Q2 2023 Shockwave Medical Inc Earnings Call
Good afternoon, and welcome to Shockwave second quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. We will be facilitating a question and answer session towards the end of today's call.
As a reminder, this call's being recorded for replay purposes, I would now like to turn the call over to your host Debbie Kaster, Vice President of Investor Relations at Shockwave for a few introductory comments.
Thank you all for participating in today's call joining me today from Shockwave Medical I got Godshall, President and Chief Executive Officer is exactly Rice, President and Chief Commercial Officer, and Dan Puckett, Chief Financial Officer.
Earlier today Shockwave released financial results for the quarter ended June 30th 2023.
A copy of the press release is available on chocolate website.
Before we begin I would like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any statements contained in this call other than statements of historical fact are forward looking statements.
All forward looking statements, including without limitation statements relating to our sales and operating trends business and hiring prospects.
And revenue expectations.
We can push that proposal future product development and approval and the integration of Neovasc and its technologies into our business are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties, including the impact of macroeconomic conditions and global events, such as the COVID-19 pandemic that could cause actual results or events to material to materially differ from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements.
For a list and description of the risks there.
And uncertainties associated with our business. Please refer to the risk factors section of our annual report on Form 10-K on file with the SEC.
Available on Edgar and in our other reports filed periodically with the SEC.
Shockwave disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements whether because.
[noise] of new information future events or otherwise.
This conference call contains time sensitive information and is accurate only as of the live broadcast today August seven 2023.
With that I'll turn the call over to Doug.
Thanks Debbie.
Good afternoon, everyone and thank you for taking the time to join US to review shockwaves results for the second quarter of 2023.
Our businesses continue to experience solid growth across the board in the U S and internationally in both peripheral and coronary franchises.
Second quarter revenues of $180 2 million.
Represented a 49% increase from the second quarter of 2022.
We are pleased with the continued acceptance and penetration of our products and are particularly encouraged by the traction we have seen with our two newly released released products. They all six peripheral product in the U S and C to plus coronary product internationally.
In both cases, the enhanced capabilities of these new designs have resonated with customers are a testament to the ability of our organization to understand customer needs and work together efficiently to design and launch products that successfully address those needs.
This past quarter, we closed our acquisition in your basket and we quickly got to work integrating the reducer product and team into Shockwave.
The lean resource profile and creative financing structure. It in your basket made for a complex integration process and it was a heavy workload for our team.
But they did a stellar job first such project together and prevent proved they were up to the top.
Over the last few months, we have begun to infuse additional resources into the Reducer program, which we're confident will help up regulate performance and execution.
Much of the future value of producer hinges on clinical data generation, particularly because there are two studies we.
We have overhauled the approach to clinical operations that are adding resources to existing to the existing team.
Which should lead to a tightly executed study asked me.
Become accustomed to a chocolate.
Our principal focus right now will be to activate more sites since having more shots on goal is a critical component of enrollment.
As a reminder, because here too is a sham controlled double blind randomized <unk> trial to evaluate the reducer system for safety and effectiveness in patients with refractory angina due to constructive coronary disease that is not amenable to conventional revascularization.
The study will include approximately 380 patients and up to 50 centers.
Primary endpoint is change in exercise tolerance testing done.
Now that we have begun to get our arms around the clinical and regulatory program.
We're projecting U S approval in 2027.
Sticking with the subject of the reducer for the moment the.
The energy we saw around this product at Euro PCR was rather remarkable as evidenced by a standing room only symposium in multiple very well attended training sessions.
The strong global interest in reducer as its even more enthusiastic about this acquisition and further increases our confidence the reducer is well positioned to address a significant unmet need and has great potential to become a meaningful contributor to our business once because year two data is available.
Europe PCR was a fantastic conference for us across the board.
Many of our customers referred to it as the Shockwave Congress.
We had our official international launch at <unk>, plus and at the same time, we celebrated the five year anniversary of our initial commercial launch of coronary IV alopecia or 2018.
The IV all presentations at PCR consistently highlighted the outcomes achieved with LVL in real world environments, including data presented from the Lilly replica registries from France, and Spain, respectively.
Together included almost 1000 patients and strongly reinforced the safety and efficacy of coronary Ivy Hill.
It is remarkable that in just five years, we have transition from IV, all being a relative unknown to becoming a standard of care.
The fall will include several strong conferences for Shockwave and we are particularly looking forward to T. T. In a tumor in San Francisco, where we have many events, including several symposia more real world evidence and one of our favorite events. The top shocks that petition, which will focus on best practices with IV L, India centric and audio of calcium.
We had roughly 100 submissions from our global customers this year.
