Q1 2023 AtriCure Inc Earnings Call

Speaker 2: Good afternoon and welcome to AHRQ's first quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of today's call.

Speaker 2: As a reminder, this call is being recorded for replay purposes.

Speaker 2: I would now like to turn the call over to Marissa Baish from the Gilmartin Group for a few introductory comments. Please go ahead. Marissa Baish from the Gilmartin Group for a few introductory comments.

Speaker 3: Great, and thank you for joining us. By now, you should have received a copy of the earnings press release. If you have not received a copy, please call 513-644-4484 to have one emailed to you.

Speaker 3: Before we begin, let me remind you that the company's remarks include forward-looking statements.

Speaker 3: Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond ATRA-Cures control, including risks and uncertainties described from time to time in ATRA-Cures FCC filings.

Speaker 3: These statements include, but are not limited to, financial expectations and guidance, expectations regarding the potential market opportunity for atricure franchises and growth initiatives, including the adoption of hybrid AF therapy, and future product approvals, clearances, reimbursement, and clinical trial outcomes.

Speaker 3: AtraQure's results may differ materially from those projected. AtraQure undertakes no obligation to publicly update any forward-looking statement.

Speaker 3: Additionally, we refer to non-GAAP financial measures, specifically revenue reported on a constant currency basis, adjusted EBITDA, and adjusted loss per share. Our reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures is included in our press release, which is available on our website.

Speaker 3: And with that, I would like to turn the call over to Mike Carroll, President and CEO .

Speaker 4: Thank you, Marissa. Thank you, Marissa.

Speaker 4: I am pleased to share an exceptional start to 2023 at AtriCare. We achieved $93 million in revenue, reflecting 25% year-over-year growth and 6% sequential growth.

Speaker 4: We are experiencing robust demand from physicians to treat patients and remain excited for the extensive opportunities in our markets. Our performance is driven by broad-based strength across all of our franchises and geographies, reflecting the depth of our product portfolio and considerable market opportunities.

Speaker 4: This momentum is a testament to our people and their drive to execute a growth strategy while doing what is right for patients globally.

Speaker 4: Our robust top-line growth also contributed to positive adjusted EBITDA of nearly $2 million for the first quarter, which Angie will discuss further in a few minutes.

Speaker 4: As a result of our first quarter performance and ongoing momentum across the business, we now expect full year 2023 revenue of $385 to $392 million, reflecting 17 to 19% growth over the prior year and full year 2023 adjusted even to $9.5 million.

Speaker 4: approximately 2 million dollars with improvement into 2024 and beyond.

Speaker 4: Now turning to the highlights in the first quarter.

Speaker 4: In our open ablation franchise, we recently celebrated the one-year anniversary of the full market release for Encompass Clamp in the United States.

Speaker 4: The Encompass Clamp leverages the proven technology of our Synergy Ablation System to provide a simpler and faster approach to ablation in open-heart procedures.

Speaker 4: Since the launch, we've seen remarkable adoption by new surgeon users and ended the quarter with roughly one-third of our U.S. accounts incorporating the Encompass Clamp in cardiac surgery procedures.

Speaker 4: Globally, our open ablation franchise saw 27% year-over-year growth in the first quarter, primarily driven by outstanding

Speaker 4: Globally, our open ablation franchise saw 27% year over year growth in the first quarter, primarily driven by outstanding Encompass sales in the U.S.

Speaker 4: Even with our progress, the cardiac surgery market remains vastly under-penetrated. We are confident in our ability to achieve further penetration through our leading innovation in a differentiated market position.

Speaker 4: Shifting to appendage management, the AtriClip family of devices, our foundational technology for left atrial appendage exclusion continues to show durable expansion.

Speaker 4: In the first quarter, Appendage Management revenue grew 24% worldwide over the prior year with strong activity in all of our markets. We are committed to extending our leadership in the Appendage Management space with a focus on the expanded benefits to patients and providers.

Speaker 4: To that end, we continue to transform our technology with an eye towards easier to use, less invasive devices.

