentially.
[noise] Lightning 12 is continuing to take share and D. B T. M. P E through the current quarter, and we expect our growth and share gain in Venus thrombectomy will accelerate with the launch of Lightning Flash, which we are planning for January rather than the fourth quarter.
Six we change and the timing of Lightning flash changes, our fourth quarter projections. The positive impact we expect this product to have on our business in 2023 has only grown as Jason will discuss later in the call.
Van Smith, and both software and catheter technology built into lightning flash produce a revolutionary breakthrough in how our proprietary computer orchestrated technology makes aspiration decisions flash makes these decisions automatically and much faster and.
And some that power speed and blood loss mitigation profile of Lightning Flash will I believe make flash market defining technology for both pulmonary embolism and deep vein thrombosis. Once it has launched.
Moving to the arterial side our team continues to do important work to develop this underpenetrated market. Yeah. We still have a long way to go is most arterial thrombus is still treated bolitics are open surgery. Today therein lies the huge opportunity, we see with lightning bolt.
Lightning bolt incorporates two distinct algorithms sets one of their proprietary modulating aspiration technology used in Thunderbolt and the other the technology that distinguishes caught from blood to maximize caught removal and minimize blood loss used and lightning flash.
And lightning bolt both of these algorithms sets are customized to pair with arterial catheter system.
We are as excited about lightning bolts potential an arterial as we are about lightning flashes opportunity in Venus, we expect both products to have a huge impact on vascular patients as well as our business we plan to launch lightning bolt during the second quarter.
Of 2023.
Now, let me turn to Thunderbolt and our neuro business.
Earlier this quarter, we began treating patients, but thunderbolt and the Thunder study and we can say.
That this product is performing exactly as we had hoped.
Because of this we have even more confidence today that thunderbolt could completely change the paradigm, an ischemic stroke stroke treatment driving better patient outcomes.
We also think Thunderbolt to drive an increase in stroke procedure volume there are over 200000 patients who suffer a larger so stroke in the U S annually.
We think thunderbolt to beat the technology that energizes expansion in the number of these patients treated each year and.
And finally, we continue to think Thunderbolt will allow doctors to use smaller catheters, well getting the unique benefits of our prompt proprietary modulating aspiration faster more complete caught removal.
This could allow physicians to treat even more stroke patients in the future by advancing routine treatment of both large vessel and just all the conclusions.
We continue to expect to launch Thunderbolt in the United States and the second half of 2023.
Before I ask Sandra to discuss our robust clinical evidence strategy. It is important to mention that the product development and geographic growth opportunities. We have in front of US go even further than the three cornerstone products I have focused my comments on so far.
We anticipate launching additional new products in 2023, making next year likely the largest number of new products launched in a single year in our history.
Moreover, in Europe , the recent launch of a red family Cat.
Family or stroke catheters drove sequential growth for a stroke business in the third quarter or the lunch of lightning 12, and seven accelerated or peripheral thrombectomy growth.
2023, we expect continued adoption of these products to drive accelerating growth from our European business. We're also excited about our growth opportunities in China, and Japan going forward.
In China Genesis has proven to be an extraordinary partner with whom we hope to expand our business with additional products in.
In Japan, we are very excited to bring our peripheral thrombectomy products to Japanese physicians and patients in 2023 and collaboration with our newest vascular partner Asahi intact, whose management team culture and reputation are very impressive.
I'll now turn the call over to sound or less on phone president of our intervention on business to give an update on our clinical work things right now I'm in good afternoon. This has been a pleasure and excitement crunch, that's what they know and I would choose both the United States and international markets.
After they expanded the number of patients we have globally during the third quarter.
The commencement office standup try it keeps us great confidence, we can bring your needs and revulsion revolutionary.
East gaming stroke patient in the U S.
We do have your style.
We gained sure in the U S and I tell Ya.
Which like little 12, and like me and then and we beneath the long sheets of Lightning flash and lightning bolt relaxing hankou approach.
I Wanna get a real pain.
You and your birthday <unk>.
Why did the allowance Kathy.
Kathy.
Human nature truly.
Within which we have seen larger approaching cheese open up in high volume European accounts seems direct loss.
In addition to I will continue at any pop fully notation I went.