And of course, we're looking forward to the U S launch of <unk>, plus a T C T and to our Investor Innovation day on October 23rd.
Our ideal clinical work continues to ramp up after a quiet 2022 and last quarter. We were pleased to announce the first enrollment in our groundbreaking empower study, which is the first of its kind all female.
Study assessing the performance of IV L and a population that is almost always under represented in cardiovascular research.
Ah BTT Beachy case study is enrolling at a healthy pace and we anticipate the last patient will be enrolled by the middle of 2024.
We have a full pipeline of other studies in the very near future, which we will discuss at our innovation day.
Overall, our investment in IV L clinical studies will be roughly 50% higher in the second half of this year and it was at the same period last year regarding U S. Reimbursement, we continue to make great progress and are very encouraged by how we see CMS transitioning coronary ABL from temporary innovation programs like the untapped.
So a more permanent reimbursement structures such as those.
As those programs conclude.
As you may recall, the duration of the N type program for coronary that'd be almost two years and is set to expire on September 30 at the end of CNS This fiscal year.
Consistent with the with their procedures CMS to analyze the relevant data collected on coronary that'd be all under the untapped program in order to determine how to best structure and pay for coronary Ivy Hill going forward.
In April CMS proposed the creating proposed creating three new M. S. DRG for coronary Ivy Hill.
The most appropriate long term structure coming out of event up.
We were extremely pleased to see that the final inpatient rule issued last week confirmed accretion of the three new DRG eastern corner at Yale.
This is a watershed event because this is the first time CMS has created new D argued in the field of PCI in over 20 years.
We think this is good for the field of interventional cardiology and for patients suffering from complex calcified coronary artery disease.
The new DRG is capture the use of coronary ivy ill, whether it's with or without a stack. The vast majority of coronary that'd be all cases involved the stent implantation.
So I'd like to focus on those DRG, which will pay on average.
$21785 or $228987, if major complications or comorbidities are present.
For comparison, the other pizza ideologies involving stent implantation without ideal.
$12767 and $20187 respectively.
So in summary, effective October 1st 2023 payments for coronary Ivy Hill, and the new tiers DRG structure will be approximately $8000 more than the non Ivy L. PCI procedures and $4000 more than was paid by the end of that program.
We believe this will help alleviate economic pressures on hospitals and enable physicians to make the best clinical decisions for their patients.
And the hospital outpatient front the transitional pass through program will continue through June 30 of 2024.
And while CMS has not given any early signs of how they plan to transition from temporary or permanent we remain very optimistic about our prospects of lending in the highest APC.
As we've seen in the hospital inpatient side with the conclusion of the coronary IVF Amtrak CMS, followed that process and we remain confident in what we're seeing from the data.
To date additional renewable Mauritian for physicians professional fees or our views have not been available for any of our therapies.
We are excited to report that this will change as of January 20th January 1st 124, when a new category one CPT code will go into effect.
We will not know the amount of the physicians will receive starting in 2024 until the final calendar year 2024 physician fee schedule because it released in November .
We're pleased with CMS is 'twenty 'twenty four graphs schedule issued last month, which proposed up to 30% additional remuneration for physicians when coronary Ivy Hill has performed.
Turning now to operations, we continue to make significant investments to support and sustain our growth.
We are accelerating our investment in Costa Rica, where we have a strong leadership team in place and have hired over 15. Please many of whom are spending significant time in Santa Clara for training to ensure that the new site starts operating at a high level from day one.
Based on our global momentum and pipeline, we believe we will need even more capacity in the future than our combined Santa Clara in Costa Rica facilities will be able to provide.
So we have exercised an option for a second phase in Costa Rica earlier than we had initially planned which will nearly triple our clean room space there by 2025.
Our strategy of using Kusturica as our primary production location in Santa Clara is our innovation center is coming to fruition as we had hoped.
Our intention is to develop new designs and therapies in Santa Clara pilot them to optimize processes and then transfer most of them to Costa Rica in order to make room for the next wave of innovations.
Next year, we are anticipating having having seven products in pilot production, which is a considerable step up and would once again be bus out of space. So we have also exercised an option on a fourth building in Santa Clara, which we will occupy towards the middle of next year.
We are fortunate that we have the bandwidth and financial wherewithal to expand our commercial footprint continue ramping our R&D and clinical activities forward to invest in high quality margin expanding production facility and layer in a very promise promising future growth stimulus and reducer.
These investments should bear fruit for years to come.
Yeah.
We now anticipate topline revenue in the range of $725 million to $730 million for the full year of 2023.
Representing growth of 48% to 49% from 2022.
Number includes less than $5 million of reducer sales for the full year of 2023.
