Q2 2023 Profound Medical Corp Earnings Call
Good day, and thank you for standing by.
Welcome to the profound medical second quarter 2023 financial results Conference call. At this time, all participants are in listen only mode.
After the speaker's presentation, there will be a question and answer session.
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I would now like to hand, the conference over to.
Stephen Kilmer Investor Relations. Please go ahead.
Thank you good afternoon, everyone.
Let me start by pointing out that this conference call will include forward looking statements within the meaning of applicable securities laws in the United States and Canada.
All forward looking statements are based on per pounds current beliefs assumptions and expectations.
Relate to among other things our expectations regarding the efficacy of the Companys treatment technologies result for future clinical trials, the ability to obtain coding and reimbursement from third party payers and anticipated financial performance business prospects strategies regulatory developments market acceptance and future commitments.
Such statements involve known and unknown risks uncertainties and other factors that may cause actual results performance or achievements to be materially different from those implied by such statements.
No forward looking statement can be guaranteed.
Listeners are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this conference call.
Ah found undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information future events or otherwise other than as required by law.
For the benefit of those who are new to the story I would also like to take a moment to summarize our business.
Profound develops in markets customizable incision free therapies for the ablation of disease tissue.
We are currently commercializing Tulsa pro a technology that combines real time, MRI robotically, driven transfer urethral ultrasound and closer with temperature feedback control.
The technology is designed to provide customizable and predictable radiation free ablation.
Find prostate volume, while actively protecting the urethra and rectum to help preserve the patient natural functional abilities.
The CE marks health, Canada approved and five 10-K clearance by the FDA.
In the U S. We employ a pure recurring revenue model for Tulsa pro whereby we charge customers on a per procedure basis for Tulsa Pro consumable medical devices and services associated with the extended warranties.
Outside of the United States, we primarily deploying our capital and consumable sales and service model separately as the situation warrants.
We're also commercializing Parnell is an innovative therapeutic platform that is CE marked for the treatment of uterine fibroids and palliative pain treatment of bone metastases.
It has also been approved by the China National Medical products administration for the noninvasive treatment of uterine fibroids and has recently obtained FDA approval under a humanitarian device exemption for the treatment of hospital in Australia.
The business model for signed a lease for some it's currently a onetime stealthy capital equipment.
On the call today, representing the company are Dr room megawatt bounce Chief Executive Officer, and Richard <unk>, Chief Financial Officer.
That said I will now turn the call over to Richard.
Good afternoon, everyone and welcome to our second quarter 2023 conference call.
On behalf of the management team and everyone at profound I would like to thank you for your ongoing interest in our company.
For those of you who are shareholders. We appreciate your continued interest and support.
I will turn the call over to oil in a moment.
An update on our commercial activities.
However.
Before I do I'd like to provide a brief update on our second quarter 2023 financial results.
To streamline things.
All of the numbers, we will report to have been rounded.
Our approximate.
For the three months ended June 32023.
The company recorded revenue of $1.6 million with the full amount coming from recurring revenue.
Presenting an increase of 38% from $1 $2 million in the same period of 2022.
Total revenue in the last year second quarter was $2 million.
864000 up that.
Coming from one time sale of capital equipment.
In international markets.
Total operating expenses in the 2023 second quarter, which confer a R&D DNA.
Selling and distribution expenses.
$75 million.
Decrease.
10% compared with $8.7 million in the second quarter of 2022.
Breaking that down partner spend.
But in New Jersey, our R&D work viewpoint of $2 million.
A decrease of 14%.
Compared to the second quarter of 2022.
G&A expenses decreased.
By 21% to two.
$2 1 million.
Selling and distribution expenses decreased by 6% to $2 3 million.
Net finance costs for the 2023 second quarter were $884000 compared with net income of $1 $9 million.
In the same three month period up 2022.
Overall, the company recorded its second quarter 2023, net locked up seven 4 million.
Our already quite park.
Common share.
Paired with net loss of five 9 million or.
