Q4 2022 CVRx Inc Earnings Call
Good day and welcome to the C V. R X Q4 2022 earnings call at this time, all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session.
Ask a question during this session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your Speaker Mr. Mike Sally. Please go ahead.
Good afternoon. Thank you for joining us today for CVR Xs fourth quarter and full year 2022 earnings conference call.
Joining me on today's call are the company's President and Chief Executive Officer, and Chief Financial Officer Jarrett Osha.
Our remarks today will contain forward looking statements, including statements about financial guidance.
These statements are based on plans and expectations as of today, which may change over time.
In addition, actual results could differ materially due to a number of risks and uncertainties, including those identified in the earnings release issued prior to this call and in the company's SEC filings.
Including the upcoming Form 10-K that will be filed with the SEC.
I would now like to turn the call over to <unk>, President and Chief Executive Officer, Nadeem you Alright.
Thank you, Mike and thanks to everyone for joining us today.
I'll begin today's call by providing an overview of our fourth quarter and full year performance, followed by an operational update and review of our financial results by our CFO <unk> <unk> and then I will conclude with our thoughts on 2023 before turning to questions and answers.
We are very proud of everything that our team accomplished in 2022.
It has been a great year for <unk> X.
We made progress towards all of our strategic initiatives, resulting in increased adoption and utilization of better stem. Despite several macro disruptions throughout the year.
This is demonstrated by the fact that our worldwide revenue increased by 72% over 2021.
Literally driven by our U S. Australia business is 108% annual growth.
And the year was capped by a strong fourth quarter.
Our worldwide revenue for the fourth quarter was $7.2 million.
An increase of 96% over the fourth quarter of 2021.
Performance in the quarter was driven by the continued expansion of our U S. Salesforce and contributions from our marketing initiatives, which led to an increase in U S active implanting centers.
In the U S or heart failure business generated six point of million dollars.
An increase of more than 121% over the fourth quarter of 2021.
The increase was primarily driven by continued growth and expansion into new sales territories, new accounts and increased physician and patient awareness.
When we went public in the summer of 2021.
We were in the very early stages of our commercial launch in the U S.
At the time, we expected to consistently grow this business in line with the investment in our commercial organization.
We are very pleased with how this has played out with the fourth quarter being our 10th consecutive quarter of increasing U S heart failure revenue with average quarterly sequential growth in excess of 20% since the IPO.
Now for an update on operational developments during the fourth quarter to support greater adoption and use of Patterson.
Our focus areas, where one the continued expansion of commercial infrastructure to.
Innovation of our product portfolio and three the expansion of the clinical body of evidence.
Starting with the continued expansion of our commercial infrastructure.
During the quarter, we added three new territories, bringing the total to 26.
We are excited with the quality of sales talent, we have been able to attract and look forward to continuing to build upon that quality in 2023.
During the year, we generated momentum with several of our marketing programs.
Clothing, our direct to consumer or DTC pilot program, our new branding campaign and patient education programs.
The DTC pilot program has been successful to date and has had a positive impact on our U S business.
To date, we have made minimal investments in localized DTC campaigns.
And we have seen more than 100 patients undergo a breast implant and have a robust pipeline of potential patients with interest and learning whether they are candidates for this therapy.
We plan to continue to optimize these campaigns to make them more cost effective as we evaluate whether to roll them out more broadly.
Our second area of focus is innovation of our product portfolio.
During the second half of 2022, we launched better still near to IPG. The second generation device, which reduces the size of the IPG by 10% and extends battery life by 20%, reducing the frequency of device replacements for patients and their providers.
It is remarkable how the new to extend longevity, while employing a smaller footprint and allows for a streamlining of the implantation procedure.
Our third focus area is the expansion of our clinical body of evidence.
The <unk> clinical trial was designed to demonstrate that burst and provides our mortality and morbidity benefit. In addition to a reduction of symptoms of heart failure in patients with reduced ejection fraction.
As previously announced we accrued the required 320th event in the trial and are working to collect and monitor all the data.
As a reminder, the primary endpoint of mortality and morbidity composite endpoint.