With that I will turn the call over to Isaac to provide more detail on the commercial front.
Was it.
Thank you Doug I.
I am pleased with the team's efforts and results in Q2, our U S. Peripheral business grew 13% sequentially from Q1, and 65% compared to the prior year driven by increased usage across all sizes of catheters and strength from our newly launched L. Six catheter.
We were pleased to be able to showcase the L. Six at several conferences, including multiple life cases in the quarter, which generated a lot of energy and enthusiasm.
Customers love the device and the power profile about six and see it as the ideal treatment for iliac and large common femoral arteries, our customers believe El six provides improved angiographic results due to larger sizes empower profile.
During the quarter, we launched IL, six and more than half of our peripheral accounts and we are seeing solid reorder patterns were also encourage that approximately two thirds of the El Cig sales were in the 910 and 12 millimeter sizes. These are cases that would likely have not been IV al cases, with the eight millimeter M five plus.
We plan to get the vast majority of our remaining peripheral customers lost around <unk> six in Q3.
U S coronary revenue grew 9% sequentially from Q1, and 37% compared to the prior year driven primarily by increased penetration in our existing accounts as we continue to see healthy same store sales growth.
Nearly all of our revenue in Q2 came from accounts that were opened in prior quarters, while new account growth has slowed.
That's per account are increasing and we're seeing solid growth in high volume accounts.
We are on plan.
To grow the U S sales force to over 110 territories by the end of this year and we'll have about two clinical specialists per territory.
With a growing sales team we are looking forward to the launch of C to plus in Q4, coupled with the tailwind of the improved inpatient reimbursement starting in October and the additional physician fee for coronary IV all starting in January .
On the international side, we posted record revenue that was up 20% from last quarter and was over 70% higher than a year ago quarter.
The headline of the quarter wasn't was Germany, where the increased reimbursement that took effect in January drove a doubling of coronary IV all revenue from a year ago.
We expanded from six to 10 territories in Germany. During Q2 of 2023 and expect to add more salespeople in the second half of the year to support increased demand.
In Japan the team posted great results in Q2, the revenue in Q2 more than doubled from Q1 and the momentum is increasing and the current Q3. We are encouraged by the physician response and are exceeding our expectations for penetration in the lost accounts, we expect that Japan will become a significant contributor to our group global revenue in the coming years.
We were pleased to see peripheral sales account for nearly 20% of our international sales in Q2, we've been adding head count and focus to our peripheral efforts outside the U S and have expanded peripheral marketing programs and our cable network in Europe .
It is nice to see the hard work of the team payoff and bolster our non U S peripheral business.
We also transition from distributor to direct sales in Canada, Spain, and Portugal during the second quarter, our distributors in those countries were good partners, but as we have typically seen our direct teams can drive increased penetration due to their ability to focus exclusively on shockwave products. While these changes caused some small disruptions in revenue and an increase in operating expense, we have seen that the investment quick.
We generated higher penetration and gross margin more than offsetting the increased costs we.
We will transition to a direct sales model in Italy in Q4 this year.
On the reducer side, we made good progress to rationalize the distribution network with the intent to focus resources on countries and centers that can both afford the product and build a solid practice treating underserved refractory angina patients.
While the revenue contribution of reducer will be relatively small this year, we are more up.
Optimistic than ever that we can go to the sustained business that said, we will do so methodically and are not in a hurry to generate revenue.
We prefer at this point to continue building clinical evidence and partnering with centers of excellence in those countries to learn how to establish patient care pathways and achieved excellent outcomes for those patients.
With that I will turn the call to Dan to review the financials. Thank you Isaac good afternoon, everyone. Shockwave Medical's revenue for the second quarter ended June 32023 was $180 2 million or 49% increase from $120 7 million in the second quarter of 2022.
Revenue was $144 9 million in the second quarter of 2023, an increase of 45% from $100 1 million in the second quarter of 2022.
Coronary products contributed $99 million U S revenue in the second quarter of 2023, an increase of 37% from $72 1 million in the second quarter of 2022.
Revenue from our peripheral products was $45 7 million in the second quarter of 2023, an increase of 65% from 27 point.
$7 million in the second quarter of 2022.
U S generated revenues of <unk> 2 million in the second quarter of 2023 the growth in U S revenue during the quarter reflects increased utilization of existing accounts, new account adoption of IVF and continued sales force expansion.
International revenue was $35 2 million in the second quarter of 2023, representing a 70% increase from $20 7 million in the second quarter of 2020 to coordinate product contributed $26 7 million to international revenue in the second quarter of 2023, an increase of 70% from $15 7 million in the second.
2022.
International revenue from our peripheral products was $6 6 million in the second quarter of 2023, an increase of 57% from four point.