Our 28 <unk> common share for the same three month period in 2022.
As at June 32023 profound had cash.
$39 $3 million.
With that I will now turn the call over to Laura.
Thank you Richard.
Good afternoon, everyone.
At the beginning of the year.
<unk> identified certain goals that we want to achieve this year to achieve our main objective of driving adoption of the Tulsa procedure for patients with prostate disease in the United States.
At this midyear point.
I would like to start by discussing.
Where we are against these goals.
First and foremost.
We indicated that we anticipated that the growth of the Tulsa procedures in the United States.
Tick up to about 5% per month in 2023.
By framing as a monthly basis.
Part of our intention was.
I want to highlight the predictability of our recurring revenue business model.
As compared to Q1 'twenty three.
The U S recurring revenue.
By 21% in Q2 2023.
Comparing the first half of 2022.
Since the first half of 2022.
The U S recurring revenue grew by 63%.
Based upon these results.
We remain comfortable.
Our U S business will.
We will continue to grow.
Similar or better place in the second half of this year.
U S revenue growth.
About 70% over last year.
We realize that these numbers.
As a small base.
But our benchmarks indicate that acceleration of the growth rate in the upper double digits.
The right expectation at this stage of the company.
The primary mode of payment remain cash pay.
70% of our patients today remain cash pay patients.
<unk> are typically paying over $30000 per procedure.
The second expectation was that we would apply and receive approval of category one CPT codes, specifically for the Tulsa procedure.
And as you already know that goal was achieved in June .
With sponsorship and support.
Multiple physician specialties Poseidon.
The A&D established three new category one code.
Awesome.
<unk> will be effective on January one 2025.
The first code is for procedure performed by specialists such as Asia all of this.
Assistance from another special.
The other two codes are for a procedure performed by two physician touch as a urologist and a radiologist.
We believe having multiple codes.
Our physician users the flexibility to either do the whole procedure or collaborate and get reimbursed for their part of the service.
The next step of the CPT application process evolves.
Relative value scale update committee or rock.
Funding questionnaires to Tulsa users.
The physicians what related value units or RV use associated with the Tulsa procedure.
Both the <unk> and the UAE.
We'll be very involved in this process.
Which along with reviewers by the center of Medicare and Medicaid services or CMS will ultimately determine the Tulsa procedure payment amount.
For reference.
The U S hospitals.
Farming the Tulsa procedure.
On Medicare patients.
Currently utilizing Epic's code C 97, three for tablets.
The U S centers.
Hospital outpatient prospective payment system.
And reimbursement to a hospital billing.
This code is.
$13048.
Okay.
The proposed recommendations.
Are expected to be published in the Federal Register in August 2020 for.
Finally in October 2024.
And come into effect as of January 2025.
The third goal was about increasing the size of the installed base.
Given that our U S business model.
It's about getting paid on a per patient day.
A larger installed base.
In preparation of January 25.
When the category one CPT code.
Effective.
We will be important to drive faster growth in the future.
Yeah.
Today, we have an installed base of 38 systems.
And additional seven contracts to be installed.
A pipeline in.
In the final stages of 15 additional installations.
Altogether this.
This gives us confidence that we will meet the expected installed base of 50 systems by the end of this year.
Indeed, none of the U S business objectives, all deliverable.
Remember plenty quality have changed.
The non U S business.
Wherever.
It's all about capital revenue.
Which is always unpredictable in the early stages and is even more so in our case since we have chosen to increase our sales and marketing investments in the U S and not in the international market.
Having said that we.
We do expect that our installed base.
In certain countries.
Including the important market of Japan will increase in the second half of 2023.
Turning to our utilization metric.
Over the last two quarters.
I have talked about that.
A variety of patients.
Being treated using Tulsa technology.
We continue to see that more and more sites.
Our increasing.
Variety of Tulsa operation they are cheating.
With respect to indication.
Proximately, 66%.
Were treated for prostate cancer.
25%.
