Q3 2022 Transmedics Group Inc Earnings Call
Workflow and we plan to leverage this for our future growth.
It is notable that we have achieved these strong results despite being in a back order situation for a few weeks during <unk>.
Has the growth in demands of the ots accelerated beyond our immediate capacity.
Our team did a phenomenal job to minimize the impact of the supply constrained by mobilizing inventory from MLP launch points to meet the clinical demands across the U S.
Overall, we're very encouraged by our performance acceleration in demand for Ocs and our achievements are a 100% year over year revenue growth and 22% compared to the full year 2021.
Full quarter ahead of schedule.
Now, let me discuss our strategies to build on this momentum for the remainder of 'twenty, two and into 'twenty three and beyond.
First.
We are well underway to expand our manufacturing and production capacity.
As of today, we are on track to add new clean room production space that is three times the size of our existing clean room by year end.
We are we're now focusing on staffing training and securing FDA certification of the new clean room space.
In the meantime.
We have already instituted a second shift in the original clean room space to expand our production capacity to a level that will enable us to meet the current demand.
We have expanded our sterilization capacity and we and we are well underway to add more capacity in early 'twenty three.
In addition, we're continuing to expand our raw material inventory to meet the growing demand and mitigate against supply chain risks.
Currently we have adequate supply of raw materials to meet the demand in the near term.
Second we are working to expand our MLP infrastructure.
We're expanding our surgical capabilities and clinical support staff across the board and opening new launch points to expand our geographical reach and coverage in the U S.
Third we are focused on reviving ocs lung transplant volumes post Covid era.
We have initiated national program with a goal to doubling lung transplant volumes in the U S. Over the next few years.
To do this we are collaborating with leading transplant programs.
And as well as partnered opioids in the U S.
We hope to benefit from this initiative over the course of 2023.
Fourth we plan to continue to gradually increase the number of transplant centers using MLP for each Oregon throughout 'twenty three.
Finally, we are partnering with transplant logistics experts to create a dedicated air and ground logistical network across the U S to support the growing MLP transplant activities.
We're actively engaged with several potential partners to create this dedicated network and have it operational sometime in 2023.
To date, we have unequivocally demonstrated the strength of our MLP program to accelerate commercial growth and ocs adoption.
We're confident in our go forward strategy.
And scalability initiatives, we discussed above.
We fully expect to leverage these initiatives to further capitalize on our unparalleled foothold in the market and drive the next level of growth in 2023 and beyond.
No.
No.
No.
Yes.
Okay.
Hello.
Thank you.
If you would like to ask a question. Please press star followed by one on your telephone.
Excuse me excuse me.
<unk> got interrupted with some music.
We're not done.
I apologize please continue.
To date, we have unequivocally demonstrated the strength of our MLP program to accelerate commercial growth and ocs adoption.
We are confident in our go forward strategy and scalability initiatives, we discussed above.
We fully expect to leverage these initiatives to further capitalize on our unparalleled foothold in the market and drive to the next level of our growth in 2023 and beyond.
As mentioned <unk> results continued to outpace our forecasted demand plans and challenged our finished goods inventory.
We're fully cognizant that as we are aggressively expanding our production capacity and infrastructure. We may experience. Some temporary shortage in supply of finished ocs products in the immediate term.
Importantly, we need to allow the proper time to ensure that we are growing our production with the highest quality staff training and products.
During this ramp up process, we may find ourselves in another back order situation in <unk>.
Please standby.
Mostly trying to reconnect with today's speaker.
Thank you for your patience today's call will continue as we have reconnected with today's speaker.
When <unk> come from G&A continue.
Sure I apologize about these technical difficulties everyone.
Let me repeat the last paragraph.
And we continue.
As mentioned three Q results continued to outpace our forecasted demand plans and challenged our finished goods inventory.
We're fully cognizant that as we are aggressively expanding our production capacity and infrastructure. We may experience. Some temporary shortage of supply of finished good product and a need in the immediate terms.