2 million in the second quarter of 2022.
Revenue from our reducer product, which we acquired through the Neovasc acquisition that closed in April of this year contributed $1 2 million to international revenue in the second quarter of 2023 Jenny.
Generators contributed $7 million to international revenue in the second quarter of 2023.
The increase in international revenue over the prior year period reflects continued geographic expansion.
Turning to China, and Japan, the increased productivity of our direct selling teams in Europe , and the strength of coronary sales in Germany.
Looking at product lines, our peripheral products Shockwave and five.
Chuck with Empire, plus Shockwave as sport and shop with all six accounted for $52 3 million in total revenue in the second quarter of 2023 compared to $31 9 million in the second quarter of 2022.
64% increase.
Our coronary products Shockwave situ Shockwave C T plus I can't afford $125 8 million of total revenue in the second quarter of 2023 compared to 87 8 million in the second quarter of 2022, representing a 43% increase.
Revenues from our reducer product accounted for $1 2 million of total revenue in the second quarter of 2023.
The sales of generators contributed $9 million in revenue in the second quarter of 2023.
Gross profit for the second quarter of 2023 was $155 7 million compared to $104 million in the second quarter of 2022.
Gross margin was 86, 4% for the second quarter, 2023, which was slightly above the gross margin of 86, 1% for the second quarter of 2022.
Total operating expenses for the second quarter of 2023, $123 3 million.
66% increase from $74 4 million in the second quarter of 2022.
Sales and marketing expenses for the second quarter of 2023 were $56 7 million compared to $40 5 million in the second quarter of 2022.
The increase was primarily driven by sales force expansion.
R&D expenses for the second quarter of 2023, with $36 8 million compared to $20 8 million in the second quarter of 2022.
The increase was primarily driven by head count growth heart clinical related expenses and facility expansion to support R&D.
General and administrative expenses for the second quarter of 2023, or $29 7 million compared to $13 2 million in the second quarter of 2022.
The increase was primarily driven by higher head count to support the growth of the business and legal and other acquisition related expenses associated with the acquisition of Neovasc.
We do not expect that the full year operating expense from new basketball exceed our prior full year forecast of approximately 32 million.
Right the higher than expected upfront non recurring spend in Q2 2023.
We expect to continue to make significant investments to support and sustain our growth and anticipate full year 2023 operating margin in the range of 20% to 22%.
Excluding meal baskets are operating margin range is expected to be 24% to 26%.
Net income for the second quarter 2023 was $28 9 million compared to net income of $25 6 million in the second quarter of 2022.
Basic net income per share for the period was 79 cents diluted net income per share for the period was 76 cents. We ended the second quarter of 2023 with $258 6 million in cash cash equivalents and short term investments at this point I'd like to turn the call back to Doug for closing comments.
Thank you Dan and thank you all for joining US today, we had a great quarter at Shockwave as we continued to execute and grow our existing businesses. While at the same time painting, an exciting path for our future.
With that I will open the call to questions.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Bill <unk> with Canaccord Genuity. Please proceed with your question.
Great. Thanks for taking my questions.
Doug I was wondering if you could help US understand just you gave us some general timelines, but maybe some processing key dates as we look at the ops.
Reimbursement and kind of you know how that kind of the next thing to look out for there and then just any other color on the Investor day are at T. C. T kind of major themes or topics you may cover thanks.
Sure and I'll Uh Huh, Thanks, Bill and I'll Tag team with Rob Fletcher who is also on the call are meant to I think you guys are all familiar with now.
So O P. P. S. There will be a final rule out this fall.
We are not anticipating that Ivy L will.
There is there will be any change you mentioned of IV Ellen and the final rule.
We think it's more likely.
Well.
We will we will see.
Something in the in the proposed rule next summer.
So that we.
We'd go from transitional pass through.
Sunsetting and at the end of June and then early in July we'd see a.
How we would map to what we believe will be APC 50 194.
Starting January of 2020.
And Rob I don't know if you want to.
Add color on that.
Well said the next thing well from CMS felt that we'll see as Doug stated was on November 1st when the final PPS for calendar year 2024 on approximately the first.
And then for Investor day.
We.
We'll see.
Obviously.
The spectrum of our pipeline.
Peripheral coronary and structural heart.
And.
And the reducer.
Yeah.
So you should see several new products that we've not we've not talked about previously.
And.
Looking forward to two folks participation.
We're excited about our pipeline and our customers are incredibly excited about our pipeline.
And hopefully our investors are too once they get a glimpse of it it will will truncate it to things that we.
We think are appropriate to share at this time, we have.
Some very very interesting things under the cupboard, but but no need to.