And we have pre specified a few potentially meaningful secondary and ancillary endpoints and analysis.
These include the hierarchical will ratio analysis few COVID-19 sensitivity analysis and ways to account for the severity of hospitalization.
While we and the steering committee are still blinded to the results.
But also based on how the data collection is progressing we now believe that we will be in a position to I'm blind and share the data before the end of the first quarter of 2023.
Our goal for the post market trial is to broaden barrels stems labeling.
We plan to submit the totality of the evidence and our corresponding analysis to FDA when we outlined the data.
Please note that FDA has the ultimate decision maker on whether to allow additional claims a new labeling for better stem based on its own evaluation of all the available data.
<unk> also seek advice from a panel of independent experts.
At this point it is difficult to plan for a specific scenario.
The results May produce a conclusion that is more complex and nuanced than a straightforward binary answer.
In addition, we continue to make progress with backfire, our ultrasound guided implant tweak. It in 2022, we added more sites and more patients into the clinical trial. As a reminder, we expect to complete the trial in 2024.
We announced in late September that we added a veteran medical device executive Kevin hikes to our board of directors.
Kevin brings his business acumen and his decades long experience in the field of cardiovascular implantable devices.
Additionally, with the promotional afford leaders to the executive team.
Now have eight out of 10 of our executives promoted internally.
Casing, the strength and depth of our talent bench at CVR acts.
In summary, we had a fantastic 2022, as we considerably expanded the adoption and application of Patterson.
Seen by 10 consecutive quarters of strong growth in our U S heart failure business.
The year was topped off with a successful fourth quarter during which we continued to push the growth of active implanting facilities in the United States highlighting once more of the benefits that <unk> can provide to both health care professionals and patients with cardiovascular disease.
I'll now turn the call over to Jared to review our financials Jarrett.
Thanks Mindy.
Total revenue generated in the fourth quarter was $7 $2 million, which is an increase of $3 5 million or 96% when compared to the same period last year revenue generated in the U S was $6 million for the fourth quarter, which is an increase of 109% over the same period last year.
Failure revenue in the U S totaled $6 million in the fourth quarter on a total of 193 revenue units up 121% as compared to $2 $7 million in the same period last year on 95 revenue units the.
The increase was primarily driven by continued growth in the U S heart failure business as a result of the expansion into new sales territories, new accounts and increased physician and patient awareness of barrels to them.
At the end of the fourth quarter, we had a total of 106 active implanting centers as compared to 46 at the end of Q4 2021 and 91 at the end of Q3 2022.
At the end of the fourth quarter, we had a total of 2006 territories in the U S compared to 2014 at the end of Q4 2021 and 23 at the end of Q3 2022.
Revenue generated in Europe was $1 2 million in the fourth quarter, which is an increase of 49% when compared to the same period last year.
Total revenue units in Europe increased from 39 in Q4 2021 to 68 in Q4 2022. The revenue increase was primarily due to the lessening impact of the COVID-19 pandemic in Europe. The number of sales territories in Europe remained consistent at six during Q4 2022.
Gross profit was $5 7 million for the fourth quarter, an increase of $3 million when compared to the same period last year gross margin increased to 79% for the fourth quarter compared to 73% for the same period last year gross margin for the three months ended December 31, 2022 was higher due to a decrease in the <unk>.
Cost per unit and an increase in average selling price, partially offset by a larger percentage of our revenue units coming from full systems versus battery replacements.
Research and development expenses were $3 million for the fourth quarter, which is an increase of 70% when compared to the same period last year.
Change was primarily driven by increases in compensation expenses due to increased head count.
<unk> expenses were $14 $1 million for the fourth quarter, which is an increase of 46% when compared to the same period last year. This was primarily driven by an increase in marketing and advertising costs associated with the commercialization of <unk>.
As well as higher compensation costs from increased head count net.
Net loss was $10 5 million or <unk> 51 per share for the fourth quarter as compared to a net loss of $10 6 million or <unk> 52 per share for the same period last year net loss per share was based on approximately 26 million weighted average shares outstanding for the fourth quarter and approximately 24.
Weighted average shares outstanding for the same period last year.