Our hybrid patients suffering from both cancer and BPH.
7% were solid wage and 2% for men with BPH only.
Tulsa is increasingly being used in patients who are on active surveillance.
Or diagnosed with low grade cancer, but also have symptoms of BPH.
We continue to see Tulsa as the only minimally invasive option for such patients.
For cancer, Great Approx.
Approximately 14% with Q1.
60% with Reg Ru two seven.
17% with Greg for three and 9% are great group, four and Great group five.
In terms of ablation.
Around 60% where homeland.
24% for <unk>.
Later than 50%, but.
But less than 100%.
And 16% or focal therapy.
For prostate side.
Approximately 4%.
Less than <unk> <unk>.
34% were between 20% to 40 <unk>.
37%.
We're between 40% to 60 feet.
20% are between 60 to 116.
And 5% or over 100 cc.
Based upon these results.
Clearly.
<unk> continues to be used.
Wide variety of patients with prostate disease, and we continue to believe that.
The total addressable market for Tulsa is about 600000 patients.
Which is larger than that of <unk>.
Any other technology.
That can be used to treat patients with prostate cancer.
Finally, I would like to provide an update on the Tac pivotal study.
Which has reached the end of five year follow up duration.
Our results demonstrate the predictability and durability of the Tulsa procedure.
By five years.
Yes.
State specific antigen or Psa.
0.63 nanograms per milliliter.
Only 20.
21% of patients received additional treatment for prostate cancer.
Yeah.
Im expected complications.
The latter outcome is especially compelling.
As it falls in line.
With the one year biopsy data.
And compares well.
With similar rates.
Reported after radical prostatectomy and intermediate with Glenn and.
In several publications.
<unk> the pivotal randomized controlled trial.
And the cap sure.
St.
One of the largest databases.
Phosphate cancers.
In the United States.
Aldo.
This outcome was achieved.
Despite.
The fact that a second Tulsa ablation, while not permitted by protocol.
Since the early days of test <unk>.
Physician experience.
And protocols for patient selection.
<unk> treatment have been refined.
On review.
The risk of failure.
Mitigated by modern management approaches.
Additionally, we have been able to demonstrate that.
Data from intra procedural.
Emel MRI imaging.
And R&D clinical follow up Ken Indeed predict.
The risk of solid therapy by five years.
The five year outcomes in the tax study.
Also establish the durability of the favorable safety and functional outcomes.
<unk> achieved by one year.
For your marine content.
92% of patients who were tagged free before Tulsa remained so at five years.
Table from one year.
This is consistent with natural decline in function typically observed in men of this age over this time period as reported for example, and the observation arm.
Pivot randomized controlled trial.
Four election function.
<unk> been experienced grade III severe erectile dysfunction.
Medication is not helpful and 87% of been preserved baseline erection.
For penetration.
Five year visit.
There were no attributable.
Greatly.
This year or serious adverse events reported from two to five years.
To summarize.
Most of the boxes.
For increased adoption of Tulsa pro.
And now in chest.
Our reporting of preliminary five year results.
From the tact trial comes within the context of increased awareness of the high in continents.
Erectile dysfunction side effect rates with radical prostatectomy and radiation treatment.
The preliminary five year data.
Constraints.
One year safety efficacy.
Functionality.
Salvage therapy risked outcomes are predictive of the same outcomes.
Five years.
This is encouraging.
We expect in Q1 2025 initial data from our ongoing level, one captain clinical trial.
Elsa continues to be unrivaled in the types and.
And numbers of prostate disease patients.
That urologists are using to treat prostate disease safely and effectively.
With 38, Tulsa pro sites.
Comprised of top tier hospitals.
Independent corporate centers.
And opinion leading practices.
We now have a large number of experienced.
Physicians.
Especially urology.
Who are ready to lead adoption of Tulsa.
We remain on track to grow our installed base to 50, Tulsa pro sites by the end of 2023 and at least 75 by the end of 2024.
All subtle offers.
Nice point of over $8000 per patient.