Preview things for our competition that we wouldn't be launching until.
Sort of after 2026, so so we're we're still going to keep it to a reasonably near term pipeline.
Other things other than things that have already been disclosed previously such as our structural heart.
Platform.
Great. Thanks, and then on guidance just what are you contemplating in the high end and the low end of that range that you're giving and then I'm just I dunno, how if damn once you say how many one time cost kind of we saw in that quarter that wont be reproduced kind of in Q2, and Q3 and operating and thanks for taking my questions.
And we'll see it this week at our conference.
So Dan we can go back and forth.
As we look to the back end of this year.
Obviously, you've got.
As we have expanded our footprint.
And are you.
Over 1500, Cath labs in the U S. And then obviously lots of catalogs internationally.
It will.
We feel seasonality in the summer.
In the northern hemisphere as as other companies do.
<unk>.
And as Isaac Pellucid dated we are continuing to add accounts, but.
And not at the same clip because we did a couple of years ago obvious sort of obviously so we'll.
We see the year progressing with.
Substantial growth in the back half weighted more in the fourth quarter.
And <unk>.
And Dan I don't know if you add.
Sure sure. It was about 6 million nonrecurring for Neovasc and that was mainly change in control.
Severance.
Yeah.
Alright, Thanks Bill.
Yeah.
Our next question is from Travis Steed with Bank of America. Please proceed with your question.
Just wanted to follow up on the margin question about the 6 million nonrecurring because that in and G&A because I was going to ask about the 10 million step up in G&A and then at the op margin guidance for the year.
To be clear it looks like it was at 22% to 23% at the end of the year and now you're guiding to 20% to 22% you've got neovasc in there just want to see what else changed in the full year op margin guide versus three months ago.
And and how to think about margin expansion kind of beyond that you know in 24, if it should be closer to a couple of hundred basis points of margin expansion or are not you can continue to expand margins. Thanks for the question.
Sure. So most of that 6 million nonrecurring was in G&A.
We're still expecting about 32 million and the Opex for reducer as I noted earlier. It was most of the we had a bigger chunk didn't expect in Q2. So if you looked at the combined margin. It's about 18%. If we look just at the base business the operating margins 25, 6%.
So a slight improvement over Q1, even with our kind of pick up in investments that Doug alluded to.
As far as this year, we did give in the past we had given like 'twenty six 'twenty, 7% without neovasc. So we've knocked that down to 24 to 26.
We're feeling very good about some R&D programs. So the decrease is really kind of driven by probably a little more spend in R&D programs that are in more spending clinical we're accelerating some costa rica activities to get that plant up and running which will help our margin down the road and that's hitting R&D right now and we all.
He used to footprint so.
We are we've always said, where we're going to spend what we need to spend to grow the business near and long term. So that's where you get a little bit of of of 100 200 basis points off of potential hit to the margin from what we said three months ago, but I think it's a it's smart money.
Longer term, we expect you know.
Like I said this is a big investment year 'twenty five 'twenty, six well will be back up and it will absorb and get some scale and be back to where we've kind of always guided which was the upper twenty's.
Okay, Great and then in dog on a six month gap scenario just curious if if your customers are talking about that yet or it's too early and your willingness to kind of help customers through that and and how you'd think about the impact on on kind of the overall revenue if any at all thanks. Thanks a lot.
Yeah, no customers are just now becoming aware of the inpatient reimbursement.
But well barely aware of this.
Of the reimbursement reimbursement because it is not.
It's not even coming into fruition.
Here for a few months so that's.
That'll be the next order of business is making sure. They are aware of that then comes a physician.
The physician fees, which will be finalized in the fall and then go into effect in January .
The outpatient.
The transition from <unk> to permanent is so far in the future that no thats not really getting.
Getting any airtime and and at this juncture, where as we've said before we think the.
Assuming the.
The transition is from from that July to till till January we're not really anticipating.
Yeah.
And impact on our business you've got the other two very favorable outcomes on the reimbursement side between physicians and outpatient physician fee in outpatient inpatient.
And there's so much.
Our momentum clinical momentum behind our device.
We're not anticipating.
Change in utilization rates.
Great. Thanks, a lot.
Our next question is from Adam Nadir with Piper Sandler. Please proceed with your question.
Hi, good afternoon, and thank you for taking the questions.
I wanted to start with one on the topline guidance.
You know healthy guidance raised here I think $17 5 million at the midpoint.
It could be Q2 by $6 million in change. So maybe just talk about kind of what's giving the confidence to raise by.
The larger amounts are you able to kind of bridge us with specific components in that guidance increase and.
What's being contemplated for reducer.
Reducer in and that updated number. Thank you I had a follow up.