Importantly, we need to allow the proper time to ensure that we are growing our production with the highest quality staff training and products.
During this ramp up process, we may find ourselves in another back order situation in <unk>.
That said based on our three Q and year to date results and balancing these results with the expected with the expected finished goods pressures.
For the third sequential quarter, we are raising our annual revenue guidance for the full year 2022 to $80 million to $85 million for up from 67% to 75 million for the same period.
This represents a phenomenal 164 to 181.
Percent growth over 2020 one.
The guidance range excludes the $1 4 million adjustments based on the change in estimate of the Contra revenue. This quarter again, I want to stress that the guidance range excludes the $1 4 million adjustment experienced in Q3.
With that let me turn to Stephen Gordon to cover the detailed financial results for the quarter.
Thank you Elizabeth.
I will now provide some additional detail on the CCAR results and other financial information for the quarter.
As Waleed mentioned, we had a favorable $1 $4 million change in estimate in Q3 related to cultural revenue.
That was accrued during the clinical trial phase of several programs and now we've updated our estimates, resulting in a lower amount of clinical trial payments expected to be paid.
Therefore, we see a favorable impact to revenue.
So for the third quarter of 2022, I want to focus on the commercial or gross revenue, which represents the true commercial revenue for the quarter commercial revenue for the quarter was $24 $3 million, which was an increase of 349% from the third quarter of portfolio.
As a reminder, the third quarter of 2021 was a period after our clinical trials have completed enrollment and for the most part before we received.
RFP approval to revenue in that period was fairly low.
We reported $24 3 million for Q3 2022 also represents 18% sequential growth over Q2 of 2023 is a good indication of the momentum we are experiencing.
In the U S. The revenue again, excluding the $1 4 million favorable revenue adjustments was $21 9 million.
This compares to only $3 2 million that was recorded in Q3 of 2021.
Yes.
You have sequential growth was 21% in Q2 2022.
So the Oregon revenue breakdown in the U S was as follows 12.
$12 4 million of liver.
$8 $2 million, apart and $1 3 million of loans.
I'll repeat that again.
$12 4 million of liver $8 2 million of heart and <unk>.
$1 3 million of loans.
Outside of the U S. Our revenue grew 20% on a constant currency basis.
Taking into consideration on third unfavorable currency movements a.
Our reported revenue was $2 4 million, which was up 6% from Q3 of 2021 and that includes $2 $2 million of heart.
$3 million alone, which was fairly consistent with what we did last quarter.
The key driver of future revenue Q3 revenue performance was again, the growing adoption of the natural offsets program.
Our U S local partner.
Such of this program is evident in the strong revenue performance.
Gross margin for the third quarter of 2022 was 71% compared.
Compared to 70% in the third quarter of 2021.
And excluding the favorable revenue adjustment the gross margin would have been 69%.
This was slightly lower than last quarter and reflects the larger MLP proposal.
Overtime, we do expect margins to gradually improve as we improve our energy efficiency.
Total operating expenses were $23 7 million in Q3, 2022, a 53% increase over Q3 2021 operating expense and a slight decrease from the $24 1 million reported in Q2 of 2022.
The significant increase in expenses compared to Q3 of 2021.
It was primarily due our commercialization efforts in the U S and our adelphia in particular as well as R&D investment in our next generation platform.
So fairly flat sequential spending ensures that we have leveled off somewhat from the pace of growth we were seeing over the last several quarters. They were ramping up our MLP peers.
We do expect to continue to see growth in expenses, but at a slower pace than in the last few quarters.
Operating loss was $5 5 million in the third quarter $4, two compared to $11 7 million.
The third quarter of 2021, primarily a result of the growing revenue in the business.
Net loss for the third quarter of 2020 was $7 4 million compared to $13 million in the third quarter alone.
Cash and cash equivalents of $204 5 million.
September 30th 2022, and the increase is a result of our debt and equity financing activity in Q3 of 2022.