Our recurring revenue has grown.
Five consecutive quarters, and we expect that to continue going forward.
Our recurring revenue model.
Already yield.
Gross margin of around 65% and we think they will potentially exceed 75% in future with increased volume.
We are delighted with.
With the air Maze establishment of three new CPT category, one code for Tulsa.
Which will be effective on January one 2025.
And look forward to the next stage of the CPT process.
Finally, we continue to believe.
That the establishment of the permanent reimbursement codes.
Bind with initial data from the captain clinical trial will serve as a significant catalyst for Tulsa adoption in the U S.
Beginning in the first quarter of 2025.
This ends our prepared remarks for today.
With that <unk> and I are happy to take any questions you might have.
Operator.
Thank you we.
We will now conduct.
The question and answer session.
To ask a question. Please press star one one on your telephone and wait for your name to be announced.
To withdraw your question. Please press star one again.
Stand by while we compile the Q&A roster.
Our first our first question comes from Rahul <unk> from Raymond James. Please go ahead.
Good afternoon, everyone. Good afternoon. Appreciate it. Thank you so much for taking our questions and let me start by saying congratulations on getting the CPT codes this quarter.
So my question.
It's nice to see the growth from 34 to 38 devices this quarter.
So.
Looking at that Youll need to grow.
Six more devices per quarter to get to the year end goal of 50.
And also given that now that you have the CPT codes in hand, and granted that they'll they'll come into force in Sabra a year from now are you seeing growing <unk>.
Momentum among hospitals and docs.
For the installation that you think will be a tailwind to these installations.
Yes.
Hey, good afternoon now yes.
Yes, I think we that.
That message is relatively new but it is definitely.
Impacting.
The pipeline that we're building.
The pipeline that I talked about.
In the in the prepared remarks.
<unk>.
About the <unk> system.
We are in the final stages.
Or the seven contracts and we.
Additionally have.
<unk>.
I would say.
That was done prior to.
That news, but yes, I think the answer to your question short answer is definitely we're seeing.
Very positive feedback about the permanent code.
Most certainly more and more of the urologists are interested in learning about it.
And.
So getting trained on it.
Terrific. Thanks, Thanks for that.
My second question staying on reimbursements.
There was some.
Discussion last time about the potential expansion of the existing <unk>.
Coat.
174 to ambulatory centers.
Perhaps share an update on that.
Sure.
But what I would call it sort of work in progress.
I think we will know sometime.
October early October .
As I mentioned before.
The data supports the expansion.
And.
<unk>.
So.
We are in dialogue, we're continuing to be in dialogue with CMS.
It's kind of hard to put the odds.
At the moment.
It could be that they're saying well a year from now youll have a permanent code, which will be effective in seasons.
And so on also.
So they may feel like this is a generic code and they don't want to go there, but on the other hand, the data strongly supports the request and it's not a major change for them to make so I think I would say stay tuned.
Certainly don't think that.
It's a lost cause I think it does work in progress and we.
We do have a strong case.
Perfect. Thanks, very much and just one last quick question.
It's interesting to see the broad the broadening use.
Through active sales BPH.
<unk> of course.
The range of sizes, the prostates that are being.
Treated so now translating this cheap captain trial and of course recruitment.
How do you see.
<unk> playing out in that trial I still looking at early 2025 for an initial read on that data and what can we what can we be looking for in these utilization numbers.
To date and hopefully will continue.
As as sort of leading indicators.
And to the captain readout.
Yes.
That's a great question actually.
First of all we are really really focused on the U S business at this point and so the growth rates that I've talked about our U S growth rates and.
The.
As the experience of the U S community is in.
Increasing.
I explicitly think youre right is that.
We're finding that there is a subset of population, which is actually a very large subset, which is patients who have.
BPH symptoms.
We need a procedure, but also have <unk>.
Cancer.
And that happens to be low grade cancer, so normally they don't get treated and they're on drug and theirs.