At the end of the fourth quarter cash and cash equivalents were $106 2 million net cash used in operating and investing activities was $10 9 million for the fourth quarter compared to $7 6 million for the same period last year. We continue to believe we have enough cash on hand to reach cash flow breakeven without needing to.
To raise additional capital now turning to guidance as announced in early January for the full year of 2023, we expect total revenue between 35% and $38 million gross.
Between 78% and 79% and operating expenses between 76 and $80 million for the first quarter of 2023, we expect to report total revenue between seven one and $7 5 million.
I would now like to turn the call back over to Nadeem.
Thanks, Jared before opening the line for questions I would like to discuss our key areas of focus for 2023, as we seek to drive increased adoption and utilization of <unk>.
First the continued expansion of our commercial infrastructure, especially our direct sales force in the United States remains a top priority. We expect to continue hiring top talent throughout the year and are targeting a total of approximately 38 U S territories by the end of 2023.
Or on average, adding three new territories per quarter.
In addition, we will continue to invest in marketing efforts to help drive increased awareness of Paris Tim.
Outside of the U S. We have added additional talent to our direct sales organization in Germany, and we continue to expect to add incremental headcount in 2023 to support our commercial strategy in that region.
Our second focus area is the expansion of our clinical body of evidence.
Our post market study of Pete H F and backfire remain on track with our previous updates and.
In regard to beat the chef.
We have been conducting this trial since early 2016 and here. We are seven years. Later, we are looking forward to potentially blinding the data and sharing the results with you before the end of this quarter.
Looking ahead to 2023, we are very eager to accelerate the development of Paris, Tim by utilizing the positive momentum we have built over the previous two years.
While we are still very early in the commercial ramp and the market penetration.
Totally focused on the significant potential to provide treatment to as many patients as possible.
And now I would like to open the line for questions operator.
Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, one moment, while we compile the Q&A roster.
Our first question will come from the line of Robbie Marcus with Jpmorgan. Your line is open.
Oh great.
Thanks for taking the questions.
Maybe first.
The cash burn is going to be it looks maybe a bit higher than last year.
Based on the sales and Opex guidance.
You talk about a pathway to profitability without further capital raises how how important is a positive read out from P. J F to getting to that target.
And any time frames in terms of revenue or years out that we could be thinking about cash flow profitability.
Hey, Robert Thanks for the question. So one thing that we've been consistent on is the model that we've built is under the assumption that we get a neutral readout from morbidity mortality trial and Thats not based on us being pessimistic about the results. It's just us taking a conservative approach and so when we say that we think we still have enough cash on hand.
And to reach cash flow breakeven it comes with that assumption that morbidity mortality is neutral we havent yet drawn a line in the sand for when our publicly when we're going to reach that cash flow breakeven point from a run rate perspective, but we do expect this to be the year, where we see that cash burn start to flat line to be similar.
So the burn that we saw in 2022, and then from there starting to see.
The overall burn start to drop on a quarterly basis.
Yeah.
Great.
If I just wanted to dream Big and say it is a positive trial, how important has or how big a barrier has not having a mortality benefit spin to driving physician adoption and.
If it does have a positive do you think we should be thinking more like a rapid improvement in adoption following or is there still.
You know what it would have to wait for FDA labeling so maybe a little time afterwards.
Hey, Ravi.
So thanks for the question by the way.
Listen when we started the sign in 2000.
We're doing it in 2016 started enrolling yet we powered it to win it right. So we're still hopeful that the data will be positive.
<unk> got simple, yes answer to all of the questions below that said.
It's the.
I think certainty yet as the time it takes to get the word out.
First we'll probably if that does that.
We'll do the announcement of the results during the medical meeting, but if there isn't one.
Close by in terms of time logging off the set on the data for too long so we'd like to get it out as soon as possible. So we may end up doing.
Hum.
Basically the IDEXX events, where we will invite you and other people who wants to listen in and will present ourselves the data.
But that doesn't get it.
So we'll have to wait for that medical meeting and do the presentation. There will be a symposium for late breaker.
After that.
Hurdles one has the FDA labeling that would allow us to market the data and the second is the.