In July we refinanced our debt with a new $60 million term loan, which netted about $23 million in cash from the balance sheet and in August we completed an equity raise which provided approximately $140 million in those questions.
This was cosmetics and a very strong position to execute our strategy and increase ocs for utilization throughout the organ transplant field.
Weighted average common shares outstanding for the quarter was 32 3 million shares and.
And finally, I will give further guidance, which excludes the impact of the favorable revenue adjustment of $1 4 million to 80 to 85 million, which represents a range of 164% to 181% growth over 2021.
That all critical basketball league for closing comments.
Thank you Steven.
In summary, we're very pleased with our <unk> and year to date performance and the strong clinical demand, we're experiencing for our Ocs technology and MLP offering.
We strongly believe however that we are just at the early stages of capitalizing on the significant greenfield opportunity that we've created in the transplant space.
We plan to leverage the solid foundation, we established in 'twenty two to drive transmit it to the next level of growth for our business in 2023.
Transparency Ocs technology in MLP program are becoming an integral part of performing organ transplants in the U S.
Now our goal is to leverage this structure to ensure that we are managing the vast majority of heart liver and lung transplants, while we are growing the annual transplant volumes in the U S.
We're thrilled for the future of transplant X and look forward to further capitalizing on our global leading position in transplant therapy with that I will now turn the call to the operator for Q&A operator.
Thank you.
Thank you.
That's about to ask a question. Please press star followed by one on your telephone keypad.
To remind any time, please press star two.
Please standby with the auditor change Q&A lifestyle.
The first question we have comes from the phone line.
Allen Gong of J P. Morgan your line is open.
Hi team congrats on the great quarter and thanks for the question. So I guess the first question I have is that we clearly saw that even with a little bit of backlog in third quarter, you came in pretty high above expectations and based on the guidance raise you essentially raised fourth quarter expectations by around the same amount so how much.
That is really influenced by just the trends you've seen so far in October and I guess I should have those continued from the strength you obviously saw in the third quarter.
Alan Thank you for the question.
Really.
Is that the trends we're seeing in October has no influence whatsoever on on the guidance.
And to the country, we're seeing acceleration in October , but we are cognizant of the where we're concerned about the.
Supply chain related to finished goods inventory.
So we want it to be.
<unk> in our estimation for Q4.
So we were not.
If we are not in this growth phase of ramping up our production capacity.
You know what.
It may be in that guidance would have been different but this is this is why the guidance is what it is because we wanted to apply some level of conservatism given given where we are in the a and the ramp up phase.
Got it and I think I've.
Given the year being a little you know you seem to be a little conservative, but it sounds like a lot of the years.
Apply challenges manufacturing work should be done by the time you get into 2023, you've previously talked about your ambitions to essentially double our revenues again in 2023 and maybe even in the years after that similar to what you are on track to do this year is that a reasonable target.
The value you are still holding to given the momentum that youre seeing in the fact that you shouldnt be in a much better supply situation coming here.
From a from a high level goal Alan.
Again, we believe that they the success we've achieved in 'twenty two.
And the rapid acceleration is just the tip of iceberg, that's what we believe.
I would not comment yet on our expectation for 'twenty three we will do that in the beginning of the year and as always we are going to be prudent and realistic in our estimation, but.
At a high level.
Our expectation is tranche medics is in the early innings of a significant growth curve.
Driven primarily initially from the U S and the MLP and the acceleration of our adoption in the U S across the three organs, we are working with.
So that Hasnt changed in fact, the results of 22.
Validates that.
But we'll comment on the guidance for 'twenty three.
Next year.
Okay.
If I can sneak a final quick one and youre talking about the Nextgen Ocs system. We've also heard you mention ambitions in other organs like kidney should we expected yet.
More concrete additional concrete updates next year and do you have any preliminary expectations around timelines for both of those.
Product update thank you so much for the question.
Thank you Alan I think I.
Next year, we are going to discuss both.
That's our expectation.
Leading with the next generation first phase of the next generation and hopefully towards year end of 'twenty three.