They're suffering from the psychological trauma of having cancer and they're suffering from the symptoms of BPH that subset. We think is an amazing sweet spot for Tulsa. So I think we are going to see more and more of that.
But kathryn clinical trial is really because it's designed to be a level one study head to head with.
Prostatectomy, the patient population in that trial.
Is.
More.
Aligned with what more traditional intermediate risk or higher risk patients. So I think at some point, we will be publishing more data on that other subset of the population, but the captain trial itself is actually more of a head to head against.
Radical prostatectomy, so the patient selection criteria there is similar too.
Normal prostate cancer patient, who would be treated and finally youre right we will we.
We do expect that we will have results the preliminary results.
Early Q2.
2025.
Again just to.
Highlight one more thing again that the.
The most important thing that we learned from <unk>.
Fact.
That I talked about in the prepared remarks is the predictability of the results so that we'll be able to.
Discuss with payers as well as urologists.
The fact that.
The data.
As predictable and tag Theres No reason why that should not be the same so even the early results should be impactful.
Yes.
Distinction thank you very much.
Thank you again for taking my questions I'll get back in the queue.
Thank you Ron.
Thank you.
One moment for our next question.
Okay.
Our next question comes from Michael Sarcone from Jefferies. Please go ahead.
Hey, guys. This is Chris on for Mike. Thanks for taking the question I was wondering if you could give an update on the broader macro environment and the backdrop for our system installs.
Any challenges or bright spots to call out there.
Chris Good afternoon.
<unk>.
I think I mean, I don't know if I have too much of a commentary.
I think that.
The pipeline is pretty strong.
I don't think the macro environment is.
Affecting us that much.
I think that.
The recognition that this technology is flexible and has.
Mendes potential from this variety of patients with them, which I'll talk about all the time without urologists and year.
I think that message is definitely resonating.
And the kind of.
Startup related issues of finding the MRI.
Trailing the anesthesiologist.
Upgrading the system MRI to enable to use Tulsa I think most of those things are now sort of.
Such that we know how to resolve them.
Compared to a year ago.
And that is why I think we're seeing increased usage and that is what.
I think is driving the pipeline so high.
In summary, Chris I don't.
See any headwinds from the macro environment.
Awesome understood. Thanks.
Thank you.
One moment for our next question.
Our next question comes from Frank <unk> from Lake Street Capital markets. Please go ahead.
Hey, this is Nelson contact on the phone for Frank today.
Thanks for taking the questions.
So in prior quarters, you talked about MRI time, being a challenge to come by and resulting in some backlog can you maybe update us on that dynamic in the most recent quarter and months.
Sure Nelson.
As I was saying the other conversation.
The.
We have.
Enough.
Different types of MRI that we are compatible with.
If we look at our installed base today I think.
We use all three magnets from all three companies.
Almost equal from all three companies and that variety of tomorrow is being used.
Continuing to expand.
And in terms of the usage time and availability.
I think it's been because.
Because we use a temporary code or cash pay mostly.
Basically what it is.
Once the patients are scheduled.
The communication with the administration to make sure that the amount of time is available.
It works.
So it's more of a matter of how do we.
An entirely new technology and make sure that the right things are discussed at the sites.
To drive utilization I think that's what it is the availability of the EMR is really not the issue anymore.
Got it and then one more quick one in the past you're talking about.
<unk>, you're kind of in the utilization rate can you talk about that trend with new users have you seen new sites ramping up in <unk>.
Or how have you seen new sites in the first three months six months and then.
What are you kind of seen for volume.
<unk>.
12 month Mark are there.
Yes, very good question Nathan.
Do think that.
We are far better this year.
Compared to last year.
In terms of the rent.
Of the of the sites.
For several reasons.
One of them is suddenly we know a lot better our sales team is more experienced in a lot better with respect to how to get the startup going how to make sure we educate them properly and so on.
Clinical genius team is quite frankly, great at it.
And I think the second reason is the things that I talked about the fact that now they can see the wide variety of patients so they're no longer.