The publication.
Surprisingly ft.
The FDA has been faster than north journals.
The median time to publish a manuscript.
Mark.
So those are the uncertainty element that would make me hesitate to say, yes, we will see a pickup in 2023.
The backup in sales what happened in 2024.
But based on your previous question if the data is positive.
We may decide to faster.
So paradoxically, we may burn cash a little bit faster earlier.
To funnel that you want to pick up.
Yes.
Got it Okay. Just last quick one for me is this something youre going to try and submit for a late breaker at ACC or do you think you'll miss.
Date, there thanks a lot.
Yeah. Thanks for the question, we don't know yet.
Got it Okay. I appreciate you taking the questions.
Thank you Leah.
Yeah.
If you still think the ACC deadline for late breaker was picked up and Thats why we don't know we don't know if the data will be ready.
We are blinded number one and if we are if they would accept that even after the deadline.
Thank God.
Operator.
One moment for our next question.
And that will come from the line of Matthew O'brien with Piper Sandler Your line is open.
Afternoon, Thanks for taking the questions.
I don't know Nadeem or Jared, which one of you. This is for but I don't want to overstate this too much but when I look at the.
The unit number in Q4.
<unk>.
<unk>.
The number of active centers that you had the last.
In Q3, and even in Q2.
That productivity rate is down somewhat here in Q4. So can you just talk a little bit about why that's the case and then that confidence and why those metrics improve steadily, especially even in Q1 and all the way throughout 2023.
Yes, Hi, Matt This is Jerry and I can take that one so as we look to the productivity for the accounts that we saw throughout 2022 part of this was driven by the success on the addition of new accounts driving the overall average productivity down we've said early on that.
Right. One on account starts we see them treat one or two patients and then they pushed pause for a period of 345 or six months a checkout. The results from a reimbursement perspective, but then also as to how the therapy is going with are doing with their patients. After they see that then they start to pick up the pace on their own productivity so the longer.
They're with us on average to more patients. They are treating so we still have confidence that the longer. These accounts stay with CVR Rx theyre going to treat more and more patients based on the data that we've seen and collected over the last three years, but I think the challenge we're facing over the last couple of quarters is that we exceeded expectations on the number of accounts where.
<unk> AD, which just drives that overall productivity rate down because of the newness of those new accounts.
Got it it makes sense so just to put a finer point on it just because you were up 15 in 'twenty.
The centers in Q2 and Q3, respectively.
That's the reason why that metric is down a little bit and youre not seeing any change from trend line as far as utilization.
Among those accounts as we're kind of.
Exiting that six month window.
Yes, that's correct, yes, we're still seeing the centers that have been with us for a couple of years doing more than the centers that have been with us between one and two years and they're doing more than the centers that have been with us less than 12 months.
Got it Okay and then.
We can get into margins at all.
The other stuff, which are positive updates.
I guess later, but.
The other question I did have was really on the DTC campaign.
It seems like Theres, a lot of patients out there and I know, it's just a pilot study.
Are you seeing as far as bringing some of those studies.
Getting in front of patients that could be.
Good candidates for this and then transitioning them all the way through to potentially getting into a plan.
Yes.
Matt Thanks for the question.
Our DTC pilot and why we kept it as a pilot telephone at a bit longer is to understand exactly those questions that you're asking.
<unk> have no idea what form of heart failure they have if.
If they have an ICD CRT they think they have a pacemaker and I'm over general component of it.
It's a disease, that's harder to characterize and when you look at our incidence rates that we calculated at a thousand new patients every year.
That's about 4% to 5% of the heart failure patients overall.
Small percent after that.
Game of numbers and we track every single click every single patients when they provide us the information we try to get as much as possible.
Medical condition.
As much as we are allowed to know.
And if they are seeing their own physician versus seeing.
Two paths diverged and if the hotel, especially if they're seeing happened to be on a site, where we are already activated as well there is a diaper versus the buyback.
It will go much faster on the other hand much slower.
So it's all of those uncertainties, Matt that keep this quarter the timing is a very interesting.
Okay.
Yes.
Got it thanks, so much.
Thank you.