The kidney might play a role.
Next question please operator.
Operator.
Thank you we now have.
You see the asylum of Morgan Stanley Your line is now.
Hey, good afternoon, and thank you for taking the questions and congrats on the quarter and I wanted to start just with the guidance and how youre thinking about for Q. You had talked previously about some air transport constraints, how that situation is playing out and then I'm, just really what youre thinking or what's contemplated either from lung.
Recovery, what you're seeing in heart recently, just with us Pentagon a broader take on organ specific contribution from Clark here.
Great. Thank you Cecilia.
And we don't expect and air transport to be.
At all and influence negative influence in Q4.
Or even in the in early 'twenty three.
You know as far as the hot momentum, we expect that to grow we expect <unk> to grow and.
And we expand lung to grow however, long I think it's prudent to assume that long growth that we will start witnessing that in Q.
Q1, Q2 'twenty three.
Rather than in Q4.
But we expect again, we see no risks to Q4.
Revenue from Air Transport.
We expect the heart momentum to continue to accelerate we expect deliver momentum to continue to accelerate and we're hopeful that the lung will begin the recovery in Q4, but I think tangibly, we will start looking at that in Q1 and Q2 of 'twenty three.
Okay.
Okay, Great and then if I could follow up the trial I'm, just as you're thinking about guidance and the supply of potential supply dynamics or does the high end of your guidance right now really represent the ceiling could we see upside just as you sit here today looking at supply pressures that could potentially arise and then.
Just wanted to follow up to an MLP expansion in heart, specifically on how Youre thinking about further expansion in <unk> with N O P in hard and really where you're seeing utilization either D. V. D. R. D CDN and thank you for taking my questions.
Thank you Cecilia.
So enough on the first part of the question.
I'm sorry.
Can you repeat the first part of the question. Please.
Our.
Job is there appetite items, yeah, yeah yeah.
The only risk we see.
That made the guidance what it is is the as these supply chain issues. We were dealing with two things in Q4 were dealing with a short quarter because of the approximately three weeks of vacation holiday time between Thanksgiving and Christmas and new year's and what we're dealing with this potential.
Potential risk of another week or two of back order situation and these are basically this is why we wanted to be prudent and conservative we don't see any other risks in Q4 other than the finished goods inventory production that we were talking about is there an upside.
We're hopeful but.
We wanted to we wanted to be realistic with our with the expectations.
Yes.
The second part.
As far as growing the number of centers a number of hubs.
We are we are growing the number of hubs in Q4.
But we are more focused on that.
The growth in the number of centers and making sure that those new centers that came in Q3 become repeat centers in Q4, and that's going to generate its own momentum and we're adding new centers in the heart and we're doing the same thing for the lung.
I think the big lesson in the big metric that we learned from 'twenty. Two is small number of centers are theres, a significant leverage with a small number of centers that are regularly adopting that could generate significant acceleration in revenue. So right. Now we are increasing the number of centers now we're focusing on driving repeat utilization.
From N O P.
Great. Thank you for taking the questions again, congrats on the quarter.
Thank you thank you Cecilia.
Operator can we go to next question. Please.
Thank you.
Mr Jennings.
Colin Please go ahead when you're ready.
Uh huh.
Hi, good afternoon. Thanks.
Thanks for taking the questions.
Congratulations on another strong quarter wanted to ask will even Steven.
Just about the market correctly.
Those databases suggest in a transplant volumes are growing in the high.
Single to low double digit range at least in <unk>.
It seems like in October as well.
Ocs is the new technologies with added to the market or parse out.
The market growth contribution.
And the Ocs in nuclear reporting and then the reason I'm asking is I don't know if there's any.
Reading through us and CMS and HHS.
As youre working on.
Transforming the U S transplant network.
There's evidence now that <unk>.
Is growing the market as you stated in the earnings call in any way to quantify it and can that have an impact.
Thank you Josh.
Yeah, Yeah, where we are.