Oh, Gee I'm going to keep only this type of operation. This technology I think they are starting to see that they can keep treat more patients and so I do think that.
The rate of startup the rate of adoption.
<unk> increased as I mentioned in the.
The prepared remarks, I think the goal that we said U S revenue.
70% growth. This year is it's all related to that.
What I think is likely to happen and I also think.
<unk> installed base compared to <unk>.
Six months ago is.
Going to double.
This year. So I also think 2024 should be even better compared to this year.
So hopefully that helps.
Yeah. Thank you congrats on the quarter, it's good to see the progress.
Okay.
Thank you.
As a reminder.
I would like to ask a question. Please press star one one and wait for your name to be announced.
One moment for our next question.
Okay.
Our next question comes from Ben Hayner from Alliance Global Partners. Please go ahead.
Thanks for taking the questions and congrats on the CPT code front.
Oh man.
Youre welcome just wanted to hit on that kind of a couple of Big picture comments you made in the prepared remarks, you mentioned that.
Being able to get north of 75% gross margin.
With enough volume.
Just kind of wondering where your add on.
Sort of a marginal gross margin basis, if you will or a contribution margin basis.
Currently.
Kind of the consumables.
Yeah. That's a great question, that's kind of where the confidence comes from I think the marginal margins are.
Yeah.
Already fairly close to that number.
Okay.
So, yes, I think it's more about absorption of the overhead to.
In terms of technology I don't think we have to do much even though we have an excellent engineering team and theyre driving the cost of goods also.
And quality.
But I think that.
It's getting to that margin is really more about absorption.
Over it.
<unk>.
Volume.
So let's call it.
So from the short term the margin contribution from the increased revenue is going to be in line with what we have been reporting in Q1, Q2, but overtime our volume goals.
Typically higher that's when do we expect that the margins going to improve.
North of 70%.
Because again number one we're going to have a volume discount that we can negotiate with the vendors.
On the other it wasn't mentioned, we can spread out our rigs are o'brien with lot more product.
Okay perfect. Thanks for the color there guys and then just on the 50 installed this year and over 70 75 at the end of next year.
Yes.
I was one of the earlier folks pointed out.
Six ish, a quarter, which doesn't seem like that heavy lift.
Given that you now have a CPT code.
Yes, I know.
And that doesn't kick in right away, but.
It would seem to me that that would.
Accelerate fairly easily or you could get more than six a quarter.
Relatively readily.
Any commentary there.
But I think on paper everything looks great.
But I think in reality.
Getting to where we are has been a lot of work.
And it has not been because of our technology. It has not been because pay.
Patients are.
Not happy outpatient are very happy.
It has primarily been because this is such a unique technology in the workflow is so different so I think.
I feel far better today.
We know how to tackle that workflow than I felt a year ago.
But that's the reason.
What would be very.
About this is I feel we are definitely in the right track, we're growing at the pace that I think is appropriate for us, but I'm certainly not at a point, where we're ready to talk about faster growth than what we have.
Okay fair enough.
Lastly for me you mentioned in response to one of the early questions on.
That the engineering team.
Yes.
Doing.
Doing a great job.
And I apologize if I missed this earlier, but anything new kind of on the.
R&D front or that we should be on the lookout.
Coming soon.
I know you had some stuff in the deck.
Recently, but just curious on any update there.
Yeah, Ben again, great point.
I think the most important one.
Is on the horizon is the.
As the.
Tulsa AI.
Which will not only you.
Use the knowledge of and the few thousand cases that had been done.
That has been successfully done.
And based upon that it will automatically provide a.
<unk> to the.
Physician aware.
How to plan the treatment.
So I think that is.
Of course, there is more that are not going to share today, but certainly next year, we will but I think the point being that.
It will not just it's not just a time saver, but I actually think that over time it has the potential to.
Improve outcomes beyond this threshold.
That about 20% of the patients always need something else beyond the first treatment.
Think that is something quite frankly very exciting to us.