Speaker 4: At the same time, we are investing in a landmark clinical trial to bring the benefits of AtriClip devices to more patients. In 2022, we introduced LEAPS.

Speaker 4: A trial of 6,500 patients, 250 sites, multi-year randomized controlled trial to examine the prophylactic use of the H-EQIP devices on cardiac surgery patients without preoperative AFib diagnosis. There's six base specialty workshops available at alling vacuums, colon,Unlike, New York

Speaker 4: The size of the LEAPs clinical trial reflects the immense opportunity we expect to capture with two-thirds of the over 1 million annual cardiac surgery patients worldwide not having a preoperative AFib diagnosis. The primary endpoint of the study is a demonstrated reduction in ischemic stroke.

Speaker 4: systemic arterial embolism laying the groundwork for a new frontier in stroke prevention.

Speaker 4: Enrollment in LEAPs is well underway, more robust than we expected, and we are investing in a major expansion of trial sites through the remainder of 2023.

Speaker 4: The trial will take several years to complete. However, we expect increasing awareness of appendage management in all cardiac procedures in the near term and a meaningful extension of our addressable market over the long term.

Speaker 4: Turning next to hybrid therapy, we had a solid quarter and continue to deliver unmatched outcomes for patients with long-standing persistent atrial fibrillation.

Speaker 4: To this point on outcomes, in addition to the CONVERGE procedure, in the first quarter there were several European randomized trials which were presented and published consistently showing the superiority of hybrid therapy to catheter ablation alone in the advanced AF population. After national invasive treatment in iPhones each year South Asians with chronic stroke

Speaker 4: As a reminder, the Converse Procedure combines our Upposensed Technology with catheter ablation.

Speaker 4: showing over 100% improvement over catheter ablation alone and durable outcomes for longstanding persistent AFib patients.

Speaker 4: Similarly, the CCAF clinical trial presented at Era of the SAPRIL demonstrated that hybrid epocardial and endocardial elablation using ATRQ's synergy technology is the superior option to robust endocardial catheter elablation alone.

Speaker 4: The data presented error showed an 82.7% relative benefit of the hybrid approach over the endocardial ablation only, or 71.6% primary effectiveness of hybrid ablation, verse 39.2% endocardial ablation only. This groundbreaking randomized controlled trial

Speaker 4: Also in the first quarter, our professional education team assembled top U.S. providers to discuss physician experiences with hybrid approaches to treatment and how to deliver the best solutions to those who suffer with longstanding persistent A-Fib. It was striking to see these surgeons, nurses and care teams engaging with patient stories.

Speaker 4: discussing early-patient identification, evaluating the consequences of delaying APEB treatment, and learning how to effectively implement hybrid AF therapy programs at their hospitals. We continue to focus on providing comprehensive support for the many programs we have in the early stages of adoption and expect 2023 to build.

Speaker 4: the foundation for our future growth. Now, we are frequently asked about innovation in cardiac ablation and the potential for pulse field ablation or PFA to the impact of AF therapies. So, I thought a brief statement would be worthwhile.

Speaker 4: We believe innovation is of paramount importance in the medical device field and are encouraged by the activity in progress with PFA.

Speaker 4: The awareness it brings to the treatment of AFib encourages robust conversations on this topic and the focus on more efficient endocardial ablation is a tailwind for everyone in this market.

Speaker 4: For atricare, these are all positives. And our hybrid approach remains complementary, much like it is shown with all the other energy sources.

Speaker 4: We are excited for the building momentum in the broader AFib market and potential impact on the substantial unmet needs today.

Speaker 4: Finally, our pain management franchise continues to deliver outstanding growth. Worldwide revenue increased 39% over the first quarter of 2022, with contribution from new and existing accounts in the US, Europe , and Australia.

Speaker 4: Across engagements with physicians, there is a tangible excitement and the demand for outcomes that can be achieved with this solution for postoperative pain, giving us confidence in the trajectory of the therapy for years to come.

Speaker 4: We are in the process of implementing enhanced training and awareness of programs for thoracic surgery.

