Q4 2022 Transmedics Group Inc Earnings Call
Yes.
Good afternoon, and welcome to the transmit its fourth quarter and full year 2022 earnings conference call.
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I would now like to turn the conference over to Brian Johnston from the Gilmartin Group. Please go ahead.
Thank you earlier today <unk> released financial results for the quarter and full year ended December 31, 2022, a copy of the press release is available on the company's website.
Before we begin I would like to remind you that management will make statements. During this call including during the question and answer portion that include forward looking statements within the meaning of federal Securities laws any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.
All forward looking statements, including without limitation, our examination of operating trends the potential commercial opportunity for our products.
And our future financial expectations, which include expectations for growth in our organization and guidance and our expectations for revenue gross margins and operating expenses in 2023 are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.
Additional information regarding these risks and uncertainties appears under the heading risks and risk factors on our Form 10-Q filed with the Securities Exchange Commission on November four 2022, and our subsequent filings with the Securities and Exchange Commission, which are available at Www SEC Gov and on our website at Ww W. Dot transmitter.
Dot com <unk> disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise. This conference call contains time sensitive information and is accurate only as of the live broadcast today February 22023, and with that I'll.
I'll now turn the call over to Waleed, Hassanein, President and Chief Executive Officer.
Thank you, Brian Good afternoon, everyone and welcome to transplant into fourth quarter and full year 2022 earnings call.
As always joining me today is Stephen Gordon, our Chief Financial Officer.
Our fourth quarter performance demonstrated continued commercial momentum and accelerated clinical adoption through the MLP.
Despite constrained supply of our Ots perfusion module as we are working to increase finished goods assembly capacity.
This marks another quarter of significant sales growth for the business.
Yes, the summary results.
<unk> total revenue was $31 4 million, representing 225% year over year growth and approximately 22% growth over the third period third quarter of 2022.
As expected <unk>.
<unk> continued to be the primary driver for the revenue growth at.
A trend we expect to continue for the foreseeable future.
Total revenue for the full year 2022 was $93 5 billion, including new product and service revenue of $92 1 million and $1 4 million unfavorable contra revenue adjustment in <unk>.
These these results you'll present to 209 and 204% year over year growth respectively.
We effectively tripled our revenue in 'twenty to over 21.
Stephen will cover the financial details in Oregon split in his section of this call.
Now, let me provide some more granular highlights from the quarter and the full year.
Overall for Europe presented a high watermark or case volume for Ocs and MLP.
As heart and liver cases cases increased sequentially for the fourth consecutive quarter.
We were also pleased to see modest but encouraging growth of lung activities in Q4.
A trend, which we hope to maintain in 'twenty three.
Okay.
Approximately 89% of our total U S case volume came from NLP on a per Oregon basis, approximately 97% of the liver approximately 79% of the heart and approximately 85% of the lung cases worth were from MLP.
22 has demonstrated to us that MLP is here to stay.
And is uniquely differentiating <unk> in the marketplace.
Our goal is to drive the MLP to be the new standard of care for solid organ transplant in the U S. Over the next several years.
As we predicted and despite being in the first year of commercial launch of Ocs liver and heart in the U S.
The overall size of that market. So saw modest overall transplant volume growth year over year.
Liver transplant grew by approximately 3% our transplant grew by approximately 9% and even lung were up approximately 7% and 22 of our 21.
We believe this is an encouraging early sign that the use of ocs and MLP are enabling growth in the overall transplant volumes in the U S through the use of BCD extended criteria and disciplined.
In the U S.
Simply stated the ocs in MLP are fundamentally growing the transplant market.
We will continue to track this annual trend and we expect to see these growth growth rates to increase over overtime with MLP growth and all the organs.
We ended <unk> 'twenty, two with critical mass of transplant program, using Ocs and MLP.
They were 22 liver programs that use ocs and MLP in Q4.
Of which there were 12 active users.
Or heart there were 29 programs that use the ocs in MLP.
Of which 12 were active users.
And the lung there were 13 programs that use the ocs and MLP of which five were repeat users.
It is important to note we have achieve the above results despite being in a supply constrained situation for several weeks during <unk> <unk>.
As we continue to build up our production capacity to meet the growing demand for ocs.
We were able to navigate these difficult situations grow our case volume and grow our revenue by leveraging the MLP hub network to supply Ocs modules.
To any location across the U S to meet that demand using charter flight.