In clinical research and <unk>, that's how it will be very important to achieving both our near and long term growth.
We are on boxing.
Aerobic era of clinical a generation in our company history.
In addition to the important standards studying choke, we announced details over the past couple of months about two randomized controlled trial that will come in in coming months.
Trump P E. Ah first of each time, she will study I will come to you.
Talk is Tracy desperation.
They send it to my nephew I believe that patients.
Path to being used up anticoagulation, Ireland when she's the treatment still use in the vast mentally intermediate highly P patient today.
They get if she thought H, yes, which is also a first time teaching and it will be a 1000 plus patient study okay.
Tell the 19 year old patient with high thrombin burden.
This study will evaluate Qatar Expo aspiration.
To spell that P T I compared to the P. T I L L.
We expect both tried to put you down it shall we.
Coastal patients treated with lightning flashed in feeling I don't believe them and Qatar eggs in a true choice.
And we think this study's supposed to pick me pick out the extent that NASA patient.
Patients in Poland P E ankle the national team nation, who could benefit from treatment.
Technology.
In addition to Spender stone P E and she thought I see it we have the clinic.
Clinical studies cause Iraqi on building.
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[noise] significantly decreased ebay junkie after the procedure impatient on the table.
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He presented 30 days, that's how France tried showing a significantly lower oxidation rate and I tangled patients treated with our technology compared to historical rate, which traditional sandwiches.
And stuff.
We will continue to build I was what he asks you need to call eight events to prove computer Okay, Tracy denervation, easing hartzell and transformational I've been significantly improves outcome.
<unk> P E D V D. I tell you and it should go without patience.
The vast majority of who you'll receive lead cheeks surgery or maybe call management Tuesday.
I will now turn the call back to Idaho.
Thank you Sandra before I turn the call over to Maggie I'd like to give an update on our immerse of health care business. We made great progress over the past three months on our second quarter earnings call I talked about the extremely innovative work.
The state's department of Veterans Affairs was doing using a mercy of computing or B R to help our veterans.
We recently commence work under a contract with the V. A for targeted mental health therapy. We are excited about this and additional opportunities to bring this technology to help our veterans and show how to implement it into the therapeutic workflow for patients and.
In addition, it is noteworthy that nobody health recently announced that they are offering cancer patients are realized series, while receiving infusion treatments are undergoing diagnostic imaging.
We will remain disciplined and our investments as we discussed last quarter Wow, continuing the important work to scale our platform and how many more patients. For example, today, we are launching our full body avatar technology, including legs.
With this technology, we're also launching a series of activities for therapists to focus on the lower body.
The continued development of our hardware and software together with the work we're doing with the V. A and other leading partners in health care is important.
I'll now turn the call over to Maggie to go over our financial results for the quarter.
Good afternoon, everyone.
Today, I would discuss the financial results for the third quarter of 2022.
Naturally it's always on this call for web anyone gross margin on the cat basis, while operating expenses and operating income on a non-GAAP basis, the corresponding get measures and a reconciliation of gap two non-GAAP financial measures are provided in our posted press release.
For the first for the end of September 30th 2022 hours total revenues for $213.7 million, an increase of 12.4 per cent reported and 15.1 per cent in constant currency compared to the third quarter of 2021.
With current here today, so I'm exchange headwinds after $11.6 million in projected food gift exchange headwind of $18 million to $19 million.
Ouch graphic mixed up sales and a quarter or so.
69.6 per cent in U S.
0.4 per cent international.
U S. We put it growth of 10.4 per cent and international regions increased 17.3 per cent reported and 26.8 per cent in constant currency.
Moving to revenue by franchise.
Revenue from out after the business grew to $123.4 million in the third quarter of 2022.
An increase of 17 per cent reported and 18.8% in constant currently compared to the same period last year, we saw a strong double digit growth across.
Mm Yeah, APAC in Latin America region.
Revenue fell on your own business, what $90.3 million in the third quarter of 2022, an increase of 6.7 per cent reported and 10.5% in constant currency compared to the same period a year ago.
Driven by growth in in Europe from back to me franchise.
Moving to grocery budget goes marching in the third quarter with relatively flat at 63.3% compared to 63.1 per cent in the same quarter last year.
Productivity improvement savings continued to offset the heightened inflation and supply chain pressures.