Speaker 4: Additionally, we are making excellent progress on our evaluation of crown nerve block in sternotomy applications and are beginning a very limited roll out with our existing device.

Speaker 4: The Opportunity for Post-operative Pain Management and Theorathic and Astronautomy Procedures is truly compelling and we continue to drive awareness for this differentiated patient experience.

Speaker 4: To that end, I would like to invite everyone to join us for the next phase of our virtual education series on May 16th, where we will sit down with Dr. Stephanie Chang, Associate Professor of the Department of Cardiothoracic Surgery at NYU Grossman School of Medicine to discuss her experience.

Speaker 4: using the HRQ cryosphere probe for the management of post-operative pain. We hope the event sheds more light on the incredible outcomes patients receive and how the physician community implements this important therapy into their practice.

Speaker 4: In closing, we are pleased with such a strong start to 2023.

Speaker 4: Our framework for expanding the business extends beyond targeting large under-penetrated market opportunities. We are thoughtful about building a complementary portfolio with diverse drivers, while being intentional about our spending as we enhance profitability in our business. Our first quarter results highlight the progress we are making because of these efforts and the potential for a better future.

Speaker 4: for it's your career to drive meaningful, accelerated, and profitable growth for years to come.

Speaker 4: I will now turn the call over to Angie Weirich, our Chief Financial Officer, for more details regarding our financial performance.

Speaker 4: and to call over to Angie Weirich, our Chief Financial Officer, for more details regarding our financial performance. Thanks, Mike.

Speaker 3: I will start with our financial results for the quarter. Our first quarter 2023 worldwide revenue of $93.5 million increased 25.4% on a reported basis and 25.9% on a constant currency basis when compared to the first quarter of 2022.

Speaker 3: As Mike noted earlier, we saw broad-based growth across key product lines and geographies, underscoring the depth of our many growth drivers.

Speaker 3: On a sequential basis worldwide revenue experience grows at 6.2% from the fourth quarter 2022 to the first quarter of 2023.

Speaker 3: First quarter, 2023, US revenue grew to $78.2 million, a 25.6% increase from the first quarter of 2022.

Speaker 3: dollars, up 32.5% over 2022, driven by continued market penetration of the Encompass Clamp across both existing and new accounts, and favorable pricing.

Speaker 3: To that point, we estimate that open ablation product volume growth was nearly 20% in the first quarter 2023.

Speaker 3: U.S. sales of a Pending Management products for $32.3 million of $21.3% over the first quarter of 2022, and Pay Management Sales were $11.1 million compared to $8 million, up 38.1% over the first quarter of 2022.

Speaker 3: Minimally invasive ablation sales were $9.6 million, up 11.9% from 2022, and solely on the growth in sales of our epicence system.

Speaker 3: We continue to expect relatively moderate expansion of hybrid AF therapy in 2023 as we build the foundation for future growth in this franchise.

Speaker 3: International revenue was $15.3 million, up 24.4% on a reported basis and 27.7% on a constant currency basis as compared to the first quarter of 2022.

Speaker 3: European sales accounted for $9.4 million, up 29.9% over the prior year on increased volume and all key product lines throughout major markets.

Speaker 3: Asia Pacific and other international markets accounted for $5.9 million in international sales, up 16.5% over the same period and driven mainly by activity in Australia.

Speaker 3: Growth margins for the quarter was 74.5%, which is flat in comparison to the first quarter for 2022.

Speaker 3: Although we continue to leverage higher sales volume and our seeing production efficiencies, we experience modest cost increases throughout our supply chain, along with pressure from product mix in the quarter.

Speaker 3: Moving on to operating expenses for the quarter, total operating expenses increased $5.6 million or 8.1% from $69.7 million in the first quarter of 2022 to $75.4 million in the first quarter of 2023. Overall, the changes and results of investments in our headcount as well as strong clinical trial and

Speaker 3: 23 legal settlement and reduced legal spend.

Speaker 3: Adjusted EBITDA for the quarter was positive $1.9 million compared to a negative adjusted EBITDA of $4.2 million for the first quarter of 2022.