This early inefficiency in the supply chain distribution was the primary driver of the <unk> service margin erosion.
<unk> had to absorb these cost to meet the demand.
We expect this to be a transient phenomenon.
And that this will revert once we scale our production capacity and develop more leverage on the logistical process.
Let me use this opportunity to update you on several actions that we've taken to enable us to overcome the production capacity constraints over the coming several months.
We've already expanded our clean room space.
The documentation for FDA certification is under review by FDA, and we are expecting this justification or FDA decision over the coming months.
We are expanding our existing sterilization capacity and are in the final stages of qualifying a larger sterilization partner to expand total capacity and further derisked our supply chain.
We have staffed a second assembly shift that is now fully operational.
Accordingly, we have brought on Nick Cochran, who has served in a month and multiple roles of increasing responsibilities at Stryker Corporation as our senior Vice President of supply chain and operations to lead these initiatives as we continue to scale.
In summary, we expect to resolve production capacity constraints by the second half of 2023.
There's no doubt in our mind that 22 was a transformative year for transmitting business as we demonstrated the significant value proposition and growth potential for ocs and MLP in the United States.
We strongly believe however that this is just the beginning of a long runway of sustained significant growth for <unk> business.
Let me articulate our strategies to achieve our growth potential.
First starting in 2023 and as soon as we adequately enhance production capacity.
We will focus on four areas to grow our U S transplant franchise further.
Specifically, we will.
You need to add new transplant program through the MLP initiative in the U S for liver and lung.
We will drive deeper penetration within existing and new transplant program based on the demonstrated efficiency and clinical outcomes of Ots cases at these programs.
Focus on growing the overall transplant volume at these programs from DTD extended criteria and distance standard donors used.
Using the MLP infrastructure.
Finally.
Reinvigorating the Ocs lung program through the MLP in the U S to contribute additional growth.
Second we will continue to expand our MLP infrastructure.
Specifically, we are expanding our surgical capability and clinical support staff.
The board.
And may be opening new launch points as needed to expand our geographical reach in the U S.
Third we are developing we are developing a best in class.
Dedicated air and ground logistics network for organ transplantation in the United States.
This is critical.
I repeat this is critical to managing our growth potential and controlling our transportation costs.
And improving our service margins.
Importantly, we strongly believe that this initiative will create a significant catalyst for further growing the MLP franchise in the U S.
Importantly, it will create a larger deeper and wider moat around our MLP offering while uniquely positioning us to more fully.
To more fully transform the standard of care in the United States.
Finally by continuing to invest in our next Gen Ots and next Oregon programs.
This is critical to our long term growth.
Importantly to further distance ourselves from any potential competitors on the horizon.
Let me conclude this section by sharing some important facts.
To help quantify the magnitude of growth in front of transmit X that we are planning to fully capitalize on.
In 'twenty two we transplanted approximately 1000 cases on ots.
This represents only 7% of that.
Existing total U S liver heart and lung transplants in 2022.
We strongly believe that we have the potential.
And are creating the MLP infrastructure to be able to perform the lion's share of the existing U S transplant volumes for liver heart and lung transplants.
In addition.
We are we also expect to benefit from our ability to grow the overall transplant volume as we have demonstrated early on in 'twenty two by enabling the use of Oregon's from DCD extended criteria and distant standard criteria dollars that were seldomly utilized for transplantation in the U S. Due to the limitation.
The historical procurement and preservation methods.
This is effectively will grow our total addressable market opportunity for transmitting and organ transplantation.
In all we are humbled and thrilled by our successes in 'twenty, two and we're looking forward to continuing to build on this solid foundation to catapult transplant X to new heights in 'twenty three and beyond.
We are confident in our strategy and we are laser focused on execution of our plans to drive the next gear of growth for <unk> and MLP.
As mentioned.
<unk> results continue to outpace our forecasted demand plans and challenged our finished goods production capacity.
As we stand today, we foresee this issue continuing with us until probably the end of Q2.
Which may be in which may may be impacted by a temporary shortage of supply of finished ocs products in the immediate term.
During this ramp up process.
We may find ourselves in another back order situation in Q1 or Q2 2023.
That said based on our <unk> and full year results.
In balancing these results with the expected finished goods pressures in <unk> 2023.
We are setting our annual revenue guidance for full year 'twenty three to be between 138 and $145 million in revenue.
Representing a strong 50, 257% growth over 22 total revenue excluding contra revenue reversal.