Gross margin sequentially declined by 120 basis points, primarily driven by distributor and country makes timing.
In general are flown back to new products and direct channels have higher margins than embolization products and distributor channels.
Looking forward to 2023, we expect to see continue marching expansion as all the new product launches will have favorable product mix impact with volume leverage to our gross margin.
Now onto our non-GAAP operating expenses, excluding the amortization of a quiet intangible assets of $2.4 million and $1.8 million for this quarter and last quarter respectively.
Total operating expense for the quarter was $127.5 million or 60% of revenues come.
Compared to $111.1 million 59 per cent of revenue for the same quarter last year.
A research and development expenses for Q3, 2022 or $21.3 million compared to $16.7 million for Q3 2021.
SG&A expenses for Q3, 2022, $106 $2 million or 49.7 per cent of revenues compared to $94.4 million or 49.7 per cent of revenues spelled Q3, 2021, and 112 $48 million compared to last quarter.
Why are we have invested in commercial resources and infrastructure to enable us to scale and support growing demand.
SG&A expenses have reduced by $6.6 million sequentially.
A friend discretionary spending control.
Our overall operating expense reflect how philosophy up just been just a question that we spend.
We expect an additional reduction in operating expenses about two and a half million dollars an immersive healthcare spends four Q4, and that's part of our baseline expenses moving forward.
We recorded offering income of $7.8 million or 3.7% of revenue in the third quarter of 2022.
Excluding the amortization of a quiet intangible assets compared to an operating income of $8.8 million for the same period last year.
We ended the third quarter with a cash cash equivalent they're marketable securities balance of $184 million.
Catchiest H and a quarter reflected increasing raw material purchases for new product launches and higher working capital.
And now I'd like to turn the call over to Jason to discuss al-qaeda.
Thank you Maggie and good afternoon, everyone.
Having a very strong start to our fourth quarter, but by our computer orchestrated product franchise ambassador thrombectomy and or stroke business cause the Thunder trial enrollment is gaining momentum.
Notwithstanding strong start.
Wanna be prudent about our 2022 guidance given to near term dynamics, neither of which impact our confidence about 2023, which I'll touch on that in a moment.
First the lightning flash product launches now expected to occur in the first quarter of 2023 six weeks later than the previous mid fourth quarter of 2022, aspirin and second and incremental $46 million from currency translations are updated 2022 guidance for total revenue with no 800.
$40 million to $845 million compared to the low end of our original range of 860 $875 million given on our second quarter call updated revenue guidance calls for growth on a reported basis.
12% to 13% and 15% to 16% on a constant currency basis, which is within our original expectations.
Moving to 2023, we expect lightning flashed lightning bolt and Thunderbolt will fuel accelerating growth and drive significant share gain and P E Venus or journal and stroke drama Directory, respectively first in the United States and around the world in 2024 and beyond we expect to.
<unk> the $1 billion total revenue level in 2023.
In addition, we expect to see more significant expansion to our gross margins next year or in a favorable mix. It a realisation of productivity gains and finally, we expect to increase our operating profitability in 2023 and beyond.
Now turn the call back to Adam for closing remarks.
Thank you, Jason Maggie Sandra and cheap it's obvious to everyone that the environment that most businesses are operating in is particularly challenging right now I want to acknowledge everyone on the pin number team for their work in this challenging environment with a particular acknowledgement of <unk>.
Three amazing achievements first cause the world class innovation over the past year. This incredible development work has not just continued but is actually accelerated.
Second our operations in quality teams and the groups that support them from keeping up with growing demand, while working hard to become even more efficient all in the face of constant supply chain challenges this year.
And finally, our commercial team for their dedication and integrity to their customers and the patients there, helping I could not be prouder of the people who work at the number.
Thank you operator, we can now open the call to questions [noise].
Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad.
Try your question please pass that one again.
Our first question comes from Bell Slavonic from Canaccord Genuity. Please go ahead. Your line is open.
Hi, John on Sir Bill Tonight, Thanks for taking our questions.
When you say you are getting share in Venus could you provide some color if you're taking a chair from other international players are you converting users of medical management.
Yeah. When we said that we are alluding to Ah Ah talking about shield from other intervention or Ah devices at this point.