Speaker 3: Note that our adjusted EBITDA excludes the gain recorded on legal settlement in the first quarter.

Speaker 3: Our loss per share was 14 cents in the first quarter 2023 compared to a loss per share of 33 cents in the first quarter of 2022, while the adjusted loss per share each period was 23 cents and 33 cents respectively.

Speaker 3: We ended the first quarter with $161.4 million in cash and investments, a strong capital position to fund current and future business initiatives.

Speaker 3: Cash burn in the first quarter is typically higher than the remainder of the year. With that in mind, we do expect our quarterly cash burn to moderate in the coming quarters. And finally, turning to our outlook for 2023. As Mike mentioned earlier, given the strength of our underlying business and current progress,

Speaker 3: We now anticipate full-year 2023 revenues to be between $385 million to $392 million. Our updated guidance reflects annual revenue growth of approximately 17 to 19%. For quarterly cadence, we anticipate sequential trends to reflect more normal seasonality.

Speaker 3: with a modest increase in revenue from the first to second quarter in 2023.

Speaker 3: We continue to expect 2023 gross margin to be comparable to 2022 with the potential for varying impacts from an increasing cost to next.

Speaker 3: On the bottom line, we are balancing our commitment to profitability with the opportunities to progress key areas of our business, including accelerating clinical trial enrollment and expanding therapy awareness programs. The level of investment in research and development activities will ensure a robust pipeline and growing clinical evidence across our platform.

Speaker 3: Additionally, our plans anticipated discipline expansion of our commercial teams along with training programs to drive further adoption in our markets.

Speaker 3: We expect positive adjusted EBITDA of approximately $2 million for full year 2023, corresponding to the adjusted loss per share of approximately $1.10 to $1.15.

Speaker 3: Our guidance reflects a shift in discretionary spending from the first quarter to the rest of 2023, as well as an increase in clinical trial enrollment, registries, and studies.

Speaker 3: Therefore, we would expect quarterly adjusted evid thoughts for a select some variability for the remainder of 2023.

Speaker 3: As we commented at the beginning of the year, we are focused on growing a profitable business in the years ahead.

Speaker 3: To end, we are incredibly pleased with our start to 2023, as this quarter's results demonstrate many diverse and innovative, direct catalysts that each occur. Our ability to broaden the impact on patients in each of our markets and achieve leverage in our business.

Speaker 3: I will now turn the call back to my for closing comments.

Speaker 4: Thank you Angie. We begin 2023 with excellent momentum throughout our business. I'd like to thank the entire HKIR team for outstanding collaboration and deep commitment to our patient first mission.

Speaker 4: Our efforts this quarter achieved the goal of growing patient impact, progressing clinical science and innovation will improve leverage across our operations.

Speaker 4: The future of Azure Cures is bright and together we have a unique opportunity to continue to both advance and further expand our markets as we work to heal the lives of those affected by a fib and pain after surgery and with that I'll turn it over to the operator. As a reminder to ask a question please press store 111 on your telephone.

Speaker 2: We stand by while we compile the Q&A roster.

Speaker 2: The first question comes from Robbie Marcus with J.P. Morgan. Your line is now open.

Speaker 5: Hi, this is actually Lily on for Robbie. Thanks for taking the question and congrats on a good quarter. Maybe just starting with MIS, I know guidance doesn't really assume much in terms of converge this year, but can you give us an update on how traction has progressed here?

Speaker 5: And have you seen any sort of improvements in uptake as procedure volumes and the staffing environment have normalized?

Speaker 4: Yeah, I appreciate the question. I mean, as it comes to MIS, as we talked about on the call, we've made continued progress. I talked a little bit about kind of a lot of the education platforms and things reporting in place, getting a lot of good feedback and working on the workflow. We've had, we've seen definitely great momentum. If you saw the overall number, it was an increase year over year.

Speaker 4: And so we feel like we're in a really good spot. But as we all talk about, this is a building here for us. We're going to continue to kind of really work on getting more depth into these accounts, working at getting good workflow for the patients. And that's really going to be a focus throughout 2023 and really to look at 2023 as a building block year. And not to really expect much on a quarterly basis from us on that.