With that let me turn the call to Steven to cover the detailed financial results for the quarter.
Thank you Ali.
I will now provide some additional detail on the Q4 results and other financial information for the quarter and the year.
Yeah.
For the fourth quarter of 2022, our total revenue was $31 4 million.
This was an increase of 225% from the fourth quarter of 2021, and the 22% sequential increase from last quarter.
In the U S revenue was $29 1 million.
U S revenue increased over 300% from the fourth quarter of 2021, and 25% sequentially from last quarter.
The Oregon breakdown on U S revenue was $16 1 million of liver <unk>.
11 million apart from the one $9 million of loan.
X U S revenue was $2 3 million a 5% decline from Q4 of 2021 in U S dollars, but in constant currency non U S revenue grew 7%.
And the <unk>.
<unk> revenue was $2 1 million apart.
$2 million of lung and $1 million of liver.
We also are reporting the breakdown of product and service revenue this quarter.
The service revenue includes the out of the mills, we charge for the surgical procurement and Oregon management as part of the MLP.
In Q4 product revenue was $25 1 million and service revenue was $6 3 million.
The service portion was about 20% of the total in Q4.
Gross margin for the fourth quarter of 2022, 66%. This is down from 72% in the fourth quarter of 'twenty, one and reflects the higher MLP service component and the early inefficiencies that will lead mentioned in his remarks.
The margin on product revenue was 79% in Q4 2022 and the margin on service was 14% in Q4 2022.
Total operating expenses for the quarter were $27 5 million, that's 50% above Q4 of 'twenty one.
Driven primarily by our continued investment in scaling our MLP infrastructure and resources to be able to meet growth and it'll keep them out.
Our operating loss was $6 8 million in the fourth quarter of 22% compared to $11 3 million in the fourth quarter of 2001.
Primarily a result of the growing revenues in the business.
And our net loss for the fourth quarter of 2022 was $6 7 million compared to $12 7 million in the fourth quarter of 2021.
Total cash was $201 2 million as of December 31, 2022.
Which equates to a reduction of $3 3 million from the balance at the end of Q3 of 2022.
The weighted average common shares outstanding for the quarter were $32 million.
From a cash perspective transmitters remains in a very strong position to continue to execute our strategy and increase ocs and MLP utilization throughout the organ transplant field.
Now, let me share some detail on the full fiscal year 2022 results.
For the full year total revenue was $93 5 million or 209% increase over the prior year and included the $1 $4 million favorable reversal of Contra revenue in Q3.
U S. Oregon breakdown for the full year was $46 1 million of liver $29 9 million of park and $8 million of loan.
And <unk> was $8 5 million of heart.
$9 million was $1 1 million of liver.
Product revenue for the year was $79 2 million and service revenue was $14 2 million.
Gross margin for the full year was 70% the same as in 2021 the product margin was 79% service margin was 21% for the full year of 2023.
In total operating expenses were $96 7 million for the full year 2022, that's up 60% from $60 6 million in 2021.
Operating loss was 31 million $31 4 million for the full year 2022, compared to $39 4 million in 'twenty one.
Net loss was $36 2 million or 22 compared to $44 2 million and 21 overall.
2022 was a significant year for transmitting.
We demonstrated the commercial strength of the Ocs.
<unk> in general as.
As <unk> discussed we are very enthusiastic about our opportunities to grow ocs and NOP adoption in 2023 and over the next several years.
To repeat what leads earlier comment we are providing annual revenue guidance in the range of $138 million 245 million, which represents 48% to 55% or 50% to 57% excluding the favorable country reversal in 'twenty two.
Now I would like to turn the call back to Lee for closing comments.
Thank you Steven.
To summarize.
22 was a transformative year for <unk> delivering exceptional 209% revenue growth.
We strongly believe however that we are in the early stage of a long sustained growth period for our business and organ transplantation in general in the U S.
We are now laser focused on scaling our production capacity and MLP clinical and logistics infrastructure.
To achieve our goals.
With Ocs, an NLP transmit <unk> is uniquely positioned to lead the global transplant space into the future. We look forward to furthering our impact in 2023.
With that I will now turn the call to the operator for Q&A.
Later.
We will now begin the question and answer session to.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Our first question is from Allen Gong with J P. Morgan. Please go ahead.
Hi, This is actually wrote him on for Alan Thanks for taking the question and congrats on a nice quarter.
I just wanted to start off with 2023 guidance and specifically.