We are definitely playing a big role in that and the growth in our transplant volumes in the U S.
The source of growth, it's really multi factorial Josh at.
The social growth is coming from DCD is coming from DVD. It's also coming from more centers are comfortable with MLP and you asked me how is that going to grow the volume.
I'd give you one anecdotal example, several centers in Q3 commented to us directly that.
With the N O P.
Historically, when the center is busy meaning the surgeons.
Our busy now are doing either transplant or doing another surgical procedure and they get a donor offer historically, we would turn down that don't offer because they're busy.
Now with the N O P. They would accept that donor offer send the MLP team to procure the Oregon bring it back keep it overnight and or or staggering when the order history and when there's time allows to do the transplant procedure.
And I've heard that from several institutions across the three organs not just in one Oregon. So yes, we think the ocs in the MLP are playing a key role in growing their transplant volume by accessing more DCD accessing more DVD oregon's either that our long distance older age or.
That normally would not be utilized and through the logistical piece of historical.
The logistical challenges that transplant programs or not.
April to accept Oregon's, while they're busy doing another transplant procedure today. They can do that now to address your part about the national initiatives from CMS and HHS I think we're still in the early innings, Josh I think.
Big.
You know federal organizations, they're they're they're focusing on on just keeping up with that with that with what's going on I think over the next year. However, we expect them to be more and more aware as the numbers continue through two to grow.
I Hope I hope I addressed your questions.
Is it 100 times. Thanks, I have just one follow up on.
Talk to some surgeons that are I think there was a.
A paper published by the National Academy of Sciences early this year with some recommendations on how to kind of restructure the newest transplant my work in one of the proposals.
Donna organ unit that some surgeons expressed interest in establishing those but also setting up perfusion units as well.
The combination can you just can you just help us understand that set up better and maybe any thoughts on the prospects of that coming to fruition. Thanks for taking the questions.
Thank you Josh.
Josh that the paper, you're referring to that.
That paper was drafted before MLP became a reality in the United States. So what they were trying to do is without.
Without the knowledge of MLP trying to create.
Something a pseudo type structure, where they can salvage, oregon and keep them in a centralized location.
Now that was the extent of their horizon, given their lack of knowledge of the MLP today that concept doesn't make any sense.
It adds cost and as complexity it apps time unnecessarily.
And frankly when it was tried it never really resulted in increase in organ transplants.
We believe that the MLP is here to stay the MLP is the most.
A seamless way of growing the transplant volume working within the current constraint of the transplant systems in the U S working through that same workflow.
And the same.
Individuals central control over their volume or over their cases as they are doing it today, rather than centralizing things in shipping things in the middle of the night without knowing what happened to the Oregon.
Sitting for several hours.
You know so you know.
Again, that's that's our vision at that's how our view on this particular paper I think that the paper is trying to was trying to.
Come up with a creative solutions before the MLP was the mainstream now the mlps mainstream and we continue to we believe it will continue to grow in the U S. Throughout next year.
Okay.
Thanks for helping us think through the appreciate it.
Thank you. Thank you.
We now have the next question from <unk>.
That's kind of code. Please go ahead when you're ready.
Great. Thanks, Good evening, I, just like to dig into the supply constraint challenges a little more.
Help us understand.
Is this a raw materials is it in the capital side the disposable side. The solution sizes is it Oregon specific what exactly is it or is it you just need to run more shifts she can't get product sterilized help us understand so that we can understand the guidance and kind of what those are.
Limitations are in and what you're doing to mitigate those risks near term.
Do you have a champagne problem that demands out CEO exceeding supply and so kind of.
It is just a near term problem, you're facing that'll get resolved sooner rather than later.
Or is this something that will linger on in malls wont be resolved until you have increased capacity as you noted which is end of this year next year dependent on FDA clearance or approval of the site.
Yeah.
Thank you Bill So let me dissect that that that is that.
Situation.
We don't have any issues with raw material.
For the foreseeable future over the next 18 months.
We don't have any issues with.