Speaker 5: Got it. That's helpful. And just to follow up, it was nice to see you hit EBITDA profitability again, especially so early on in the year. And guidance with the number that you put up in the quarter implies losses over the balance of the year. Is that just conservatism?

Speaker 5: And how should we be thinking about the progression of spend and your profitability over the balance of 2023? Thanks so much.

Speaker 3: Lily, so I think you're going to see some variability with each quarter. We're really pleased with the results in the first quarter, really driven by the top line strength across our business. As I mentioned in my comments, we are seeing some operating efficiencies throughout the business, but I think a bigger part of this was strong top line.

Speaker 3: but just shift in discretionary spend, mainly RAD activity later in the year. We also are off to a great start with our clinical trial enrollment and are expecting at this point that the overall kind of spend for the year is higher than we had anticipated, which kind of gets you to the point up to the balance of the year. I think you're going to see some variability in bottom line, but to get to the full year guide.

Speaker 4: spot to really accelerate enrollment in that trial for the rest of this year and into next year.

Speaker 2: Got it. Thanks so much. Please stand by for our next question.

Speaker 2: The next question comes from Matthew O'Brien with Piper Sandler. Your line is now open. Good afternoon. Thanks for taking my questions.

Speaker 6: I mean, maybe Mike, just on the guidance side of things, you're, you know, you tip, you beat by about 6 million this quarter, you take a thing up about 5 million for the year. So a little less than the beat seems like open, student great and clips are doing great.

Speaker 6: You know, why not take things up a little bit higher? Is there something specifically you're pointing people towards to maybe seeing a little bit more pressure across the business item open to us or OUS? They really should keep in mind or you're just trying to make sure you're being conservative here in Q1 with a long way to go.

Speaker 4: I mean, you said it. QM is the long way to go. I think we're in a great spot. We had a remarkable Q1 Momentum in every aspect of the business. We feel really good about the business mad But you know, there's still three more quarters to go and so obviously when you wait the $5 million When you have that that we have a six million dollar beat But then we don't arrange earlier in the year you never know on the quarters So we're just kind of being conservative as we look out for the rest of the year But we feel really good about the numbers overall

Speaker 6: Did you say most of the growth in the quarter in MIS in the US was just because it converged, so that would get me about 16% growth? Is that number about right? And then any sense for the timing of these, sorry, is these next generation clips? Last time you guys introduced new clips, you know, that business really accelerated. So I'm just trying to get a sense for when those may come out and I'm sure they're not gonna be as big a leap as we saw recently, but just any color around that would be helpful.

Speaker 3: are working through the product development and clearance activities in 23 and would expect to launch sometime next year. Excellent. Thank you.

Speaker 2: Please stand by for our next question. The next question comes from Bill Plovanec with Can Accord. Your line is now open. Now open.

Speaker 6: Hi, my name is John on for our builds tonight. Thanks for taking our questions. Can you first start on the pain management, Tri-Mes-Link quarter? It came in a little bit lighter than we were expecting, but what were you seeing in the quarter? Was this just seasonality? And how should we think about the growth throughout the rest of the year? I think overall, we still feel really good about it. We have really strong growth. If you look at it on a year over your basis.

Speaker 4: Great, thanks. And then just on that defense, I mean, what has changed in terms of education efforts or just other mindset by the company as you try to make the most out of this year to build a good foundation for the business? Yeah, well we found it's a great question. I mean, twofold. One is, I mentioned in my comments a lot about education and training and what I mean by that is...

Speaker 4: We've really kind of pivoted and gotten feedback around. We've brought people in to really have best practices conversations, talking about how are they managing the workflow at their sites, how are they managing patient from the time they actually meet them to putting them into the hands of the surgeon to then bringing them back to the EP. What does that look like? And so we're spending a lot of time on that. And there's a lot of conversation. And the...

Speaker 4: Programs we've run so far, we've had great. The number of people that have been there have been well beyond our expectations and we expect both an EP and a surgeon to be there. So they're both learning from each other on it and the first two have gone really, really well on that front and we're going to keep doing those throughout the year. So that's number one. The next big area of focus is then to take that.