Was hoping you could talk more about what this range assumes by Oregon. In addition to new center adds and penetration rates.
You mean 2023 guidance, yes, yes.
Yeah.
We never we never provide guidance on center or Oregon, We provide total revenue guidance for the year and we're not planning to change that anytime soon.
Okay, and then I guess shifting over to the next question would you be able to comment more on the durability of demand that drove outperformance during fourth quarter and also just if you could give additional color on the supply situation as it stands today and specifically I guess your ability to meet demand in 'twenty three given.
We're kind of most of the way through the first quarter already.
On the demand we believe that the demand was really in the early innings in 'twenty two even in Q4, we expect that demand to continue to grow throughout 'twenty three and beyond.
And this is why we are focusing on scaling our.
Supply capacity. This is why we are adding new leadership expanding footprint of our production space, adding a second shift because we need to create that infrastructure to allow us to continue to be ready to meet that growing demand, we do not expected demand to be a one and done.
We expect this to continue to grow.
And until we are out of the supply capacity, we have to be prudent and we have to be conservative in our guidance in our estimation because we know that.
Back order situations could create so.
I hope I addressed your question.
Yes that was helpful and I guess just to clarify something I believe you mentioned that you hope to resolve production capacity by the second half of this year, if I'm not mistaken I just wanted to okay. Great. Thank you that's correct that's correct.
Are you.
The next question is from Cecilia furlong with Morgan Stanley . Please go ahead.
Hi, great. Good afternoon, and thank you for taking my questions holiday I wanted to follow up with that on the supply dynamics in and you talked about a bit of pressure in fourth Q I don't know if there's a way to quantify the impact from the topline standpoint, but as we think about the first few quarters at 23, how does.
Mailing and supply how should we think about upside relative to that the <unk> run rate.
Superior because because we expect the demand to continue to grow and we expect the demand to continue to outstrip our ability.
To beat it I would be.
From our perspective, we would highly advice to plan Q.
Q1, and Q2, either flat or modest.
Growth because we expect to find ourselves again outstripping our increased capacity that we are experiencing the second chip. This is why we are taking this.
Protocol and conservative approach to our guidance.
Okay understood and if I could follow up Steven on gross margin as you think about just.
Your your initiatives in 2003 to two grams to logistics side, how should we think about the margin expansion story and I know you've talked about that 75 or mid 70. It at scale and how should we think about the progression in 'twenty, three and coupled with that too just from an opex standpoint from an SG&A side as you think about continuing to build.
The MLP model can you talk through how you're thinking about just the ramp on a relative basis in 2010.
Yes, Thanks Cecilia.
It's a good question around margin so margin was.
Was challenged in Q4 because of the limited limited supply that we have.
To provide other costs that allowed us to be able to grow the revenue that's going to continue in 2023.
Similar margins overall, maybe slight.
Sequential improvement throughout the year.
The goal of the mature goal of the mid 70 level to see that in 23 until we're completely out of it.
Uh huh.
Aldo.
Supply constraints and with more revenue on the on the top line as far as spending we do expect to grow spending in 'twenty three.
Oh the model just for modeling purposes, I would think of a range of about 25% to 30% overall opex single digit on R&D and the rest in <unk>.
SG&A.
Great. Thank you for taking the questions and congrats on that okay.
Thank you Cecilia.
The next question is from Josh Jennings with Cowen. Please go ahead.
Hey, good afternoon, thanks for taking the questions and all that cozy, it's good to see a strong finish to the year.
Was hoping to bleed to just ask about I guess, the three buckets that you called out on the call D. C B.
Criteria DVD and then.
Distant.
Standard Oregon's donor organs.
It seems like I think you've mentioned earlier in the year and some public commentary just about <unk>.
<unk> volumes were kind of spread widely throughout each of those buckets and maybe if you could just build on <unk> comments earlier in the year today and just help us think through because I think some some are thinking that the.
This opportunity may be limited or heavily weighted towards the deep CB opportunity, but looking at the national database. It seems like P. C.
<unk>.
Oregon.
Very very early in terms of the step up in 'twenty two versus 21, sorry for the long winded question, but I hope you got the gist of it.
Absolutely Josh and thank you for the question. This is exactly why we I went through that.
The script to highlight that we're growing the overall transplant market not just by ECB organ in fact, ETD, Oregon. When you look at the blended rate across of the Oregon was less than 50%.
But we're actually seeing DDD, Oregon.
Neither distance procurement.