Thank you one moment for our next question.
Okay.
And that will come from the line of Margaret Kesar with William Blair. Your line is open.
Hey, good afternoon, everyone. Thanks for taking my question.
And just because that Hff's, obviously isn't a short term catalyst I was just curious if you can walk us through.
Any commercial and marketing changes that you would make based on let's call. It three scenarios, where let's first is positive by morbidity mortality are on all of them yeah.
Maybe I'm more gray area like numerical improvement in mortality, but not all of that.
Third is maybe a less good morbidity outcomes or whatever gray areas.
Good day that you would look at how would that change your behavior I guess relative to the guidance that you have.
Thank you, Mike and thanks for the question.
Of the three scenarios that you mentioned, let's start from the most negative to the most positive.
The most negative data is due to that is no.
I think doing our plan is built on that scenario as John just mentioned earlier, it's not that we don't believe that we would win.
You know what.
But I would like to establish.
<unk> that is conservative and consider all of the positive news is upside.
If it's.
Yes.
Positive trending positive, but not meeting the endpoint itself.
Probably there'll be no change in our marketing.
Sales strategy now if it.
Clear cut positive, where we met the masaki motivate the endpoint and that's.
That FDA will give us the labeling that this device improves heart failures outcome.
Then.
It hasn't been that Jared and I with.
The approval of our board, we may decide to accelerate the.
And our sales and marketing effort in the United States and <unk>.
When that could happen it will take time.
Thanks, guys.
Inc. Territories, you have to identify the talent hired them train them and so forth so that ramp will accelerate but you would not see it overnight.
Alright.
Your question.
Yeah that was great and then I guess, turning further on that right. So the existing accounts do you already have.
Yes.
A good sense of it.
Training in patient years in history with.
With Barrow steps that have you talked to them about what their expectations are for the trial and how they might change their utilization once the data is announced.
I'll sneak one more in.
Walk us through how they would view their tam opportunity changing should one of those more positive scenarios come up.
A question and now I Wonder if I should have spoken with some physicians about this number one we instruct our sales force to be super careful and stick with us.
FDA approved labeling so that's why they did not engage in speculative discussions regarding outcome.
However, I could do that.
Explore that come in.
Feedbacks perspective that said there is one area, where our tab will increase.
Before I hit the endpoint.
When we negotiate it is the current labeling with FDA back in 2019.
FDA was very clear that we have not met yet the mortality and morbidity because it was not what we are blinded for.
And PRT devices when they are a class one indicated so you had asked about 150 and the presence of a bundle.
Red rock they have a more talking about EBT benefit update did not want.
Visions to prescribe.
In those situations. So that's why in our calculation of the total addressable market, we excluded patients who are eligible.
Actually indicated.
CRT treatments.
I believe that if we.
The mortality morbidity endpoints.
I know that we will ask FDA to remove that exclusion and I believe that FDA will accept.
Because we should then lead the physician decides.
What therapy is more appropriate for their patients and the labeling would allow us then.
For those patients who are indicated for our CRT device, so that will increase the total addressable market.
You have to expand or how much Margaret but at the right time.
Probably during the discussion about the results we.
I'm speculating here, but I believe we will be ready with the updated numbers of the total addressable market at the same time.
So in Q1 great.
Okay fantastic Thanks, guys.
Thank you.
Thank you one moment for our next question.
That will come from the line of William <unk> with Canaccord. Your line is open.
Great. Thanks, Good evening, thanks for taking my questions.
A lot of them have already been answered.
With some guidance and P&L stuff.
You talked you gave us the rep cadence you expect in terms of the new account cadence.
Would you expect that to stay the same or are you shifting more to a go deep strategy.
Hey, Bill this is Jared I can handle that one so from an account perspective last year, we were talking about adding high single digits on a quarterly basis throughout 2022. This year, we're expecting that to be in the range of about 10 to 12, new active implanting centers added on a quarterly basis as we March through 2023.
<unk>.
And then there is going to be a bit of work done by the account managers to really start digging a little bit deeper and worked in the referral pathway for those centers that are already active so the centers that have been around for 12 or 24 months trying to go a little bit deeper reach out to more of the referral cardiologists along the way.