Yeah.
Maybe ill just.
Just chime in a little bit on sort of what are you seeing in the market that gives us confidence on reducer, where as I as we said on our last call in aggregate, it's going to be less than $5 million for the year. We did one two last quarter.
We're very focused on understanding the model how you impact referrals for these patients.
And we're focusing on a small handful of countries.
As we transition from from the former Neovasc team many of them will.
Who will stay with us on the commercial side and others.
So we'll be adding to it.
Some countries.
But but the focus is not on.
Taken out 1.2, and making it to the focus is how do we take that commercial experience. So that we are poised.
Once we have <unk> two data.
<unk>, which we think will be helpful well necessary for U S approval, but incredibly helpful for driving global adoption.
We want to really understand the model well, which is what we're working on now.
And then I think maybe a bit of a what you're seeing in the field.
Yeah sure.
I think if you look at what we what we see for revenue in the second half and the increased guidance.
We're.
Q3 will be seasonal as it is for everybody I will still be able to grow through that but probably modest growth quarter.
Quarter on quarter in Q3 versus Q2, particularly with the.
The international business really really being much more seasonal.
In Q3, and then as we go into Q4.
Have Japan, we expect obviously quarter on quarter growth throughout the year, but you're getting a bigger contribution from Japan.
In Q4, and we're pleased with what we saw in Japan in Q2.
Impaired to what our expectations were we will have the U S coronary business in particular with a new product launch of C to plus.
In the fourth quarter and that'll be coupled with the you know the story for our customers on the inpatient reimbursement that's taken effect in October and then generally you know with.
With the international businesses, we've seen some really strong performance.
This year, we'll have.
It's a nice tailwind in Germany, that's going to continue to build a will have direct selling organizations now and.
Spain, and Canada, which would be nice contributors incrementally as they go and then we'll have Italy going direct in Q4. So we think there is you know a nice nice momentum going into the second half and that kind of builds on itself as we come out of the seasonal Q3 with the growth drivers are mentioned in Q4.
Yeah.
Any color and where.
We also think you know we also.
You have two additional stimuli and in the U S. In the fourth quarter with a C to plus launch and then inpatient reimbursement.
Yes.
So we're and I think where we continue to see building.
Mentum and benefit from.
The physician education investments, we've done this year, which is quite substantial relative to prior years and.
The work we've done to continue building out our sales and clinical specialist team. So so that that can continue.
Seniors to bear fruit bore fruit last quarter, it will bear fruit for the through the end of this year.
Very helpful color. Thank you for that I guess, just one quick clarification, so in the previous guidance range.
Are you, assuming roughly $5 million for reducer I, just I guess I want to understand that or has that added into the updated guidance. This go round.
And then I had a follow up.
Yeah, we so beginning of the year obviously.
No reducer because we.
It didn't have it [laughter], but but as we look.
And our last commentary producer was incorporated into our expectations not not everybody's model on the street incorporated neovasc into the either the spend or the revenue. So there's a little bit of a mixed bag on the street.
But we did include it.
Okay perfect. Thank you for that and then for the follow up.
Doug both you and <unk> touched on it in your last response, but see two plus.
Just was hoping to get a little bit more color in terms of the U S launch.
In terms of pricing strategy.
Hum.
How quickly will that rollout and I guess, how much of a potential growth lever is this war for that business. Thanks for taking the questions.
Yeah go ahead Isaac.
Sure.
Yeah. Good question. So in the U S. We will we'll bring it will bring C to plus with price parity.
On C too so at the same price point.
The launch strategy is really coupling the message of the improvements that you can get with C to plus compared to see too.
And then really you know we feel very good about those based on what we've seen with the launch and in the international markets. A couple of that message I went with an in service and the reimbursement message for inpatient inpatient changed in October one so we'll launch a kind of a typical you know we've got more territory.
Everything we have in the past so I expect this launch will go.
More quickly than prior launches the product C to plus compared to see to it it's reasonably simple to explain you could basically get 50% more power more pulses.
And Oh by the way.
You're now getting this incremental reimbursement did not exist before on the inpatient side of your business.
And what kind of do a yeah.
We're still.
We're still quantifying the specific tactics, but I expect the launch to go reasonably quickly and kind of roll it up in the next probably two quarters, so kind of be through most of the launch by the end of Q1 of 'twenty four.
And part of the reason for that is part of the reason for that is we need to.
As we launched two products a year, we need to we need the teams you know kind of clearing a launch in roughly six months. So they can get ready for the next launch.
Thanks.
Our next question is from Michael Pollack with Wolfe with Wolfe Research. Please proceed with your question.
I will continue the threat on C to plus may be asked to ask a very specific question.