Speaker 4: and then go really deep into those accounts and make sure there's good follow up and follow through. We need to make sure that within the accounts that we're in where they've already been trained that they're actually getting, they're moving those patients through and they're establishing programs. And so our team is spending a lot of time, more time than maybe they were at the beginning when we were getting a lot of new counts set up and trained that way, really making sure they've got the workflow really well worked out so that they don't kind of get, have any hiccups in those hospitals. That's why I look at it.

Speaker 4: 2023 is going to be a nice building near for us and why we've got confidence that growth will continue in a more robust fashion in 2024.

Speaker 2: Thank you. Please stand by for our next question. Thank you.

Speaker 2: The next question comes from Marie Kibou with BTIG. Your line is now open. Hi, Mike and Angie. Congrats on a strong start to the year and thanks for taking the questions. One ask a question here on the open ablation strengths. Certainly, sounds like you're seeing nice volume growth in addition. The next question comes from Marie Kibou

Speaker 3: So into with the new Clam, just to help us understand how the rest of the year might go on that business. It's a fair question, Marie. As we think about this, you will start to see beginning in the second quarter kind of a declining contribution from just the pure effect of pricing. I'd say what's been really encouraging two data points, the last two quarters in particular, kind of the volume growth or the activity in our cardiac surgery business has been exceptional. It's been above kind of our historic rates.

Speaker 2: just lapping a year's launch that tells us we've got good confidence that this continues to be a strong growth drivers for us for the rest of the year. Okay, very good. And you made some comments about increased awareness of AtriClip near term related to the trials and is this just to sort of

Speaker 4: with an A-5 or sometimes obviously on the prophyllactic side. So it's tough for me to kind of pinpoint that exactly, but we do think that just the general conversations and awareness around better data, doing the innovative clinical work that we need to do, combined with what's happened even on the endocardial side, it all contributes towards really good awareness in this area that manages the appendage when you're undergoing cardiac surgery, makes sense and is better for the patient.

Speaker 2: Makes sense. Thanks so much. Please stand by for our next question.

Speaker 6: The next question comes from Rick Wise with Seafold. Your line is now open. I'm Mike, I Angie. This is John on for Rick today. I guess start off congrats on a really strong kind of exceptional sequentially accelerating quarter here. I wanted to get a sense. Did you feel like from the fourth quarter there was any kind of... that you're looking for? Have you ever felt it? Have you ever felt it? Have you ever felt it? Have you ever felt it? Have you ever felt it? Have you ever felt it? Have you ever felt it? Have you ever felt it?

Speaker 4: and staffing issues. Those issues still remain, but they're much better at managing them so that they can manage both the OR time, the ICU time, et cetera. And so, no backlogs per se. It's really just robust volumes throughout the quarter. And we're going into new markets too. So, for us, there's so much penetration gain to have. We're not going to necessarily see backlogged the way that you're talking about from that standpoint.

Speaker 4: Thanks, that's helpful. And just the second question here, can you kind of frame the international business setup for me for 2023? It seems like the clip had a really strong quarter OUS, and I'm just wondering how you're thinking about it as we look ahead.

Speaker 3: We were really pleased, John , with the results in our international business. I think across the franchise, as you saw, really good growth and good activity. It's probably the most stable. We've seen the operating environment broadly outside of the U.S., which I think was another contribution to be able to achieve the numbers that they did. I think the penetration numbers are so significantly low.

Speaker 6: Great. Thanks for taking my questions. Please stand by for our next question. The next question comes from Mike, Mattson with Needle. Your line is now open. Hi. This is Chios Tafon from Mike. Could you maybe talk a little bit about pre-cash flow usage? I guess you know what was it in the quarter and how close to is?

Speaker 3: Are you guys, you know, to become a free cash flow positive? Yes, so we burned a little over 11 million. All the first quarter is typically our highest in terms of an overall cash. For a lot of that has to do with seasonality of paying out variable comp and then stock besting those are kind of the two big drivers typically that you see in the first quarter.