Is leading the way.
Extended criteria DVD, Oregon.
<unk> is being used across all transplants, including transplants within the same hospital.
And any and using NLP. So this is not intended to segment or limit.
I was trying to actually highlight.
Excuse me the opposite that the Ocs is being used across the gamut of organ transplants.
Thanks, John Thanks for that and then just two other.
Areas, we just heard surgeons talk about recently one was the rapid recovery approach that.
You may be Theres. Some centers are using are particularly <unk> win donors are either becoming more compromised and there's not enough time to match.
Match and <unk>.
Serology testing two to match the donor with the recipient to stick explain the Oregon, putting it on the Ocs system and then running the serology tests and then.
And then matching that the Oregon and then also just the stacking of organ transplant procedures by MLP adopters would love to hear kind of how.
Now early we are in those two approaches that of appeals are using as well as liver organ transplant centers, a rapid recovery and stacking and where you see those two buckets kind of contributing to growth in 'twenty, three and 'twenty four thanks for taking the questions.
Thank you Josh.
We're very early on both.
Stacking is becoming more and more.
Our routine process and the active users and heavy users the super users of NLP and Theyre preaching yet to their colleagues in other transplant programs.
The rapid.
Deployment of MLP to salvage in Oregon, It's way early innings.
I think we are just scratching the surface. This is another mechanism of how can we increase the supply of organs from routine standard, Oregon that traditionally would have been a loss because there is no lcs or no MLP that would salvage these organs, we've done a handful of those procedures throughout 'twenty two and.
And we expect that this is just this is just the beginning we expect this to grow we're seeing more opioids coming to us not just for that but coming to us just to it.
Encouraging us to creating hubs near major opioids to help them out.
Allocate more Oregon.
Again, we're evaluating all of this with you now.
With a laser focus on making sure we are.
Progressing and expanding and growing methodically and with maintaining the highest clinical quality of managing these organs and delivering MLP service.
Thanks for those centers procurement.
Thanks, Ross excuse me. The next question is from Bill <unk> with Canaccord. Please go ahead.
Great. Thanks, good evening.
My first question is just on the impact of supply in the fourth quarter.
How much how many cases do you think you'll loss number one number two is we look at the kind of active users in the accounts you're in.
How much impacted this have on new account adoption or youre limitation of new account adoption and then I have some follow ups on that.
Great.
Bill.
Let me start with the.
With the second part of the question of course, it impacted initiation of new program we're highly.
Selective and we.
However, we maintained an open dialogue we expressed.
Or why we Couldnt do it sometime what would we could do it we mobilized heaven and Earth to make sure that NLP hubs that have supply would go and get these organs. So of course, it negatively impacted our ability to grow active users in Q4, but we had already forecasted that.
And I feel we're out of this supply constrained we expect this to continue to happen.
And our team is getting.
Getting great at making sure, we're managing expectation appropriately and not causing any untoward.
Action. The first one as you know we never we never really quantified the magnitude.
Other than the number of weeks.
And in Q3, we had.
I think one five or two weeks of.
Shortage that we could not perform cases.
In Q4, we had approximately two to three weeks.
Sure.
And it impacted both liver and heart.
So were hopefully.
Arching towards a time, where this is not is no longer an issue.
Great and then if I could dig into it so from my understanding from the manufacturing standpoint, there's kind of multiple points that there was one of human problem, where you didn't have enough people you added the second shift.
What revenue level can you support with the second shift until the incremental capacity comes on board, which I think you said you expect now by the end of the second quarter or ended the first quarter for that incremental capacity. Thanks for taking my questions.
Thank you Bill I said, we expect the incremental capacity to start coming online.
In the second half of the year I wasn't specific end of the first the end of the second.
That's number one number two.
Okay.
It right now.
We are not providing.
Granular information on the revenue potential because we are just trying to maximize that throughput and manage.
Manage that the existing demand so I would caution not to share anything at this point because this is all going to change within the next few months here once the new clean room comes online once MC finished.
Bringing in the additional firepower that he needs to.
Ron this with US we'll process once you finish the layout and everything else that this could have significant efficiencies to increase the numbers whatever number we think we have today.
Great. Thank you.
The next question is from Suraj Kalia with Oppenheimer. Please go ahead.
While he is can you hear me all right.
I can hear you just fine for us.
Perfect pardon the background noise, so first and foremost exceptional quarter congrats to you as Stephan painter and the whole team.
So Molly.