Okay.
It ties into the DTC question, you kind of alluded to the fact that I want to make sure I heard that right is is this more of a.
Efficiency in terms of spend that you're trying to try to titrate and find out what what is the most efficient in terms of getting a patient and converting them all are getting a lead and converting it through a patient is that where a lot of the focus on the DTC is today.
Bill the study and by the way. Thank you for this question, it's an excellent question.
Yes.
No.
Direct to consumer awareness campaigns that medical device companies did 20 years ago are very different from what we are doing today.
Think about it what they did back then putting television ads with an open loop system, what we're doing as it closed.
We favor channels, where we have traceability every single click in every single patient.
And as I think who saw the ads and converted so we know all of those metrics at every single stage of the game.
And the visibility.
Of the iceberg.
Is the marketing campaign itself, 90% of the work is what happened behind the scene.
Those.
Consumers, who saw the AD all the way to becoming candidates will not be coming to identifying if they are.
Four two.
Basically offer them possibilities and contacts sites that are doing the procedure.
So cost.
For every single one of those campaigns is very closely track and monitor almost on a daily basis.
To optimize we are not in the business right now of throwing money and creating awareness. This is not what we would do it.
We're paying money, where we believe that those money would lead to X number of patients.
And that equation should be profitable for us from there.
That's what we're trying to explore.
As an example, we added a new channel two days ago.
And we'll be testing it for a few weeks.
Different iteration and see if it is profitable more profitable or less profitable than other channel are we using and that I.
But we're trying to do here to figure out different geographies different type of sites different type of advertisement different channels between solids.
The display and social media out there and you do not advertise Facebook in the same way you do it on Instagram with tic toc or towards that and so forth. So.
It's a big project.
It's really a phenomenal job.
Excited.
Okay, Good and then.
Quick Jared the 1136 gain in the other that's a little.
It's kind of a big number just curious what that was and then.
You've kind of went through it with with Margaret but in like it as simply as possible what would you define as positive what would you define as neutral and what would you define as negative for the BD <unk> outcomes and I know that's hard to do but I think for investors.
If you could sum it up like where those kind of break points and how should we think about it. Thanks.
Hey, Bill just on the first piece of it I mean, the biggest chunk that's gone into that other expense net bucket as is the interest income that we're seeing from the cash balance that we have at this point in time. So that's kind of the biggest number there nadeem I'll, let you cover the second piece.
Yes.
Yeah.
And statistics Bell there was a P value that you've identified to ensure that the.
Got it.
Highpoint at or less than a certain percentage right. So what FDA wants to know.
Is what whether you achieved those results as a fluke is by chance or whether the observation is right.
And the reality.
What I consider to be positive if the primary endpoint met.
The statistical.
The elephants that FDA is looking for.
I believe.
Would then say it will be in between.
Is it Margaret.
If either the more tactical with is trending close to that point, but not reaching at all.
Other pre specified prioritized endpoints that we have previously agreed with FDA to analyze wood.
Relevance.
Why do I say, so usually when you're designing that's all quite a proven you selected endpoint FDA approved endpoint and if you meet the endpoints you weigh in if you don't meet the endpoints you lose and that's the end of the game.
What we have seen over the past 'twenty EBITDA until devices, it's a little bit more complicated than that and FTE has to rely on the totality of evidence.
Before they issue a judgment.
Approved or not.
In our case, our device is already approved the.
The benefits outweigh the risk.
According to FDA. So what we're looking at here is what does the device do and other elements that FDA would allow us to tell physicians that you have to do the right.
And that's why it's a little bit more complicated than the usual situation and even if we don't meet the primary endpoint per se, but we're treading.
Please meet another.
Secondary or ancillary endpoints, we still believe that that is a net net positive not as positive as meeting the primary end point.
Positive about above our base case later.
Okay. Thank you.
Thank you one moment our next question.
That will come from the line of Alex Nowak with Craig Hallum. Your line is open.
Okay, great. Good afternoon, everyone and perhaps I missed this but can you expand on what is happening in the background collecting all of the morbidity data to move the.