And we will be monitoring how it goes.
We have.
We are working according to the guidelines that FDA has provided to us and I feel very good about being able to deliver that product next year and I do think that that product will provide some growth in 2024 as well.
Okay, Great I appreciate the color there and that's it for me congrats on the CPD Bronco and the progress.
Thank you ma'am.
Thank you.
Our next question.
One moment.
Our next question comes from Joshua Jennings from TD Cowen. Please go ahead.
Hi, good afternoon.
Was hoping to just start off.
You ask about.
As we as we look out into 2025, when reimbursement will be in place in some of these.
Engineering development projects would be.
Hence the Tulsa pro system.
Wanted to also just ask about how youre thinking about the advancement of our technologies and.
Potentially some large imaging players.
Evolving their systems to better integrate with.
The delivery of MRI guided interventions like Greg.
Alright, good post close approach.
System.
Good afternoon, Josh Yes, that's it.
Very good conversation to have also.
So we are in.
Communication with the EMR companies.
And.
As you know.
There is there is a lot of.
Innovation coming along in that space.
Yes.
And I think that.
As a general comment I would say there is recognition.
By MYR companies also that moving from the standard robotics too.
MRI based incision free.
Robotics is where the next growth could come from because I think if we go into the ASC.
This is one way that we can get to <unk>, where they've always wanted and MRI, where we think we can be.
One of the.
And one of the.
Key justification to get one and so I think the <unk>.
Our companies.
<unk> are looking at intervention on MRI as a growth opportunity for themselves and they look at Tulsa and this again the flexibility and the variety of patients we can treat as a.
Potentially a very good driver towards that change so I.
I do think Josh that.
You will see more and more dialogue.
And I think it will come into the public domain.
In 2024 timeframe, where you will start to see some.
Alignment.
With the EMR companies and Tulsa.
That's exciting and then you did mention <unk> was just.
Hope I didn't Miss this but just the potential for expansion of the C code.
For Tulsa pro coverage in Afcs, maybe.
Maybe next year and any updates there and then also would love to just hear about.
And if you can expand on the ESG opportunity.
And and how that channel could evolve.
Outside of just the evolution of EMR systems, and getting them into <unk>. Thanks for taking the questions Yeah, Yeah, absolutely Josh.
<unk>.
The answer to your question I answered it basically work in progress.
Data that we have submitted to the CMS strongly supports the expansion.
And we have a meeting coming up with them.
And.
I think it's hard to predict exactly where they're going to go and I was saying before.
The data is usually CMA does when data supported but you never know.
So on that from that perspective, I'm optimistic on the other hand, the code that we're using is a generic code and so they might feel like they don't want to change the code and the fact that we are getting the city. The CPT code approved might actually be.
A bit of a pause for them because they might say well, they're going to get it by 25 anyway. So why do I want to change. This generic code for one year. So I could see arguments on both sides, but I do think that.
It's not a very big change for CMS to make and so I do have some level of optimism that we could get there, but I think the bigger point that you're making is a very important one which is that I think <unk>.
Can be.
A very.
A prime target for us in the long haul to drive usage of this technology.
Because.
You do those procedures that ASC, where you don't have.
The possibility of emergencies or emergency.
For the patient.
In our case, because there is no incision.
And as I've talked about before.
If the lights go out they can basically wake up the patient take the catheters.
Tell him to come back in two weeks.
And in Europe that has happened at least ones that I know.
And so it's not a risky procedure from that perspective, and so I do think that ASE is are going to gravitate.
Towards this end MRI companies will gravitate towards it and we think that's where this belongs as well so I think hospitals in ASP over the long haul are likely to be the best places for this procedure and its a day procedure. So I do think patients will be much happier go into those.
And places.
I appreciate all the answers.
Thank you.
I am showing no further questions at this time, so now I will turn the conference back over to Dr. <unk>.
For closing remarks.
Thank you so much.
We look forward to updating you at the Q3 call.
<unk>.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
[music].