From the Europe .
Launch, thus far the analogy there kind of what have you seen in.
Same store sales impact from C to plus kind of how much more productive does it make these accounts would you hazard a number or a framework.
That's a good question I don't have a good number for you Matt right.
At this moment I think.
We do think there is any incremental uptick it's a little hard to divorce that from just the base momentum. If we you didn't put C to plus and we were still growing same store sales at a pretty good clip.
At least they found we can see the same store sales in our direct selling.
Markets, but we do think there as you know from a anecdotal perspective.
The.
And when when do you pull IV L versus something else or take your shot without using IV al and I think C to plus with the additional pulses addresses some of those some of those anecdotal question marks that customers have about when to use IV L and that's longer more diffuse lesions, where they they don't want to they want to treat the whole lesion with one.
Catheter, we think she two pluses a benefit for that in and that's what our customers are telling us as we've launched internationally.
And then also for nodular, an eccentric calcium and we've done a lot of good work.
On the publication of clinical trial and publication standpoint on that this year educating on how IV all works and those really difficult nodular eccentric coronary lesions.
The additional pulses help help that that helped that story and help the results in those lesions even more so I think kind of to both of those aspects are where our customers are telling us theyre getting better results and they feel more comfortable pulling I V. L. A with the Hunter Twentyfold catheter then the Adas bowls catheter.
For the follow up question on Reducer and maybe my note on this was sufficiently squishy such that that's the the.
The answer, but I had a wide range for a potential U S approval 'twenty 'twenty five 'twenty 'twenty six 'twenty 'twenty seven I heard on the prepared remarks, Doug 2027 hours as the targets so kind of.
You know.
To the extent that was a range in your mind as well before why the back end of the range. What have you learned that kind of once you to position a little more runway there before it could come to market.
Yes.
Neovasc had been.
Couple of thing, saying 2025.
And when we inherited it we.
And Harry a trial that had really slowed down to a crawl at best which we are now.
Switching from crawl to walk and then probably run next year.
And so we.
We werent sure when we bought it how quickly we'd be able to stimulate.
Enrollments, so we were cautious about sort of being.
Leaning into heavily on on when we ask how long are we expecting the trial to take to enroll now that now that we understand it it's.
It's a fascinating sophisticated complex trial in terms of enrollment and so we think we would have a significant impact but there is there is sort of only so much we can do with <unk>.
From where we stand today and so we thought it better to make sure everybody understands that it's going to take a bit of time to enroll.
And and we didn't want to have have model is still sort of landing in 2025 approval.
Because we don't think thats.
That's.
At all likely.
And hard to even imagine how we could get enrollment done fast enough to get a 2025 approvals.
There are on the back end there are things that might offer some.
Upside on approval timelines like do you or do you not have a panel, but we think it's save us to just assume in 2027 approval at this juncture.
Thank you so much.
Our next question comes from Larry Big Olson with Wells Fargo. Please proceed with your question.
Good afternoon, and thanks for taking the question a couple of quick ones for me, Doug The Investor Day T. C. T is there a plan to give any kind of long term financial guidance or any kind of anything directional.
We will let you know when we get there like we're calling it an innovation day, we want to focus on on technology.
But we appreciate that a lot of it had a lot of these.
Investor days that that folks are looking for a a bit of a view into the future. So we will.
We will be thoughtful about the about what we share for for sort of future financial outlook.
That's helpful and I was also surprised by the the reducer 'twenty 'twenty seven data I wanted to just understand what that assumes Doug.
So Gregg Stone said they had 42 patients enrolled last year T. C T. They hope to complete by the end of 'twenty three enrollment it's an adaptive design. So what are you. Assuming you know is the first interim analysis at 380, and you can roll up to 760, just to help us understand kind of what you're assuming to get to.
That Ah 2027 U S approval. Thanks.
Yeah, So you've got to get.
One of the.
Ways that the trial had been characterized in the past was focusing on enrollment what really matters is randomization. So they did they didnt have 40, some odd randomized and thats, what we need 380 randomized.
And so where are where we stand today with sort of less less than half of the sites.
Well frankly fewer than 20 had been.
<unk> initiated had been activated when we bought the company out of the.
Out of the 50 that will eventually get to so we're now adding sites activating sites.
Head of at a better clip.
And and yet enrollment you got to get the site activated for the further randomization is happening at.
Et cetera, so we're anticipating that the final randomized patients will will be sometime in 2025.
Probably back half of 2025 based on on what we're seeing in the trajectory so far.
Which then you got to follow the patients submit et cetera, which is how we kind of realistically landed into.
In 2027.
Got it got it I'll just add onto that Larry it.
Where we've landed is not.