Great. Thanks, and then the sauce on the impact in China, and the volume based procurement and nerve that Taylor.
I'm, sorry, say that one more time.
Sorry, I'm just sauce on any impacting China from the volume.
<unk> policies and narrowed after a competitor I call them out that might be easier.
Jason Jason can answer that quick yeah. Thanks for the question drive a great question. So as you know we have a very strong partnership with Genesis and we're really just getting started there. The the D. V. P policies, we've been tracking closely as as Genesis and we've been factoring them into our.
Thoughts about our business in China for some time, so nothing really has changed with respect to our.
Our current business in China, or how we're thinking about our prospects for growth in 2023 [noise].
[noise]. Thank you.
Thanks, Thank you.
Our next question comes from Larry Beach Olson from Wells Fargo. Please go ahead. Your line is open.
[noise] hi, there.
Thanks to my calling Fowleri, thanks for taking the question.
Hi, So I just wanted to start with.
Probably start without 2023, you can talk about still keeping a billion plus rubbing next year. The mid point of view guidance for 2022, if you grow from that that implies 19 to come a point across and I'm Constantine currency basis, probably somewhere a little north of 20 per cent can you.
Talk about more about your confidence and hitting that number.
And the key club drive understand what she touched on it if you can give them a call us and also if we can if we should think about that maybe once that can have waited just based on the timing of the different launches.
Yeah, that's a great.
Great question, and I can't wait to answer it we have a lot of confidence in that.
That number are probably more than we've ever had don't forget we originally give that number in the end of 2019. When we were about half the size that we are now and here. We are right on track so something we're particularly proud of the confidence we have come.
From the three cornerstone launches, primarily starting with lightning flash and I Gotta tell Ya it is.
It might be easy.
You haven't seen it underestimated, but once you've seen it.
It would be.
Be hard to overestimate it it is a really extraordinary.
Equipment, so I'm pretty excited about it I think the whole team is and physicians I think are ready to embark on that new era. So.
We are particularly confident about that delay.
The lay of the land here with Lightning Flash Lightning bolt and of course Thunderbolt.
Where the trials underway.
This is Jason thinks of the question just to follow up a little bit on that with respect to your question about sort of the cadence certainly we are very excited and I think we mentioned in our prepared remarks, we expect lightning flash to be the most successful product launch in our company's history to date.
When it launched.
It will be first to launch and shoot him tribute as the year goes on and we expect contribution to increase as the year goes on well Lightning bolt, we tried to launch not until the second quarter.
Ballers follow a similar cables and with respect to Thunderbolt qualitatively continue to believe.
The second half launch is where's that product will win but honestly quantitatively.
Factored into the four cats are we just gave very much with respect to the north of 1 billion dollar level.
It just gets cleared thunderbolt is not in that billion plus targets in it yet.
Jason said, it's not factored in as a huge part of that it's definitely in there, but it is not the majority or the subs and the driver of that.
Got it Okay. That's helpful. And then if I can just asked quite follow up just on your coupons guidance that implies about you know low teen parochial yeah, but <unk>.
<unk>, it's a low singled they can't go out the nurse's queue silly and that's you know a little softer than what you've done historically, what's different about this Q4, I know you're talking about a year.
Headwind you have a new product launch delay, but even just kind of looking at the base business there tends to be a little more growth in queue for but I see what you're dieting too.
[laughter].
Ah first pass it doesn't atomy went up all of them being through the question.
So the two dynamics, obviously impact the fourth quarter importantly, it doesn't they don't in fact 2023. So clearly if you look at those two dynamics, we'd call it upfront quantitatively $146 million in incremental impact.
X effects that we are worried about where we anticipated three months ago. So that's part of the sequential dynamics you can look at.
Our previous guidance and our current guidance and Stephen differential number you know around $20 million or so so the the rest of that Ah correlates to that six week, a six week delay in the lightning flash launch.
And you can do the math, obviously of what we had expected for that and why we think that.
No one likes to spend time in cold call things delays, but we did.
Discovered an opportunity we developed a way to improve upon when you're working on software, it's sometimes easier than working on her you know the catheters and so on you can do things faster a way to make lightning flash even better.
Then it was and I I am willing to bet that we're going to look back and say that's the the the best six weeks that proved to be the best investment in time that we've ever had so again no one likes to do it but I think it was well worth it and it's only.