The big issue that we don't have any issues with solutions.
Zero, none we have inventory of solutions to last us for a piece of 18 to 24 months.
And we have several orders coming in throughout next year. The big problem is or the big issue is that throughput on the production floor.
In the area of perfusion module.
And Ah.
This this problem Pete it's had at end of Q2, we took some aggressive actions to increase the number of heads double the shift it took time to get to full double shift.
And while we're working on expanding the footprint of our new clean room that is three times the size of the old team.
So now.
What are the risks.
We see the risks as really.
Near term over the next one or two quarters, we do not expect.
<unk> to be a lingering effect.
We are working very hard to make sure. It is not a lingering effect.
Because we can we can do this once.
But we want to get out of this situation within the next one or two quarters maximum.
As far as the the certification of the clean room, we are in active dialogue with the FDA and we have very clear.
Fair degree of confidence that this is going to be.
30 to 60 day process compared to anything longer than that but you know until it's done it's not done.
So that's that's our that's our situation.
And we and just for <unk> did you say, it's perfusion module jabil.
The actual protect the actual actual disposable use that that goes with every Oregon.
Not the hardware, it's not a hardware issue, it's not a sensor issue it's not a solution issue, it's not a raw material issue its really the assembly part of the raw material into an active.
Sterile perfusion module as far as sterilization capacity is concerned though we've increased.
Near term our sterilization capacity, we're working on in our mid and long term even in.
Further increase in that capacity.
Because we did not want to solve for the production piece in and forget about sterilization, so where we're on it.
And we're already achieve some efficiencies and for the near term now I was just just cranking cranking the Ah Ah Ah the gears and building more of these disposables.
So it sounds like you've you're on your earlier comments you you've pulled all your disposable inventory that wasn't productive in the field you've been shipping it around and moving it which is probably why your Cogs are higher youre running O T and youre trying to put out as much as you can.
I think you mentioned that your labor kind of took a little longer to get up and running the training the folks whatever but theyre up now why wouldn't it be I don't understand like.
Why can't you increase sequentially or is it just a function you were just checking out any inventory in the field and you are kind of hand them out at this point I'm just trying to understand that our hand, where are you concerned available we are hand, hick up down the line.
Yes, exactly where we are hand to mouth at this point, though and we don't like that and with hand to mouth Theres always hiccups.
So that's that's why we have to be prudent.
So and we're what we're trying to do is over the next couple of quarters start building strategic reserves like we used to have in Q1 and early Q2 right now it's literally hand to mouth.
I'm sorry.
Got you okay. Thanks for the granularity I think Thats really helpful for all of us, especially as it related to guidance and then.
Yeah.
If you think about.
I will just ask one more and that's on the one you know you talked about that's been a little slower for you.
Is it have you had any luck with the FDA or any discussions with the FDA and changing the post approval study because from my understanding that was one of the the big limitations, it's because it's almost like running a full another clinical trial to get all the patients sign offs and what have you and that's been a big barrier to kind of just commercializing that product.
Alex So any update on activity with the FDA and kind of.
Expectations there thanks for taking my questions sure sure. Thank you Bill.
Yeah.
Re engaging with FDA on on updating the design of the post approval study is as a part of that.
National initiatives that we are leading to revive the lung.
That being said.
That is not the main driver here, it's a key part, but it's not the main driver. The main driver is we need to get the lung transplant community in this country laser focused again on lung transplantation in the post Covid era.
Covid caused a lot of the transform program to be distracted from lung transplantation.
And it became even further consolidated so we need to just to get get the community focus back again in lung transplant and <unk>.
Show them, the success of MLP, and heart and liver and that amount of growth that these oregon have been experiencing in the U S. As a proof of concept that if they can apply the same model. They can achieve the same results, which is growing their transplant volume without growing their workload without growing their staffing needs and.
Now we have the the tangible proof of that it's no longer a hypothesis or a vision, it's actually happening theyre seeing it some of them are seeing it even in their own institutions. So that's and that these are the two two pronged approach that we are pursuing to revive the lung programs.