Let me start out with an MLP.
Do you have to have the flexibility to increase N O P pricing over time and the second part to that question is so you mentioned the active sites versus the total size for each Oregon, great, but a number of these sites as we know our contract at Fort transport, but some other agency.
I'd love to get your perspective on what happens.
How long a process is that to proselytize them choose to MLP.
How does the process work there.
Yeah.
So suraj, let me address the.
I'm sorry can you repeat the first part of the question I got the second part what was the first part.
So just the flexibility of MLP pricing right. We are today, what 15 20 grant.
Yes, why couldn't we increased it to 30 40 50 over time, because that's what the statistics indicate what the current logistics providers.
End up charging.
Right. So so.
Raj.
Listen we are early in the MLP.
<unk>.
And our strategy has always been that MLP is nothing but a catalyst to drive growth of the disposable sales and disposable utilization.
So we cannot over.
Overpriced, the MLP portion that actually end up having a negative.
Impact not a positive impact and when we talk about MLP service charge.
Excluding that any claim charges. This is just personnel.
And the surgical front surgical procurement fee and clinical management of the Oregon.
We think we are in good shape in the future, we'll reevaluate, but right now I.
I am not expecting significant changes on the pricing of the MLP service component.
Weighted to the transportation.
Transportation for organ transplant in this country is a broken field. It is not harmonized. It is individualized many of those contracts youre, referring to are with entities that don't even own a single jet and then nothing by brokers in the middle of the night trying to brokers.
Flight from <unk>.
High net worth individuals or another operator, and it is very inefficient from a cost structure standpoint, I am not weighed one bit about.
What existing contract, we do I am more laser focused on establishing our own network and creating the Amazon or Fedex.
It'll for organ transplantation for the MLP I am confident if we do this right and we do it at the scale, we want to do it at that.
<unk> contracts will melt and won't be any issue for us to.
To see transformation of the field in the way, we we hope to see.
Got it.
Two questions. One for you will lead one for Stephen So for you while he's in terms of lungs love to get your thoughts, obviously youll have gone gangbusters on heart and liver right.
Everyone is now focusing the attention on the lungs.
Could this take off any additional color there would be great and Stephen specifically for you.
When we started out FY 'twenty two.
<unk> was approximately $50 million if memory serves me right it will be.
We ended the year with almost doubled.
Because you guys did have couldnt provide product for the last two quarters are some weeks and if so how.
US understand FY2023 guide what is the level of conservatism built into these numbers as youll see the euro at gentlemen, Congrats again and thanks for taking my questions.
Even you want to address that.
First I'm going to answer the conservatism question first of all I don't think I can give specifics around it.
I would say to you though is last year was really our first year of commercialization. So there was really a lot of unknown how.
How the market was going to evolve and especially the piece, but the market was going to evolve. So now we have a lot more information we have a lot.
More history, and so we won't put that all together with our guidance. So I can't really talk about the level of conservatism, but I can tell you. We just have a lot more information today to predict that we did a year ago.
Suraj I want to also add build on what Steven just said.
Listen we know we have lived through two quarters with.
Level of conservatism.
I'm sorry at level of back order situations, we know what the impact is on our customers our MLP franchise and the revenue.
We have to be conservative at least in the first half of this year to make until until we are out to bid supply constraint, we have to be extremely careful prudent and conservative.
But it's not at the same level as Stephen said last year, we didn't know.
That ramp curve of MLP, and especially on heart remember we started.
MLP less than 20% we ended the year at.
Hi, <unk> so.
We have better visibility now.
Let me go back to your first question about the lungs listen given given the huge negative impact that long has been suffering from for the last several years.
We have to be cautious we have to assume that our efforts is going to take the full year before we start seeing some tangible progress on that.
Our uptake in the lung numbers in the lung activities in the U S.
We are taking this very seriously we're focused on that and.
We.
We guide for patients.
We guide for looking at the long term horizon. This is not going to happen overnight.
Remember the ice, which LTE is not happening until end of April that is usually a big catalyst for lung and heart activities every year. So we're not going to have that impact until probably Q2. So we need to we're guiding for the full year impact not in the Q1 or Q2, So I hope I hope I'm addressing your.
And we're looking forward to your visit from Friday.
Yeah.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Waleed Hassanein for any closing remarks.
Thank you.
We want to thank everybody for joining us on this call and we're looking forward to speaking again on our <unk> 23 call. Thank you have a great evening everyone.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
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