The increased.
[noise] excitement around this product.
Got it thank you so much.
Thank you.
Our next question comes from Robbie Marquez from J P. Morgan. Please go ahead. Your line is open.
Hi, This is actually Lily on for Robbie Thanks for taking the question Oh Willie.
Hi.
Flat sequentially, which was a little softer than what we were thinking so what was the driver of that is it stopping or seasonality or is there. Some other reason that that didn't grow quite a recording.
Yeah. Thanks for the question. So first it's important to point out that our business in the United States was strong and we continued to to make sure we were up over 10% sequentially and our peripheral thrombectomy business in the United States. You're here every region grew so <unk>.
Eventually for some lumpiness and distributor markets and that's that's but that's specific to the third quarter.
Got it that's helpful.
And then maybe just on the broader and narrow market, obviously put some challenges in terms of competition and market growth. So can you give us an update on what you're seeing in terms of underlying growth and narrow and how you're thinking about the outlook 2023, and does that 1 billion dollar number assume some sort of market next salary.
You said.
Yeah. It's a great question I think your accurate in that the market growth has been slower than anyone would want, particularly all of us who wanna.
Have our technology help as many of these people as possible and that that is probably related to staffing and and post COVID-19 and everything else that being said, we continue with the red theories to do really well on a competitive basis and for me.
Time that that's that's where the focus is gonna continue I believe and we said that Ah pretty clearly in the prepared remarks that with the continued excitement that the Thunderbolt is having one said data we finish the trial and it's it's all out we think that will have.
The effect of potentially reigniting, the interest and desire to continue to grow this market. That's our hope we think it's a huge market that needs to be grown, but I think the technology Ah Ah might help do that as we get further but for now.
Growth is coming from sure Ah and we're really quite proud of of the Red series, They are doing really well.
That's helpful. Thank you.
Thank you.
Our next question comes from David mascot from True Securities. Please go ahead. Your line is open.
Hey, Guy who thanks for taking my question I guess.
Thanks, and then the question rent in the corner I wanted to follow up on I think some of the comments. He made about the updated guide for 2022 I think if you do some of the back of the envelope Maths, which I think you guys walk through you. If you take off the incremental four to 6 million Ah and up accent I think complaint about 20 million contribution from flash for about six or so weeks and.
Of course I guess.
If you were to extrapolate that up to $20 through that that's certainly imply something north of maybe 150 million or so from that product specifically next year. So I guess just wondering if if we're doing the math, they're right and also what led to that delay but by six weeks.
Yeah, well a couple of things first of all I think the total was 20 when you take out the four to six the the flash contribution is is less than 20, So I Wanna make sure we get the math right. It's a little less than the total if you ran that out just to to be after.
But but yeah. Once you do that corruption and that that is an accurate assessment, we said pretty clearly we expect it to be the most impactful launch Ah. It is one of those products. Let me just put it this way when a physician.
Seems the demo it takes them about 40 seconds to understand the power and the impact of this product is gonna have and.
It's it's something it's something so we're pretty excited about it Ah and what was the last question that was about.
Ah.
[noise] timing on something I apologize I Miss the timing of it yeah. The the <unk>. The reason the reason why you know I I think I addressed that in in person, but I reiterated we had the opportunity to.
To Ah improve upon the algorithm a little bit we took that opportunity because it made what was then a really really good product. It made it that much better and as I said that might be the the best six weeks, we've ever invested in so that that's the reason for the delay.
Yeah, David it's important to underline this point, but I think that I am just made software. The software innovation is you know probably blowing the tech industry moves faster.
Our discovery of advancements in our computer industry to portfolio by definition can move faster.
[noise] Oh, Okay. That's that's very helpful. Like a second question. So I think maybe you mentioned you in the queue and I you know five or six times that you know pretty clear about gaining sure in the U S going back to the market and Venus. So I'm just wondering.
Where maybe specifically you you've been seeing those games coming from I mean does it have to do with you know new accounts is it is it utilization with him with a new account, maybe just capturing a higher dollars. Your her procedure and just wondering you know why that's occurring even a hot flash and is that something that kind of occurred throughout the quarter was there may be a point within the <unk>.