Thanks for taking my questions.
Thank you Bill.
We now have.
Another question on the line from Suraj Kalia of Oklahoma. Your line is now open.
Good afternoon Waleed, Stephen can you hear me all right.
Can you hear just fine.
Hi, Suraj.
Good.
Gentlemen, congrats on a nice quarter, so at least three questions from my side.
Deliver approval I believe was in November 'twenty, one if memory serves me right DCD heart was sometime late Q1, 'twenty two well.
While either features if we were to map out.
Liberals adoption.
And heart adoption.
How are you seeing the slope of the adoption curves of these two oregon's what is different and if so what is causing it.
We don't as we sit here, we don't see a difference.
We do not see a difference at all the difference was early in the year when the liver really jump.
Jumped on the MLP bandwagon quicker and that resulted in an uplift of the liver.
But we said the heart will be shortly thereafter, and what we are seeing that we saw that in Q3.
So I think our original statement will will prove to be true.
Liver and heart rate catch up with each other by end of this year or Q1 of next year.
Suraj. This is Stephen so just.
The number sequentially heart sequential grew about 40% liver sequentially grew about 30%. So we're both on a brilliant trajectories and I don't know who the accruals as much as the utilization of the MLP, which is really driving the slow bookings curves.
Right I was just curious if there was anything clinical or just in terms of the excitement.
In one Oregon versus versus another it looks like there isn't so fair enough.
Okay, well, if youll mentioned about <unk>.
Frequent NOP users I believe 11 in heart 12 in liver.
So when a transplant site is a frequent MLP user.
What would cause them to use NLP plus ocs in one Oregon and.
Maybe Nokia was that the next months or.
And maybe if you could just kind of clarify or give us a little more granularity in what does how do you define frequent.
Sure.
Actually I was going to answer that question exactly that suraj selfish.
What we define as frequent as actually a center that doesn't stop using the ocs month over month.
And we have a minimum of three to four <unk>.
Ocs usage per month for a center to qualify as a frequent user.
So.
The the centers that we call users, but not frequent users of the center that use it.
Early centers like the heart the few centers that joined in Q3. They they did one two maybe three.
So we expect those to ramp up in that same trajectory, we don't expect tenders to be onesie twosies.
If they are the they won't last because there are many centers that are.
Once they've tried to MLP once it works and they.
They don't stop.
And you don't expect to see these kind of stoccado movements that we used to see during the trial.
And when that happens we don't we move on and focus on other centers that are there are.
More engaged and it's only a matter of time when the centers come back in because they are seeing momentum in the region.
So that's the definition of an active user and active user at the center.
Our definition of an active user.
Our centers that are using the old she asked at a very high rate and minimum of three to four times per month.
Throughout the quarter consistently.
Okay.
Okay, that's great.
Additional information finally, while it from my side.
You have given a lot of clarity in terms of some of the supply issues labor.
Fracturing.
See a weak link in our quality process, if I'm standing here and I know that there is a weakening I don't deserve to be here.
So we are making sure that every aspect of our quality chain is addressed taken care of we're allowing the time for the team to be ready and we're not demanding them to triple the production capacity overnight where we.
We're doing it in stages, we're making sure that the quality metrics are met.
We're really being very prudent in giving them the appropriate time to scale to avoid these issues from happening.
Could could something could something happen that we're not aware of.
Everything is possible but.
Again, the key for US is to give it the proper time proper training, making sure our quality metrics are met before we even released a product to the market. So we're.
We're not going to cut corners to meet the supply.
Demand, we have to make sure that our product quality is of the highest category because that's what's going to sustain this business and help us grow.
Thank you.
Thank you.
We have nice side the questions on the line so I'd like to hand, it back to Luke when he speaks with any final remarks.
Thank you. Thank you so much for your time and I apologize about the technical difficulties have a wonderful evening everybody.
Thank you for joining this does conclude today's call you may now disconnect your line.
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