Frankly is about right, where we thought we would land as we looked at this and then peeled it back after the acquisition.
We always sort of have a what we thought were overly rosy and optimistic expectations from previous management on that trial enrollment.
We were we were hopeful that they were right, but as we've integrated and spent the last three four months.
Getting our arms around it and put in new plants in place. It's it's Atlanta about where we thought it would so that's sort of the bid ask I think is what what did previous management tank and what is that realistic compared to what what we think now.
Okay. Thank you.
Our next question is from Imran Safar with Deutsche Bank. Please proceed with your question.
Oh, Hey, good afternoon. Thank you very much for taking my question I wanted to focus on the international business first it sounds like the watches.
And also the big three O U S markets, China, Japan, and Germany are all going quite.
Quite well I was just wondering if you can talk about the relative <unk>.
<unk> growth contribution from those three geographies in the back half and especially in 2024.
We anticipate.
Okay go ahead.
Yeah, I mean, we probably would say we anticipate that all going to continue to be healthy growth.
If you know from a.
From a dollar growth perspective.
I haven't really scrubbed down 2024, yet, but if you.
Just based on what and I you know, we're two quarters in and in Japan. So that's that's pretty early.
And we are two quarters into the improved reimbursement situation in Germany, which is already having a substantial effect on.
On revenue growth compared to the last four years that we've had in Germany. So I.
I would expect that as we go through this year and into next year Youre going to see kind of largest dollar growth coming out of Japan, and then Germany and China.
Little early to tell yet for Germany, but Germany is looking strong right now.
Okay, and then on this topic of relative growth rates. It looks like the street is looking for pretty similar growth in 2024 for coronary and peripheral sort of the mid twenties.
Is that is that consistent with your thinking for next year.
We've not.
We certainly expect next year to be a very strong growth here, but we've not characterize what we think.
Do we think top line is going to be so I think I'll I'll shy away from that until we.
Until we have a chance to put a number out there.
Fair enough. Thank you very much.
Our next question is from Mike Matson with Needham <unk> Company. Please proceed with your question.
Yeah. Thanks, So just a couple on the peripheral business so.
Just wondering if you could maybe compare what you're seeing in terms of adoption trends customer objections et cetera in protocol versus what you've seen in coronary.
And then just the international peripheral business he commented or I know, it's small, but maybe just talk about where you are seeing.
Some some traction there I guess what countries.
Yeah, sorry, just going to tag team this one too.
The peripheral market in the coronary market, obviously dramatically different.
The.
The sort of sales.
Model.
Peripheral across the industry not just shockwave.
Is a little bit more labor intensive and we think one of the real benefits that were.
We're seeing from the expansion of our clinical specialist team is that we have better wherewith all the boats.
Support our coronary business, but more importantly support the.
The case coverage that is expected and from which sales benefit on the.
On the in the peripheral lab.
There is certainly I think we do benefit from the peripheral coronary.
Synergy.
Because we have one team in a territory that.
Can sell to the cardiologists, who does to both practices peripheral and coronary coronary interventions in a very high percentage of our customers do both which is why a very high one of the reasons, a very high percentage of our hospitals.
Use both coronary and peripheral.
But we also will have a larger portfolio as we already do on on peripheral with <unk> plus.
S four.
A couple of our next.
Product launches are also going to be in peripheral so we will have a more comp.
Complex and more sophisticated bag, because you're covering a much broader spectrum of.
Our vessels versus on coronary we have see too and then we will see two plus.
In the future, we will have two or three coronary products that we'll be selling simultaneously, but for now it's a it's a little.
A bit more.
Sort of targeted.
With.
See two version depending on where you are selling.
Uh huh.
And.
I don't know if you want to jump in on the international aspect.
Sure Yeah the international.
And national perfectly as you mentioned, it's a small number but it's a we've started as we've gone and had more focus in some of the large European countries with the direct sales force that salesforce and some marketing horsepower that we put put behind it has really done a nice job of.
Really introducing the peripheral product to many customers because of it because the distributors you know with a lot of work in and relatively.
A lot of effort for a relatively small juice for the distributors to focus on peripheral internationally, but.
Our team has gotten on it where do you get dishes a nice.
Nice to incremental growth driver and we're seeing good patterns of vascular surgery, primarily the vascular surgery adoption in the European countries.
Okay got it thank you.
We have reached the end of the question and answer session I'd now like to turn the call back over to Doug Godshall for closing comments.
Thanks, everybody for your time and attention and continued interest in Shockwave, we're obviously incredibly enthusiastic about.
The next six months in.
Most of the years ahead of US thanks for your time everybody.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.
The conference has ended please disconnect your lines at this time. Thank you.