Porter restarted the seal moment acceleration of those sure games. Thank you yeah. So let me just go back to our second quarter call, where we raised this topic for the first time and said that we had started to see some gain and share, particularly in D. V. T. So we we call that out as you know there were lots of discussions.
Put that topic with lots of different people and investors that share continued to go in our direction throughout the quarter and.
Have gone to meetings and meetings, we've been at them and that the toppings raised that the generated that sheer shift and continued.
And continued to this day, we just finished the Ah the Beaver meeting the topic was raised again to us not by us to people Ah. Many many times and we think that you know that led to the strong strong gain.
N D P T.
[noise] Okay. Thank you.
[noise]. Our next question comes from shotgun things from RBC. Please go ahead. Your line is open trade.
Can you hear me okay yeah.
Yeah I should.
Hey, so I just want a better understand you know the change in guidance. So you know it does assume about you know 20 million or so and you know pretty big numbers that you talked about in 2023, you know, what's what's behind those assumptions how do you get to those big numbers you know it definitely suggest that deal or a billion.
Number in 2023 could be could be a base case, you know within that and then how should we think about other products on a relative basis in terms of revenue contribution. So tender bold you know is it similar more or less and then you know also lightning bolt you know how should we think about.
The relative contribution off those products and then I'll have a fun at all.
Well.
There's a lot of questions. So let me try to answer them and then we'll get to the follow up but they're great question. So we I think answered the question of what is in that 20 million. It is a combination of the delay the six weeks of launching lightning flash.
Together with the additional FX, which we've quantified. So then the number is fairly good. We also want to remind you we made it clear in our prepared remarks that this quarter is off to a really strong start. So there is absolutely nothing in our mind wrong with our base.
Today in fact, it's strong as it's ever been so that needs to be said again I think we said it.
The delay.
Was very purposeful because we wanted to make this product even better it was.
Great product, but we had the opportunity to change or tweak the algorithm to make it even better I think that's gonna prove to be a really really smart decision and it's that simple and it's literally a six week topic, you know and I I don't know how else to to say that you are.
Not long the the billion dollar number is the number we put out there again in 2019 and by reiterating it we want to make sure. We are not giving formal guidance will do that on our our fourth quarter call but.
But we are giving a clear guidance that that's the number that will at least be at so we're not giving specific numbers beyond that are additional to that yet.
Which we will do but that is I.
I guess in your language a good starting base case.
Oh, so you're just to clarify so I guess my question is just if you annualized you know the 20 million into 2023, you do come up with $160 million on a number maybe it's smaller slightly smaller than that I'm. Just wondering you know what what is driving that that bill was it sounds like.
What are the assumptions behind those numbers and then as we think about lightning bolt and tender Bullard in terms of revenue contribution should be expect them to be similar or less impactful just on a relative basis, how should we think about it.
So I was studying with.
No no. So again, the 20 million some of that will get back to you I didn't take that out there and if you look and do the math around that you come up with a numbers smaller than the number you just did but but still significant and then you add in the contribution on top of that from Lightning bolt.
Comment earlier, and Thunderbolt, which we've already said is a relatively small portion of that that's how you build the math around so again, we're not giving specific numbers on each of those products now that wouldn't make sense, but I think directionally Ah I think you have it.
Got it and just as a follow up you know I just wanted to get some sense of how you're thinking about Opex next year. I think you have indicated that you expect to grow it at a slower rate at a lower he'd been sales growth can you help us pink to that a little better you know is it is it <unk> is it.
Below but still in the double digits and then anything you know it you know.
You can share with respect to getting do I don't know the first 20 per cent operating magenta that'd be great. Thank you for taking the questions.
Great. Thanks for the question I mean, not though.
And we're not giving a formal guidance anything now feature I'll tell you Martin I'll go ahead and continue to improve those outgrowth Martin and the bottom line operating margin, but I'm really excited that we are at a point that we're setting up a business or a fat.
Sat related grows as well as continue marching expansion.
Thank you.
Thank you.
Our next question comes from Quito Chickering, Some Deutsche Bank had your line is open.
The fish for taking my questions. So big countries next year. Some is due launches Ah any color on houses new products will be priced for example, if it takes a ballpark of $150 million from Lightning flash how much of it is coming from revenues Ah Ah sorry from volumes versus pricing.