Speaker 3: Given the gain or the settlement that we had from the legal activity, that was a bit of an inflow, $4 million in terms of magnitude. That's a bit of an offset to the overall burn. And relative to your question about kind of the timing when we're, you know, pre-cash flow positive, we're not ready to give that kind of guidance quite yet. We're focused on delivering a profitable year and profitable quarters sustainably and would expect that, you know, in the near term to be able to update on that. Okay, thank you. Thank you. And then maybe, I guess on cryosphere.

Speaker 6: You know, looking into the future, it's there maybe a possibility to kind of, you know, iterate or I guess innovate on design. You know, kind of launch a cry through 2.0 similar to what you guys have done with the with the clip. And I guess obviously the second question that that would be.

Speaker 7: Is there a higher price involved with that if that were to be the case?

Speaker 4: Yeah, I mean right now we are anticipating a release of a new cryo probe that will have some advancements in it for sure based on feedback we've gotten from our customers. It might we're not sure yet about the kind of the price increase. The problem will have the same kind of price, it won't have the same kind of price increase that we have historically seen with the clip technology from that standpoint. But it is some new innovations in it to make it just easier to use for the surgeons.

Speaker 4: when they're applying it, and we do anticipate that that'll have obviously a positive impact overall. But really, the biggest impact is going to be as we move, we're still so underpentrated, as we move into strenotomy in other areas, that's probably going to, you're going to see, the bigger impact and jump is going to be more market expansion, which we anticipate in 2024 coming from the strenotomy area. Yeah, absolutely, okay, that makes sense. And then if I could just squeeze in another quick one.

and a half million a quarter and that's roughly what contributed in the first quarter within the USMIM revenue.

Okay, perfect. Thank you very much for taking our questions.

Thank you. Please stand by for our last question. The last question comes from Sue Reg Kila with Oppenheimer. Your line is now open. Mike, Angie, can you hear me all right? We can. Perfect. Hey, so Mike, a lot of questions have been asked. First, let me ask on LEAPs, Mike. Will the study split out ischemic stroke versus arterial embolism, Mike? And the reason I ask is, you know, the incident rate of events is, at least literature says, is quite low.

and a large contributor to the strokes is carotid stenosis. Please correct me if I'm wrong. The primary and secondary efficacy endpoint is tying to first ischemic or embolic event. So I'm curious if you all are gonna give that split or is it gonna be lumped together in the trial?

Well, we're obviously going to be tracking it in terms of both separately how we're going to actually disclose it externally and things like that. I think probably to be determined, depending on what the data comes back and shows. But the combination is what the overall piece is going to look like and we're, we feel very good about being able to meet those endpoints in the trial over the period of time.

Fair enough. Mike, a cryosphere obviously has been a strong line item for you guys. Do you envision any potential competition? Because this comes up in client discussion that I'm curious to get to your perspective. You know, Pachera by the sciences is Iovera is being talked up and I'm curious to get to your perspective if that potentially could be competition. And if so, how do you deal with it, especially in pricing? Thank you for taking my questions. Yeah, it's a great question. I mean, any one of our businesses we anticipate that people are going to want to come in and competing against is whether it's the craft sphere, the clip.

come into the market, everybody benefits. Literally everybody benefits. The market does grow and both parties will continue to obviously expand at that point. The market will expand. There'll be more awareness that is out there. And so yes, I do anticipate that somebody will come into this area. As it relates very specifically to Iovera from Basira, it's a technology that today is being used for new replacements.

And in that area, it's a device that is really done with similar gas, but really different delivery type mechanism that would be difficult to do in the areas that we're doing today. And it's really targeted at that knee replacement area as far as I understand. But again, we anticipate that somebody is going to come into the market at some point and are ready for that overall.

I show no further questions at this time. I would now like to turn the call back to Mike Carroll for closing remarks.

Great. Again, thank you everybody for joining us today after a great quarter here at H3CIR and we look forward to seeing you after the Q2 call. Have a wonderful evening. Bye now.