The readout from the first half to first quarter, you must be seeing something or hearing something to give you that confidence it's going to come this quarter rather than more in the first half of the year.
Hey, Alex This study and nice hearing from you.
It's actually not the data, but the rate of collection of the data and the rate of monitoring of the data.
So we're just if.
And if I could the trend of monitoring of sites.
To ensure that we will have all of the data monitor is required by FDA before we would like to turn the data.
And based on the trajectory, we see we are able and we're able to narrow the timeline for the blinding.
Got it.
Very strong likelihood that this would happen in Q1 not in Q2.
Okay understood.
Hopefully bladder head.
Okay understood that makes sense.
Youre all good what do you think about the rate of New center adds in 2023 more than double that number in 2022, I'm just going to throw it out there double the number again in 2023 or what are you thinking about what the ramping sales can do this year.
Alex maybe I'll, just kind of baseline on that guidance again, so for the U S heart failure business the midpoint of the range. The expectation is that we'll be seeing ads of around 10 to 12 active implanting centers on a quarterly basis going forward.
We're continuing to see those longer term accounts continued to ramp up the productivity level similar to rates we saw in the past.
And then as I, just look to the hypertension business in the U S. It's still flat rate. Its a set patient population and then just one more piece on the European side of it.
We still haven't necessarily crack the code over there at this point and so our base case, the middle of the road of the guidance is that it would stay consistent at around that $1 million or so per quarter, we saw a bit of uptick there in the fourth quarter.
But some of that was distributors stocking up some shelves shelf units there for the first half of 2023. So we don't expect that to be repeated here in the first quarter. So overall, the vast majority of that growth coming from the U S heart failure business, but most of that revenue is coming from those centers that have already signed up have already been activated.
In 2022.
And then adding that 10 to 12 per quarter going forward.
Okay understood that makes sense and maybe on that last point, what do you need to happen for Europe to really ramp is it just you need to put a little bit more focus on it youre just focusing too much on the U S. Obviously, good reason is it a reimbursement dynamic just how you're thinking about Europe .
Alex the study all of the all of the above.
Yeah from a first we're really not in Europe put in Germany, and a couple of other companies in regards to Germany, we have a Z codes.
From a reimbursement perspective.
The code is kind of the middle layer, it's not as low as it is not as good as DRG one of the.
Can say about <unk> is that.
The hospital has to pre Covid.
And procedures at the beginning of the year with the payers.
But even if they are pre negotiated it they can do the procedures. They can still do you think.
By an entity called the Mds that is made of medical auditors would come in <unk> and that kind of skewed.
Of engaging and procedures that are not yet a DRG or are not yet in the guidelines and we added either and because of this we are not currently in Germany right now waiting until we have more data.
And do more advocacy and education in regard to getting.
And the guidelines in Europe , and it's a chicken a deck to get the DRG, we need a certain number of units per year.
It's about 1500 procedure, we have a device that the high price low number of units as I've mentioned in previous quarters.
Listeners.
And because of that it's harder to get to 1500 units in Germany to get into that the DRG examination mode.
And all of the above that we have not yet decided to invest heavily in Europe .
Just as a comparison.
We have more in our marketing team.
If our entire team in Europe right now.
Takes from an education perspective physician education patient education.
Direct to consumer marketing.
Physician directed marketing team and so forth.
It is a large effort that we've provided in the release.
Since right now to duplicate that just for Germany in Germany, and we don't have the volume to justify being able to do it and again, it's a chicken and egg.
It has to decide to do it and break that Luke but right now our focus is in the U S have I answered your question Alex.
Yes that makes total sense really appreciate the update thank you.
Thank you so much.
Thanks.
Great operator.
I'm showing no further questions in the queue at this time I would like to turn the call back over to you Mr yard for any closing remarks.
Hello. Thank you so much operator, and thanks to everyone again for joining us for our fourth quarter earnings call. We have received several awards and we look forward to updating you on our progress during our next update.
Thank you all for participating. This concludes today's program you may now disconnect.
The conference will begin shortly to raise and lower Johan during Q&A, you can dial star one one.
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Okay.
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