Yeah. That's a great question, we have not set or announced the pricing they're they're me.
B as an element of that but the vast majority increased in and usage and procedures.
As I said once you see this product working it's it's it's hard to not see the value that this product will bring the patient.
Okay, and then back on the margin question, you know just to grow revenues $160 million next year I understand you aren't getting formal guidance here, but do you plan to maintain cutting investments most of healthcare.
The you know that revenue growth or do you plan on scaling up those investments as a grown revenue.
Yeah.
Great question Ah, what we were certainly not there's no current plan to cut those investments anymore.
Re organize that department.
Spend a little less and be more disciplined last quarter's we said that's proving to be a very effective decision and we're getting a lot out of that as you heard we announced Ah on this call. The the full body avatar, including the use of leg. If you look at.
Followed D. R. That's a huge topic you know in health care. It matters, because there are parts of the body and the legs it needed to be Rehabbed and it allows you to experience and be fully more fully immersed and therefore get better but also in the non health care world.
An issue that Ah lots of other companies, particularly some big companies haven't yet being able to to achieve so we're pretty proud of that and again the work would there be a so far it's early early but it's really been profound so we're going to continue to do that work.
I think it's important work and it it's been Ah I think help a lot of people I don't expect to need to [noise] scale. The spend from generally where we are until revenue is in effect you know.
Adding enough contribution to make that valuable.
[noise] I don't suppose you wanted us or give us any ranges or where it just costs are running at this point to the to the piano.
[noise] theater or are you asking specifically.
On the rest of your site or general Opex just on like most of the health care of just you know what does it cost structure at this point in the penalty for members of health care [noise].
Yeah, I I I'm not.
We're not prepared to sort of go into those details we did quantify and Maggie's section the general quarterly savings that you'll start to see next quarter and beyond that that's sort of the extent of those numbers that we're gonna share right now.
Great. Thanks, so much.
Thank you thank you Peter.
Our next question comes from Mike Matson from need them. Please go ahead. Your line is open.
Yeah. Thanks for taking my questions I guess first you know just with all these intelligent afterwards.
Watching they're all I guess electronic so you feel like you've got either adequate number of semiconductors opponents on hand to meet all demand in or out of visibility into getting those next year to to meet the demand.
Yeah.
It's actually a very very good question and one that I started some time ago with our operations theme.
As we were getting ready for this and making sure. We we we were okay as you.
Heard in Maggie section you know we were.
Getting ahead of that a little by buying materials in anticipation of these launches so I I N.
Any supply chain question I I hesitate to be definitive cause that has been a huge challenge for every company and we're not immune from it but but I can tell you at this stage so far so good and and we've been working credibly hard to get ahead of that and I think we're in.
Ah in pretty good shape at this point.
Okay, and then as far as the Thunder trial goes you know we.
Well the results that be made public at some point in advance of either submission to the F D a or some point before the products actually cleared and launched like when we get to see that it cannot be like sort of a positive catalyst the data is good.
Yeah, that's that's certainly depending on the timing you know what at what meeting happens to come along that that will be the biggest question. You know if there's a neural meeting that lines up with being able to do that before clearance, we've shortly who want to do.
That I, just I can't totally predict the timing down to which meeting we're gonna be able to do that at that that would be certainly a logical expectation.
Okay, and then just the the Red catheters in Europe , I mean that was launched fairly late in the third quarter. So did that to what degree to that top I mean, it looked like your your nerve business is a bit stronger, but did wasn't a material impact or is that going to be more on the fourth quarter.
The Red catheters were doing well in Europe , and we call that out it's been a lotta fun. There's been a lot of there was a lot of waiting for them. Once. They finally came people are excited they are working well, but the the normal business you know in the U S has continued to do really well too weak all that out the the the share.
Gain those captors are doing well and and there's a lot of excitement about us as a company and our our products again and stroke. So we feel very very positive and I think that.
Is in large part because of the captors some parts because of the excitement around Thunderbolt as people talk about it I think combinations set us up for some real success going forward.
Okay got it thank you.
Thank you thanks Bye.
Our next question comes from Michael start calling from Jeffrey each. Please go ahead. Your line is open.
Hey, Mike Good afternoon.
Good afternoon, Thanks for taking my question.
Just my first one on Thunderbolt.
See here you were thinking about product uptake once you receive approval so for existing and the number of customers could you talk about your expectations for the timeline around adoption should just be a pretty quick seamless conversion or are they are gaining factors, we should be thinking about.
Yeah, It's a great question and again, one that you know it was sort of their you know back half of 2023 not as fun.
Half as lightning flash and lightning bolt, which I think will b as we said this coming year more significant but with thunderbolt, both new and existing customers and a new customers I think are a similar thing the only.
The group that will be faster will be the people in the trial you know they've already you that they they don't have to have even in in service because they've been doing cases that will be the fastest group, but whether you currently use a red cap that there and you continuous aspiration or you want.
To use other people's catheters, or a combination of tools.
In service around how to use Thunderbolt will be the same and so there isn't going to be a fundamental difference between those people that are sort of picking up there and and we've even seen that in the trial, where people who have joined the trial and started who you know really haven't been big active users.
Of our products before the again the in services the same and the the uptake is pretty pretty quick for for both groups of people.
Got it Okay. That's helpful. And then just my follow up could you talk about peripheral vascular friends in Europe , particularly interested in how the lightning 712 products are progressing.
Yeah. So lightning is continue we again called that out lightning is continuing to do pretty well in Europe again every country is a little different around the reimbursement strategy, but those people who are using it.
Are sticking with it it's a again both lightning 12 might be seven depending on the location and so we call that out it's been a very positive Ah momentum again, the numbers are relatively small compared to the rest of the book or lightning 12, and seven business, but but.
It won't be positive.
Got it thank you.
Yeah. Thank you.
Our next question comes from Margaret Kezer from William Blair. Please go ahead. Your line is open.
[noise] emergency and everyone. Thanks for thanks for taking my question and I apologise kind of happened in between calls this is that Ah yeah, hopefully hopefully it won't take too much of your time, but maybe just first of all you know you guys have a series of products options. We look out over the next 12 to 18 months, Yeah, I think that's the top process perhaps.
And others that there's gonna be now he'll play a nice accelerating both unit grow up as well as market share gains in pricing and so I was.
Just curious you know as we look at that 1 billion dollar target for 23 could you give us any color or flavor is.
Kind of the individual pieces relate.
Relating specifically to market share, whether within Bachelor or or stroke, you know red lightning price any [laughter].
Yeah, Yeah, no. It's a it's a good question Ah so the majority of the the biggest peaceful obviously come from Lightning flashed, we talked about that in P and DVT Ah the the second biggest and that's partly just because it will have the the whole year.
Lightning.
Both will have Ah hopefully around three quarters of that so that would be the next biggest and then stroke, which is thunderbolt will be you know in the second half so by definition that will be.
The smallest of the car.
[noise] probation and and we did answer a question or comment that that that amount is is relatively unknown quantity basis relatively small amount of of our growth next year.
Okay, and and that's the volume side anything you can share in terms of your assumptions around market chair or I'm kind of market growth dynamics within those yeah, well most of that growth will come from <unk> from share and or market growth.
A combination of those two the implication that most of that would come from prices. You know if that was the question is not accurate most of that you again, we haven't announced the price and all that you know there there might be a little part of price, but most of it is coming from.
Sure and market growth.
Okay, and then just as a as a follow up to you know, giving some of the staffing issues. At <unk> are you guys seeing any change in terms of enrollment for any of your clinical trials or things kind of progressing it's normal.
<unk> Thanks [noise].
Yeah.
It's a really good question, it's hard to.
To give you a definitive answer on that on a comparative basis, we haven't run a trial in neuro like this in a while so so it's hard to know it's continuing to enroll so on a comparative basis I think it's it's pretty.
Normal you know there's no doubt that you know people complain about their staffing issues all the time and they have less help than they used to but so far that does not seem to have an impact on either our core business or clinical trials at this point.
Okay, Great Thanksgiving Yeah. Thank you thanks for.
We have no further questions I'd like to turn the call back over 10 minutes Hamlin Harris for closing remarks.
Thank you all for right now on behalf of after I hang up I. Thank you for listening we look forward to update you on our fourth of course call.
This concludes today's conference call. Thank you for your participation you may now disconnect.
Mhm.
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